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End of Day Briefing - Recap of Tuesday Oct. 27, 2020

Stocks end mixed as earnings season picks up

Equity futures were modestly firmer in early trading as the sharp declines yesterday provided an opportunity for dip buyers, although that bargain shopping did not support the major averages for long after the open. The indexes finished with a mixed day as the Nasdaq got a boost from the big semiconductor M&A deal announced this morning. Earnings reporting was busy before the bell this morning and investors are braced for more of the same after the closing bell this afternoon.

ECONOMIC EVENTS: In the U.S., advance durable goods orders jumped 1.9% in September, strongly beating expectations. The Conference Board consumer confidence index declined slightly to 100.9 in October from 101.3 in September. The Richmond Fed manufacturing index climbed 8 points to 29 in October to hit a fresh all-time high. The FHFA house price index increased 1.5% to 297.7 in August. The Case Shiller 20-city home price index climbed 1.1% to 229.4 in August.

TOP NEWS: Shares of Caterpillar ($CAT) were 3.2% lower despite the fact that the company reported better than consensus adjusted earnings and sales in the third quarter. The heavy machinery maker did not offer full year guidance, although it said it expects sales and end user demand to improve sequentially in the fourth quarter.

Shares of 3M ($MMM) fell 3.1% following the company's report of better than expected Q3 sales and earnings. Similarly to Caterpillar, 3M said it "continues to believe it is prudent to not provide guidance" given the "continued evolving and uncertain impact of the COVID-19 pandemic."

In other earnings news, it was a busy day for the pharmaceuticals sector. Share of Merck ($MRK) and Pfizer ($PFE) were little changed following their quarterly updates. Meanwhile, Eli Lilly ($LLY) shares fell 7.1% after the company reported results and also announced last night that the ACTIV-3 trial run by the NIAID was stopped with no additional SARS-CoV-2 patients in the hospitalized setting to receive bamlanivimab, the company's antibody designed to treat COVID-19.

In M&A news, AMD ($AMD) announced an agreement to acquire Xilinx ($XLNX) in an all-stock transaction valued at $35B, or $143 per Xilinx share. Current AMD stockholders will own approximately 74% of the combined company on a fully diluted basis, while Xilinx stockholders will own approximately 26% after the closing of the deal, which is expected by the end of calendar year 2021.

In spinoff news, AIG ($AIG) announced plans to separate its Life & Retirement business from AIG "in a way that maximizes shareholder value and establishes two independent, market leading companies. In addition, DTE announced a decision to pursue a spin-off of the DTE Midstream business from DTE Energy ($DTE). Elliott Management, which manages funds that collectively own a significant interest in DTE Energy, said it is "supportive" of DTE's plan to spin-off the business and take "steps to unlock significant value."

In IPO news, Airbnb (AIRB) announced that it intends to list its common stock on Nasdaq.

Meanwhile, Visa ($V) shares declined 1.6% after The Wall Street Journal reported that the company's agreement to buy Plaid is in jeopardy because of antitrust concerns at the Department of Justice. The DOJ could decide soon whether it will sue to block Visa's planned acquisition of Plaid, according to the report, which was echoed by similar reporting from Bloomberg.

Additionally, shares of Tiffany ($TIF) jumped 4.9% after CNBC's David Faber reported that the company and LVMH ($LVMUY) are close to agreeing to a new price of $130-$133 per share for the luxury brand house to complete its takeover of the jeweler. Financial Times and Bloomberg also said that the two sides are in talks about a revised takeover agreement.

MAJOR MOVERS: Among the noteworthy gainers was Exact Sciences ($EXAS), which rose over 23% after the company agreed to acquire Thrive Earlier Detection for up to $2.15B and reported quarterly results. Also higher after reporting quarterly results was Harley-Davidson (HOG), which gained 22.2%.

Among the notable losers was Chegg ($CHGG), which slid more than 11% after reporting quarterly results and providing guidance for the fourth quarter and fiscal 2020. Also lower after reporting quarterly results were Amkor ($AMKR) and JetBlue ($JBLU), which fell a respective 16% and 5.4%.

INDEXES: The Dow fell 222.19, or 0.80%, to 27,463.19, the Nasdaq gained 72.41, or 0.64%, to 11,431.35, and the S&P 500 declined 10.29, or 0.30%, to 3,390.68.

  • Nasdaq Composite +27.4% YTD
  • S&P 500 +5.0% YTD
  • Dow Jones Industrial Average -3.8% YTD
  • Russell 2000 -4.7% YTD
Market Snapshot
SP 5003390.68-10.29(-0.30%)
10-yr Note +3/320.777
NYSEAdv 915 Dec 2058 Vol 795.7 mln
NasdaqAdv 1328 Dec 2099 Vol 3.0 bln

Industry Watch
Strong: Consumer Discretionary, Information Technology, Communication Services
Weak: Energy, Industrials, Financials, Materials, Real Estate

Moving the Market

-- Growth concerns persisted

-- Earnings reactions were generally disappointing

-- Mega-cap stocks outperformed at expense of the cyclical stocks

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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