“Fed Mega Pressure” Vista Partners Daily Market Recap 6/25/19

By John Heerdink LinkedIn

The markets felt negative pressure today from the further selloff of the mega caps as it digested a tempered and or a clipped alternative approach to monetary policy which was described by Fed Chair Jerome Powell. He seemed to be trying to revise the markets’ previous understanding regarding an interest rate cut at their next meeting in July.  He pushed forward his understanding by emphasizing the central bank’s “independence”, by warning about how the Fed’s policy will not be submitting to “short-term political interests, ” & he pushed or reminded us the importance of policies that will “sustain the expansion.” Reportedly this “adjustment in position” comes in reaction to rhetoric and/or comments that President Trump has been expressing post the Fed’s decision to not lower rates at their recent meeting.  However, you choose to slice it, the market has come away with a belief now that lowering interest rates may not in be in the cards for the Fed’s next meeting in July or maybe only a .25 basis points vs .50 basis points reduction that many assumed.

In turn, the markets were down overall but mostly seen or led by the mega stocks. The S&P 500 dropped 27.97 points and closed at 2,917.38 down .95% on the day & seeing 10 of its eleven sectors drop. The Dow lost 179.32 points closing down .67% at 26, 548.22. The tech-heavy Nasdaq dropped a solid 1.51% closing at 7,884.72 down 120.98 points. The Russell 2000, the small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index,  moved down only .59% giving back 9.05 points

Volatility increased today & closed higher today. The CBOE Volatility Index (VIX) closed higher at $16.28 jumping 6.68% or $1.02/share. It traded between $15.10 – $16.68. The 2x leverage ETF TVIX also closed higher at $20.30 up 4.53% and traded between $19.43 and $20.49 today.

The US Dollar Index was down again today (4th day in a row) .2%  ending the day at 96.00.

The 2-yr treasury yield ended up at 1.74% (-.04) & the 10-year Treasury note closed up at 2.02% (-.05).

Oil prices closed basically flat at $57.81/bbl after its recent moves higher.  Dow 30 energy participants Chevron (CVX) moved lower by 1.02% closing at $123.64 & Exxon (XOM) closed at $76.27 down .88%.

Big tech stocks were overall down today.  Amazon (AMZN) lost 1.86% closing at 1,878.27,  Alphabet (GOOG) lost a solid 2.61% closing at 1,086.35, Apple (AAPL) was down 1.52% closing at $195.57, Facebook (FB) gave back nearly 2 points off 1.95% closing at $188.84. Shares of Microsoft (MSFT) dropped an eye-popping 3.16% closing at $133.43 & Intel (INTC) fell 1.64% closing at $46.85/share.

On the recent IPO front, Zoom Video Communications (ZM) moved sizably lower again by 4.90% closing at $85.03 & Uber Technologies (UBER), the ride-sharing company closed flat at $43.09/share but still below its recent IPO price of $45. Plant-based burger maker Beyond Meat (BYND) got back to its winning ways and closed at $150.60 soaring 6.82%. Their meat is made of four main ingredients: water, pea protein isolate, canola oil & refined coconut oil and is meant to taste like “meat.  Slack Technologies (WORK) which jumped into the public markets with their IPO last week flying up 48.5% from their offering price of $26/share closed today at $35.20 off 1.57%. Slack is a provider of a cloud-based workplace messaging app and went public via a direct listing avoiding paying fees to the relevant banks.

Entertainment giant Disney (DIS) closed at $139.94 gaining .52%. 

Institutional alternative asset manager Och-Ziff Capital Management Group (OZM) closed at $21.39 down 4.38%. The 52-wk range is $8.60 – $23. OZM sports a healthy 5.65% cash dividend.

Home Depot (HD) lost .37% ending the day at $204.74.

Dow 30 component & the world’s leading manufacturer of construction & mining equipment Caterpillar (CAT) closed at $133.71 down .49%.

McDonald’s (MCD) closed higher at $205.71 up .88%.

The health care sector took another hit overall today after yesterday saw President Trump sign another executive order that is seeking to make health care costs more transparent to patients. The S&P 500 healthcare sector closed at 1075.31 off .41% but there were some bright spots.

The was a mega M&A event where AbbVie (ABBV) surprised the markets when they announced they will acquire rival drugmaker Allergan (AGN) which closed up +25.36% at $162.43 for approximately $63 billion, or $188.24/share, in cash & stock. AbbVie shares lost 16.25% closing at $65.70/share.

