Summary:
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US benchmarks a little higher ahead of the open
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Weds marked 2nd consecutive gain after Monday’s rout
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Lyft called to start around 6% after losing less than expected
There’s been a relatively subdued trade in equities so far today and for those looking for a further recovery from Monday’s large declines that is no bad thing. The markets seem to have recovered their poise after 3 heavy down days in a row and the S&P500 is now back around the 2900 handle. Short term the outlook is more promising but longer term the trend could have turned lower and this could simply be a corrective bounce before a retest of the low around 2775 or even a new leg lower.
Broadly speaking there’s been two significant pullbacks since last October with the first turning into a deeper sell-off while the latter merely proved to be a dip in the prevailing uptrend. On both occasions the size of the initial decline (7%) was comparable to the recent drop (8%). The question is which path will the market now follow? A move back up into the region between the 8 and 21 EMAs (2911-2946) could attract selling interest amongst those hoping for another move lower. Source: xStation
Once more there’s little to go off from the economic calendar today with the Initial jobless claims which came in at 209k (vs 215k exp and 217k prior) the only release of note. One stock to have on the radar however is Lyft, after the firm reported earnings for the second quarter. The ride-hailing company continues to lose money, but at a far slower rate than expected, with an adjusted loss per share for the period of $0.68 vs a consensus of $1.74. Revenues also topped forecasts with $867M comfortably beating the $809M expected. In a call with CNBC’s Deirdre Bosa, Lyft CFO Brian Roberts said he believed peak losses for the company were last year, based on how well this quarter went. He also said the company may break even sooner than it predicted, and will update the street later this year in terms of long-term guidance and break-even date. The stock jumped by as much as 13% in after hours trade however, some of the enthusiasm was curbed when it was announced that share lock-ups will expire in less than 2 weeks on August 19th rather than the previously scheduled date in September. The stock is still expected to start well and begin higher somewhere in the region of 6%.
Shares in Lyft soared on the debut after an IPO price of $72, with the stock jumping to trade as high as 88.25. Since then however the market has pulled back and remains below the IPO price even if it does begin higher by around 6%. Source: xStation
