April 12, 2018.
Yesterday, a two-day rally came to a close as an impending strike on Syria sent tremors through markets. Cold war tensions haven’t been more palpable in a long time as Russia threatened to shoot down any missile nearing the Syrian base used to launch the recent chemical attack.
Market Summary: All of the major indexes ended down, the Dow slipping 0.90%, the S&P 500 edging lower 0.55%. The NASDAQ came out least scathed, with losses of 0.36%.
Telecom and financials were the biggest losers, falling 1.49% and 1.26% respectively, only 2 of the 11 sectors on the S&P 500 ending up for the day. The real estate sector saw marginal gains of 0.2%, whereas, the energy sector which, thrives on disruptions in the global oil supply, staked out gains of 1.04%. On the financial sector, two heavyweights, JPMorgan (JPM) and Bank of America (BAC) fell roughly 1.2%, Goldman Sachs (GS) taking a larger hit of 1.6%.
Bonds, also, didn’t fare so well, yields falling to 2.7753% after Trump announced that “missiles will be coming,” haranguing Putin for standing behind Syria’s Assad. As with anything in the economy, at times the market can overreact; in truth, an isolated attack on a Syrian base has little overall effect on the GDP, but the question firstly is how it plays on investors nerves, and secondly, whether it could indirectly – at a later point – have repercussions on global trade.
Ladenburg Thalmann Asset Management in New York CEO, Phil Blancato, weighing in on the matter, noted, “It feels like there are expectations that the U.S. is going to take some action against Syria, The market, I don’t believe, has priced one yet.” The complexity of the factors at play in the market now was summed up as follows: “You’ve got the tariff story which continues to proliferate, some of the long-time folks in Congress are stepping down and not willing to run again, and then you’ve got Syrian issue.” With no more than months before mid-term congressional elections, Ryan announced that he won’t be seeking re-election – and that as of the start of 2019, he will be leaving his post as top Republican on Capitol Hill.
On the data front, we saw an uptick in U.S. core inflation last month, which picked up 0.2%. In February, inflation also saw gains of 0.2%. With that said, last month’s inflation didn’t succeed in raising yields, headline consumer prices seeing a downtick for the first time in 10 months.
Among individual stocks, one of the biggest winners was Hilton Worldwide (HLT) which rose 4% after the operator of the hotel’s primary shareholder, HNA Tourism Group opted to divest itself of its stake in the company.
We saw active trading in these stocks in after-hours trading: Zumiez (ZUMZ) was up as high as 7% after the release of its March sales, same store sales climbing on the month by over 12%; net sales soared close to 15%.
QuinStreet (QNST) surged as much as 22% in after-market trading, the marketing firm releasing positive preliminary Q3 results.
American Water Works (AWK) fell almost 2% in the extended trading session. The catalyst was the announcement the public utility company made on Wednesday afternoon to acquire Pivotal Home Solutions.
In after-hours trading, one of the stocks in the spotlight was Bed Bath & Beyond (BBBY). As we cautioned yesterday, don’t automatically assume that if a company beats out the market consensus, that gains are a done deal! With the retail chain reporting a revenue and an earnings beat, and boasting a lower than expected decrease in same-store sales, the market not only shrugged off the seemingly good news but sent its stock tumbling a full 14% in extended trading after guidance for the coming year came out weak.
Thursday’s Hot Stocks: QNST, AWK, ZUMZ, BBBY
Have a great trading day!