After Hours Report

The S&P 500 declined 0.8% on Thursday, failing to overcome weak economic data and a fresh increase in U.S.-China tensions. The Dow Jones Industrial Average lost 0.4%, and the Nasdaq Composite lost 1.0%. The small-cap Russell 2000, however, eked out a 0.1% gain. 

Losses broadened out to ten of the 11 S&P 500 sectors, including energy (-1.5%) and information technology (-1.4%). The industrials sector (+0.2%) was the lone sector to close in positive territory, thanks to shares of Boeing (BA 139.00, +5.68, +4.3%) after the stock was initiated with an Outperform rating at RBC Capital Mkts.

Regarding today's economic data and U.S.-China news, it should be prefaced that the market wasn't too shocked or upset by the news. That's been the case since its March 23 low, at least. In fact, advancing issues outpaced declining issues at the NYSE, but the market was without the leadership from its mega-cap components. 

Weekly initial claims decreased by 249,000 to 2.438 million (Briefing.com consensus 2.400 million), bringing the nine-week total to 38.636 million; continuing claims increased to an all-time high of 25.073 million; and existing home sales fell 17.8% m/m in April to a seasonally adjusted annual rate of 4.33 million (Briefing.com consensus 4.32 million).

On the U.S.-China front, the White House issued a report criticizing China's economic and military policies, President Trump accused China of a "disinformation and propaganda attack" on the U.S. and Europe, and a bipartisan group of Senators planned to introduce legislation to sanction China over new national security laws in Hong Kong. 

Separately, buyers appeared to concentrate their efforts to the retail space following positive earnings/reopening news from TJX Cos. (TJX 54.30, +3.45, +6.8%) and BJ's Wholesale (BJ 35.25, +6.28, +21.7%). Best Buy (BBY 77.98, -3.56, -4.4%) was an exception despite reporting positive quarterly results. The SPDR S&P Retail ETF (XRT 39.09, +0.7) rose 2.0%.

On a related note, Starbucks (SBUX 78.05, +0.29, +0.4%) told partners that it's tracking slightly above its forecasted recovery curve.

U.S. Treasuries finished the session little changed. The 2-yr yield declined one basis point to 0.15%, and the 10-yr yield was unchanged at 0.68%. The U.S. Dollar Index increased 0.3% to 99.44. WTI crude increased another 1.3%, or $0.45, to $33.96/bbl. 

Reviewing Thursday's economic data, which featured the weekly jobless claims report:

• Initial claims for the week ending May 16 decreased by 249,000 to 2.438 million (Briefing.com consensus 2.400 million), bringing the 9-week total to 38.636 million. Continuing claims for the week ending May 9 surged by 2,525,000 to 25.073 million, which is an all-time high.
  • The key takeaway from the report in the market's mind is that the pace of initial claims is decelerating; however, the real-world takeaway is that the economic damage runs deep as initial claims and continuing claims keep piling up.
• Existing home sales plummeted 17.8% m/m in April to a seasonally adjusted annual rate of 4.33 million (Briefing.com consensus 4.32 million). That is the lowest level of home sales since July 2010.
  • The key takeaway from the report is that sellers pulled listings amid the COVID-related downturn in demand, yet the inventory constraint translated into higher prices for buyers remaining in the market.
• The Conference Board's Leading Economic Index decreased 4.4% m/m in April (Briefing.com consensus -5.3%) following a downwardly revised (and record) 7.4% decline (from -6.7%) in March.
  • The key takeaway from the report is the Conference Board's conclusion that the breadth and depth of the decline in the index does not imply a fast rebound for the economy at large, even with the imminent reopening of some sectors.
• The Philadelphia Fed Index for May increased to -43.1 (Briefing.com consensus -43.0) from the -56.6 reading in April.

Investors will not receive any notable economic data on Friday.

