Merck shares rise after Barclays upgrades shares, downgrades competitor Pfizer

A research lab at Merck

Barclays upgraded Merck to overweight from equal weight on better opportunities versus its competition, while downgrading Pfizer to equal weight from overweight given the less likely chance of a “transformative” acquisition.

Analyst Geoff Meacham and his team also raised their price target on Merck by $2 to $64, a more than 17 percent increase from Wednesday’s close.

“In our view, there is perhaps 15 to 20 percent of first-line lung market share ‘up for grabs’ in the U.S.,” Barclays analyst Geoff Meacham and his team said in a Thursday report. Meacham also noted a better outlook versus key competitors, namely Bristol-Myers Squibb.

Merck shares rose 1 percent in premarket trading Thursday above $55 a share. The stock has fallen 3 percent so far this year.

Meacham and his team lowered their price target on Pfizer by $3 to $38, still more than 5 percent above Wednesday’s close.

“In our view, current levels largely capture the upside for key products such as Prevnar, Ibrance, Xeljanz and Xtandi,” the report said. “Our previous Overweight rating was based on the potential for a transformative acquisition, which could accelerate the growth profile and provide a clearer strategic direction, which we now view as less likely in the near term” based on recent interaction with management, including the CFO.

Pfizer shares were mildly lower in premarket trading Thursday. The stock is down 0.25 percent for the year so far.

Gundlach betting against stocks becaGundlach betting against stocks because of bond yields and bitcoinuse of bond yields and bitcoin

The era of low volatility is over and it’s stock market investors who will have to pay, “bond king” Jeffrey Gundlach said Wednesday.

Rising bond yields and the plunge in cryptocurrencies like bitcoin are providing signs that have led Gundlach to expect stocks to end the year in negative territory.

The DoubleLine Capital founder conceded that his bet against the market suffered in December and January, “but it was so obvious to me that bitcoin is the dot-com of our world today, and this mania is so similar to where we were in 1999.”

In addition to betting against stocks generally, Gundlach has been long equities in his flagship fund as he expects the return of volatility to change the investing landscape.

Jeffrey Gundlach

“We’re in a volatility regime that is completely, obviously different from what we experienced in 2017. It’s payback time,” Gundlach told CNBC’s “Halftime Report” in an interview. “2017 was the easiest investment year of all time. The risk-adjusted returns for the stock market were probably the best in history.”

Rising government bond yields have put pressure on stock prices, he said. Specifically, a 2.63 percent yield on the benchmark 10-year Treasury note marks a line in the sand for stocks, which are currently in correction territory.

“The stock market can’t take higher bond yields,” he said.

Gundlach spoke on a day when stocks tumbled at the open but regained most of their losses through the course of the day. The S&P 500 and Nasdaq briefly turned positive in afternoon trading, while the Dow industrials remained negative.

Volatility has indeed surged in 2018 after lingering around historic lows in the previous year.

One sign Gundlach pointed to is bitcoin — the cryptocurrency had peaked in 2017 along with stock prices, while its slumps this year have preceded downturns in stocks.

Top Stocks To Short On The Market’s Volatility

ST. LOUIS – NOVEMBER 15: Stifel Financial’s ‘Forces’ statue of a battling bull and bear sits outside the office building in St. Louis, Missouri on November 15, 2015. (Photo By Raymond Boyd/Getty Images)

Based on the market’s recent volatility, we thought it would be timely to come forward with some of CressCap’s top sell recommendations. The CressCap five factor model analysis ranks the following three stocks as some of the top shorts in U.S. listed equities. The foundation of our recommendations is to identify companies that perform best and worst on the collective basis of value, growth, EPS revisions, profitability, and LT momentum. Every day, the CressCap systematic trading model gathers data for 6,500 companies globally, then analyzes and assigns academic grades (A – F) for each financial metric. These grades are scored relative to each region/sector. The stocks in the table below have been selected based on their low rank in the sector and poor financial metrics. In addition, our low grades for these companies’ EPS revisions, growth rates and long-term price momentum characteristics make these three stocks top shorts in the CressCap universe. CressCap Investment Research

Chicago Bridge Is Falling Down

Chicago Bridge and Iron Co.  (CBI-US)

Overall Grade: F

CBI provides design, engineering, and construction services for energy infrastructure projects including bridges. CressCap currently ranks the company as one of the top shorts. CBI uses technology and professional expertise to deliver to customers state-of-the-art designs and construction services.

