Wall St set to open at 2019 high; Lyft performs U-turn

Summary:

• US500 hits 2019 high; US100 and US30 not far behind

• Durable goods orders fall less than forecast

• Lyft shares now trade significantly below IPO price of $72

Bulls are firmly back in control of the tape as far as US stock markets are concerned, with further gains seen this morning with both the US500 and US100 hitting their highest levels of the year. The US30 has been a bit of a laggard in the past month or so (ever since Boeing’s shares plunged) but is still holding up pretty well and not far from its 2019 peak. The US100 is heavily weighted towards tech stocks and it is perhaps worth noting that a bit of a divergence has opened up between this market and the USFANG in recent trade. The divergence with Apple is even more notable and for this market to make new all-time highs you’d think that both USFANG and Apple need to contribute to more of the heavy lifting.

Both USFANG, and to a greater extent Apple are underperforming the NASDAQ of late and weighing on the broader index as it attempts to make new YTD highs. Source: xStation

On the data front the main release this afternoon has shown a less severe drop than expected in consumer spending with durable goods orders for February coming in at -1.6% vs -1.8%. However this beat was largely due to a downward revision to the prior month which now stands at +0.1% from +0.3% initially. The core reading was as expected in coming in at +0.1%.

Durable goods orders dropped less than forecast but they are still seemingly pulling back in the past couple of years. Source: XTB Macrobond

Lyft shares made their debut on the NASDAQ last Friday amidst much fanfare in what was the exchanges largest IPO since Facebook. The ride-hailing company saw a flurry of buying in the stock which was listed at $72 but traded as high as $88 last week (a gain of more than 20%) before falling 11% yesterday to end back below the IPO price at 69.00. This dramatic U-turn could also be described as a mini car crash and the stock is now in danger of going into reverse and called to open lower by around 4.5% this afternoon. The speed with which investors rushed to buy the stock was somewhat alarming, considering that even though revenues last year doubled to $2.16B, losses jumped more than 30% to $911M. The performance of the stock in the coming weeks will no doubt catch the attention of Uber, with the rival firm expecting to carry out its own IPO later this year.   

Shares in Lyft are called to open lower this afternoon and after surging as high as 88 on Friday, the market is now coming under some heavy pressure. Source: xStation