• Nasdaq Composite +3.5% YTD
• S&P 500 -8.7% YTD
• Dow Jones Industrial Average -14.2% YTD
• Russell 2000 -19.2% YTD

Overseas: 

• Europe: DAX -1.4%, FTSE -0.9%, CAC -1.2%
• Asia: Nikkei -0.2%, Hang Seng -0.5%, Shanghai -0.6%

Commodities: 

• Crude Oil +0.35 @ 33.84
• Nat Gas -0.06 @ 1.85
• Gold -30.30 @ 1721.80
• Silver -0.66 @ 17.38
• Copper -0.03 @ 2.43

After-Hours Spotlight:

• Abbott (ABT) announced today an interim analysis of an ongoing multi-site clinical study in urgent care clinics that indicates its ID NOW COVID-19 rapid test is showing strong agreement to lab-based molecular polymerase chain reaction (PCR) instruments... ABT up 0.9% after hours
• Agilent (A) beats by $0.10, beats on revs... A up 3.4% after hours
• Chuy's (CHUY) beats by $0.05, reports revs in-line, withdraws FY20 guidance... CHUY up 0.1% after hours
• Deckers Outdoor (DECK) beats by $0.48, beats on revs, does not provide guidance... DECK down 1.2% after hours
• e.l.f. Beauty (ELF) beats by $0.05, beats on revs, suspends FY21 guidance... ELF up 7.8% after hours
• Geron (GERN) announces public offering of common stock, with size not disclosed; also announces updates for imetelstat... GERN down 16.8% after hours
• Hewlett Packard Enterprise (HPE) misses by $0.07, misses on revs; announces cost optimization and prioritization plan... HPE down 4.8% after hours
• Intuit (INTU) beats by $0.01, reports revs... no after hours indication for INTU
• LiveRamp (RAMP) beats by $0.09, beats on revs; guides JunQ revs below consensus... RAMP up 4.0% after hours
• NVIDIA (NVDA) beats by $0.27, beats on revs... NVDA down 0.5% after hours
• Palo Alto Networks (PANW) beats by $0.21, beats on revs; guides JulQ EPS above consensus, revs in-line... PANW up 6.3% after hours
• Perspecta (PRSP) beats by $0.02, beats on revs; guides FY21 EPS in-line, revs above consensus... PRSP up 4.4% after hours
• Ross Stores (ROST) misses by $0.31, misses on revs, suspends quarterly dividend, does not provide guidance... ROST down 2.1% after hours
• Splunk (SPLK) beats by $0.01, misses on revs; guides JulQ revs below consensus; withdraws full year guidance... SPLK down 2.7% after hours

Fair Value for Friday, May 22:

• S&P 500: 2944
• Nasdaq 100: 9372
• DJIA: 24415

Today's News Summary:

For a full rundown of today's market and after hours developments, see Live In Play

