Half-Hearted Market Rebound; IPOs Shine
Yesterday, Wall Street succeeded in cobbling together a half-hearted rebound – after the most vicious selloff in 8 months this past Wednesday – with the chances of a Trump impeachment and subsequent removal from office now slightly on the downtick. Bottom buyers drew encouragement from a video released from the testimony of former FBI head, James Comey, who declared that Trump had not intervened in the investigation exploring the links between his election campaign and Russian officials. On another front, there were two red hot IPOS issued yesterday, each closing their first trading day with spectacular success. But more of that to come!
Yesterday’s trading movement was enough to take the bite out of the seed planted on Wednesday, the American press releasing details then of a private memo written by Comey about a conversation with Trump, the latter having expressed his “hope” that the investigation linking Russia, Turkey, and the former National Security Advisor, Flynn, would be halted.
The new political scandal in Brazil caused the country’s stock market to erase close to 10% in value, sending waves overseas, including the stocks of the Brazilian companies traded on Wall Street – and hurting some companies with exposure to the Brazilian economy. The iShares MSCI Brazil Capped ETF (EWZ), which tracks the Brazilian stock market, ended sharply off by 16.3%. Reportedly, the incoming president, Michel Temer, who had replaced former president, Dilma Rousseff, was recorded negotiating bribes during the election campaign, at this point not only casting a heavy shadow on the prospect of implementing Temer’s economic reforms, but also undermining the stability of the administration. At present, Temer is being investigated by Brazil’s Supreme Court.
Goldman Sachs has identified a number of companies with sales exposure of 10 percent or more to Brazil, including MOS, WHR, ADM, BG and SBAC.
In Summary for the Day: The Dow Jones recovered with gains of 0.27%. The S&P 500 rose 0.37%, and the NASDAQ tacked on 0.73%. Gold shed 0.5%, cutting a 6-day winning streak, while crude tacked on 0.6%.
One of the stocks standing out in yesterday’s trading was Walmart (WMT), which soared 3.2%, with glowing results for a sector that’s become more and more beaten down. WMT beat Q1 expectations, with a 1.4% rise in sales.
Also on the positive side, two IPOs saw jaw-dropping gains on their first day. First off is BEDU, a company whose mission is to offer Chinese students a world-class academic education and prepare them for overseas studies. The stock soared 27% on its first trading day. The second IPO is the Netherland-based clinical stage biotech company, ARGX, which soared almost 36% on its first trading day.
On the negative side, Cisco (CSCO) fell 7.2%. Despite having beaten out analysts’ earnings expectation, revenues fell short, guidance warning about difficulty in emerging markets and in U.S. public sector activity. The hamburger chain, Jack in the Box (JACK) shed 3.4% on the background of a downgrade from analysts who see competition crimping company operations.
Despite the fact that correction buyers went into action yesterday, the fundamental and technical perspective remain unchanged. Headwinds have been brewing for months. Banking stocks are especially vulnerable, after coming out the biggest winners after Trump’s election victory last November. The financial sector (XLF) has soared almost 30% since the bottom produced before the elections, on the background of hope for higher profits and a better interest rate environment for banks. On Wednesday, on the background of a market selloff, the financial sector took the biggest hit.
Despite a decline of almost 2% on Wednesday, the S&P 500 is still trading up 10.5% since the elections, some of these gains rooted in expectations for the execution of Trump’s growth oriented policies which had pushed up consumer and business confidence.
On the S&P 500, 15 stocks rose to new 52-week highs, 15 dipping to new yearly lows; on the NASDAQ, 47 stocks recorded new 52-week highs, 97 falling to new yearly lows.
About 8.16 billion shares changed hands on U.S. exchanges, compared to the 6.99 billion average over the last 20 trading days.
Friday: Investors today will continue to follow the stormy developments surrounding Brazil which led yesterday to the collapse of the country’s stock market, and shockwaves that hit both Brazilian firms traded on Wall Street and American firms exposed to the South American powerhouse. Likewise, investors are continuing to focus on all of the political developments stirring on Capitol Hill.
The Economic Diary will be eventless today. The companies reporting before opening include DE and CPB.
Friday’s Hot Stocks: DE, CPB, CRM, GPS, ADSK, ROST, MCK
Have a great trading day!
|Wednesday||10:30||Crude Oil Inventories||–||Low|
|LBTYA||Liberty Global plc||PM||Monday|
|DKS||Dick’s Sporting Goods, Inc.||AM||Tuesday|
|TJX||The TJX Companies, Inc.||AM||Tuesday|
|HD||The Home Depot, Inc.||AM||Tuesday|
|JACK||Jack in the Box Inc.||PM||Tuesday|
|URBN||Urban Outfitters, Inc.||PM||Tuesday|
|AEO||American Eagle Outfitters, Inc.||AM||Wednesday|
|LB||L Brands, Inc.||PM||Wednesday|
|FLO||Flowers Foods, Inc.||PM||Wednesday|
|CSCO||Cisco Systems, Inc.||PM||Wednesday|
|WMT||Wal-Mart Stores, Inc.||AM||Thursday|
|BABA||Alibaba Group Holding Limited||AM||Thursday|
|RL||Ralph Lauren Corporation||AM||Thursday|
|PLCE||The Children’s Place, Inc.||AM||Thursday|
|GPS||The Gap, Inc.||AM||Thursday|
|ROST||Ross Stores, Inc.||PM||Thursday|
|AMAT||Applied Materials, Inc.||PM||Thursday|
|DE||Deere & Company||AM||Friday|
|CPB||Campbell Soup Company||AM||Friday|
|FL||Foot Locker, Inc.||AM||Friday|
Today’s Picks – Day Trading!
New York Strategy Swing
Today’s Picks – Swing “New-York Strategy
No.1 – TRCO
|Company Name||Tribune Media Company|
|Sector||Services | Broadcasting – TV|
No.2 – GIMO
|Sector||Technology | Networking & Communication Devices|