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End of Day Briefing - Friday May 22, 2020

S&P 500 ekes out gain in front of holiday weekend

Dow -8.96 at 24465.16, Nasdaq +39.71 at 9324.61, S&P +6.94 at 2955.32

[BRIEFING.COM] The major indices closed near session highs on Friday, preserving their weekly gains in front of the Memorial Day weekend. The S&P 500 increased 0.2%, the Nasdaq Composite increased 0.4%, and the Russell 2000 increased 0.6%. The Dow Jones Industrial Average (-0.04%) finished just below its flat line.

From a sector perspective, investors leaned defensively, evident by the positive performances from the S&P 500 real estate (+2.2%), utilities (+1.1%), and consumer staples (+0.3%) sectors. The information technology (+0.4%) and communication services (+0.5%) sectors also closed higher.

The tech sector was perked up by shares of NVIDIA ($NVDA 361.05, +10.04, +2.9%) after the company reported positive quarterly results and upbeat guidance. Conversely, many of the cyclical sectors closed lower, including energy (-0.7%) and financials (-0.3%). Energy stocks were clipped by the decline in oil prices ($33.25, -0.71, -2.1%).

The price action was relatively muted throughout the day, with the broader market barely reacting to positive or negative news. The S&P 500 traded lower for most of the day, so the positive finish was good to see for the bulls.

Today's negative news came out of China as reports indicated it was going to implement national security laws on Hong Kong to tighten its control over the region. The Hang Seng Index declined 5.6% on Friday, while shares of Alibaba ($BABA 199.70, -12.46, -5.9%) declined 6% despite beating quarterly estimates.

Separately, NIAID Director Fauci told media outlets that he was "cautiously optimistic" about Moderna's ($MRNA 69.00, +1.95, +2.9%) COVID-19 vaccine candidate and that it was possible to develop a vaccine by the end of the year.

U.S. Treasuries closed mixed. The 2-yr yield increased two basis points to 0.17%, while the 10-yr yield decreased two basis points to 0.66%. The U.S. Dollar Index increased 0.4% to 99.77.

Investors did not receive any economic data on Friday and will not receive any on Monday due to the market's closure for Memorial Day.

  • Nasdaq Composite +3.9% YTD
  • S&P 500 -8.5% YTD
  • Dow Jones Industrial Average -14.3% YTD
  • Russell 2000 -18.8% YTD

Market Snapshot

Dow24465.16-8.96(-0.04%)
Nasdaq9324.61+39.71(0.43%)
SP 5002955.32+6.94(0.24%)
10-yr Note +1/320.661
NYSEAdv 1640 Dec 1246 Vol 719.7 mln
NasdaqAdv 1845 Dec 1357 Vol 3.6 bln


Industry Watch

Strong: Real Estate, Utilities, Information Technology, Communication Services
Weak: Energy, Financials


Moving the Market

-- S&P 500 ekes out gain in front of the Memorial Day weekend

-- Defensive-oriented sectors outperformed

-- China withdraws 2020 GDP growth target, says it will implement national security laws on Hong Kong


ECONOMIC EVENTS: No U.S. data of note was reported ahead of the long holiday weekend.

Outside of the U.S., Hong Kong's Hang Seng plunged about 5.5% as China, at its annual National People's Congress, confirmed that there will be a bill establishing "an enforcement mechanism for ensuring national security" for Hong Kong.

TOP NEWS: Shares of Nvidia ($NVDA) are 3% higher near noon after the company exceeded expectations for Q1 as better datacenter demand helped fuel revenue and gross margin upside. Rosenblatt analyst Hans Mosesmann, who was among the Wall Street pundits who raised his price target on Nvidia following the report, tells investors that Nvidia "already dominates virtually all aspects of GPU acceleration" and can work next on innovating on the data processing side.

Goldman Sachs analyst Piyush Mubayi noted that Alibaba ($BABA) reported better than expected Q4 results with revenues that beat both the firm's and Bloomberg's consensus. Of note, gross merchandise volume transacted in the Alibaba Digital Economy hit $1T for the first time in fiscal 2020. However, amid the headlines regarding the rising tensions between the U.S. and China, Alibaba shares trading in New York are down 5% near noon.

Meanwhile, Deere ($DE) shares are up 1% after the company's Q2 sales and earnings beat. Deere's decision to re-institute guidance suggests stabilizing end market demand, Goldman Sachs analyst Jerry Revich tells investors.

Shares of HP Enterprise ($HPE) are not faring as well following earnings, sliding 11%. Raymond James analyst Simon Leopold downgraded HP Enterprise to Market Perform from Outperform following its Q2 results, stating that its unexpected restructuring efforts degrade his confidence. Meanwhile, Morgan Stanley analyst Katy Huberty said HP Enterprise's $1B cost-reduction plan, salary cuts and lack of visibility into backlog conversion and future order trends suggest the company is not yet at a bottom and the trough "is still on the come."

MAJOR MOVERS: Among the noteworthy gainers was Splunk ($SPLK), which rose 12.5% after it reported quarterly results and provided Q2 revenue guidance. Also higher after reporting quarterly results were LiveRamp ($RAMP) and e.l.f. Beauty ($ELF), which gained a respective 27% and 15%. 

Among the notable losers was Amarin ($AMRN), which fell 2% after Hikma ($HKMPF) was given FDA approval for a generic version of Amarin's Vascepa. Also lower was Intercept ($ICPT), which fell 14% after the FDA requested additional data on its liver fibrosis drug.


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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