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End of Day Brief - Tuesday April 20 - Stocks pullback

SP 5004134.94-28.32(-0.68%)
10-yr Note +1/321.588
NYSEAdv 863 Dec 2394 Vol 878.8 mln
NasdaqAdv 990 Dec 3044 Vol 4.2 bln

Industry Watch

Strong: Health Care, Real Estate, Utilities, Consumer Staples
Weak: Financials, Energy, Consumer Discretionary, Industrials

Moving the Market

-- Market registers back-to-back losses, representing consolidation activity

-- Weakness in cyclical sectors; strength in defensive-oriented sectors

-- Better-than-expected earnings reports

Stocks lower as investors look through earnings reports

The major averages moved lower for a second straight session amid a fresh round of risk-off sentiment driven by a resurgence in worries over the virus that have caused jitters about the global recovery outlook. Profit taking also continues to feature following the record highs seen on Wall Street just last Friday.

ECONOMIC EVENTS: In the U.S., no economic data of note was reported.

TOP NEWS: IBM (IBM) shares rose 3.8% after the software and technology giant reported better than expected earnings and revenue for the first quarter, with Cloud & Cognitive Software revenue rising 3.8% year-over-year in the quarter. Looking ahead, the company said it expects fiscal 2021 revenue growth based on mid-April 2021 foreign exchange rates, adding that second quarter analyst estimates for revenue look "reasonable." Analysts expect IBM to report Q2 revenue of $18.23B.

Shares of Johnson & Johnson (JNJ) closed 2.3% higher after the company reported better than expected Q1 results, raised its fiscal 2021 earnings and sales guidance, and raised its quarterly dividend by 5%. Meanwhile, the European Medicines Agency's safety committee said that a blood clot warnings should be added to J&J's COVID-19 vaccine, adding that the "overall benefit-risk remains positive" for the single-dose vaccine. The company later said that it will resume vaccine rollout in Europe following the EMA review.

Other big name companies reported quarterly results, including Travelers (TRV) and Procter & Gamble (PG), whose shares each rose just under 1% following their reports. Meanwhile, United Airlines (UAL) shares slid 8.5% after the air carrier reported downbeat Q1 results.

In M&A news, Kansas City Southern (KSU) shares surged 15.2% higher after Canadian National (CNI) announced that it made a "superior proposal" to combine with KC in a cash-and-stock deal valued at $33.7B, or $325 per share. Previously, Canadian Pacific Railway (CP) and Kansas City Southern announced that they have entered into a merger agreement, under which CP agreed to acquire KCS in a stock and cash transaction representing an enterprise value of approximately $29B.

Apple (AAPL) was in focus after a special event streamed online where the tech giant made a number of product announcements, including a new AirTag iPhone accessory, Apple Card Family for Apple Card sharing, a new Apple TV with 4K capabilities, and the Apple Podcast Subscriptions marketplace. The two biggest announcements, however, were for a newly designed iMac with the company's proprietary M1 processor and a new iPad Pro with the M1 chip that will have 5G accessibility and a liquid retina XDR display.

Meanwhile, The Wall Street Journal reported that Discord has ended talks to sell itself to Microsoft (MSFT) and other potential suitors. The Journal said that Microsoft had been in advanced talks to acquire the company for at least $10B, and Bloomberg later reported that Discord had turned down a $12B bid from Microsoft.

MAJOR MOVERS: Among the noteworthy gainers was Nano Dimension (NNDM), which rose 7.5% after the company announced it has entered into a definitive agreement to acquire DeepCube. Also higher was CRISPR Therapeutics (CRSP), which gained 5.8% after announcing an amended collaboration agreement with Vertex Pharmaceuticals (VRTX) to develop, manufacture and commercialize CTX001 as a therapy for sickle cell disease and transfusion-dependent beta-thalassemia.

Among the notable losers was Syndax Pharmaceuticals (SNDX), which dropped almost 31% after the company released updated data from the ongoing phase 1 AUGMENT-101 trial on SNDX-5613. Also lower was Futu Holdings (FUTU), which fell 23.4% after announcing an offering of 9.5M American depositary shares.

Investors did not receive any economic data on Tuesday.

  • Russell 2000 +10.8% YTD
  • Dow Jones Industrial Average +10.5% YTD
  • S&P 500 +10.1% YTD
  • Nasdaq Composite +7.0% YTD

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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