Early Look

Tuesday, December 29, 2020

Major averages appear on track for another record with U.S. futures pointing to a higher open, looking to build on yesterday’s closing all-time highs for the S&P 500, Dow Industrials and Nasdaq Composite after the House of Representatives passed a bill that would replace the $600 stimulus checks in the newly enacted relief bill with $2,000 payments, as Democrats try to pass a proposal suggested by President Trump. The measure to amend the relief bill that Trump signed today passed on a 275 to 134 vote, meeting the two-thirds majority required for an expedited procedure. It now goes the Senate, which is controlled by the Republican party where many previously opposed checks larger than the $600 payments in the existing law. Stocks are powering higher in the final days of the year, as the S&P 500 index has climbed over 15% this year, building on its 29% surge in 2019, while the Nasdaq Composite Index has gained over 43% in 2020 alone. News of the latest Covid relief bill which included additional assistance and payments to individuals, small business and sectors has lifted reopening stocks like cruise lines, airlines and casinos the last few days. Megacap tech names also paced the gains on Monday with big moves for Apple, Amazon, Facebook and Google. To this point, investors have ignored the stretched market valuations, and margin debt at records, as traditional stock metrics and fundamentals have gone out the window with euphoria and greed leading the end of year rally. In Asian markets, The Nikkei Index rose 2.6% or over 700 points, powering to a 30-year high of 27,568, while the Shanghai Index fell -18 points to 3,379 and the Hang Seng Index jumped 253 points to settle at 26,568. In the U.K., where markets reopened Tuesday, the main FTSE 100 stocks benchmark rose 2.2% to 6,645 as investors cheered the post-Brexit deal struck on Christmas Eve, while the German DAX adds to its recent record highs, up about 35 points to 13,825.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 32.30 points, or 0.87%, to 3,753.36

·     The Dow Jones Industrial Average rose 204.10 points, or 0.68%, to 30,403.97

·     The Nasdaq Composite gained 204.10 points, or 0.74%, to 12,899.42

·     The Russell 2000 Index declined -7.70 points, or 0.38% to 1,996.25

Events Calendar for Today

·     7:45 AM ET         ICSC Weekly Retail Sales

·     8:55 AM ET         Johnson/Redbook Weekly Sales

·     9:00 AM EST      CaseShiller 20 City Home Index for October

·     4:30 PM ET         API Weekly Inventory Data

World News

·     U.S. House of Representatives voted 322 to 87 to override President Trump’s veto of the $740.5B defense policy bill. 109 Republican lawmakers joined 212 Democrats supporting the legislation. The Senate is expected to begin its override process tomorrow

Sector News Breakdown

Consumer

·     Caesars Entertainment (CZR) clears the U.S. antitrust waiting period for its proposed combination with William Hill PLC and still expects to complete the transaction in March.

·     Tesla (TSLA) wants to integrate Apple Music (AAPL) and Amazon Music (AMZN) into its user interface, Electrek reports, which would allow drivers to play their streaming music through the in-car system without using their phones to play over Bluetooth, which is currently a feature.

·     TAL Education (TAL) announces that a group of investors has agreed to invest an aggregate of $3.3B in the company through private placement, of which $2.3B in convertible notes, and $1B in newly issued Class A common shares

Energy, Industrials and Materials

·     Continental Resources (CLR) upgraded to Overweight from Sector Weight with a $20 price target at KeyBanc as expects improved leverage and “significant” free cash flow generation in 2021

·     American Airlines (AAL) is set to restart the Boeing (BA) 737 MAX commercial flights on Tuesday morning with its first flight to be between Miami and New York’s LaGuardia. Recall the MAX was given the go-ahead by Federal Aviation Administration last month after BA agreed to software upgrades and new safeguards on a key flight control system linked to both fatal crashes – Reuters

·     AeroCentury’s (ACY) plan to regain compliance with NYSE American listing standards was accepted by NYSE American; continues its listing under an extension with a target completion date of March 11, 2022

Financials

·     Ambac (AMBC) files an appeal of a court decision that dismissed Ambac’s fraud claim against Countrywide Home Loans, which is now part of Bank of America (BAC).

Healthcare

·     Arcturus Therapeutics (ARCT) shares fell over 30%; provided the clinical and preclinical data for its COVID-19 vaccine candidate, ARCT-021. Arcturus also announced that the Singapore Health Sciences Authority has signed off its Phase 2 clinical study backed by favorable Phase 1/2 study results, as well as supportive preclinical data

·     The European Medicines Authority (EMA) will most likely not be able to approve the COVID-19 vaccine developed by drug maker AstraZeneca (AZN) and the University of Oxford in January, the watchdog’s Deputy Executive Director Noel Wathion said. “They have not even filed an application with us yet”, he told Belgian newspaper Het Nieuwsblad – Reuters

·     Moderna (MRNA) is awarded $1,97B modification to contract for purchase of an additional 100M filled drug production doses of SARS-CoV-2 mRNA-1273 vaccine.

·     Guardion Health (GH) names Bret Scholtes as new Chief Executive Officer, effective Jan. 6, replacing interim CEO David Evans; Scholtes is currently the CEO of Omega Protein Corp, a nutritional products company

·     AbCellera Biologics (ABCL) edges higher after Peter Thiel discloses 5.3% stake or holding of ~14.36M shares of the company.

Technology, Media & Telecom

·     SAP (SAP) had previously announced plans to spin off its Qualtrics unit two years after buying the company for $8B in the summer; Qualtrics has now filed its IPO paperwork to list on the Nasdaq under the “XM” ticker.

·     SINA Corp. (SINA) will deliver authorization notices, as required by Cayman Islands law, to all shareholders who had validly objected to the company’s previously announced “going private” merger before the shareholder meeting that took place on Dec. 23, 2020.

·     FuboTV (FUBO) shares edge higher, trying to snap a 3-day losing streak after a regulatory filing showed hedge fund Islet Management reveals a 7.44% stake. Shares have slipped recently on cautious analyst comments, an expiry lock-up and as Hedgeye named the company a best idea for a short trade.