Market Outlook – May 15, 2018

End of Dow Jones’ 8-Day Win Streak Looms


The three main U.S. stock market benchmarks posted slim gains on Monday. The Dow Jones Industrial Average advanced 68.24 points (+0.3%) extending its winning streak to eight days which is the longest positive streak since a nine-session climb in September. Meanwhile, the S&P 500 Index and the Nasdaq Composite Index each rose 0.1%.

However, the Dow Jones’ longest winning streak is in danger of ending as U.S stock futures are pointing lower early on Tuesday. The dip in the U.S. stock index futures was goaded by the Commerce Dept.’s report that retail sales increased moderately in April with rising gasoline prices weighing in on discretionary spending.

Mainland Wants Big Chinese Tech Companies Back Home


China is devising a plan to lure its biggest companies back to their mainland. Some of the country’s leading tech companies like Alibaba (BABA) and Baidu (BIDU) have elected to go public on the U.S. stock market. Tencent opted to list in the Hong Kong exchange.

The world’s second-largest economy wants to change all that. Beijing intends to loosen some of its restrictions. China’s financial markets are not as sophisticated as the markets in America and Europe. However, it is less attractive because of stringent requirements.

Welltower Teams Up with ProMedica


Thomas DeRosa, the owner of Welltower Inc. (WELL), told Reuters that his real investment trust is set to purchase ManorCare’s real estate for $2.7 billion as disclosed last April 24 and while awaiting approval from a U.S. bankruptcy.

DeRosa is confident that he can build a national, low-cost healthcare network for America’s aging population. Unlike others before him who failed, his business model will succeed. His plan is to strip out the “for-profit” business model, and leverage the real estate in nursing homes for outpatient care.

Meanwhile, non-profit operator ProMedica is buying ManorCare’s operations for $1.3 billion then team-up with Welltower. The nursing home’s operation when combined with ProMedica’s surgery centers, clinics and health plan will form a network with $7 billion of annual revenues and 70,000 employees.

Home Depot Sales Drop Below Expectations


For the first time in seven quarters, Home Depot Inc. (HD) missed Wall Street expectations. On Tuesday, the company reported a 4.2% increase in sales in the 3 months ending April. According to Thomson Reuters I/B/E/S, analysts expected a 5.4% increase.

Home Depot said that due to an unusually long winter, sales of spring products such as like lawn-mowers and patio furniture weakened. The price of HD dropped 3% in premarket trade which is rare for the top U.S. home improvement chain. Home Depot has consistently bucked the trend of retailers losing out to Inc. (AMZN) and other online shopping sites.

Intel Eyes Expansion in Israel


Intel Corp. (INTC) confirmed on Tuesday it had submitted plans to expand its production operations in Israel. Intel is one of the biggest employers and exporters in Israel. Many of its new technologies are developed in the country.

The U.S. chipmaker will be investing $5 billion. The money which will be used to upgrade its Kiryat Gat manufacturing plant in southern Israel. Israel’s Finance Ministry said Intel’s investment in the factory will come between 2018-2020.

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