The market began the new year with a steep drop at the open, which was attributed to the government shutdown entering its twelfth day, poor manufacturing data out of China, and falling oil prices. The averages saw their lows shortly after the open and then drifted higher until crossing into positive ground. Oil prices also improved following a report showing OPEC production dropped as well as a WSJ article saying many fracking wells are producing less than had been originally predicted. Stocks were led by the Nasdaq, which was higher for the fifth consecutive session, marking the first time that has occurred since August. The Dow and S&P finished with slight gains, giving the major averages a green start to 2019.
ECONOMIC EVENTS: In the U.S., Markit's manufacturing PMI fell 1.5 points to 53.8 in the final December reading from the 55.3 figure reported for November, though that was only down a tick from the 53.9 preliminary December figure. In China, the Caixin manufacturing PMI for December came in at 49.7, representing contraction and missing the consensus estimate of 50.2. In Europe, the final Eurozone manufacturing PMI for December was in-line with the flash reading at 51.4. In White House News, CNBC reported that U.S. President Donald Trump said that there was a stock market "glitch" in December and that the market will go up once trade deals are fixed.
COMPANY NEWS: Shares of Tesla (TSLA) fell about 7% after the company announced that it had delivered 90,700 vehicles during the fourth quarter, below Wall Street forecasts despite the electric carmaker’s efforts to ramp up production. The company also said it is reducing the price of Model S, Model X and Model 3 vehicles in the U.S. by $2,000 as a step to "partially absorb the reduction of the federal EV tax credits," which stoked demand concerns among bears on the stock.
Activision Blizzard (ATVI) announced that Dennis Durkin has been named Chief Financial Officer, effective immediately, reprising the role he held from March 2012 to May 2017. Durkin replaces Spencer Neumann who was terminated for cause for "violating his legal obligations to the company." The game maker noted that the cause for his firing was "unrelated to the company's financial reporting or disclosure controls and procedures." Later, Netflix (NFLX) announced that it named Neumann as its next CFO. Bloomberg reported that Neumann had a provision in his contract with Activision Blizzard barring him from negotiating with other potential employers.
Meanwhile, the Wall Street Journal reported that thousands of shale wells drilled in the last five years are not producing as much oil and gas as their owners have forecast to investors. The Journal said that two thirds of estimates made by many fracking companies between 2014 and 2017 in America's four biggest drilling regions seem to have been overly optimistic. Companies in the oil services space include Baker Hughes (BHGE), Diamond Offshore (DO), Halliburton (HAL), Nabors Industries (NBR), Noble Corp. (NE), Rowan Companies (RDC), Schlumberger (SLB), Transocean (RIG) and Weatherford (WFT).
MAJOR MOVERS: Among the noteworthy gainers was MedEquities Realty Trust (MRT), which surged 44% after Omega Healthcare Investors (OHI) announced an agreement under which Omega will acquire all of the outstanding shares of MedEquities in a $600M deal. Also higher was ProQR Therapeutics (PRQR), which gained 11% after receiving fast track designation for QR-421a from the FDA.
Among the notable losers was MyoKardia (MYOK), which slid 14% after it regained the rights to all programs under its license and collaboration agreement with Sanofi (SNY). Also lower was Hologix (HOLX), which fell 6.5% after Morgan Stanley analyst David Lewis downgraded the stock to Underweight from Equal Weight.
INDEXES: The Dow rose 18.78, or 0.08%, to 23,346.24 , the Nasdaq gained 30.66 or 0.46%, to 6,665.94 , and the S&P 500 advanced 3.18, or 0.13%, to 2,510.03.
