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Fly Intel - End of Day Brief - Friday Jan 17, 2020

Stocks have quiet end to strong first week of earnings season

The major averages were range-bound for much of the day and didn't end far from where they'd began, though the market remains near all-time highs, supported by earnings, reduced trade uncertainty and accommodative central banks. The first week of the fourth quarter earnings reporting season was generally solid, but its hard to draw conclusions with only about 40 of the S&P 500 having reported so far. The pace of reporting should pick up next week after investors return from the long MLK holiday weekend.

ECONOMIC EVENTS: In the U.S., housing starts surged 16.9% to a 1.608M pace in December, which was a massive beat of consensus forecasts. Industrial production fell 0.3% in December, as expected. The University of Michigan consumer sentient reading dipped 0.2 points to 99.1 in the preliminary January print. The JOLTS report showed job openings dropped 561,000 to 6.80M in November, which was a disappointment. In energy news, Baker Hughes reported that the U.S. rig count is up 15 rigs from last week to 796.

In China, the National Bureau of Statistics reported 2019 GDP growth of 6.1%, which was within the government's target range but also the lowest level of growth in nearly three decades.

TOP NEWS: The Gap (GPS) announced that the company no longer intends to separate Old Navy into a standalone public company, with interim president and CEO Robert Fisher explaining that the board of directors has "concluded that the cost and complexity of splitting into two companies, combined with softer business performance, limited our ability to create appropriate value from separation." In addition, Gap said that it now expects total company fiscal 2019 comparable sales and net sales to both be at the higher end of its previous guidance range.

In an event last night, Comcast (CMCSA) unveiled Peacock, its upcoming ad-supported streaming service with subscription tiers. Following the event, JPMorgan analyst Philip Cusick said he was impressed with NBC's Peacock presentation, particularly around content strategy, advertising monetization, rollout strategy, and long-term revenue forecasts. In addition, Comcast CFO Brian Roberts previewed that the company would report "an exceptional fourth quarter with core growth driven by broadband," Cusick noted.

Shares of Dave & Buster's (PLAY) jumped 12.7% after private equity firm KKR (KKR) filed a 13-D disclosing a 10.7% position in the restaurant and entertainment company when accounting for both its shareholdings and derivatives position. KKR has a "good relationship" with D&B management and the two sides have had "constructive dialog," reported Dan Primack of Axios, who added that his source said that there is no internal talk of going hostile.

Boeing (BA) shares fell 2.4% after ABC reported that there is yet another software issue for the company's 737 MAX aircraft. ABC's David Kerley said that during a testing audit last weekend, the 737's two flight computers weren't talking to each other at startup. Following the report, Boeing told CNBC that it is "making necessary updates and working with the FAA on submission of this change, and keeping our customers and suppliers informed."

Meanwhile, Philadelphia Court of Common Pleas Judge Kenneth Powell has cut the award in a punitive damages trial in the Risperdeal litigation to $6.8M from $8B after a Philadelphia jury handed out a record $8B verdict against Janssen Pharmaceuticals, a Johnson & Johnson (JNJ) subsidiary, according to media reports.

Additionally, Reuters reported that Stanley Black & Decker (SWK) is in talks to buy Consolidated Aerospace in a deal that could value CAM at over $1B.

MAJOR MOVERS: Among the noteworthy gainers was 2U (TWOU), which rose 4.9% after Bloomberg reported that the company is working with financial advisors on a strategic review and is weighing a potential sale. Also higher was Bloom Energy (BE), which gained 4.6% after it said that the Superior Court of California overturned a resolution by the City of Santa Clara that would ban future installations of Bloom Energy's fuel cells.

Among the notable losers was MGP Ingredients (MGPI), which slid 27.7% after reporting preliminary results for fiscal 2019. Also lower was Fastenal (FAST), which slipped 1.4% after reporting quarterly results.

INDEXES: The Dow rose 50.46, or 0.17%, to 29,348.10, the Nasdaq gained 31.81, or 0.34%, to 9,388.94, and the S&P 500 advanced 12.81, or 0.39%, to 3,329.62.


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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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