After the Bell: Dow Gains 68 Points, But Is That a Warning Sign I See?

Discussion in 'Wall St. News' started by dealmaker, May 14, 2018.

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    dealmaker

    After the Bell: Dow Gains 68 Points, But Is That a Warning Sign I See?
    By Ben Levisohn
    May 14, 2018 5:56 p.m. ET


    The Dow Jones industrial and the other major indexes managed to hold onto their gains today. In today'sAfter the Bell, we...

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    •...explain why the market could be set up for a fall;
    •...highlight stocks moving after a mention inBarron's;
    •...take a look at the S&P 500's biggest loser—Viacom(VIAB)—and biggest winner—Symantec(SYMC).

    The Rise, the Fall?
    A day that started with optimism ended with a lot less of it, though the market still managed to finish higher.

    Early reports that the Trump administration wouldhelp China's ZTE stay in businesshelped boost shares this morning, butviolence in Gazacombined withrising Treasury yields put the market under a bit of pressure in the afternoon. Still, the S&P 500 and the Nasdaq Composite both finished up 0.1%, while the Dow Jones Industrial Average rose 0.3%.

    The recent gains have many observers feeling upbeat, with some even positing that the S&P 500 has finally resumed its uptrend. Maybe. But even some of the bulls acknowledge that it could be time for a pause. Todd Market Forecast's Stephen Todd notes thatbreadth was negative today, even though the market finished higher. "Frequently this is a precursor of a correction," he writes. "We've had a good run and a bit of weakness wouldn't be surprising."

    Still, there are reasons for optimism...five of them actually. UBS strategist Keith Parker listed five catalysts in April that have come into play: The 10-year yield has settled down new 3%;inflation data is no longer at risk of overheating; earnings season has been awesome;buybacks are back; and the tech sector is leading the market higher. "Five circuit breakers turned positive & point to further upside," Parker writes.

    We can only hope.

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    S&P 500: +0.1% to 2730.13
    Dow 30: +68.24 points, or 0.3%, to 24,899.41
    Nasdaq: +0.1% to 7411.32
    Vix: +2.2% to 12.93
    10-year Treasury Yield: +0.032 percentage point to 3%

    The Barron's Bounce
    Every Monday, we check to see if the stocks we mentioned in the weekend's edition ofBarron'sgot a bounce from our articles. Sometimes it's a direct line from our article to a higher stock price, and sometimes we just get lucky, but we do have a way of moving the market.

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    Kroger(KR) advanced 1.2% to $24.73 after Jack Hough argued that its "the valuation is low, and bricks-and-mortar veterans investing in digital savvy have a shot of surviving the Amazon threat."

    SunRun(RUN) rose 1.9% to $10.89 after Avi Salzman wrote that California "has ruled that starting in 2020, developers will have to install solar panels on nearly every new residential building," and that the "new dynamics should favor companies like Sunrun, now the leading U.S. residential solar installer after passingTesla-owned SolarCity (TSLA) last year.

    Not all of our calls worked out.Arista Networks(ANET) dropped 2.5% to $253.52 despite Tiernan Ray'sbullish profile of the company.

    The Hot Stock: Symantec
    Last Friday,Symantec(SYMC)tumbled 33% after announcing an investigation of its accounting, so is it any surprise that it's the biggest gainer in the S&P 500 today after the company announced that it would provide more information inan after-the-bell conference call?

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    Symantec rose 9.6% to $21.40 today, and is up another 1.5% at $21.72 in after-hours trading after it said it expects operating margins of 30% to 32% in 2019, though didn't provide much new information on the probe.

    The Biggest Loser: Viacom
    Investors betting on a combination withCBS(CBS) to cure what ailsViacom(VIAB) got a big surprise today when CBSfiled a lawsuit against National Amusements, the company owned by Shari Redstone and the Redstone family and that controls both companies. TheWall Street Journalcalled it the "nuclear option."

    Shares of Viacom fell 4.9% to $28.74, while CBS rose 2.2% to $53.65.

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    In a note this morning, Cowen analyst Doug Creutz called the suit, which claims that the Redstones have breached their fiduciary duty, "extraordinary." But will it succeed? "It is hard to gauge the chances of success for CBS, however, we view the suit as consistent with acting in the best interests of shareholders," writes Creutz.

    The market's clearly worried that it might.


    https://www.barrons.com/articles/af...s-but-is-that-a-warning-sign-i-see-1526334995