Markets Move Lower On Tuesday As Housing Starts Report Confirms Precipitous Drop In April

We now have seen more than 4,867,515 confirmed cases of COVID-19 in the world with 1.664M cases that have recovered and more than 321k worldwide deaths. In the US, we have 1.55M confirmed cases with 291k that have recovered with 91,582 deaths. At the same time, the reopening processes across the US are proceeding for a number of dates and others are setting the stage like my home state of California that is still hunkered down in shut down mode. Stimulus measures are being pushed forward through the legislature and more, is on the way as many have collected their checks and these moves will hopefully speed up economic recovery.

Today, the stock market reversed into negative territory after yesterday’s positive move. On the macroeconomic front, we received the Housing starts report which confirmed a precipitous drop of 30.2% month/month in April to a seasonally adjusted annual rate of 891k while building permits dropped significantly by 20.8% month/month to a seasonally adjusted annual rate of 1.074M. Housing permits for single-family dwellings dropped a whopping 24.3% month/month to 669k. In a sort of a repeat from recent revelations and without much fanfare, the Fed’s Chair Jerome Powell & Treasury Secretary Mnuchin testified before the Senate Banking Committee respectively reiterating their commitment to support the use of all stimulus tools & the preparation to raise the risk & the lending of money.

As a result the S&P 500 closed down 1.05% as eleven of 11 S&P 500 sectors closed in the red led by energy (down 2.9%) and financials (down 2.5%). The Dow lost 1.59% after tow components reported their quarter including Walmart (WMT) closing at $124.95/share down 2.1% & Home Depot (HD) closing at $238.10/share down 3.0%. Walmart confirmed that they will discontinue jet.com, the online-only marketplace that they had acquired for $3B in 2016 citing that they are seeing strength in walmart.com brand. The Nasdaq closed down .54% & the Russell 2000 gave back 1.95 after yesterday’s whopping move up (6.1%). 

The popular FAANG stocks slowed overall and closed as follows: Facebook (FB) closed at $216.88/share, up by 1.73%, Amazon (AMZN) closed at $2,449.33/share, up .95%,  Apple (AAPL) closed at $313.14/share down by .58%, & Netflix (NFLX) dropped .34% closing at $451.04/share, & Alphabet (GOOG) closed at $1,373.49/share down .76%.

Oil prices jumped another today 1.5%  (+18% in the last 3 days) and closed at $32.30/bbl. This move came after the recent surfacing of the May IEA report confirming that global oil supply is set to fall by a “spectacular” 12 mb/d in May to a nine-year low of 88 mb/d, as the OPEC+ agreement takes effect and production declines elsewhere. Chevron (CVX) closed at $89.62/share down 3.17%, Exxon (XOM) closed at $43.94/share down by 3.09% & Occidental Petroleum Corporation (OXY) closed at $14.37/share down 4.64%. 

The 2-yr US treasury yield moved down 1 basis point to end at .18% & the 10-yr yield moved down by 3 basis points to end at .71%. The U.S. Dollar Index weakened by .1% to end at 99.55. 

Gold prices ended at $1,722/oz (+30) while silver prices closed at $17.78/oz (+.52). North American silver and gold producer Hecla Mining Company (HL) continued its recent run closing at $3.35/share up 6.35% while First Majestic Silver (AG) rose 1.73% closing at $9.42/share.

MOVERS

• Shares Schrödinger, Inc. (Nasdaq: SDGR) rose 12.58% closing at $66.48s/share. SDGR’s physics-based software platform enables the discovery of high-quality, novel molecules for therapeutics and materials. Today SDGR announced its financial results for the first quarter ended March 31, 2020. They highlighted the following: Total revenue of $26.2 million and strong growth of 26% year-over-year, record software revenue of $23.8 million, up 28% year-over-year & the raised $209.6 million in net proceeds through an initial public offering.

• Shares of Beyond Meat, Inc. (BYND) closed t $136.20/share up +4.75% today.  BYND reported the following financial highlights about 14 days ago: First Quarter 2020 Net Revenues Increased 141% Year-Over-Year to $97.1 Million, Gross Profit Improved to $37.7 Million or 38.8% Gross Margin, & Net income of $1.8 Million or $0.03 per Common Diluted Share.

TOMORROW

Tomorrow’s significant economic data report schedule will include the following:

• The weekly MBA Mortgage Applications Index

Economic Reports

• On Monday, we received the NAHB Housing Market Index Report for May, which confirmed a rise of 37 up from 30 the month before.
• On Tuesday, we received the Housing starts report which confirmed a precipitous drop of 30.2% month/month in April to a seasonally adjusted annual rate of 891k while building permits dropped significantly by 20.8% month/month to a seasonally adjusted annual rate of 1.074M. Housing permits for single-family dwellings dropped a whopping 24.3% month/month to 669k. 

Investing & Inspiration

“I believe the returns on investment in the poor are just as exciting as successes achieved in the business arena, and they are even more meaningful!” -Bill Gates

“Every portfolio benefits from bonds; they provide a cushion when the stock market hits a rough patch. But avoiding stocks completely could mean your investment won’t grow any faster than the rate of inflation.” – Suze Orman

“The tax on capital gains directly affects investment decisions, the mobility, and flow of risk capital… the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy.” – John F. Kennedy

“If all the economists were laid end to end, they’d never reach a conclusion.
-George Bernard Shaw

“The riskiest thing we can do is just maintain the status quo.
I get up at 4:30 in the morning, seven days a week, no matter where I am in the world. I think it is important for people who are given leadership roles to assume that role immediately. What I’ve really learned over time is that optimism is a very, very important part of leadership.” Bob Iger, Ceo of Disney

“There are old traders and there are bold traders, but there are very few old, bold traders.”-Ed Seykota

“Let this scenario play out on its own, in its own fashion. As you watch it unfold, you will soon be grateful that you choose the peaceful path. Remember — those who live by the sword, die by the sword.”

“As long as you enjoy investing, you’ll be willing to do the homework and stay in the game.” -Jim Cramer

“I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” -Mark Cuban

“Michael Marcus taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.” -Bruce Kovner

“The policy of being too cautious is the greatest risk of all.” -Jawaharlal Nehru

“The only true test of whether a stock is “cheap” or “high” is not its current price in relation to some former price, no matter how accustomed we may have become to that former price, but whether the company’s fundamentals are significantly more or less favorable than the current financial-community appraisal of that stock.” -Philip Fisher

“I learned to avoid trying to catch up or double up to recoup losses. I also learned that a certain amount of loss will affect your judgment, so you have to put some time between that loss and the next trade.” -Richard Dennis

“The four most dangerous words in investing are: ‘this time it’s different.” -Sir John Templeton

“Money doesn’t make you happy. I now have $50 million but I was just as happy when I had $48 million.” -Arnold Schwarzenegger

Tomorrow

Tomorrow’s significant economic data report schedule will include the following:

• The Employment Situation Report for April
• The Wholesale Inventories for March