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End of Day Briefing - Tuesday June 30, 2020

Market wraps up tremendous quarter on positive note

Dow +217.08 at 25812.90, Nasdaq +184.61 at 10058.77, S&P +47.05 at 3100.16

[BRIEFING.COM] The S&P 500 gained 1.5% on Tuesday to close out a tremendous second quarter, while the Nasdaq Composite (+1.9%) pulled ahead amid strength in its mega-cap and semiconductor components. The Dow Jones Industrial Average increased 0.9%, and the Russell 2000 increased 1.4%.

The gains were broad, with all 11 S&P 500 sectors closing in positive territory. Eight sectors rose at least 1.0%, including a 2% gain in the energy sector (+2.2%), while the utilities sector (+0.4%) lagged. The most influential gains, though, were found in the mega-cap stocks, including Tesla ($TSLA 1079.81, +70.46, +7.0%) and NVIDIA ($NVDA 379.91, +11.91, +3.2%).

TSLA shares surged in anticipation of the company's Q2 delivery results this week, while NVDA shares rose alongside the broader semiconductor space after Micron ($MU 51.52, +2.38, +4.8%) and Xilinx ($XLNX 98.39, +6.43, +7.0%) provided upbeat guidance. Micron also topped quarterly expectations. The Philadelphia Semiconductor Index rose 2.7%.

On the downside, Boeing ($BA 183.30, -11.19, -5.8%) was a noticeable drag on the Dow after Norwegian Air and BOC Aviation reportedly canceled plane orders from the company. Note, BA shares did climb 14% on Monday. Wells Fargo ($WFC 25.60, -0.10, -0.4%), meanwhile, said it expects to reduce its Q3 dividend following its stress test results.

In M&A activity, Uber ($UBER 31.08, +1.45, +4.9%) reportedly started discussions to acquire Postmates for $2.6 billion, while lululemon athletica ($LULU 312.01, +17.66, +6.0%) agreed to acquire in-home fitness company MIRROR for $500 million.

Separately, Fed Chair Powell and Treasury Secretary Mnuchin testified before the House Financial Services Committee about the measures taken to support the economy. Market reaction was muted, as nothing new was particularly said.

U.S. Treasuries finished near their starting positions. The 2-yr yield declined one basis point to 0.15%, and the 10-yr yield increased two basis points to 0.65%. The U.S. Dollar Index decreased 0.2% to 97.38. WTI crude declined 1.0%, or $0.39, to $39.28/BBL.

Reviewing Tuesday's economic data:

  • The Conference Board's Consumer Confidence Index for June increased to 98.1 ( consensus 92.0) from a downwardly revised 85.9 (from 86.6) for May.
    • The improvement is welcome, yet the key takeaway from the report is that the index remains well below the February reading of 132.6, which predated the COVID-19 shutdown effort.
  • The Chicago PMI for June increased to 36.6 ( consensus 45.0) from 32.3 in May.
  • The S&P Case-Shiller Home Price Index increased 4.0% in April ( consensus 4.1%) following a 3.9% increase in March.

Looking ahead to Wednesday, investors will receive the ISM Manufacturing Index for June, the ADP Employment Change report for June, the FOMC Minutes from the June meeting, Construction Spending for May, the weekly MBA Mortgage Applications Index, and auto and truck sales for June.

  • Nasdaq Composite +12.1% YTD
  • S&P 500 -4.0% YTD
  • Dow Jones Industrial Average -9.6% YTD
  • Russell 2000 -13.6% YTD

Market Snapshot

SP 5003100.16+47.05(1.54%)
10-yr Note -25/320.662
NYSEAdv 1898 Dec 1036 Vol 1.2 bln
NasdaqAdv 2258 Dec 1105 Vol 4.4 bln

Industry Watch

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

Moving the Market

-- Stock market gains in broad-based advance to close out tremendous quarter

-- Mega-caps exert influential leadership while semiconductor stocks rally following some positive earnings-related news

-- Boeing (BA) drags on Dow after reportedly receiving plane order cancellations

Stocks close out record quarter with up day as consumer confidence reading jumps

Stocks gained to close out the second quarter, which was true to form in the strongest quarter for the market in 22 years. While Fed Chair Powell said the economy's path forward is "extraordinarily uncertain and will depend in large part on our success in containing the virus" in testimony on Capitol Hill, he also reiterated that the Fed is "committed to using our full range of tools to support the economy." The central bank's support for the stock market, if not the broader economy, has certainly played a big hand in recent strength in equities, which may in turn have played a role in the big jump in a consumer confidence figure reported this morning.

