Mid-Morning Look: April 16, 2020

Auto PostDaily Market Report

Mid-Morning Look

Thursday, April 16, 2020






DJ Industrials




S&P 500








Russell 2000






U.S. equities are mixed, losing steam after opening sharply higher despite another dismal jobless claims weekly report, as market clings to hopes after U.S. President Donald Trump said late yesterday that data indicates the country has overcome the peak on new COVID-19 infections, and said he would announce “new guidelines” for reopening the economy. Stocks pulled back from highs led by the usual suspect’s such as financials, energy and REITs while tech outperforms (though off the highs). Markets reacted fairly calmly to more sobering economic data, as U.S. weekly jobless claims totaled 5.24M (as the coronavirus has now wiped out all the jobs created over the last 11-years), March housing starts sank 22.3% to a seasonally adjusted annual rate of 1.216M, and the Philadelphia Fed Index for April plunged 43.9 points to -56.6. The data added to weak results on Wednesday with NY manufacturing, retail sales falling sharply lower. U.S. Treasury prices rise the 10-year yield falls 3 bps to move below the 0.6% level, while gold rises and oil falls. Tech has been buoyed by a handful of names including AMZN, NFLX, GOOGL and AAPL recently. Earnings in healthcare has been strong thus far (JNJ, UNH, ABT), while banks mixed today after various results (MS, BK, BLK).


Economic Data

·     Weekly jobless claims another dismal print, as they to 5.245 million individuals (vs. prior week 6.6M) filing first time unemployment vs. est. 5.5M while continuing claims were at 11.976M vs. est. 13.26M (form prior week 7.44M); the 4-week moving average rose to 5,508M from 4.267M (jobless claims now over 21 million in the last 4-weeks)

·     The Philly Fed Survey posted a negative reading of (-56.6) vs. est. (-32) – April prices paid fell to -9.3 vs 4.8, new orders fell to -70.9 vs -15.5, Employment fell to -46.7 vs 4.1 prior and shipments fell to -74.1 vs 0.2 last month; Prices received fell to -10.6 vs 6.8

·     Housing starts for March fell a greater (-22.3%) vs. est. (-18.7%) and prior month revised to down (-3.4%) from (-1.5%); building permits fell (-6.8%) in March vs. est. drop of (-10.7%)







WTI Crude















10-Year Note





Sector Movers Today

·     Housing & Building Products; housing data (housing starts for March fell over 305) awful today hurting builders again early (LEN, KBH, TOL) while two analysts out with negative comments in building products sector: 1) Wells Fargo upgraded SHW given its exposure to defensively positioned end-markets and downgraded JELD 2) Baird downgraded shares of AMWD, DOOR, FBHS, JELD, MHK saying Q1 checks show softness ahead in R&R categories as impacts from COVID-19 and related consumer reactions weigh on the industry

·     Bank movers; MS posted better Q1 trading revs of $2.20B, up 29% YoY and above estimates of $1.77B, but overall revs of $9.49B missed estimates and EPS of $1.10 was down from $1.39 YoY/said profit fell 30% in the quarter; BK Q1 EPS of $1.05 beats expectations of 88c on better revs of $4.1B citing increased fee revenue, as well as higher transaction volumes/said quarterly provisions for loan losses at $169M; KEY Q1 EPS missed (12c vs. est. 18c) on weaker fees ($477M vs. $573M est.) while NII, expenses and provision were better (provision $359M)

·     Consumer Staples; PFGC 13.5M share Spot Secondary priced at $22.50; in research, Credit Suisse upgraded SJM to neutral and THS to outperform while raising sales estimates above consensus for 10 of the 11 packaged food companies under coverage on rising sales growth; KHC upgraded to overweight at Wells Fargo saying work suggests its portfolio is far from as “off-trend” as bears claim, and internal savings can self-fund reinvestment; MNST reinstated buy and $70 tgt at Bank America based on a Price-to-earnings (P/E) multiple of 30.5x our 2021e EPS of $2.30; SAM was cut at MKM to hold from buy as believe every brand has played out and valuation already reflects best case scenario

·     Hardware & Component news; CIEN downgraded to equal-weight from overweight at Morgan Stanley given disruptions in installation capabilities and potential for more volatility in SP spend; ZM shares active after the WSJ reported VZ is buying Blue Jeans Network video conferencing (competitor) for less than $500M; GPRO guided Q1 prelim revs $119M, down 51% YoY which was below the prior view of $140M-$160M and said it plans to lay off more than 20% of staff

·     REITs; data center REITs COR, DLR, EQIX all downgraded at Raymond James and lowering estimates on CoreSite, as they are trading at or above where their levels before the COVID-19 crisis – says are hard-pressed to see upside to our price targets while they are trading at or above historic averages (notes not a fundamental call); INVH downgraded at Morgan Stanley saying SFR REITs have lower turnover rates than apartments and coupled with an outsized growth opportunity to scale, means SFRs can trade at premiums to apartments



·     ABT +4%; Q1 EPS of 65c and sales $7.73B topped estimates of 61c and $7.4B while 1Q international nutrition sales rose +4.6% and suspended guidance for year

·     BK +4%; Q1 EPS of $1.05 beats expectations of 88c on better revs of $4.1B citing increased fee revenue, as well as higher transaction volumes

·     BLMN +3%; after saying off-premise sales, that include take-out and delivery, have nearly tripled since the beginning of March when many customers began staying at home as sales

·     DVAX +2%; after entering into a collaboration with Sinovac Biotech to develop a vaccine to prevent Covid-19/collaboration will evaluate the combination of Sinovac’s chemically inactivated coronavirus vaccine candidate with Dynavax’s advanced adjuvant

·     NFLX +4%; tgt raised to $490 at Goldman Sachs ahead of earnings next week, as expect to report 1Q results well above guidance, with over 10mn net subscriber additions

·     NVDA +4%; pacing the gains in the semiconductor sector which remains resilient

·     RCUS +72%; after Bloomberg reported late yesterday that GILD is in discussions regarding a potential stake or partnership, though noted a deal has not been finalized and does not provide additional details https://bloom.bg/2VaMQ74



·     COP -2%; to voluntarily curtail 225,000 gross barrels of oil per day, reduces 2020 cash uses by added $3B, cuts capex forecast and said its share buyback program was suspended

·     GPRO -4%; guided Q1 prelim revs $119M, down 51% YoY which was below the prior view of $140M-$160M and said it plans to lay off more than 20% of its remaining staff

·     SQ -5%; downgraded at Raymond James to underperform from market perform as believe there is a significant disconnect between the recent performance of the stock (down just 4% YTD vs S&P 500 -15%, +700 bps vs peers since 2/21)

·     TWTR -3%; downgraded to neutral at JPMorgan citing the social-media company’s risks to revenue as a result of a weakening ad environment

·     UAL -10%; top decliner in the S&P down followed by rival airlines (AAL, ALK) and cruise lines (RCL) as transports and leisure tumble


Market commentary provided by Catena Media Financials US, LLC, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

Live Trading

Open an Account

Paper Trading