CressCap notably grades CBI’s estimated EPS Growth a D- as it posted a decline of 176.98% vs. a sector growth avg. of 43.24%. Additionally the company received a CressCap grade of F for its 2yr historic sales growth rate. The company posted a -48.39% growth rate vs. the sector avg. 7.8%. Another factor to the company’s lagging stock performance is its operating margin. CressCap grades CBI’s operating margin F as it reported the margin at -3.09% vs. the sector’s avg. operating margin of 15.13%. To add to the fundamental turmoil the company’s estimated cash flow growth is graded a D- at -61.13%. CressCap’s overall grade for CBI, F, reveals the company as a potential short in a market that’s volatility is awfully high. Furthermore the company’s ROI and ROE are both graded F as ROE is -182.19% (vs. sector avg. 11.71&) and ROI is -97.57% (vs. sector avg. 6.34%). All these metrics are glaring red flags that should sway investors away from owning the stock.

Revenues have fallen sharply for each of the last 3 years. FY2015 was down 18.1%, FY2016 was -19.1% and FY2017 was -22.4%. Operating profits fell commensurately from $995m to ($294.1m) over the same period. OCF was mixed with FY2015 at ($56.2m), FY2016 at $654.5m and FY2017 at ($909.4m), reflecting the company’s uneven performance history. CBI’s debt is $2.6b and cash was $355m as of FY2017. The trailing dividend yield was 0.97% (the dividend was suspended as of 2Q17 results released on 8/10).

The stock may find support at the prior low of $9.66 but RSI is confirming lower lows into support. We would watch for buy-side volume into support as a tell that the stock might try to bounce off $10, give or take.

Top Stocks Under $10

A woman is seen using the Empower app on 10 May, 2017. Founder Warren Hogarth developed the app to help millenials manage their finances and eventually to replace all banking apps offering cross paltform functionality. The app has secured financing by the prominent fintech investment firm Sequoia Captial based in Silicon Valley. (Photo by Jaap Arriens/NurPhoto via Getty Images)

Investing has to start somewhere, and starting small can be a great way to get acquainted with the market. The trick is to identify stocks with low prices that also possess very strong fundamentals. We are re-introducing an old concept of buying stocks below a $10 stock price. Typically, it is hard to find companies possessing the collective financial traits we seek, such as the attractive characteristics of value, growth, strong EPS revisions, profitability and strong momentum. Fortunately, the power of filtering big data along with our systematic trading model has helped CressCap to identify six stocks under $10 that possess the above core fundamental metrics which we desire. CressCap Investment Research

Expand to see how our directional recommendations are computed: CressCap uses a multi-factor model to select the best-performing stocks. Our data is updated daily and the academic grades (A – F) for each financial metric are scored and ranked on a regional/sector relative basis. The foundation of our recommendations is to identify companies that possess the collective investment style of Value, Growth, EPS Revisions, Profitability and LT Momentum. Academic grades of C or better indicate that each metric scores well compared to the peer sector.

Arrowhead Pharmaceuticals

Arrowhead Pharmaceutical is a company that specializes in treatments for gene-based diseases and is at the forefront of developing and testing new experimental treatments. Their medicines treat intractable diseases by silencing the genes that cause them.The company is ranked 56 of the 1,905 in our overall universe and is ranked 7 of the 355 stocks in the sector. The stock is recommended as a buy based on our quant model and is also supported by technical indicators and fundamental analysis. Long and short-term momentum are A+ and A grades, respectively. Growth grades are also very solid, with 2 Yr. historic sales graded an A+ and 2 Yr. forward sales grades an A-. This year also held a market cap change of 334.78% relative to a sector change of 31.41%.

Glu Mobile Inc.

Our next buy recommendation with a price under $10 is Glu Mobile. Glu is a leading creator of mobile games. Founded in 2001, Glu is headquartered in San Francisco and it produces games like MLB for every new season. The company had a very exciting and rewarding 2017. Recently, Glu reported Fourth Quarter and Full Year 2017 Financial Results. According to the company’s press release, fourth quarter revenue was up 73% year over year to $80.2 million; full-year 2017 revenue up 43% to $286.8 million. Fourth quarter bookings grew 44% year over year to $83.2 million; full-year 2017 bookings reached a record $320.4 million, up 50% year over year. The stock has a long-term price momentum that is graded an A- in our system, a grade reflected in the EPS revisions that have been moving up for FY1 and even more for FY2. The company’s debt to equity is 0%, outstanding against a sector ratio of 34.5%.