• Earnings/Guidance (Full Earnings Calendar):
  • Advanced Drainage Systems (WMS) reports Q4 (Mar) results, revs in-line
  • Apollo Investment (AINV) beats by $0.14
  • Best Buy (BBY) beats by $0.26, beats on revs; Q1 enterprise comps -5.3%; expects continued pressure on Q2 sales growth rate
  • BJ's Wholesale (BJ) beats by $0.32, beats on revs; Total Q1 comps +19.9%, Q1 comps ex-gas +27%
  • Boot Barn Holdings (BOOT) misses by $0.08, misses on revs, same store sales decreased -4.7%
  • Brady (BRC) misses by $0.01, beats on revs
  • Copart (CPRT) misses by $0.05, reports revs in-line
  • Endava (DAVA) beats by GBP 0.01, beats on revs; guides Q4 EPS below consensus, revs below consensus
  • Expedia Group (EXPE) misses by $0.46, beats on revs
  • Hormel Foods (HRL) misses by $0.01, beats on revs
  • HUYA (HUYA) beats by RMB 0.08, beats on revs; guides Q2 revs below consensus
  • JOYY (YY) beats by $0.06, beats on revs
  • L Brands (LB) misses by $0.28, misses on revs
  • Macy's (M) sees Q1 revs below consensus
  • Manchester United (MANU) reports Q3 (Mar) results, misses on revs; withdraws guidance
  • Medtronic (MDT) misses Q4 estimates (says in-line with update provided on April 21 and consistent with impact felt across MedTech industry); increases dividend
  • Nordson (NDSN) beats by $0.32, beats on revs
  • Shoe Carnival (SCVL) misses by $0.19, beats on revs
  • Skyline Champion (SKY) misses by $0.08, misses on revs
  • Synopsys (SNPS) beats by $0.23, beats on revs; guides JulQ EPS below consensus, revs below consensus; guides FY20 EPS in-line, reaffirms FY20 revs guidance
  • Take-Two (TTWO) misses by $0.17, beats on revs; guides FY21 EPS below consensus, net bookings below consensus, stock still halted
  • Teekay LNG Partners (TGP) misses by $0.08, misses on revs
  • Teekay Tankers (TNK) beats by $0.36, beats on revs
  • TJX (TJX) misses by $0.56, misses on revs; not providing FY21 guidance; Initial sales overall have been above last year's sales across all states and countries for the over 1,100 stores that have been reopened for at least a week
  • ZTO Express (ZTO) beats by RMB0.12, misses on revs
• General News:
  • White House issues report criticizing China’s economic and military policies; report does not announce any potential retaliatory actions
  • President Trump confirms US will pull out of "open skies" treaty with Russia; US will address the China/Hong Kong issue "very strongly"
  • China aims to impose new national security laws on Hong Kong, according to Washington Post
  • Bipartisan group of Senators will soon introduce legislation to sanction China over new national security laws in Hong Kong, according to The Wall Street Journal
  • Treasury Secretary Steven Mnuchin believes US will need additional stimulus, according to Bloomberg
  • Senate Majority Leader Mitch McConnell (R-KY) says enhanced unemployment benefits "will not be in the next bill", according to Politico
  • A new localized outbreak of coronavirus in China prompted a new lockdown of the area, according to the Wall Street Journal
  • Large Wall Street banks will have staff limits when employees return. Most employees will move to suburban offices or work at home indefinitely, according to Bloomberg
  • NBA expected to issue guidelines around June 1 that will allow for the return of players, according to ESPN
  • FHFA releases re-proposed capital rule for the enterprises
  • Amazon (AMZN) will move Prime Day to September, according to The Wall Street Journal
  • AstraZeneca (AZN) receives first commitments for Oxford’s potential new vaccine for COVID-19
  • AstraZeneca (AZN) CEO Pascal Soriot CNBC interview: He hopes to have COVID-19 vaccine phase 3 data in August; First doses could be ready by October
  • AXA Equitable (EQH) raises quarterly cash dividend to $0.17/share from $0.15/share
  • Baidu (BIDU) is mulling delisting from Nasdaq (NDAQ) exchange and moving closer to home, according to Reuters
  • Canada Goose (GOOS) to cut 250 jobs, according to the Wall Street Journal
  • Comcast (CMCSA): Orange County officials unanimously approve plan by Universal Studios to open theme park on June 3 or 4 - CNBC
  • Facebook (FB) Workplace has 5 mln paid users, up 2 mln since October
  • Kimco Realty (KIM) to partially monetize its investment in Albertsons Companies
  • Mastercard (MA) will not send staff back to offices without a vaccine, according to Reuters
  • Natl Oilwell Varco (NOV) suspends quarterly dividend until further notice, had been $0.05/sh
  • Redfin (RDFN) released housing offers data yesterday; 41% of Redfin offers faced bidding wars in late April, early May amid coronavirus pandemic
  • Republic Services (RSG) CFO to retire; Brian DelGhiaccio will be promoted to CFO
  • Starbucks (SBUX) provides reopening updates in letter from CEO Kevin Johnson - tracking slightly above the co's forecasted recovery curve
  • Tempur Sealy Int'l (TPX) says stores that have re-opened are generally experiencing strong closing rates with reduced traffic
  • Vanda Pharma (VNDA) wins motion to dismiss False Claims Act lawsuit filed against the company
  • Wal Mart (WMT) US CEO John Furner believes shopping will be changed after coronavirus in favor of e-commerce, according to the Wall Street Journal
  • Walt Disney (DIS) is not presenting a reopening proposal to Florida officials tomorrow, as was previously reported, according to a tweet by CNBC

