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Fly Intel - End of Day Brief - Tuesday July 9, 2019

Stocks mixed as investors stay on hold ahead of Fed news

The major indexes were mixed and generally flat following a quiet session as investors continue to wait on the Fed news coming tomorrow. The Nasdaq was the strongest of the benchmarks, while the Dow lagged as industrials were weighed on by yesterday's profit warning from BASF (BASFY) as well as a downgrade of 3M (MMM) this morning. In economic news, the Bureau of Labor Statistics' Job Openings and Labor Turnover Survey, or JOLTS report, showed that estimated job openings fell for the second month in a row.

ECONOMIC EVENTS: In the U.S., the JOLTS report showed job openings fell 49,000 to 7.32M in May. In trade news, CNBC reported that U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin spoke by telephone today with Chinese Vice-Premier Liu He about trade.

TOP NEWS: In M&A news, Cisco (CSCO) announced it has agreed to acquire existing supplier Acacia Communications (ACIA) for $70 per share in cash, or for approximately $2.6B on a fully diluted basis, net of cash and marketable securities. Upon closing, Acacia employees will join Cisco's Optical Systems and Optics business within the networking and security business. After Cisco paid a 46% premium for Acacia, shares of several other optical components makers - including Applied Optoelectronics (AAOI), NeoPhotonics (NPTN), Ciena (CIEN) and Infinera (INFN) - also moved higher.

Shares of 3M were under pressure, falling 2% after RBC Capital analyst Deane Dray downgraded the stock to Sector Perform as he expects the overhang on the shares from macro pressure and litigation to persist. Further, he believes 3M’s reputation as a defensive, high-quality industrial is "eroding."

Shares of Pepsico (PEP) slipped about 1% after the snack and beverage maker reported better than expected second quarter sales and profits and backed its full-year earnings outlook.

Social Capital Hedosophia (IPOA), the "blank check" company started by venture capitalist Chamath Palihapitiya, announced an agreement to combine with Virgin Galactic. The merged company will have an anticipated initial enterprise value of $1.5B and the current shareholders of SCH are expected to own up to approximately 49% of "the first and only publicly traded commercial human spaceflight company."

Meanwhile, U.S. President Donald Trump and the leader of Qatar said in a joint statement that Qatar Airways will buy five Boeing (BA) 777 Freighters. The statement also mentions an agreement between Chevron-Phillips Chemical Company, jointly owned by Chevron (CVX) and Phillips 66 (PSX), and Qatar Petroleum to pursue the development, construction, and operation of a petrochemicals complex in Qatar as well as the selection by Qatar Airways of GE (GE) jet engines and services to power its 787 and 777 aircraft. In addition, the Qatar Ministry of Defense committed to acquire Raytheon's (RTN) NASAM and Patriot Systems.

MAJOR MOVERS: Among the noteworthy gainers was Square (SQ), which rose 6% after Raymond James analyst John Davis upgraded the stock to Market Perform from Underperform. Also higher was e.l.f. Beauty (ELF), which gained 9% after JPMorgan analyst Andrea Teixeira upgraded the stock to Overweight from Neutral, citing accelerating Nielsen data.

Among the notable losers was DaVita (DVA), which fell 5% after Politico reported that the White House will push for an overhaul of the kidney transplants market. Also lower was Party City (PRTY), which declined 7% after JPMorgan analyst Tami Zakaria cut her price target on the shares to $8 from $11 and kept a Neutral rating on the stock.

INDEXES: The Dow dipped 22.65, or 0.08%, to 26,783.49 , the Nasdaq gained 43.35, or 0.54%, to 8,141.73 , and the S&P 500 added 3.68, or 0.12%, to 2,979.63 .


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