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Closing Recap 4:10PM EST

Wednesday, November 5, 14

Index

Up/Down

Last

DJ Industrials

100.69

0.58%

17,484

S&P 500

11.45

0.57%

2,023

Nasdaq

-2.91

0.06%

4,620

Russell 2000

0.37

0.03%

1,165

Equity Market Recap


New balance of power on Capitol Hillbut no change in stock prices, as major averages post new
record highs (DJIA, S&P 500, DJ Utilities), before paring gains. Economic data was mixed, as global
service PMI data points were modestly weaker, while private payroll report in US topped views
ahead of BLS report this Friday. Energy and Utility stocks led the way today as beaten energy
rises on election results/inventory data/better earnings from DVN, RDC, CHK, and EOG. Between
the Japan Central Bank surprise announcement Friday for additional easing measures,
expectations Europes Bank will spur its sputtering economy somehow, and heading into
historically strong season ahead of Holidays, markets pushing higher (also note the year prior to
Presidential electionso 2015 has not posted a losing year since 1939 for the Dow Industrials).
Still a few market catalysts this week, with the ECB meeting tomorrow morning, and the Nonfarm
Payroll data on Friday
Republicans picked up the six Democratic-held Senate seats they needed to take control of the
Senate, while maintain its hold of the House
According to the latest Investor Intelligence Poll, Bullish sentiment increased to 54.6% from
47.0%, while Bearish sentiment decreased to 15.1% from 16.3%, and those expecting a market
correction decreases to 30.3% from 36.7%

Economic Data
Private-sector hiring picked up last month, reaching the strongest pace in four months, as ADP
reported employers added 230,000 private-sector jobs in October, compared with 225,000 in
September, and up from 196,000 in October 2013 (ests. were for 220,000). Private-sector job
gains have topped 200,000 in six of the past seven months.
The Oct. ISM Non-Manufacturing Index fell to 57.1, below est. 58.0) and below 58.6 prior
month; segment breakdown: Business activity fell to 60.0 from 62.9 prior month, New orders fell
to 59.1 from 61.0, (also drop in Prices Paid/backlog orders/inventories), though Employment rose
to 59.6 from 58.5 prior month

Commodities
Crude oil prices end higher, with WTI up about $1.50 to $78.68 per barrel, helped in part by
Republicans taking the Senate, bullish inventory data, and talk of a pipeline explosion. DoE said
crude inventories rose +460k barrels vs. est. +2.35m, though gasoline data bullish after -1.38M
weekly drawdown vs. est. -600k (distillates smaller drawdown)
Gold prices were weak from the onset, and stayed lower throughout, ending down $22.00, or
1.9% to close at $1,145.70 an ounce. Precious metals remain pressured from the resurgent
dollar, which is trading at 4-year highs (and 7-year highs against the yen). Gold mining stocks also
declined with the move in gold

Currencies
The U.S. dollar with another massive advance/yen plunging (up to around 115 from 109 level
last week after Japan QE announcement); it has been 7-years since we have been near the 115
level JPY/USD (114.84 high after Governor Kuroda said he saw no limit to the steps to defeat
deflation ); the dollar index rises again (new 4-year high), touching high 87.606, extending gains;
in other currency news, the euro fell to fresh session low of 1.2458 (before bouncing) vs. US
dollar (ahead of ECB tomorrow), while dollar breaks 45 vs. Russian rouble for first time (2%
move) on central banks decision to effectively end interventions

Bond Market
Another sluggish session for bonds, with yields up ever so slightly, but once again, listless action
ahead of the ECB and jobs data on Friday; 10-yr yield little changed most of the day, with yield
holding around 2.35%

Macro

Up/Down

Last

WTI Crude

1.49

78.68

Brent

0.50

83.32

Gold

-22.00

1,145.70

EUR/USD

-0.0071

1.2476

JPY/USD

1.08

114.68

+0.011

2.35%

10-Year Note

Sector News Breakdown


Consumer
Staples; MDLZ Q3 eps beats/revs miss and raises top/bottom end of year eps view (reaffirms
organic rev growth); global direct selling co NUS plunges after guiding Q4 revs to $590M-$610M
from prior view of $650M-$675M and well below est. $658.5M (follows weaker HLF yesterday)
Online retail; ZU declines after weaker EBITDA margins (revs were in-line); COUP jumps after year
revenue guidance top analyst views; Online travel firm TRIP downgraded by a few analysts after
lower Q3 earnings/lower growth (follows disappointing guidance from PCLN Tuesday)
Restaurants; CHUY big loser on day, downgraded by several analysts after Q3 eps miss/lowered
outlook; PBPB rises after Q3 eps beats by 2c; restaurants mixed in general (TXRH, EAT, CMG)
Retailers; Athletic footwear stocks fall after Janney Capital said, citing SportScan, athletic
footwear sales dropped (-6.5%) last week, compared to a 20.6% rise last year (FL, FINL move);
KORS bounces on analyst upgrade after falling Tuesday on weaker comps

