Market’s Primed for Busiest IPO Week in 2 Years!
Stocks opened the week mixed, trading volatile with little in the way of a clear direction. Indexes started off Monday’s trading strongly, but a selloff in tech stocks led the S&P 500 to a “Monday Reversal,” with the gap closed already in the first trading hour. The financial sector strength came on the coattails of the rescue plan for Italian banks, which helped offset the day’s losses, the S&P 500 closing around the zero line.
The tech sector was led lower by a fall in chip stocks, including the best-performing stock in the sector last year, NVIDIA (NVDA), which ended off 1%. Tech stocks rebounded 2.27% last week, after having fallen during the two prior weeks. The sector continues to be the market favorite this year, with gains of over 20%.
Banking stocks (KBE) rallied higher after the Italian government announced that it had reached an agreement to bail out Popolare di Vicenza and Veneto Banca, two regional banks. The announcement pushed the European banking index up 0.9%, U.S. banking stocks not long in following suit. The rescue package removed, if anything, one concern weighing on the Euro zone, and likewise propelled the American market at the opening bell.
In Summary for the Day: The Dow Jones rose 0.1%. The S&P 500 ended unchanged, the NASDAQ shedding 0.3%. Gold ended off 0.8%, crude closing up 0.86%.
In the day’s economic news, durable goods orders for May fell 1.1%, the forecasted decline having been 0.6%. The reason for the disparity is primarily the sharp decline in transportation equipment orders, which were off 3.4% in May after having dropped 1.8% in April. Factoring out the decline in transportation equipment, the recorded decline would have only been 0.1%. These figures represent the continuation of the streak of weak economic figures released over the last few weeks, and it would seem that the market needs much stronger figures to draw sidelined investors, and in turn send prices higher.
Crude rose 0.86%, closing at the $42.38 barrel level. At the same time, the unrelenting rise in U.S. crude inventories and the dearth of evidence of a decline in global supplies, checked yesterday’s gains. Crude fell 3.8% last week, capping off its 5th straight week of losses and officially entering a bear market (having fallen 20% since the latest high recorded earlier in the year in February). The continual decline has taken a toll on energy stocks, which saw their steepest losses last year since September ’16.
One of the big movers yesterday was the car rental company, Avis-Budget (CAR), which soared 14.2% after announcing a joint venture with Google (GOOGL) to manage the latter’s fleet of 600 autonomous Chrysler cars.
On the negative side, GRUB fell 6.4% after shouldering a downgrade from Morgan Stanley. Analysts expressed concern about ads and tight competition from Amazon and other restaurant sector online platforms. SSYS toppled 12% after Goldman Sachs downgraded it to “Sell” from “Neutral,” giving it an unflattering price target of $20, all-in-all 30% lower the stock’s opening price yesterday.
Tuesday: Investors will be focusing today on Fed Chairwoman Janet Yellen, who will be speaking today in London. The pivotal economic figure today will be the Consumer Confidence Index which will be released at 10:00. It will be one of two consumer confidence indexes which will be released this week, the second being the University of Michigan’s on Friday.
On the financial reporting front, a number of companies will be reporting before opening, including DRI, FDS.
This is the last week of Q2 and as such, the last week of the first half of the year. There’s a chance we’ll see activity today prompted by the “window dressing effect,” money managers buying last quarter’s strongest performing stocks to show that they’re holding the market’s biggest winners. The Q2 earnings season will start getting really busy in the second week of July.
This last week of the quarter will be featuring lively IPO activity. In effect, it’s going to be the biggest week of new issues in 2 years, with many a biotech firm.
Today, ATXI, a biotech firm, is expected to begin trading. It’s important to note that the issue’s price range has fallen from $9-$11 to $5-$7, that being the reason the issue was postponed from last week to this one; today’s second issue is the N.Y. based bank Esquire, which will trade under ESQ.
Tuesday’s Hot Stocks: STX, WDC, WEC, FDS, DRI
IPOs: ATXI, ESQ
Have a great trading week!
|Wednesday||10:30||Crude Oil Inventories||–||Low|
|Thursday||8:30||GDP – Third Estimate||1.2%||High|
|Friday||10:00||Michigan Sentiment – Final||94.7||High|
|FDS||FactSet Research Systems Inc.||BMO||Tuesday|
|DRI||Darden Restaurants, Inc.||BMO||Tuesday|
|GIS||General Mills, Inc.||BMO||Wednesday|
|WOR||Worthington Industries, Inc.||AMC||Wednesday|
|MKC||McCormick & Company, Incorporated||BMO||Thursday|
|CAG||Conagra Brands, Inc.||BMO||Thursday|
|WBA||Walgreens Boots Alliance, Inc.||BMO||Thursday|
|STZ||Constellation Brands, Inc.||BMO||Thursday|
|MU||Micron Technology, Inc.||AMC||Thursday|
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