Community Health Systems, Inc. (CYH) one of the largest publicly traded hospital companies in the US hit an intraday high of $2.70/share & a low of $2.54 today and closed the day at $2.60 up 1.17% on 2.20, million shares of trading. More insider buying occurred recently as Michael Dinkins bought shares at $3.168/share on 5/28/19 according to the latest Form 4 filed at SEC.gov. Michael Dinkins has served on our Board of Directors since December 2017. Mr. Dinkins has served as president and chief executive officer of Dinkins Financial, a consulting firm that helps small businesses gain access to capital, since October 2017. See our story more details: INSIDER BUYING ALERT: Community Health Systems, Inc. (CYH) Director Michael Dinkins.

The Ishares Nasdaq Biotechnology ETF (IBB) moved down slightly by .21% closing at $106.89. This sector has been on more than healthy run over the last 30 days. The 52-wk range is $89.01 – 122.97.

Atossa Genetics (ATOS),  a Seattle-based biotech firm developing novel therapeutics and delivery methods to treat breast cancer and other breast conditions, soared into the close today closing at $2.31/share up 13.79%. The average daily trading volume is 752,995 shares per day.  The Maxim’s Group’s biotech analyst, Jason McCarthy, Ph.D., reiterated his ATOS buy rating recently with a $9/share 12-Month Target Price. See his update report which is called “Reports the Quarter, Endoxifen Programs Progressing, Data Updates Expected Over 2019.”

Bedford, Massachusetts-based Stoke Therapeutics is a biotechnology company pioneering a new way to treat the underlying cause of severe genetic diseases by precisely upregulating protein expression. On Wednesday last week, Stoke Therapeutics announced the pricing of its initial public offering (IPO) of 7,891,110 shares of its common stock at a price to the public of $18.00 per share. The shares are now trading on The Nasdaq Global Select Market as of June 19, 20,19 under the symbol “STOK.” Stoke’s stock traded as high as $30 last week prior to closing trading at $25.99/share up 1.80% today. See complete story.  

INVO Bioscience, Inc. (IVOB) ended the day at $.3822 as daily trading volume continues to lift as the company continues to report progress post announcing their exclusive U.S. partnership with Ferring Pharmaceuticals, a leader in the reproductive health industry. Ferring will provide the necessary sales and marketing resources to more fully develop the market in the United States. There are countless couples not able to receive reproductive treatments today, and Ferring can be instrumental in addressing the unmet needs of this cohort. Ferring has the industry experience, relationships and the marketing capabilities to successfully embed the INVOcell in clinics throughout the country. We look forward to their market expansion for many years.”  IVOB is a medical device company, headquartered in Sarasota, FL focused on creating simplified, lower cost treatment options for patients diagnosed with infertility. The company’s lead product, the INVOcell, is a novel medical device used in infertility treatment that is FDA cleared and that enables egg fertilization and early embryo development in the woman’s vaginal cavity. IVOB also announced last week news of their recent appointment of Pressly Ahammed as the new Director of International Business Development and he will be responsible for the Company’s international distribution channels in Europe, Middle East, Africa & parts of Asia. Ahammed joined IVOB from Cooper Surgical where he held a similar position. See complete story.

Pfizer (PFE) closed flat at $43.76 after last week’s announcement about their acquisition of Array BioPharma (ARRY) for ~$11.4 billion or $48/share in cash.  See complete story.

The pharmaceutical giant and Dow component Merck & Co, Inc. (MRK) that recently announced the acquisition of Tilos Therapeutics for a consideration of up to $773 million closed at $85.24 down slightly by .32%.

San Diego-based biotech Fate Therapeutics (NASDAQ: FATE), dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders,  closed at $19.72/share down 3.57% on 701,963 shares of trading after establishing a new all-time intraday high of $19.99. The 52-week range is $8.64 – $20.65. Guggenheim Securities initiated coverage on FATE last week with a “Buy Rating” and a $25/share price target. Scott Wolcho, President and CEO of Fate Therapeutics presented at the Jefferies 2019 HealthcareConferencee in New York yesterday. Roth Capital initiated coverage on FATE with a Neutral rating and a $20 price target last Friday, June 7th. Mizuho initiated coverage with a price target of $27/share this week.

Boston-based Pieris Pharmaceuticals (PIRS) closed at $4.60 down 2.75% on 434,048 shares of trading. The stock traded between $4.655 & $4.80 today and the 52-wk range is $2.39 – $6.55.

Xeris Pharmacueticals, Inc. (XERS) closed flat at $10.82. Xeris is a specialty pharmaceutical company leveraging its novel formulation technology platforms to develop and commercialize ready-to-use injectable and infusible drug formulations.

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.

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