Morning Minutes 11/18/2020

Morning Minutes

Stocks Pause Amid Mixed Retailer Earnings

November 18, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

US index futures are up 0.1%-0.4%, but essentially appear to be clawing back most of yesterday’s 0.2% to 0.6% declines. Overseas markets are also steady with the Dax and FTSE both up 0.2%, while the Hang Seng rose 0.5% and the Nikkei fell 1.1%.

Economic and corporate news flow has been light, leaving investors to continue weighing the US political and vaccine developments of the last two weeks, including two positive clinical trial results, against questions about what rising case counts and the potential for North America to follow Europe into a new round of lockdowns could mean for the corporate earnings outlook.

Some markets and stocks are also starting to appear technically exhausted and overdue for a rest. Although the Dow and the S&P 500 closed at all-time highs on Monday November 16th, and the Russell 2000 closed at an all-time high yesterday many indices remain contained below the intraday highs set on Monday November 9th, including the Dow Industrials, S&P 500, NASDAQ 100, Russell 2000, Hang Seng and Dax.

Individual stocks also seem to be struggling to seriously respond to good news. Despite more positive vaccine news on Monday, many stocks in the airline, cruise line, hotel and other deeply COVID-Impacted sectors remain below the intraday highs set in the November 9th initial vaccine rally. Despite positive earnings yesterday that beat street expectations, Walmart closed down about 2% and while Tesla Motors did get an 8.2% bump off of joining the S&P 500 next month, it remained below September/October levels.

So far today, Boeing is up 6.1% premarket on news that the 737 Max 8 aircraft has been cleared to return to service by the FAA after being grounded since March of 2019. Pfizer is up 3.4% premarket after announcing plans to file for FDA marketing approval for its COVID vaccine following a successful Phase 3 trial. Target is up 2.7% premarket after announcing strong earnings (EPS $2.79 vs street $1.60, same store sales 20.7% vs street 11.2%). Lowes, however, is down 6.3% premarket after missing slightly on earnings ($1.98 vs street $1.99) despite strong same store sales (30.1% vs street 22.8%).

The S&P/TSX Composite Index closed at a new 52-week high yesterday, propelled by gains in the energy and technology sectors. WTI and Brent Crude oil are both up another 2.0% today, while natural gas is up 2.4%. OPEC+ energy ministers did not reach a decision on whether to proceed with planned supply increases in January or extend current supply cuts.


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