Mid-Morning Look: March 17, 2020

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Mid-Morning Look

Tuesday, March 17, 2020






DJ Industrials




S&P 500








Russell 2000






U.S. equities couldn’t hold their overnight gains, as stocks dropped in the first 30-minutes of trading, taking the Dow below the 20,000 level for the first time since early 2017 (touched low 19,882) before rebounding as markets hopeful for a “green day” this St. Patrick’s Day after posting its third worst daily decline in history yesterday amid the coronavirus impact on global economies. With the current atmosphere of disintegrating confidence, struggling credit markets and businesses closing or limiting their operations in the wake of the coronavirus, stocks have been in freefall, with fears of liquidity trying to be addressed by the Fed over the last few days (expanding REPO markets, cutting rates by 150 bps over the last week and announced a $700B QE program). At the same point, reports indicated the Trump administration reportedly will ask Congress to approve an $850B economic stimulus package, to help struggling small business and major industries (airlines, cruise, restaurants, retailers). Also, the Fed reportedly is set to reinstate its commercial paper funding facility. Unusual times call for unusual measures as families stay home from school and work from home but to this point, no government programs announced for individuals who can’t work from home, leading to further market and wealth destruction not seen since the banking crisis, 1987 crash and 1920’s Great Depression.


Treasuries, Currencies and Commodities

·     In currency markets, the U.S. dollar surging against most currencies, with the euro and Pound falling sharply and emerging markets leveraged to oil (Russia, Canada) are also tumbling again; the U.S. dollar posted a 4-year high against the Canadian dollar, topping the 1.40 level; the dollar index (DXY) up over 1.4% around the 99.50 level (52-week high 99.91 on 2/21). Commodity prices actually holding up well with gold rising over 2% and oil steady after plunging to multi-year lows yesterday (below $30 per barrel for WTI crude and Brent). Treasury market’s slip with yields rebounding after yesterday declines, as the 10-year yield up a few bps to around the 0.80% level


Economic Data

·     U.S. retail sales fell in February by the most in a year, as retail sales fell (-0.5%) below the estimate for a 0.2% increase while retail sales less autos fell (-0.4%) in February worse than the est. up 0.1%; retail sales fell to $528.113b in Feb. vs. $530.93b in January; the report suggests consumers had already begun to scale back before the number of coronavirus cases in the U.S. began accelerating

·     Industrial Production for February rose 0.6%, topping the 0.4% estimate after falling (-0.5%) in January (which had been revised down to -0.5% from -0.3% prior); Capacity utilization rose to 77% from 76.6% in January, revised down from 76.8% (est. 77.1%)

·     Business Inventories fell (-0.1%), in-line with expectations, while in housing the Home Builders’ Confidence index in March falls to 72 vs 74 last month, according to NAHB/Wells Fargo, with the present single family sales falls to 79 vs 81 last month, future single family sales falls to 75 vs 79 last month and prospective buyers traffic falls to 56 vs 57 last month







WTI Crude















10-Year Note





Sector Movers Today

·     E&P sector; more cap-ex cuts given low oil and slow demand as PXD announced the decision to reduce its 2020 capital budget by ~45% to $1.7-1.9 billion resulting in 2020 oil production flat relative to 2019 (~211 Mbo/d)/plans to reduce its operated rig count from 22 to 11; ENLK cuts its FY20 cap-ex to $225M-$285M from prior view $315M-$425M; CXO cuts FY capital expenditure to approximately $2 billion, down from prior $2.6 billion to $2.8 billion view citing the dynamic environment and substantial decrease in oil and natural gas prices; CPE reduces 2020 capital program by over 25% and provides operational and hedging updates as reducing operational capital plan for full-year 2020 to $700 to $725 mln from $975 mln

·     Transports; Dow Transports erased early gains, falling below the 7,000 level; the IATA said today that the global aviation industry could need a general guarantee of about $150 billion to $200 billion; airlines again feeling pain this morning; truckers WERN, HTLD upgraded to outperform at Baird as recent channel work indicates a pick-up in spot truckload activity in recent weeks given growing supply chain disruptions amid developing COVID-19 pandemic; ODFL, XPO were both upgraded to buy at Bank America; UBER slumped after began suspending shared rides in the United States and Canada due to the coronavirus pandemic.

·     Retailers; the list of retailer companies shutting stores temporarily to deal with the coronavirus impact grows by the day (AEO, CHS, FL, FOSL, JWN, LB, PLCE) and many of those companies are also withdrawing their future looking forecasts amid the uncertainty to their businesses; WMT was upgraded to outperform at Oppenheimer ($125 tgt) as believe WMT is well positioned to still deliver on financial targets, and shares could benefit from money flows shorter-term as investors seek safety in a more uncertain global economic backdrop

·     Casino & Leisure movers; CHDN to reschedule the 146th Oaks and Kentucky Derby Presented by Woodford Reserve. The 146th Kentucky Derby will be rescheduled from May 2, 2020 to September 5, 2020 and the 146th Kentucky Oaks will be rescheduled from May 1, 2020 to September 4, 2020; MTN announced today that all of its North American resorts and retail stores will remain closed for the 2019-20 winter ski season amidst the continued challenges associated with the spread of coronavirus; movie theatres CNK, AMC downgraded at JPM after movie chains close business temporarily to deal with coronavirus efforts


Stock Gainers

·     AIMT ; erases early gains after rising initially as the FDA raised some questions regarding efficacy, questions for competing drug from DBVT, as those shares declined

·     CLX +13%; extends recent gains on expectations of increased sales (trades to 52-week highs) along with gains in CHD, KMB, while food related names also rising early (CAG, HSY, CPB) as consumer staples getting a bounce

·     HOLX ; said that the FDA granted Emergency Use Authorization for the company’s Panther Fusion SARS-CoV-2 assay that detects the coronavirus

·     MRNA +16%; shares remain active after dosing the first patient with coronavirus vaccine in early-stage trial yesterday

·     REGN +9%; after saying it has identified hundreds of virus-neutralizing antibodies and plans to initiate large-scale manufacturing by mid-April with antibody cocktail therapy

·     WEC +17%; Utilities outperforming with the UTY up over 7%, led by gains in WEC, ED, XEL, D among others on increased usage at home, flight to defensive stocks



·     ADS -20%; to new 52-week lows – stock 52-week highs $182.95 last April) as consumer driven names extend declines (ALLY, DFS, SYF)

·     BA -18%; after asking the Trump administration for short-term relief for the company and the entire aviation industry as the coronavirus grounds air travel

·     DBVT -43%; falls as the FDA raised some questions regarding efficacy, including the impact of patch-site adhesion, during a review of the company’s BLA for investigational Viaskin Peanut

·     EAT -2%; among the top decliners in the casual dining sector

·     LB -22%; as the list of retailer companies shutting stores temporarily to deal with the coronavirus impact grows by the day (AEO, CHS, FL, FOSL, JWN, LB, PLCE) and many of those companies are also withdrawing their future looking forecast

·     UBER -7%; after begun suspending shared rides in the United States and Canada due to the coronavirus pandemic


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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