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End of Day Briefing - Friday April 17, 2020

Stocks end positive week near session highs

Dow +704.81 at 24242.49, Nasdaq +117.78 at 8650.15, S&P +75.01 at 2874.56

[BRIEFING.COM] The S&P 500 advanced 2.7% on Friday amid hopes for a COVID-19 treatment and optimism about reopening the economy. The Dow Jones Industrial Average (+3.0%) and Russell 2000 (+4.3%) outpaced the benchmark index, while the Nasdaq Composite (+1.4%) had a more modest performance.

A report published by Stat News indicated that most coronavirus patients treated with Gilead Sciences' ($GILD 83.99, +7.45, +9.7%) remdesivir showed a rapid recovery in a trial at the University of Chicago Medicine. Note, Gilead did not issue an official statement regarding the trial, which lacked a placebo group for comparison.

The possibility that there might be an effective COVID-19 treatment, though, added to the positive sentiment in the market as it could restore some confidence for consumers when the economy starts to reopen. President Trump said yesterday that some states already satisfied the administration's new guidelines to reopen before May.

While some investors remained cautious, the market continued to price in a better-than-feared economic outlook. All 11 S&P 500 sectors posted gains to end the week with relative strength found in the energy (+10.4%) and financials (+5.6%) sectors.

The information technology sector (+1.4%) underperformed today amid relative weakness in Apple ($AAPL 282.80, -3.89, -1.4%), which was downgraded to Sell from Neutral at Goldman Sachs on a view that iPhone sales will take more time to recover than expected.

Boeing ($BA 154.00, +19.76, +14.7%) shares rose nearly 15% after the company said it plans to restart production at its Puget Sound facility next week. Procter & Gamble ($PG 124.69, +3.19, +2.6%) advanced with the broader market after it beat earnings estimates.

U.S. Treasuries were holding steady despite the stock market gains amid a weak Q1 GDP print out of China and continued weakness in oil prices ($18.20/BBL, -1.67, -8.4%). Longer-dated maturities saw modest selling, though, after the New York Fed stated it will reduce its Treasury purchases next week to ~$75 billion from ~$150 billion this week.

The 2-yr yield increased one basis point to 0.20%, and the 10-yr yield increased four basis points to 0.65%. The U.S. Dollar Index declined 0.2% to 99.78.

Friday's economic data was limited to the Conference Board's Leading Economic Index for March, which declined 6.7% (Briefing.com consensus -7.1%) following a revised 0.2% decline in February (from +0.1%). Investors will not receive any economic data on Monday.

  • Nasdaq Composite -3.6% YTD
  • S&P 500 -11.0% YTD
  • Dow Jones Industrial Average -15.1% YTD
  • Russell 2000 -26.3% YTD

Market Snapshot

Dow24242.49+704.81(2.99%)
Nasdaq8650.15+117.78(1.38%)
SP 5002874.56+75.01(2.68%)
10-yr Note -3/320.650
NYSEAdv 2470 Dec 427 Vol 1.4 bln
NasdaqAdv 2616 Dec 654 Vol 4.3 bln


Industry Watch

Strong: Financials, Industrials, Energy
Weak: Consumer Staples, Information Technology, Communication Services


Moving the Market

-- Stock market ends week near session highs amid hopes for COVID-19 treatment, optimism about reopening the economy

-- Broad-based advance with relative strength in the energy and financial sectors

-- Gilead Sciences' (GILD) remdesivir shows promising therapeutic signs for COVID-19


ECONOMIC EVENTS: In U.S. data, the leading economic indicators index dropped 6.7% to 104.2 in March. The March decline is nearly double the prior 3.4% record set in October 2008 and ties the lowest level going back to August 2017, though that should not be surprising and was actually not as bad as forecast.

Meanwhile, the latest data from the Johns Hopkins Whiting School of Engineering shows there are now 2.21M confirmed cases of COVID-19 worldwide and 150,948 deaths due to the disease.

TOP NEWS: Shares of Gilead ($GILD) jumped 9.7% after STAT News' Adam Feuerstein and Matthew Herper reported that COVID-19 patients in a Chicago hospital involved in a trial of the company's remdesivir drug are having "rapid recoveries in fever and respiratory symptoms." RBC Capital analyst Brian Abrahams keeps his Outperform rating on Gilead after the "promising on-the-surface" anecdotal data, but warns that there are "major limitations" to contextualizing and interpreting this data. Meanwhile, Barclays analyst Carter Gould says questions persist following last night's "encouraging" report of remdesivir data. The implied valuation for remdesivir, at just a tad over $31B, remains disconnected from commercial realities and Gilead's messaging, said Gould, who keeps an Underweight rating on Gilead shares with a $62 price target. 

Boeing ($BA) shares closed 14.7% higher after the planemaker said it will resume all commercial airplanes production in a phased approach at its Puget Sound-region facilities next week. About 27,000 people in the Puget Sound area will return to production of the 747, 767, 777 and 787 programs while the 737 program will resume working toward restarting production of the 737 MAX, Boeing announced.

Procter & Gamble ($PG) reported better than expected core earnings for the third fiscal quarter, attributing its "strong results" as "a direct reflection of the integral role our products play in meeting the daily health, hygiene and cleaning needs of consumers around the world." However, P&G also lowered its outlook for FY20 all-in sales growth, from a range of 4%-5% growth to a range of 3%-4% growth versus the prior year, to reflect stronger headwinds from foreign exchange rates.

Apple ($AAPL) received a rare Sell recommendation as Goldman Sachs analyst Rod Hall downgraded the stock and cut his price target to $233 from $250. Hall, who cut estimates for Apple for the third time since February 17, now models a deeper reduction in unit demand through mid 2020 and then a shallower recovery into early 2021.

MAJOR MOVERS: Among the noteworthy gainers was Moderna ($MRNA), which rose 15.4% after the company announced a new $483M grant from the Biomedical Advanced Research and Development Authority for mRNA vaccine mRNA-1273 against the novel coronavirus. Also higher was AMC Entertainment ($AMC), which jumped 31.1% after the company announced that it believes its current cash balance is "sufficient to withstand a global suspension of operations until a partial reopening in July" because of the "significant actions taken" in response to the COVID-19 pandemic. Additionally, Eros International ($EROS) shares advanced 55.6% after the company and STX Filmworks announced this afternoon that they had entered into a definitive stock-for-stock merger agreement to create "the first publicly traded, independent content and distribution company with global reach and unique positions in the United States, India and China."

Among the notable losers were Boingo Wireless ($WIFI) and Chewy ($CHWY), which fell 6.1% and 2.6%, respectively, following analyst downgrades. Also lower was Netflix ($NFLX), which declined 3.7% after Benchmark analyst Matthew Harrigan initiated coverage of the stock with a Sell rating and $327 price target.


Source: (Briefing.com)(theFly.com)

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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