Steel stocks’ performances
US steel stocks have come under pressure in April. Credit Suisse and Bank of America Merrill Lynch issued bearish notes on the steel industry’s outlook earlier this month.
Both these brokerages see rising US steel production capacity as detrimental to the domestic steel price environment and have downgraded U.S. Steel Corporation (X).
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US steel prices have shown signs of bottoming out after falling sharply in the fourth quarter of 2018. On April 22, Steel Dynamics (STLD) provided positive commentary on the steel industry’s outlook during its first-quarter earnings release. In contrast, Nucor (NUE) has provided a somewhat downbeat commentary and expects its second-quarter earnings results to be similar to its first-quarter results.
During its earnings release, Nucor said, “The performance of the steel mills segment in the second quarter of 2019 is anticipated to be consistent compared to the first quarter of 2019 as weakening margins for sheet and plate mill products are expected to be offset by improving margins for structural and bar mill products.”
Meanwhile, after the sell-off in steel stocks (XME), some brokerages have taken a more hopeful view of the sector. Bloomberg reported recently that Longbow analyst Chris Olin had said in a note to clients that he saw “a potential for a guidance cut from the likes of U.S. Steel Corp. and AK Steel Holding Corp.” However, he added that these risks seemed to be “fully discounted.”
Bloomberg also reported, “Cowen analyst Tyler Kenyon agrees that the risk-reward in steel stocks is more positive heading into first quarter earnings after the recent sell-off. But, given the potential downside for steel prices, the upside for the stocks is likely to be limited near-term.”
Verizon Communications (VZ) has been consistently increasing dividends over the past few quarters.
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.
Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.
Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.
As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.