Mid-Morning Look: June 17, 2020

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Mid-Morning Look

Wednesday, June 17, 2020






DJ Industrials




S&P 500








Russell 2000






U.S. equities opened higher initially, extending the recent bounce from the prior two days of trading on better economic data, accommodative comments from the Fed, indications for a treatment for COVID-19 and general upward buying momentum. However, rising COVID-19 cases and fear crept back into the market place this morning after Texas said virus hospitalizations surge 11% in 24 hours, and Florida showed coronavirus cases rose 3.3% compared to the 7-day average of 2.8%. Following the headlines, stocks are pulling back from morning highs. If stocks close higher Wednesday, major indexes will have rallied for four consecutive days. Fresh economic data Wednesday showed new home construction rose 4.3% in May after having declined a seasonally adjusted 26% in April from a month earlier, adding to the recent strong of better data points (retail sales surged this week as well). Large cap tech among early leaders with AMZN, NFLX, AAPL all positive, while homebuilders rise and cruise lines slip after cautious comments in the industry as NCLH said it would suspend the majority of its voyages through at least Sept. 30th. Fed Chairman Jerome Powell testifies before Congress on monetary policy again today, scheduled to speak before the House Financial Services Committee at 12:00 PM EST. The yield on the 10-year Treasury on Wednesday fell to 0.743%, from 0.754% Tuesday while oil prices slip.


Economic Data

·     Housing Starts for May rise 4.3% at 974K unit rate below the est. to rise 23.5% to 1.095M while April revised to 934K units from 89K; single-family starts rise +0.1% to 675K and multifamily up 15%; Building Permits for May rise 14.4% to 1.22M vs. est. up 16.8% to 1.245M (prior month revised to 1.066M unit rate







WTI Crude















10-Year Note





Sector Movers Today

·     Housing & Building Products; FND tgt raised to $65 from $48 at UBS in flooring space saying checks with multiple Pros/contractors and other data points suggest that there is upside to the consensus 2Q SSS estimate; housing stocks in general seeing recent strength following better housing data and rates remaining low (TOL, PHM, MTH), while home improvement names (LOW, HD) advanced early

·     Casino & Leisure movers; DKNG shares slip after files 33M share offering (19M for holders) through Goldman Sachs and Credit Suisse; cruise line stocks weak initially after NCLH said that its cruises will not return until at least October/the cruise line had previously cancelled departures through July due to the COVID-19 pandemic; ERI 18M share Secondary priced at $39.00 and VICI 26M share Secondary priced at $22.15

·     Bank movers; lenders nearly quadrupled the amount set aside for anticipated losses in Q1, according to the FDIC’s latest Quarterly Banking Profile, which showed U.S. banking industry profits tumbling nearly 70% to $18.5B amid the coronavirus pandemic. Over half of all banks reported a profit decline, and 7.3% of lenders were unprofitable. The amount of non-current loans rose 7.3% from the previous quarter, the biggest increase since 2010; in research, Raymond James upgraded shares of HWC, OZK, RF, PNFP, TFC, BKL, WSBC, an LBAI to Outperform from Market Perform EBSB raised to Strong Buy and downgraded ALRS, HBCP and ISTR

·     Transports; UPS, WERN, XPO named new catalyst call buys at Deutsche Bank saying for UPS, see potential for an over 20% EPS beat in 2Q for UPS as believe market participants are overly (albeit understandably) negative on the profit impact from higher B2C mix in 2Q – Deutsche also says expects sizable beat from WERN in Q2; KeyBanc was cautious on FDX ahead of earnings as lower ests to reflect the full impact of European/ U.S. shutdowns, negative mix from B2C growth, and elevated safety costs; in airlines, LUV raised outlook for June revenue and capacity, citing continued improvement in passenger demand and bookings as now expects June revenue to be down 70% to 75% from a year ago, vs. prior for a decline of 80% to 85% – the outlook for June capacity has improved to a decrease in the 40%-to-50% range from 45% to 55%, while the expectation for load factor has increased to 40% to 50% from 35% to 45%.



·     ACRS +19%; as the company receives FDA approval to start clinical study for experimental drug ATI-450 in hospitalized patients with COVID-19

·     AMRN +2%; after settled its patent infringement dispute with Apotex over its marketing application seeking approval to sell a generic version of Vascepa (icosapent ethyl) in the U.S.

·     BYND +7%; says it will start selling a value pack of 10 plant-based burgers at most WMT and TGT stores, and select retailers across the U.S. available through mid-August with suggested retail price of $15.99, or $1.60 per patty

·     FLGT +6%; has launched an at-home testing solution for the Coronavirus Disease (COVID-19)/received Emergency Use Authorization (EUA) from the FDA for use in the United States

·     MGI +2%; said based on the improving trends, now expects Q2 revenue of ~$275M on CC basis (estimate $249.4M) and Q2 Adj. EBITDA of ~$55M on a CC basis

·     TPX +4%; said QTD orders have significantly improved from prior expectations and the Company now estimates Q2 net sales to be down only 15% (vs -30% prior) due to a strong May and June

·     WATT +35%; following a deal with China-based Grepow Battery to develop wirelessly charged batteries for use in electronic devices with industrial and medical applications/batteries will use its WattUp radio frequency based charging technology



·     CEMI -60%; after the FDA revoked the emergency use authorization of its DPP COVID-19 IgM/IgG System, its SARS-CoV-2 antibody test, citing concerns with accuracy

·     CXW -17%; said the board has decided to look at “capital allocation alternatives” and that the group also has chosen to suspend the company’s quarterly dividend and said potential opportunities to recycle capital invested in certain leased assets will be analyzed

·     NCLH -7%; after the company said that its cruises will not return until at least October/the cruise line had previously cancelled departures through July due to the COVID-19 pandemic

·     ORCL -2%; Q4 results missed consensus expectations on revenue ($10.44B vs cons $10.64B), it beat expectations on EPS ($1.20 vs $1.15) and posted a strong PF operating margin (49.2% vs cons 47.3%) while provided incremental information regarding the revenue shift of the business stating that revenue now falls firmly into three camps: growing, stable, and declining.

·     X -2%; guides Q2 EPS loss to about ($3.06) vs. est. loss ($1.56) and sees 2q adj ebitda loss about $315M vs. est. loss $86.5M and says in tubular, market conditions remain challenged


·     Aveo Pharmaceuticals (AVEO) 8.5M share Secondary priced at $5.25

·     Axon (AAXN) 3M share Secondary priced at $92.00

·     BioCardia (BCDA) 4.76M share Secondary priced at $2.10

·     Black Knight (BKI) 5.6M share Spot Secondary priced at $70.25

·     Constellation Pharmaceuticals (CNST) 5.5M share Secondary priced at $35.00

·     Eldorado Resorts (ERI) 18M share Secondary priced at $39.00

·     Ingersoll-Rand (IR) 12.1M share Spot Secondary priced at $30.70

·     ShockWave Medical (SWAV) 1.7M share Secondary priced at $45.75

·     VICI Properties (VICI) 26M share Secondary priced at $22.15


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.

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