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End of Day Brief - Tuesday April 6 - Stocks a bit lower

SP 5004073.94-3.97(-0.10%)
10-yr Note +26/321.658
NYSEAdv 1974 Dec 1279 Vol 866.0 mln
NasdaqAdv 1966 Dec 2099 Vol 4.0 bln

Industry Watch

Strong: Consumer Discretionary, Consumer Staples, Utilities
Weak: Health Care, Information Technology

Moving the Market

-- S&P 500 sets an incremental all-time high in lackluster session

-- Long-term interest rates declined

-- Consolidation activity

Stocks slightly lower after IMF lifts global growth forecast

The major averages finished lower after the Dow and S&P 500 closed at record highs yesterday. Rising yields, fears that the pickup in inflation will force the Fed to hike rates before officials currently anticipate and some disappointing developments on the pandemic globally could provide a headwind to equities, but this is being offset by continued optimism about an economic snapback, led by the U.S.

ECONOMIC EVENTS: In the U.S., the JOLTS report was very strong, underscoring the increasingly good news on the recovery and the labor market. Job openings climbed 268,000 to 7.37M in February.

In COVID-19 news, The Wall Street Journal reported that U.S. President Joe Biden plans to say that all U.S. adults should be eligible for coronavirus vaccines by April 19, expediting the timeline he established last month. Meanwhile, the Los Angeles Times reported that California is seeking to fully reopen its economy on June 15, though the state intends to maintain its mask mandate.

Additionally, the IMF lifted its global growth forecast, but is warning of divergence. The IMF sees global growth at a record 6% this year following a 3.3% contraction in 2020, but while growth in the U.S. and the world is expected to be higher than the contraction last year, this isn't expected to be the case for the Eurozone and the U.K., which are forecast to bounce back less fully from last year's pullbacks.

TOP NEWS: Credit Suisse ($CS) announced that a "significant US-based hedge fund" defaulted on margin calls made last week by it and certain other banks. "Following the failure of the fund to meet these margin commitments, Credit Suisse and a number of other banks are in the process of exiting these positions. While at this time it is premature to quantify the exact size of the loss resulting from this exit, it could be highly significant and material to our first quarter results, notwithstanding the positive trends announced in our trading statement earlier this month," the bank said. As a result of the developments in connection with the U.S.-based hedge fund and the Credit Suisse Asset Management managed supply chain finance funds, Brian Chin, CEO of the Investment Bank, and Lara Warner, Chief Risk and Compliance Officer, will step down from their roles and the bank's board proposes to distribute a reduced ordinary total dividend of CHF 0.10 gross per registered share.

Moderna ($MRNA) and Catalent ($CTLT) announced the expansion of their strategic collaboration to dedicate a new high-speed vial filling line for the manufacture of the Moderna COVID-19 vaccine and potentially other investigational programs in Moderna's pipeline at Catalent's biologics facility in Bloomington, Indiana. The Wall Street Journal said that the plant will be able to fill an additional 80 million vials a year and help Moderna reach its goal of supplying an additional 100 million doses to the U.S. by the end of May and another 100 million doses by the end of July.

Trading card maker Topps and special purpose acquisition company Mudrick Capital Acquisition Corporation II ($MUDS) announced an agreement for a business combination that will result in Topps becoming a public company. Upon closing of the transaction, which is expected in late second or early third quarter, the combined company will be named Topps and remain listed on the Nasdaq market under the new ticker symbol "TOPP." In announcing the deal, Topps said that it is "capitalizing on the accelerated interest in its multi-channel Sports & Entertainment business from growing enthusiasm around its innovative sports and entertainment collectibles, as well as growth from investments in its e-commerce platform."

Meanwhile, General Motors ($GM) was in focus after announcing that its Chevrolet brands will introduce a Silverado electric pickup truck that will be built at the company's Factory ZERO assembly plant in Detroit and Hamtramck, Michigan.

Additionally, Nikkei reported that CVC Capital Partners will propose a deal to acquire Toshiba ($TOSYY) through a tender offer that is expected to be worth more than $20B.

MAJOR MOVERS: Among the noteworthy gainers was Romeo Power ($RMO), which rose 59.6% after announcing a long-term supply agreement with Paccar ($PCAR). Also higher was Illumina ($ILMN), which gained 7.9% after providing Q1 and FY21 guidance.

Among the notable losers was Ebang ($EBON), which declined 12.9% after it was called "another crypto China Hustle" in a Hindenburg Research short report. Also lower was Scholar Rock ($SRRK), which fell 20.3% after announcing top line results from its Topax phase 2 clinical trial.

Tuesday's economic data was limited to the JOLTs - Job Openings report, which showed job openings increase to 7.367 million in February from a revised 7.099 million in January (from 6.917 million). On Wednesday, investors will receive the Trade Balance for February, Consumer Credit for February, the FOMC Minutes from the March 16-17 meeting, and the weekly MBA Mortgage Applications Index.

  • Russell 2000 +14.4% YTD
  • Dow Jones Industrial Average +9.2% YTD
  • S&P 500 +8.5% YTD
  • Nasdaq Composite +6.3% YTD

Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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