After Hours Report

The S&P 500 advanced 0.8% on Wednesday, recovering some of yesterday's decline, while the Nasdaq Composite advanced 1.4% to close at another record high. The Dow Jones Industrial Average (+0.7%) and Russell 2000 (+0.8%) performed more in-line with the benchmark index.  

The market appeared to receive a late-day boost after St. Louis Fed President Bullard (non-FOMC voter) told CNBC that he is optimistic on a recovery, as the economy appears to be tracking very well right now. Prior to Mr. Bullard's comments, the S&P 500 was trading near its flat line in a lackluster session. 

Apple (AAPL 381.37, +8.68, +2.3%), Microsoft (MSFT 212.83, +4.58, +2.2%), and Amazon (AMZN 3081.11, +80.99, +2.7%), which were strong all session, each rose more than 2.0% to provide the boost in the information technology (+1.6%) and consumer discretionary (+1.5%) sectors. The materials sector fell 1.5%, but no other sector declined more than 0.3%.

Advancing issues had a modest advantage over declining issues at the NYSE and Nasdaq, reflecting a mixed market, but the continued outperformance of the market's largest technology stocks made a big difference at the index level. New macro developments were lacking today, but there was some notable corporate news. 

Biogen (BIIB 280.19, +11.84, +4.4%) submitted its application to the FDA for its Alzheimer's drug, Twitter (TWTR 35.41, +2.42, +7.3%) may reportedly be working on a subscription service, and National General (NGHC 33.84, +13.43, +65.8%) agreed to be acquired by Allstate (ALL 88.22, -4.43, -4.8%) for $4 billion in cash.

U.S. Treasuries finished near their flat lines in a tight-ranged session. The 2-yr yield was unchanged at 0.16%, and the 10-yr yield was unchanged at 0.65%. The U.S. Dollar Index declined 0.4% to 96.47. WTI crude increased 0.8%, or $0.31, to $40.91/bbl, even as the EIA reported an unexpected build in weekly crude inventories. 

Reviewing Wednesday's economic data:

• Consumer credit contracted by $18.2 billion in May (Briefing.com consensus -$22.0 billion) after declining an downwardly revised $70.2 bln (from -$68.7 billion) in April.
  • The key takeaway from the report is that May marked the third straight contraction in consumer credit that was led by a decline in revolving credit, which underscores the more restrictive credit stance adopted by lenders in the wake of the COVID shutdown and massive spike in unemployment.
• The weekly MBA Mortgage Applications Index increased 2.2% following a 1.8% decline in the prior week.

Looking ahead, investors will receive the weekly Initial and Continuing Claims report and Wholesale Inventories for May on Thursday. 

• Nasdaq Composite +16.9% YTD
• S&P 500 -1.9% YTD
• Dow Jones Industrial Average -8.7% YTD
• Russell 2000 -14.5% YTD

Overseas: 

• Europe: DAX -1.0%, FTSE -0.6%, CAC -1.2%
• Asia: Nikkei -0.8%, Hang Seng +0.6%, Shanghai +1.7%

Commodities: 

• Crude Oil +0.24 @ 40.86
• Nat Gas -0.05 @ 1.82
• Gold +9.60 @ 1819.50
• Silver +0.42 @ 19.12
• Copper +0.02 @ 2.81

After-Hours Spotlight:

• AnaptysBio (ANAB) receives orphan drug designation for imsidolimab for the treatment of patients with generalized pustular psoriasis... no after hours indication for ANAB
• Bed Bath & Beyond (BBBY) misses by $0.65, misses on revs, not providing comp data or guidance; plans to close approx 200 stores over next two years... BBBY down 3.9% after hours
• Costco (COST) reports total adjusted comparable sales growth of 14.4% for the five weeks ended July 5, 2020; U.S. adjusted (ex. gasoline and foreign exchange) comparable sales increased 13.6%... COST up 1.2% after hours
• Crinetics Pharmaceuticals (CRNX) receives orphan drug designation from FDA for Paltusotine for treatment of Acromegaly... CRNX up 3.7% after hours
• Haverty Furniture (HVT) reports Q2 sales well below two analyst estimate
• PTC (PTC) guides JunQ revenue above consensus... PTC up 2.3% after hours
• Rio Tinto (RIO) to begin planning for the eventual closure of New Zealand Aluminium Smelters.... RIO down 0.2% after hours
• Turning Point Brands (TPB) reports preliminary 2Q20 sales above prior guidance; announces public offering of 1.8 mln shares of common stock by Standard Diversified and 200,000 shares by funds affiliated with Standard General... TPB up 9.6% after hours
• Veritone (VERI) guides Q2 revenue above consensus... VERI up 6.9% after hours
• Zymeworks (ZYME) signs new license agreement with Merck; granting Merck the right to develop additional candidates using Zymeworks' Azymetric and EFECT platforms... ZYME up 4.6% after hours

