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Fly Intel - End of Day Brief - Friday Jan 3, 2020

Stocks slump after U.S. kills Iranian general

Stocks slipped and WTI oil prices rose 3% to $63.05 per barrel, hitting their highest closing price since April, following news that a U.S. airstrike killed a key Iranian general, after which Iran promised "harsh retaliation." Some sectors - such as energy and defense - gained based on the new tension in the Middle East but transportation stocks - particularly air carriers - fell given the rising costs they may face if the bump up in oil prices holds. Commenting on the strike he ordered, President Donald Trump said: "We took action last night to stop a war, we did not take action to start a war." The president added that the U.S. does not seek regime change in Iran.

ECONOMIC EVENTS: In the U.S., construction spending surged 0.6% in November. The ISM manufacturing index fell to 47.2 in December from 48.1 in November. In energy news, Baker Hughes reported that the U.S. rig count is down 9 rigs from last week to 796. In Fed news, minutes from the Federal Reserve's last FOMC meeting showed that members saw risks "tilted somewhat to the downside" and expect to maintain their current stance of policy for "a time."

Meanwhile, CNN reported that the U.S. plans to deploy thousands of additional troops to the Middle East amid rising tensions with Iran following the U.S.-ordered airstrike that killed Iran's Qasem Soleimani.

TOP NEWS: Shares of Tesla (TSLA) gained almost 3% after the electric carmaker reported fourth quarter deliveries that beat expectations. With the help of its "record" deliveries of approximately 112,000 vehicles, Tesla delivered approximately 367,500 vehicles for the year, topping the low end of the company's guidance range. Meanwhile, its traditional automaking peers General Motors (GM) and Fiat Chrysler (FCAU) declined 2.8% and 3.9%, respectively, after reporting on their own vehicle deliveries in the fourth quarter.

A number of oil and gas explorers' stocks outperformed during the session as oil prices spiked following news of the U.S. drone strike that killed the head of the Islamic Revolutionary Guard Corps-Quds Force. W&T Offshore (WTI), Whiting Petroleum (WLL), Oasis Petroleum (OAS), Diamond Offshore (DO), Hess Corp. (HES), Cimarex Energy (XEC) and Apache (APA) were just a few of the many energy names on the rise following the Iran attack news.

Defense contractors - including Northrop Grumman (NOC), Lookheed Martin (LMT), L3Harris (LHX) and Raytheon (RTN) - also traded higher based on the rising tension in the Middle East.

Airlines including American (AAL), Delta (DAL) and United (UAL) were dragged down by the spike in oil prices as well as the potential for higher risks in Mid East region to dampen travel demand.

Meanwhile, Reuters reported that Novartis (NVS), Merck (MRK), and Allergan (AGN) are among companies that raised U.S. prices on over 100 prescription medicines today, bringing the total to 445 drugs that will cost more this year. Pfizer (PFE), Bristol-Myers Squibb (BMY) and AbbVie (ABBV), which is acquiring Allergan for more than $60B, were among the drugmakers that raised prices on over 330 drugs to begin 2020.

MAJOR MOVERS: Among the noteworthy gainers was L Brands (LB), which rose 7.8% after BofA analyst Lorraine Hutchinson upgraded shares to Buy from Neutral with a price target of $25, up from $21. Also higher was Lamb Weston (LW), which gained 11.3% after reporting quarterly results.

Among the notable losers was Novan (NOVN), which dropped 73% after the release of its Phase 3 SB206 data indicating that statistical significance was not achieved for the primary endpoint in either of its B-SIMPLE1 or B-SIMPLE2 trials. Also lower was Incyte (INCY), which fell 9.4% after announcing that that the pivotal Phase 3 GRAVITAS-301 study evaluating itacitinib in combination with corticosteroids in patients with treatment-naive acute graft-versus-host disease did not meet its primary endpoint.

INDEXES: The Dow fell 233.92, or 0.81%, to 28,634.88, the Nasdaq lost 71.42, or 0.79%, to 9,020.77, and the S&P 500 declined 23.00, or 0.71%, to 3,234.85.

Symbols: $TSLA $GM $FCAU $WTI $WLL $OAS $DO $HES $XEC $APA $NOC $LMT $LHX $RTN $AAL $DAL $UAL $NVS $MRK $AGN $PFE $BMY $ABBV $LB $LW $NOVN $INCY

Source: (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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