ECONOMIC EVENTS: In U.S. data, the Conference Board Consumer Confidence Index jumped 12.2 points to 98.1 in June, up from 85.9 in May, which was much better than expected . The Chicago manufacturing PMI rose 4.3 points to 36.6 in June, which was weaker than forecast. The S&P/Case Shiller 20-city home price index rose 0.9% to 224.1 in April, which was a little below forecast.

In COVID-19 news, Florida reported 152,434 new coronavirus cases, up from 146,341 yesterday, while California reported a 2.9% daily increase in cases. In New York, Governor Andrew Cuomo announced that eight additional states - namely California, Georgia, Iowa, Idaho, Louisiana, Mississippi, Nevada, and Tennessee - meet the metrics to qualify for the travel advisory requiring individuals who have traveled to New York from those states, all of which have significant community spread, to quarantine for 14 days.

Meanwhile, CNBC reported that White House health adviser Dr. Anthony Fauci said that the U.S. is "not in total control" of the COVID-19 outbreak and daily new cases could reach 100,000 new infections per day at some point.

TOP NEWS: Shares of Micron ($MU) finished 4.8% higher after the memory chip maker's May quarter results and August quarter guidance were better than expected.

Wells Fargo ($WFC) announced that it expects its common stock dividend in third quarter will be reduced from the current level of 51c per share based on the results of the Federal Reserve Board's Dodd-Frank Act stress test and related Comprehensive Capital Analysis and Review. Wells added that it expects to announce the level of the third quarter dividend when it releases second quarter financial results on July 14.

Royal Dutch Shell ($RDS.A) announced a revised long-term commodity prices and margin outlook, which is expected to result in non-cash impairments in the second quarter results. Based on its reviews, aggregate post-tax impairment charges in the range of $15 to $22 billion are expected in the second quarter, said Shell, which noted that no cash impact is expected in the quarter.

Lululemon ($LULU) announced it will acquire in-home fitness company Mirror for $500M. Commenting on the news, MKM Partners analyst Roxanne Meyer called the acquisition "highly attractive and synergistic" for Lululemon as it further connects customers to its brand by "integrating digital and physical experiences."

Also on the M&A front, Uber Technologies ($UBER) is in discussions to buy Postmates for about $2.6B, Cara Lombardo of The Wall Street Journal reported, citing people familiar with the matter. Postmates has received acquisition offers from Uber and a special purpose acquisition company, sources told CNBC's Alex Sherman. Postmates hasn't decided whether to accept Uber's offer, the SPAC's offer or go public, though it is expected to make a decision in the coming days, according to CNBC's report.

Meanwhile, Airbus ($EADSY) announced plans to "adapt its global workforce and resize its commercial aircraft activity in response to the COVID-19 crisis." As part of the plans, Airbus will cut 15,000 positions, as commercial aircraft business activity has dropped by nearly 50% in recent months, the company said.

MAJOR MOVERS: Among the noteworthy gainers was Tandem Diabetes ($TNDM), which rose 12.6% after analysts said that UnitedHealth ($UNH) will start covering Tandem's insulin pump. Also higher was Acuity Brands ($AYI), which gained 7.2% after reporting quarterly results.

Among the notable losers was Liquidia Technologies ($LQDA), which fell 21.1% after agreeing to acquire RareGen. Also lower was Inovio ($INO), which dropped almost 15% as its COVID-19 vaccine results are seen as lacking key data, according to Damian Garde and Adam Feuerstein of STAT.

Source: (

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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