June 20, 2019

Beige Book helps market off lows

Index & Sector performance 12/4/13

The Market:

The S&P 500 started with a gap down which was quickly bought and rallied to slightly positive on the day but that rally topped at 11am EST and made its way back down to and through the earlier lows.  The market found a bottom prior to the Beige Book coming out but the release did not hurt the rally and the S&P 500 finished near flat on the day and above the 20 day SMA.

In economic news we saw ADP Non-Farm Employment Change come in much better than expected posting a 215K when 172K was expected.  Much like we saw with Construction spending Monday, September New Home Sales data missed expectations (354K vs 427K)  by a wide margin while October slightly beat (444K vs 432K).  Also on tap today was the Fed Beige Book which came out at 2pm EST.  Not much changed from expectations and the Fed stated growth is modest to moderate.

Story Stocks:

Deere (DE) close 3.32% higher after announcing an $8B increase to their share buyback  program.  The are authorized shares and do not have to be purchased but to put this into perspective, DE has a current MarketCap of roughly $32B so at current prices this means DE’s buy back represents roughly 25% of the company.  Analysts are expecting lower cash flow and EPS going forward but DE’s commitment to shareholder value could help them weather the storm.

General Motors (GM) popped in early trading on a report that Hayman Capital ran by Kyle Bass has taken a large position in the name and expects it to rise 40% over the next 12-18 months.

In merger news, Bloomberg reported that Essex Property Trust (ESS) made a roughly $5B offer to acquire BRE Properties (BRE).  This unconfirmed report sent BRE up over 10% in today’s trading but the stock closed only slightly over $4B in MarketCap so there could be further gains if the report is true.

OmniVision (OVTI) lost nearly 3% after crushing EPS (60c vs 43c) estimates on better than expected revenue ($397.2M vs $392.26M) but the company’s guidance for EPS and revenue was well below analyst expectations (28c-44c when 43c was consensus on $310-$340M when $399.9M was consensus).  OVTI was down much more in early trading but rallied back throughout the day.

Also moving lower on a disappointing EPS report was Express (EXPR) losing nearly 23% on the day.

The following noteworthy companies are scheduled to report earnings before tomorrow’s open: KR, DG, TTC, CONN, UTIW, JOSB, SOL

Analyst Comments:

Upgrades 12/4/13

Downgrades 12/4/13

Initiations 12/4/13

Price Target Changes 12/4/13

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