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Fly Intel - Mid-Day Brief - Friday May 17, 2019

Stocks mixed to slightly lower as investors consider U.S. trade fights on several fronts

Stocks are slightly lower as investors weigh the continued trade tension with China against some signs of easing on the trade front with the EU, Mexico and Canada. While the Huawei news from yesterday continues to reverberate, the U.S. appears to be taking its foot off the gas in its other trade battles and the major averages are reacting generally with indecision for the time being.

ECONOMIC EVENTS: In the U.S., the preliminary May reading from the University of Michigan consumer sentiment survey surged 5.2 points to 102.4, hitting its highest level since January 2004. The leading economic index rose 0.2% to 112.1 in April, reaching a new historic high.

On the trade front, President Trump issued a proclamation directing the United States Trade Representative to "negotiate agreements to address the national security threat" presented by imports of automobiles and certain automobile parts, noting that if agreements are not reached within 180 days that Trump will determine whether and what further action needs to be taken. In response, Cecilia Malmstrom, the EU Commissioner in charge of trade, said that while the EU "completely rejects" the notion that its car exports are a national security threat, the EU is prepared to negotiate a limited trade agreement including cars, "but not WTO-illegal managed trade." Meanwhile, Bloomberg reported that the U.S. is set to remove steel and aluminum tariffs on Canada and Mexico in favor of stronger enforcement actions, which helps provide the pathway for USMCA ratification.

TOP NEWS: Shares of Nvidia (NVDA) are fractionally lower after the chipmaker beat April quarter earnings estimates and issued better than expected July quarter guidance. However, the fact that management also pulled their previously issued annual outlook leaves near-term cloudiness in visibility and "many questions" about the expected recovery, said Cowen analyst Matthew Ramsay.

Deere (DE) is down 6% after the farm equipment maker reported worse than expected earnings for the second quarter and cut its fiscal year forecast, stating that "softening conditions in the agricultural sector have led Deere to adopt a more cautious financial outlook for the year."

Pinterest (PINS) shares have dropped 12% following last night's Q1 report, which was the company's first since coming public. Baird analyst Colin Sebastian views today's post-earnings selloff as an attractive buying opportunity, contending that a few high-end estimates skewed the consensus. Barclays analyst Ross Sandler, however, said he expects Pinterest shares to trade "sideways to down for a bit" until the valuation is "compelling enough compared to its peers."

MAJOR MOVERS: Among the noteworthy gainers was Cray (CRAY), which surged 19% after it agreed to be acquired by HP Enterprise (HPE) for $35 per share in cash. HP Enterprise shares were 1% higher after the news. Also higher were Boot Barn (BOOT) and Applied Materials (AMAT), which gained a respective 3% and 5% after reporting quarterly results. 

Among the notable losers was Achillion (ACHN), which slid 8% after announcing interim data from a Phase 2 trial assessing the safety and effectiveness of its oral small molecule factor D inhibitor ACH-4471 in combination with intravenous eculizumab. Also lower was Baidu (BIDU), which fell 15% after reporting quarterly results. 

INDEXES: Near midday, the Dow was up 3.90, or 0.02%, to 25,866.58, the Nasdaq was down 33.85, or 0.43%, to 7,864.20, and the S&P 500 was down 4.74, or 0.16%, to 2,871.58.


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TIGER'S TAKE:  Bad news = Deer, Good news = AMAT.  Avoid the Chinese stocks as we don't see an end to their downtrend. They maybe oversold, but that doesn't mean they are ready to be bought yet.

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