• Upgrades:
  • Avis Budget (CAR) upgraded to Equal-Weight from Underweight at Morgan Stanley; tgt $15
  • Bilibili (BILI) upgraded to Overweight from Neutral at JP Morgan; tgt $42
  • Covenant Transport (CVTI) upgraded to Buy from Hold at Stifel; tgt raised to $17
  • Echo Global Logistics (ECHO) upgraded to Overweight from Equal-Weight at Stephens; tgt raised to $25
  • Entergy (ETR) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt lowered to $107
  • Focus Financial (FOCS) upgraded to Buy from Underperform at BofA/Merrill; tgt raised to $29
  • Honeywell (HON) upgraded to Buy from Hold at HSBC Securities; tgt $158
  • Korn/Ferry (KFY) upgraded to Neutral from Underperform at Credit Suisse; tgt raised to $32
  • Las Vegas Sands (LVS) upgraded to Outperform from Neutral at Credit Suisse; tgt lowered to $58
  • Lowe's (LOW) upgraded to Buy from Hold at Stifel; tgt raised to $149
  • Manpower (MAN) upgraded to Neutral from Underperform at Credit Suisse; tgt $70
  • MGM Growth Properties (MGP) upgraded to Buy from Neutral at BofA/Merrill; tgt raised to $29
  • Netease (NTES) upgraded to Buy from Neutral at New Street; tgt $450
  • NexPoint Real Estate Finance (NREF) upgraded to Strong Buy from Outperform at Raymond James; tgt raised to $18
  • PDC Energy (PDCE) upgraded to Buy from Hold at Stifel; tgt raised to $21
  • Robert Half (RHI) upgraded to Neutral from Underperform at Credit Suisse; tgt raised to $51
  • Sonoco Products (SON) upgraded to Overweight from Equal Weight at Wells Fargo; tgt raised to $60
  • Stratasys (SSYS) upgraded to Neutral from Underweight at JP Morgan; tgt raised to $19
  • Wyndham Destinations (WYND) upgraded to Outperform from Neutral at Credit Suisse
• Downgrades:
  • Allegion (ALLE) downgraded to Underweight from Equal Weight at Barclays; tgt lowered to $97
  • Charles Schwab (SCHW) downgraded to Neutral from Buy at BofA/Merrill; tgt lowered to $35
  • Evelo Biosciences (EVLO) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt $8
  • Expedia Group (EXPE) downgraded to In-line from Outperform at Evercore ISI; tgt $85
  • HUYA (HUYA) downgraded to Neutral from Outperform at Credit Suisse; tgt $20
  • Intl Game Tech. PLC (IGT) downgraded to Hold from Buy at Societe Generale; tgt $8.20
  • Kaleido Biosciences (KLDO) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt $8
  • Logitech Int'l SA (LOGI) downgraded to Neutral from Overweight at JP Morgan; tgt $57
  • MGM Resorts (MGM) downgraded to Underperform from Neutral at BofA/Merrill; tgt raised to $15
  • MGM Resorts (MGM) downgraded to Hold from Buy at Jefferies; tgt lowered to $17
  • Sociedad Quimica y Minera (SQM) downgraded to Sector Underperform from Sector Perform at Scotiabank; tgt lowered to $20
  • Square (SQ) downgraded to Sell from Neutral at UBS; tgt raised to $63
  • ZTO Express (ZTO) downgraded to Neutral from Buy at BofA/Merrill
• Others:
  • Aerojet Rocketdyne (AJRD) initiated with a Sector Perform at RBC Capital Mkts; tgt $45