R1 RCM Inc.

R1 is a leading provider of revenue cycle services and physician advisory services to healthcare providers. The stock is not just a low price but a great value. In the CressCap universe, the stock ranks 179 of 1,905 and it holds a sector rank 36 of 355. The company’s value is exhibited in its price to sales ratio of 1.62 relative to a sector ratio of 6.63, earning a grade of A- according to CressCap criterion and for enterprise value / EBITDA FY1 it holds a B- grade. CF/ROI suggests the stock is somewhat undervalued with a B+ rating. For the 4th quarter, the company reported GAAP net services revenue of $140.3 million, up $17.1 million sequentially. Additionally, the company’s momentum is outstanding in the Healthcare sector, achieving all A grades in the short to long-term. R1 RCM also had a market cap change of 142.65%, graded an A- relative to a sector change of 31.41%. This indicates there is very strong underlying demand for the shares.

Gannett Company

Gannett is a global media holdings company that owns brands including USA Today, as well as, 100 local media publications and digital marketing services companies across the U.S. and Europe. The company has a reach of 43% of internet users across all of its outlets. The stock is a great value based on CressCap’s fundamental analysis, with EV/EBITDA of 3.90 relative to a sector ratio of 11.12 and a CressCap P/E and P/S grade of A. The stock price has been drifting down while 2019 annual EPS revisions from analysts have been moving up to $1.02 from $0.89 90 days ago. The company continues to make strong progress moving from print media to digital. According to the 2017 4th quarter results release, for the full-year 2017, digital revenues grew to $1 billion and now comprise 31.6% of total revenues. Additionally, net cash flow from operating activities was approximately $72.8 million compared to $47.6 million in the quarter of the prior year.

Oasis Petroleum Inc.

Oasis is an acquisition and development company that focuses on oil and natural gas resources. The stock exhibits some exciting metrics that indicate the price could move higher and break-out in coming months. In our opinion, the stock is attractive as there has been an increase in the EPS revisions grade and the value grade is still very attractive. The stock has a CressCap grade of A+ for 1-month analyst revisions and an A for 6-month revisions. Analysts EPS revisions for FY1 and FY2, exhibit a B+ grade compared to the sector. The 2 Yr. Forward EPS growth rate grade is now a C+ compared to the 2 Yr. historic EPS growth rate of F. Notably, in the last 90 days, analysts have revised annual 2017 estimates up to $0.51 from $0.32. The stock also looks attractive on a number of value metrics. The price to book ratio for FY1 is 0.62x versus 1.62x for the sector so it is logical it possesses a CressCap grade of A+ on Price to book. The price/cash ratio grade is an A- and FY1 EV/EBITDA grade is B+. Total revenue for 2017 increased 77% to $1,248,424 from $704,665 in 2016.

SRC Energy

Our final recommendation is another oil and natural gas acquisition and exploitation company, SRC Energy. The overall CressCap grade is B. We like some of the growth aspects of the company’s financial metrics. The 2 Yr. forward EPS growth rate grade is now an A- compared to   2 Yr. historic EPS growth rate grade of D. The 2 Yr. forward sales growth rate grade is an A. Analysts have a lot of conviction on the company’s growth prospects going forward. The stock also has great profitability metrics, with operating margins and gross profit margins both graded an A+ by CressCap and a return on assets graded an A. While most valuation metrics are in line with the sector, it does look inexpensive on a P/E basis at 8.6x versus 16x for the sector. Results were announced at the end of February and the company stated revenues for the three months ending December 31, 2017, increased 262% as compared to the three months ending December 31, 2016.  SRC attributed this to a 244% increase in sales volumes, period over period. For the twelve months ending December 31, 2017, SRC’s revenues increased 238%.

Mexican TVs, Pork Set to Benefit From U.S.-China Trade War

An employee pushes a trolley with a Vizio Inc. high-definition television (HDTV) at a Target Corp. store on Black Friday in Dallas, Texas, on Friday, Nov. 24, 2017. The National Retail Federation projects that about 164 million consumers -- 69 percent of Americans -- will shop at stores or online over the long weekend that starts on Thanksgiving.:  

The surprise winners of a trade spat between the U.S. and China might turn out to be Mexican producers of pork and flat-screen televisions.