Gaming sector; Credit Suisse downgraded Sands China to neutral and Wynn and SJM to
underperform; MGM stay top pick; suggests investors trim position here post the rally (follows
drop in shares for group yesterday after Macau gambling fell 23.2% to 28B patacas ($3.5B) in
October (5th monthly decline and most since started records in 2005); LVS, WYNN, MPEL move
Autos; TM boosted its full-year profit forecasts after net income for Q12 topped views; KAR
announces $300M share buyback/Q3 eps beat/outlook raised; auto suppliers generally higher,
led by MGA earnings (JCI, BWA rise as well)
Energy
Oil E&P names; EOG rises after EPS beat; DVN Q3 eps beat and raised its 14 production forecast
(gains 11%); PXD sells 5.75M shares in offering/to divest Ford midstream business, but said
could deliver consistent annual production growth 16%-21% through 2016in a $70-$80 oil
price environment; CHK trades back to 50 day moving average on earnings/boosts low end of
production view for the year (group has been beaten up relief rally today)
Energy stocks in general also benefitting from Republicans winning the Senate overnight seen
as more friendly for big oil easing restrictions
Oil drillers relief bounce early; RDC Q3 eps/revs above views and added $1.2B new contract
backlog during Q3; offshore drillers also rise RIG, DO, NE, ESV rise
Coal stocks enjoy a post Republican election win; rises on hopes Congress will slow down EPA
rules on coal which have limited its use by utilities, and any approval for the Keystone XL
pipeline would mean more rail transport for coal (BTU, ANR, CNX, WLT rise)also lifted
LNG/pipeline stocks like GLOG, TRP, TE
MLPs; AM 40M share IPO priced at $25 per share; LINE and LNCO downgraded to neutral at
Credit Suisse; CLMT a winner on day after Q3 sales $1.68B vs. est. $1.37B but says no plan to
move forward in 2014 with MLP project
Utilities another new all-time high for Utility Index, led by strength in NEE, NRG, PPL, PEG
Financials
Not much in regards to individual stock stories in financials, with group trading with overall
market; GS lowered the top end on its range of "reasonably possible" legal losses to about $S2.5B
from about $S3.2B back in August, while WFC also cut the upper end of its possible legal losses
In stock news; STL and HVB agreed to merge in a deal valued at $539 million
http://goo.gl/S01LFX ; CLNY jumped after signing a "non-binding" merger agreement with Colony
Capital LLC and post earnings http://goo.gl/CFCFLV ; RLGY up on earnings; AFSI rises after
earnings analyst upgrade
Healthcare
Biotechs; JAZZ Q3 eps beat/boost guidance (several analysts raise tgt); PCYC Q3 eps/revs top
views (upcoming event at ASH meeting 11/6); biotechs (IBB) were slightly lower, with no major
news outside of earnings
Generics; ACT shares rise on Q3 beat and ups 2H eps forecast; ENDP falls after mgmt. said
earnings will be negatively impacted by rebating in the generics business
Hospital stocks fall after Republicans last night won control of the U.S. Senate (note Republicans
have promised to seek to repeal most parts of the Affordable Care Act, which benefits hospitals
by reducing the number of uninsured patients that use their services) shares of CYH, UHS, HCA,
LPNT among some of laggards today group dropped yesterday in earnings THC/CYH
Ebola leveraged names get a lift midday after the White House asked Congress for #6.2B for
Ebola funding; did not move the needle on treatment makers (CMRX, SRPT, BCRX, NLNK), but did
for protective clothing makers (LAKE, APT) higher
Managed care stocks jump in reaction to WCG better quarterly beat and guidance (shares of
CNC, HUM, UNH were modestly higher)

Industrials & Materials


Heavy duty trucks; CMI, PCAR, NAV rise after U.S. Class 8 truck orders in Oct. rose to 46,200,
most since March 2006 (13th consecutive month above 20k units and 2nd highest monthly order
total since at least 1996); Class 5-7 Oct. net orders were 21,700 units, up 14% YoY, up 11% MoM
Metals & Miners; gold miners remain pressured by drop in gold prices shares of NEM, ABX, GG,
IAG, AUY decline again; metals and materials lower in general with FCX, AA, X, CLF lagging
Shippers/tankers fall; group down as China Ocean Shipping Group, Chinas largest shipping group,
said the global shipping market is unlikely to see a recovery during the next two years as it
grapples with an oversupply of vessels Reuters (shares of SBLK, NMM, BALT, PRGN fall)
Ag stocks/chemicals; SMG Q4 eps loss smaller than expected and boosted its 15 rev forecast;
Wholesale/distributors; group gets lift after FAST said daily sales rose 14.6% vs. 12.9% in Sept
(shares of MSM, GWW, WSO active)
Technology, Media & Telecom
Internet; digital advertising service co CRTO surges on stronger earnings; Internet security FEYE
cut at Cowen after earnings/posts weaker Q3 revs/mixed guidance; BABA trades to new all-time
highs (YHOO rallies in sympathy); online vacation rental AWAY guides Q4 revs below views
3D stocks; SSYS Q3 results in-line/slightly better, but falls on lowered year eps guidance (sees
$2.21-$2.31 vs. prior $2.25-$2.35) other 3d makers DDD, XONE, VJET weakened early
Other winners on earnings: ATVI (on sales of its Destiny title), BSFT, CTSH, JIVE
Semiconductors; INTC falls after Bernstein cut rating to Underperform; NVDA set to report
earnings tomorrow night SOX Index rises for the 14th time in last 17 sessions; QCOM reports
tonight after the close
Media sector; group rises rise; led by stronger results from both TWX (also raised eps growth
forecast) and FOXA (handily beat top/bottom) and ahead of CBS results tonight (group fell
yesterday as DISCA Q3 revs missed ests./cut its full year revenue outlook and posted 1%
domestic cable ad growth; TRBAA falls after posting Q3 eps loss

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