Stock Market Rally Powers Higher Despite Iran Tensions; Tesla, Boeing, Costco, Beyond Meat In Focus: Weekly Review


The stock market rally shrugged off an Iran missile attack, with the Dow Jones, S&P 500 and Nasdaq composite all hitting new highs. Tesla (TSLA) delivered its first China-made Model 3 cars to customers, while Beyond Meat (BYND) is getting a wider McDonald's (MCD) test. Boeing (BA) now favors 737 Max simulator training for pilots, a move to win over regulators and the public, but that will add time and money. A Boeing 737-800 crashed after takeoff from Tehran, but the U.S. said the evidence pointed to an Iranian missile. Costco (COST) had strong December sales, but Kohl's (KSS) and many other mall-based chains reported weak holiday results.

Stock Market Hits New High

An Iranian missile attack on Iraqi bases housing U.S. troops spooked Dow futures late Tuesday, but the major indexes rallied the next day as President Trump signaled there would be no further military response. The Dow Jones, S&P 500 and Nasdaq all hit all-time levels. Paycom (PAYC), Dexcom (DXCM) and Nvidia (NVDA) were among the latest crop of breakouts.

Jobs Report Underwhelms

A weaker-than-expected December jobs report raised questions about just how much momentum the economy has. The U.S. added 145,000 jobs vs. the 158,000 forecast. Average hourly wage growth slipped to 2.9%, the weakest since mid-2018. Meanwhile, the average workweek edged down to 34.3 hours. However, the household survey continues to signal healthy hiring. Also, manufacturing weakness may abate with the China trade deal, though the Boeing 737 Max production shutdown this month is another short-term headwind. If the weak data is accurate, the Fed will likely keep rates low for longer, a positive backdrop for the stock market.


Boeing (BA) is now recommending simulator training for 737 Max pilots as regulators get more aggressive. That would mean more time before the Boeing 737 Max flights resume. As the 737 Max grounding drags on, Boeing is considering raising more capital via debt to help with the associated expenses. It's also mulling cuts to R&D and capital spending, and halting acquisitions to save cash. The aerospace giant reached confidential compensation deals with American Airlines (AAL) and Aeromexico. Boeing stock briefly rose amid rumors that investing legend Warren Buffett is buying shares as Berkshire Hathaway (BRKB) looks to put some of its massive cash pile to use.

A Boeing 737-800 crashed shortly after takeoff from Tehran Tuesday night, killing all 176 on board. U.S. and Iraqi officials said they believe that the Ukrainian Airlines jet was shot down by an Iranian anti-aircraft missile. Iran denies that.

Boeing shares were little changed as of Friday afternoon.

Tesla Dances Higher

Elon Musk celebrated the first Tesla (TSLA) Model 3 deliveries at its new Shanghai factory as Musk said the plant could start building the Model Y crossover as early as 2021. Musk personally delivered the keys to its first 10 private customers of the China-made Model 3 sedans. The first 15 Model 3 cars were delivered to Tesla employees last week. Tesla says the Shanghai plant has reached a production rate of 1,000 units per week, with plans to raise that to 3,000. Tesla shares rallied again for the week.

Smart Devices, AI Dominate CES

The four-day CES 2020 in Las Vegas wrapped up Friday. Smart devices and artificial intelligence were among the most buzzed about technologies at the consumer electronics show. Other tech grabbing the attention of attendees were giant MicroLED and OLED televisions and 8K TV. Health and fitness gadgets, autonomous vehicles, streaming video services and speedier chips also made headlines.

Beyond Meat Rebounds

McDonald's (MCD) will expand its test of a Beyond Meat (BYND) plant-based burger patty in Canada to 52 restaurants. Beyond Meat rival Impossible Foods told Reuters its production capacity was too limited to pursue a partnership with the fast-food giant. Impossible Foods also introduced Impossible Pork and Impossible Sausage. Beyond Meat stock shot up, closing above their 50-day line for the first time since late August.

Costco Strong, But Malls Have Gloomy Holidays

It was not a very merry Christmas for department stores and mall-based chains, with JCPenney (JCP), Kohl's (KSS) and Victoria's Secret parent L Brands (LB) all reporting lower same-sales in November and December. JCPenney and Kohl's shares fell while L Brands ultimately advanced. Macy's (M) rose on a smaller-than-expected comps decline comparable sales results, though it plans to close 29 more stores. On the upside, discount warehouse giant Costco Wholesale (COST) rallied on strong December sales, with e-commerce a particular highlight.

Bed Bath & Beyond (BBBY) plunged after missing fiscal Q3 earnings and sales views for the home furnishings retailer.

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Homebuilder Results Mixed

Lennar (LEN) rallied above its 50-day line toward a buy point after the housing giant beat quarterly views and gave bullish guidance on 2020 deliveries and gross margins. Entry-level specialist KB Home (KBH) beat on earnings, but management blamed a revenue miss Northern California fires delaying key installation work. KB Home, which flirted with a breakout before results, fell Friday. Finally, LGI Homes (LGIH) reported a record number of home closings in December with 1,052, a 19% increase over last year.

News In Brief

Apellis Pharmaceuticals (APLS) rocketed 28% on Tuesday after its experimental drug, dubbed pegcetacoplan, topped Alexion Pharmaceuticals (ALXN) blockbuster drug, Soliris, in a head-to-head test. Those who received Apellis' drug showed a stronger increase in hemoglobin vs. those who took Soliris.

Accenture (ACN) will buy Symantec's enterprise cybersecurity services business from Broadcom (AVGO) for an undisclosed sum. Chipmaker Broadcom will retain other parts of Symantec's enterprise business, which it acquired in 2019 for $10.7 billion in cash. Accenture's purchase is expected to close in March.

Coupa Software (COUP) acquired travel and expense specialist Yapta. Terms were given. Coupa's core market is selling business spending management software. Yapta focuses on cutting spending in travel and expense by monitoring airfare and hotel prices in real time. Yapta works with over 100 companies in the Fortune 500.

Yum Brands (YUM) agreed to buy Habit Restaurants (HABT) for $375 million. That adds a small fast-casual burger chain with room for growth to Yum's roster of Taco Bell, KFC and the struggling Pizza Hut.

Walgreens Boots Alliance (WBA) plunged through its 50-day line after the Dow Jones drugstore giant missed fiscal Q1 earnings, sales and same-store sales estimates.

Constellation Brands (STZ), parent of Corona, reported fiscal third-quarter earnings that beat views and raised full-year guidance as losses from its investment in Canadian pot producer Canopy Growth (CGC) eased.

Intuitive Surgical (ISRG) reported Q4 revenue above analyst views amid procedures growth for the robotic-surgical systems maker. Shares rose x%, rebounding from the 10-week line.

Synnex (SNX) earnings crushed views for the contract electronic manufacturer, which also guided higher, raised its dividend and announced plans to split into two publicly traded companies. Shares skyrocketed Friday to a record high.

General Motors (GM) warned China sales will be weak in 2020, as the world's largest auto market continues to slow. GM China's sales fell 15.1% last year, after a 10% decline in 2018. Shares fell.

Nio (NIO) bucked a soft China EV market to post a 25% jump in electric SUV sales for December. The so-called Tesla of China said sales rose five months in a row, after cratering in the first half of 2019. Nio stock fell sharply for the weak after soaring 58% in the prior week on better-than-expected quarterly results.


I hope this has been helpful. 

Todd Mitchell Trading Concepts