Mexico, it turns out, is the largest exporter of flat-screen TVs to the U.S., which is among the thousands of Chinese products targeted by President Donald Trump’s proposed tariffs. At the same time, Mexican farmers may be able to jump in as consumers in China — the world’s largest market for pork — face the prospect of pricier U.S. meat.

Mexico’s potential fortune illustrates the far-reaching — and unintended — consequences stemming from the budding trade war between the world’s two largest economies. Trump has railed against U.S. trade deficits with both nations, but Mexico still has the advantage of favored status under Nafta — at least for now.

U.S. consumers bought $6.5 billion worth of screens from its southern neighbor last year, ahead of China’s $3.9 billion. If the tariffs are enacted, Mexico’s share of the market could grow quickly while China’s shrinks, Bloomberg Intelligence analyst Caitlin Webber said.

“Mexican factories are already benefiting from Nafta and saving a 3.9 percent tariff on their U.S. sales,” Webber said. “They could see a further competitive boost if their Chinese competitors are potentially going to be 25 percent more expensive.”

One company in particular, Vizio Inc., could get a lift. The high-definition TV manufacturer, based in Irvine, California, moved its manufacturing hub to Tijuana, Mexico, from Taiwan in 2015. Vizio sells most of its TVs in retailers like Walmart, Sam’s Club and Costco.

Trump’s China Trade Focus Brings Mexico Stock Investors Respite

On the other side of the spat is pork. China is among the largest foreign buyers of U.S. pork and is a key destination for cuts including feet and ears that aren’t in big demand elsewhere. China has already issued a 25 percent tariff on U.S. pork imports that took effect Monday.

Mexico may benefit from this — if the governments can reach an agreement. China currently receives some cuts of Mexican pork, but not products such as entrails.

‘Great Opportunity’

“There’s a great opportunity in the Chinese market for Mexico,” Alejandro Ramirez, head of Mexico’s association of pork producers, said in a phone interview. “We’re asking our government to help us open up more export plants and to negotiate a permit so we can export entrails too.”

The permit would have to be negotiated between the nations’ governments, Ramirez said. Out of Mexico’s pork exports, only about 1.1 percent goes to China, he said, but there’s huge growth potential, especially if U.S. supplies become more expensive.

To be sure, the U.S. and China have indicated they’re willing to negotiate, so there’s a chance the promised tariffs never materialize. But Mexican producers should still prepare, Ramirez said.

“If we’re given the opportunity, there’s a big space in that market we can cover,” Ramirez said.

What’s wrong with very low unemployment? Hawaii knows

Image result for What's wrong with very low unemployment? Hawaii knows

HONOLULU — Are there downsides to a low unemployment rate? In Hawaii, which has the United States’ lowest jobless rate at a minuscule 2.1 percent, the answer is yes.

Employers are frustrated by their inability to find workers. And unfilled jobs may be slowing the state’s economic growth.

A low unemployment rate is certainly better than a high one. And many employers are responding to the worker shortage by offering higher pay.

Still, Hawaii’s experience serves as a cautionary tale for the nation as a whole: Low unemployment can mask underlying problems. Nationwide, the jobless rate is at a 17-year low of 4.1 percent, and economists forecast it could drop another half-point by next year. That would bring the rate to a half-century low.

U.S. employers are already complaining about their struggles to find qualified employees. The number of open jobs nationwide reached the highest level on record in January.

Like the rest of the country, Hawaii has an aging population, and its unemployment rate has been held down in part by retiring baby boomers.

The state also has unique challenges, such as an economy long dominated by tourism. Many of Hawaii’s available jobs are in the service sector and don’t pay enough to cover the state’s high housing costs. And economists say Hawaii’s ongoing economic sluggishness could make it harder for the state to pay its public pension obligations in the future, and fund highways and other expensive infrastructure.

U.S. Rep. Colleen Hanabusa, a Democrat, cited the deceptively rosy jobless rate when she launched her campaign challenging a sitting governor from her own party in this year’s election.