Fair Value for Thursday, July 9:

• S&P 500: 3160
• Nasdaq 100: 10655
• DJIA: 25943

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):
  • Alcoa (AA) sees Q2 above consensus
  • Cambium Networks (CMBM) now expects GAAP revenues of ~$61 mln, above the high-end of the previous outlook of $51-$56 mln vs $53.1 mln estimate
  • ForeScout Technologies (FSCT) reports prelim Q2 revs above consensus
  • GenMark Diagnostics (GNMK) guides Q2 revenue above consensus
  • Levi Strauss (LEVI) misses by $0.05, misses on revs, not providing guidance, plans to eliminate about 700 positions
  • Luminex (LMNX) sees Q2 revs above consensus
  • MSC Industrial (MSM) beats by $0.16, beats on revs
  • Royal Gold (RGLD) provides update on Q4 metals sales
  • Simply Good Foods (SMPL) beats by $0.11, beats on revs; guides FY20 EPS above consensus, revs below consensus
  • SMART Global (SGH) beats by $0.03, reports revs in-line; guides Q4 EPS in-line, revs in-line
  • Stellus Capital (SCM) provides Q2 update; net asset value is expected to increase
  • Valvoline (VVV) provides preliminary June performance results
• General News:
  • U.S. Secretary of State Mike Pompeo indicates U.S. will implement visa restrictions for certain Chinese officials involved with obstructing travel to Tibet
  • White House releases statement discussing importance of opening schools this fall
  • St. Louis Fed President Bullard (non-FOMC voter) said in CNBC interview that he thinks the economy is tracking very well right now and that we could get to single-digit unemployment rate by year end.
  • President Trump tweets that he may cut off funding if [schools are] not open
  • National Economic Council Director Larry Kudlow said on Fox News that U.S. still engaged with China on Phase One trade deal, said it "isn't dead"
  • EU official says he wants Brexit deal but not at any price, according to Reuters
  • Australia may terminate extradition treaty with Hong Kong, according to ABC
  • ECB President Lagarde stresses green investment under ECB's bond buying scheme, according to the Financial Times
  • AMC (AMC) expected to announce restructuring, according to the Wall Street Journal
  • Airbus (EADSY) reports 2020 gross orders by June 30th totaled 365 aircraft with net orders before cancellations of 298 aircraft; registered no new orders in June 2020
  • American Finance Trust (AFIN) announced that 83% of the original cash rent due for Q2 has been received as of July 6, 2020, including 94% of the original cash rent due in the co's single-tenant portfolio
  • AstraZeneca (AZN) and Merck (MRK) announced that Lynparza (olaparib) has been approved in the EU for patients with germline BRCA-mutated metastatic pancreatic cancer
  • Comcast (CMCSA) plans to spend $2 bln on Peacock, according to Variety
  • Enzo Biochem (ENZ) spikes 25% after FDA grants Emergency Use Authrorization for its AMPIPROBE SARS-CoV-2 Test System
  • Facebook (FB) failed to win over group running ad boycott, according to the New York Times
  • Facebook (FB) Oversight Board confirmed it won’t be operational until late Fall
  • Fluor (FLR) awarded position on nationwide Indefinite Delivery/Indefinite quantity contract from U.S. Department of Energy
  • General Motors (GM) racketeering case against FCA (FCAU) dismissed, according to reports
  • Global Net Lease (GNL) reports 98% of Q2 rent has been received
  • Leidos (LDOS) awarded $379 mln contract from US Customs and Border Protection
  • Merck (MRK) and Eisai (ESALY) receive Complete Response Letter for KEYTRUDA (pembrolizumab) plus LENVIMA combination as first-line treatment for unresectable hepatocellular carcinoma
  • NanoViricides (NNVC) reports that safety and tolerability of anti-Coronavirus drug candidates observed in an animal model further advances NanoViricides’ SARS-CoV-2 therapeutics program
  • REGENXBIO (RGNX) provides update on progress of clinical programs; RGX-111 and RGX-121 continue to be well-tolerated
  • Spotify (SPOT) will launch in Russia next week per Music Business Worldwide
  • TechnipFMC (FTI) signs a" major" engineering, procurement, and construction contract with Assiut National Oil Processing Company
  • Twitter (TWTR) moves on speculation company might be working on a subscription product 
  • United Airlines (UAL) expects consolidated capacity for July 2020 to be down approx. 75% yr/yr; cautions 36,000 of its frontline workers about potential layoffs, according to CNBC
  • Walgreens Boots Alliance (WBA) and VillageMD to open 500 to 700 full-service doctor offices within next five years
  • Walt Disney World (DIS) theme parks will open beginning July 11 for Magic Kingdom Park and Disney's Animal Kingdom Park followed by EPCOT and Disney's Hollywood Studios on July 15

