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Fly Intel - End of Day Brief - Thursday Dec 12, 2019

Stocks end higher as U.S., China reportedly reach terms on phase-one trade pact

In early morning trading, futures were pointing to a lower open after a Reuters report appeared to indicate that the U.S. was getting ready to go forward with its China tariff threat this weekend. However, the tone changed after a more hopeful tweet from President Trump and a more encouraging trade talks report from The Wall Street Journal. The gains were cemented after Bloomberg reported that U.S. negotiators have reached the terms of a phase-one trade deal with China that now awaits President Trump's approval. Following the headlines of the tentative trade agreement, the major averages moved back toward their highs of the day an closed a bit below their session-best levels.

ECONOMIC EVENTS: In the U.S., initial jobless claims surged 49,000 to 252,000 in the week ended December 7. The Producer Prices Index for November undershot estimates with a flat headline figure and a 0.2% core price drop reported.

On the trade front, President Donald Trump tweeted right after the market open that the U.S. is "Getting VERY close to a BIG DEAL with China. They want it, and so do we!" Soon afterward, Lingling Wei and Bob Davis of The Wall Street Journal reported that U.S. trade negotiators have offered to cut existing tariffs by as much as half on roughly $360B of Chinese-made goods, as well as to cancel a new round of tariffs set to take effect on December 15. In exchange, the U.S. has demanded that China make firm commitments to purchase large quantities of U.S. agricultural and other products, to better protect U.S. intellectual-property rights and to allow greater access to China's financial services sector, sources told the Journal. In the afternoon, Bloomberg reported that U.S. negotiators have agreed on terms of a phase-one trade deal with China that now awaits President Trump's approval.

In Europe, Christine Lagarde oversaw her first policy meeting as head of the European Central Bank, after which the ECB said it will keep its key interest rates unchanged and keep its asset purchase program running "for as long as necessary to reinforce the accommodative impact of its policy rates." Additionally, the U.K. election, which is hoped to pave the way for a Brexit deal, is in focus as voters there head to the polls.

TOP NEWS: Facebook (FB) shares dipped 2.7% after The Wall Street Journal reported that the Federal Trade Commission is considering seeking a preliminary injunction against the social media giant due to its concerns about policies governing how it integrates its apps or allows them to work with potential rivals. The potential action by the FTC would likely seek to block the company from enforcing those policies on the grounds that they are anticompetitive, according to the Journal.

Meanwhile, shares of General Electric (GE) rose 4.3% after UBS analyst Mark Mittermaier assumed coverage of the stock with a Buy rating and price target of $14. This is an upgrade in the firm's rating, as prior analyst Damian Karas previously had a Neutral rating and $11.50 price target on the shares.

Delta (DAL) shares were 2.9% higher after the air carrier at its investor day provided earnings guidance for fiscal 2020, with CEO Ed Bastian saying, "We are executing well against our strategic priorities and on track for a record 2019 - a testament to the incredible work of Delta employees worldwide who serve our customers with a focus on providing exceptional travel experiences each and every day."

In other airline news, Southwest Airlines (LUV) announced that it reached a confidential agreement with Boeing (BA) to compensate the airline for a portion of projected financial damages related to the grounding of the airline's Boeing 737 MAX planes.

Meanwhile, Reuters reported earlier that Boeing CEO Dennis Muilenburg will meet with FAA chief Steve Dickson on Thursday regarding the 737 MAX. Reuters then reported, however, that the plane maker had told some of its suppliers that it is unlikely to reach its target of 57 737 aircraft per month by the end of 2020. Additionally, The Wall Street Journal said the Federal Aviation Administration is not expected to approve fixes Boeing is making the flight-control system and related pilot training for its grounded 737 MAX jet until February, about two months beyond what the planemaker has been guiding. Boeing finished 1.1% lower following the three news items.

MAJOR MOVERS: Among the noteworthy gainers was Amneal Pharmaceuticals (AMRX), which surged 44.8% after it received Abbreviated New Drug Application approval from the FDA for EluRyng. Also higher were Ciena (CIEN) and Photronics (PLAB), which gained a respective 20.4% and 7.6% after reporting quarterly results.

Among the notable losers was RH (RH), which slid 5.4% after the company said that chairman and CEO Gary Friedman sold an aggregate of 500,000 common shares in the company from December 9 through December 11. Also lower were Lululemon (LULU) and Nordson (NDSN), which fell 3.7% and 2.4%, respectively, after reporting quarterly results.

INDEXES: The Dow rose 220.75, or 0.79%, to 28,132.05, the Nasdaq gained 63.27, or 0.73%, to 8,717.32, and the S&P 500 advanced 26.94, or 0.86%, to 3,168.57.


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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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