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End of Day Brief - Tues Feb. 23 - Stocks mixed again, Nasdaq weak

Stocks close mixed after Powell says "long way" from employment and inflation goals in testimony

The S&P was down about 1% and the Nasdaq was lower by more than 2% near noon as Fed Chair Jerome Powell was on Capitol Hill for his semi-annual monetary policy report to the Congress. He reiterated that the economy is "a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved." The recovery remains "uneven" and "incomplete," but vaccine developments suggest an improved outlook later in the year, added Powell in his prepared testimony. Stocks made a recovery in afternoon trading that saw only the Nasdaq narrowly falling short of moving into positive territory.

ECONOMIC EVENTS: In the U.S., the S&P Case-Shiller 20-City home price index rose 0.8% to a new record peak reading of 240.8 in December. The FHFA home price index rose 1.1% to 313.5 in December, which was also another historic peak. The Richmond Fed's manufacturing index was flat at 14 in February. The Conference Board Consumer Confidence Index rose to 91.3 in February, up from 88.9 in January.

TOP NEWS: Shares of Home Depot ($HD) fell over 3% after the company's fourth quarter report. Despite beating sales and earnings forecasts, and approving a 10% increase in its quarterly dividend, Home Depot shares are sliding as the company declined to provide guidance for FY21 given remaining uncertainties related to the pandemic.

In other earnings news, Macy's ($M) shares rose almost 4% after the department store operator reported better than expected adjusted earnings and revenue and said its fourth quarter results "exceeded our expectations across all three of our brands."

In SPAC news, shares of special purpose acquisition company Churchill Capital Corp IV ($CCIV) sunk after it announced last night a deal to merge with high-end electric vehicle maker Lucid Motors. Bloomberg, Reuters and Wall Street Journal have all previously reported on the potential deal. The news sent some other higher-profile SPACs lower, including Bill Ackman's Pershing Square Tontine ($PSTH), Foley Trasimene Acquisition II Corp. ($BFT), FTAC Olympus Acquisition Corp. ($FTOC), Reinvent Technology Partners ($RTP), CIIG Merger Corp. ($CIIC), Switchback Energy Acquisition Corp. ($SBE), and Forum Merger III Corp. ($FIII).

In activist investor news, Reuters said Starboard Value is considering a board challenge against Box ($BOX) unless the cloud services provider takes steps to boost value for shareholders, including exploring potential acquisition interest in the company. Meanwhile, Bloomberg and Reuters each reported that Jana Partners has nominated directors to the board of LabCorp ($LH).

In other news, Bloomberg reported that SoftBank ($SFTBY) plans to expand its investments in biotech and healthcare by spending "billions" investing in public biotech companies via its asset management arm SB Northstar. However, a SoftBank spokesperson told Bloomberg that "this is misleading and inaccurate," adding that "SB Northstar continues to consider investment opportunities across the entire technology spectrum and is not specifically focused on one particular sector."

Meanwhile, CNBC reported that AT&T ($T) is close to a deal to sell a "substantial minority stake" in its DirecTV and U-verse business to private-equity firm TPG. A deal, which will value the AT&T video businesses around at $15B, includes all of the company's streaming assets, including AT&T TV, and could be announced as soon as this week, according to CNBC.

MAJOR MOVERS: Among the noteworthy gainers was AMC Entertainment ($AMC), which rose 17.7% after it said it would reopen all 13 theaters in New York City starting March 5 following an announcement from New York Governor Andrew Cuomo that movie theaters will be allowed to open in the city. Also higher were Frank's International ($FI) and ZoomInfo ($ZI), which gained a respective 17.3% and 4.1% after reporting quarterly results.

Among the notable losers was Workhorse Group ($WKHS), which plunged 47.5% after the U.S. Postal Service awarded a 10-year contract to Oshkosh Defense ($OSK) to manufacture a new generation of U.S.-built postal delivery vehicles. Also lower was Nautilus ($NLS), which fell 23% after reporting quarterly results.

Reviewing Tuesday's economic data:

  • The Conference Board's Consumer Confidence Index increased to 91.3 in February ( consensus 91.0) from a downwardly revised 88.9 (from 89.3) in January.
    • The key takeaway from the report is that attitudes about current conditions improved for the first time in four months, aided by some improvement in the view of labor market conditions.
  • The FHFA Housing Price Index increased 1.1% in February following a 1.0% increase in January.
  • The S&P Case-Shiller Home Price Index increased 10.1% in December ( consensus 9.8%) following an upwardly revised 9.2% reading in November (from +9.1%).

  • Russell 2000 +13.0% YTD
  • Nasdaq Composite +4.5% YTD
  • S&P 500 +3.3% YTD
  • Dow Jones Industrial Average +3.0% YTD

Market Snapshot
SP 5003881.37+4.87(0.13%)
10-yr Note 0/321.338
NYSEAdv 1206 Dec 1950 Vol 1.3 bln
NasdaqAdv 1126 Dec 2787 Vol 7.4 bln

Industry Watch
Strong: Energy, Communication Services, Utilities, Financials
Weak: Information Technology, Consumer Discretionary, Health Care

Moving the Market

-- Market closes mixed in resilient session, growth stocks underperformed

-- Fed Chair Powell reiterates dovish monetary policy stance before the Senate Banking Committee

-- Technical support just above the S&P 500's 50-day moving average (3797)

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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