Notable Ratings

(see Upgrades/Downgrades calendar for full list):

• Upgrades:
  • BNY Mellon (BK) upgraded to Buy from Hold at Jefferies; tgt $45
  • Caterpillar (CAT) upgraded to Neutral from Underperform at BofA Securities
  • Diageo plc (DEO) upgraded to Buy from Neutral at Bryan Garnier
  • Herc Holdings (HRI) upgraded to Buy from Neutral at BofA Securities
  • Kimco Realty (KIM) upgraded to Neutral from Sell at Compass Point; tgt $13
  • Kohl's (KSS) upgraded to Buy from Neutral at BofA Securities; tgt raised to $27
  • MAXIMUS (MMS) upgraded to Strong Buy from Mkt Perform at Raymond James; tgt $90
  • Micro Focus (MFGP) upgraded to Neutral from Underperform at Credit Suisse
  • Nikola Corporation (NKLA) upgraded to Overweight from Neutral at JP Morgan; tgt $45
  • Northern Trust (NTRS) upgraded to Buy from Hold at Jefferies; tgt raised to $95
  • Rio Tinto (RIO) upgraded to Sector Perform from Underperform at RBC Capital Mkts
  • Synaptics (SYNA) upgraded to Buy from Neutral at Rosenblatt; tgt $73
• Downgrades:
  • Altria (MO) downgraded to Equal Weight from Overweight at Barclays; tgt $43
  • BioMarin Pharm (BMRN) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt $125
  • Booz Allen Hamilton (BAH) downgraded to Mkt Perform from Outperform at Raymond James
  • Brixmor Property (BRX) downgraded to Neutral from Buy at Compass Point; tgt $13
  • CACI Intl (CACI) downgraded to Mkt Perform from Outperform at Raymond James
  • Helmerich & Payne (HP) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt $20
  • HubSpot (HUBS) downgraded to Neutral from Buy at Mizuho; tgt $200
  • Nabors Industries (NBR) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt $25
  • Nokia (NOK) downgraded to Neutral from Overweight at JP Morgan
  • SiteOne Landscape Supply (SITE) downgraded to Sell from Neutral at UBS; tgt raised to $85
  • Spirit Aerosystems (SPR) downgraded to Mkt Perform from Outperform at Bernstein; tgt $26
  • Transocean (RIG) downgraded to Equal-Weight from Overweight at Morgan Stanley
  • Vertex Pharma (VRTX) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt $300
  • Vista Outdoor (VSTO) downgraded to Neutral from Buy at B. Riley FBR; tgt $16
• Others:
  • Apple (AAPL) target raised to $400 from $380 at Deutsche Bank
  • BancorpSouth (BXS) resumed with a Neutral at Piper Sandler; tgt $23
  • InterActiveCorp (IAC) initiated with a Neutral at Goldman; tgt $135
  • Match Group (MTCH) initiated with a Neutral at Goldman; tgt $86
  • NantKwest (NK) initiated with an Overweight at Piper Sandler; tgt $18
  • S&P Global (SPGI) target raised to $397 from $336 at Goldman and added to Conviction Buy List
  • Tesla (TSLA) target raised to $1300 from $950 at Goldman Sachs

Upcoming Events:

• Econ data (Thursday):
  • 07:00 ET: MBA Mortgage Applications Index (Prior -1.8%)
  • 10:30 ET: EIA Crude Oil Inventories (Prior -7.2M)
  • 15:00 ET: Consumer Credit for May (Briefing.com consensus -$22.0B; Prior -$68.7B)
• Earnings:
  • Monday (July 6)
    • Pre-Market: None of note
    • After-Hours: None of note
  • Tuesday (July 7)
    • Pre-Market:  PAYX
    • After-Hours: FLEVI SGH
  • Wednesday (July 8)
    • Pre-Market:  SMPL
    • After-Hours:  BBBY
  • Thursday (July 9)
    • Pre-Market:  AZZ HELE WBA
    • After-Hours: PSMT WDFC
  • Friday (July 10)
    • Pre-Market: GBX
    • After-Hours: SJR
    • Full Earnings Calendar