  • Altra Industrial Motion (AIMC) initiated with an Outperform at Oppenheimer; tgt $34
  • Boeing (BA) initiated with an Outperform at RBC Capital Mkts; tgt $164
  • Carnival (CCL) initiated with a Neutral at Credit Suisse; tgt $12
  • Cedar Fair (FUN) initiated with an Outperform at Credit Suisse; tgt $37
  • Cubic (CUB) initiated with a Sector Perform at RBC Capital Mkts; tgt $37
  • Ducommun (DCO) initiated with an Outperform at RBC Capital Mkts; tgt $41
  • General Dynamics (GD) initiated with an Outperform at RBC Capital Mkts; tgt $157
  • Hilton Grand Vacations (HGV) resumed with an Outperform at Credit Suisse
  • Huntington Ingalls (HII) initiated with an Outperform at RBC Capital Mkts; tgt $213
  • Inovalon (INOV) initiated with a Buy at Guggenheim; tgt $22
  • Inovio Pharma (INO) initiated with a Buy at The Benchmark Company; tgt $28
  • Intl Game Tech. PLC (IGT) resumed with an Underperform at Credit Suisse; tgt lowered to $5
  • L3Harris (LHX) initiated with an Outperform at RBC Capital Mkts; tgt $219
  • Lockheed Martin (LMT) initiated with a Sector Perform at RBC Capital Mkts; tgt $410
  • Marriot Vacations (VAC) resumed with an Outperform at Credit Suisse; tgt $100
  • Mercury (MRCY) initiated with a Sector Perform at RBC Capital Mkts; tgt $87
  • MGM Resorts (MGM) resumed with a Neutral at Credit Suisse; tgt lowered to $15
  • Northrop Grumman (NOC) initiated with a Sector Perform at RBC Capital Mkts; tgt $366
  • Norwegian Cruise Line (NCLH) initiated with an Outperform at Credit Suisse; tgt $21
  • Opera Ltd (OPRA) initiated with an Outperform at Cowen; tgt $10
  • PlayAGS (AGS) resumed with a Neutral at Credit Suisse; tgt lowered to $3
  • Raytheon Technologies (RTX) initiated with an Outperform at RBC Capital Mkts; tgt $69
  • Royal Caribbean (RCL) initiated with an Outperform at Credit Suisse; tgt $67
  • SeaWorld Entertainment (SEAS) initiated with a Neutral at Credit Suisse; tgt $13
  • Scientific Games (SGMS) resumed with an Underperform at Credit Suisse; tgt lowered to $8
  • Six Flags (SIX) initiated with a Neutral at Credit Suisse; tgt $16
  • Vail Resorts (MTN) initiated with an Outperform at Credit Suisse; tgt $235
  • Wynn Resorts (WYNN) resumed with a Neutral at Credit Suisse; tgt lowered to $72

Upcoming Events:

• Econ data (Friday):
  • No economic data of note
• Earnings:
  • Monday (May 18)
    • Pre-Market: IGT SE
    • After-Hours: BIDU BILI BVN IQ
  • Tuesday (May 19)
    • Pre-Market:  AAP DY EXP HD KSS SINA WMT WB
    • After-Hours: KRNT NTES RRR SQM URBN
  • Wednesday (May 20)
    • Pre-Market:  ADI EV FRO LOW MCK ROLL TGT VER
    • After-Hours:  BOOT CPRT EXPE HUYA YY LB NDSN SCVL SKY SNPS TTWO ZTO
  • Thursday (May 21)
    • Pre-Market:  WMS AINV BBY BJ BRC DAVA HRL MDT TGP TNK TJX USPH
    • After-Hours: A DECK HPE INTU RAMP NVDA PANW PRSP PLT ROST SPLK
  • Friday (May 22)
    • Pre-Market: BABA BKE CAE DE FL PDD
    • After-Hours: None of note
    • Full Earnings Calendar