“We cannot wait as more and more of our young people, discouraged by the future they see for themselves here, leave Hawaii in hopes for better opportunities on the mainland,” Hanabusa said in January. A recent poll conducted for the Honolulu Star-Advertiser gave her a 20-percentage point lead over Gov. David Ige in the August primary.

Hanabusa was pointing to a trend reflected in census data: People are moving away from Hawaii even as employers here clamor for workers.

Last year, the state suffered a net loss of more than 1,000 people. On Oahu, home to Honolulu and major military installations like Pearl Harbor, the population declined an average of 11 people per day. The median price of an Oahu home tops $770,000.

According to the U.S. Census Bureau, 47 percent of Hawaii’s residents spend more than a third of their monthly income on rent. That’s greater than any other state. About one-quarter of renters put half of their income toward housing.

The personnel squeeze is forcing employers to offer incentives to attract workers.

Maui Divers Jewelry, a retailer in the old whaling town of Lahaina, offers employees extra money to cover the cost of driving to its stores from Maui’s bigger cities.

Star of Honolulu Cruises and Events has raised the hourly wage for servers on its boat cruises to $12 from $10.

“They can be picky now, I feel like. The ball is in their court,” Sheridan Andres, the company’s human resources manager, said of job applicants. Star of Honolulu is also advertising for kitchen staff, boat maintenance workers, bus drivers and supervisors.

Hawaii Pacific Health, one of the state’s largest health care providers, is pursuing a pilot program to train medical assistants at five public high schools so they’ll be ready to walk into jobs when they graduate. The company has 7,000 employees, along with 44 openings for medical assistants and more than 400 openings overall.

The demand for labor is driven by a tourism surge that brought a record 9.4 million visitors to the islands last year. Strong hiring and income gains in the Western U.S. mean more Americans can make the trip. And Japan and Canada, where most of the state’s overseas visitors come from, also are experiencing solid growth.

That’s led to an increase in low-paying hotel and restaurant jobs, which accounted for 60 percent of Hawaii’s job growth in 2017, according to data compiled by Moody’s Analytics. Hotels and restaurants employ about one of every five workers in the state, double the proportion in the rest of the U.S.

Adam Kamins, a senior economist at Moody’s Analytics, says the state has had little success in luring better-paying tech jobs from western states such as California or Washington, because of high housing and business costs. Tech firms are instead moving to cheaper states such as Utah, Colorado and Idaho.

An economy with an unemployment rate as low as Hawaii’s should be growing about 3 percent a year, said Eugene Tian, the state’s chief economist. Instead, it’s growing at about 1.5 percent.

“We don’t have enough housing. We don’t have enough trained labor. That’s limiting the growth,” Tian said. “They are connected.”

Paul Brewbaker, an economist with consulting firm TZ Economics, said Hawaii’s growth rate has lagged the nation’s for the past decade. On average, Hawaii’s economy has grown just 1.6 percent per year compared with the national average of 2.1 percent since 2009.

On a per-capita basis, gross domestic product in Hawaii was one-third higher than the national average 40 years ago, Brewbaker said. It’s now the same. The trend could have profound consequences for Hawaii in the long term.

“Where do we go from here? If we’re on this road, how do we pay for the public employee retirement system? If we’re on this road, will we ever be able to build another freeway, not to mention a mass transit system?” Brewbaker said.

How China gets what it wants from American companies

a close up of a logo

China is vital for many top international brands, but doing business there often comes with a high entry fee.

Some major US companies including GM and Qualcomm sell more of their products in China than anywhere else in the world.

“Our economic interests with China are significant and growing,” said Jacob Parker, vice president of the US-China Business Council, a trade group that represents US companies’ interests in China. “China is a $600 billion market for the American economy.”

But the Chinese government is now coming under increased pressure over the demands it makes of foreign firms seeking to gain access to that vast market. The Trump administration is pointing to unfair practices by Beijing as the reason for US plans to slap tariffs on around $50 billion of Chinese goods, a move that has intensified fears of a trade war between the two countries.

International companies have long complained that China has strong-armed them into handing over trade secrets in exchange for market access. In some sectors, Beijing will only let foreign firms operate through joint ventures in which Chinese partners have the majority stake.

‘Training their future competitors’

That’s the case in the auto industry, where many top brands like GM, Volkswagen and Toyota have teamed up with local players rather than face steep tariffs on imported vehicles.

The partnerships have often delivered blockbuster sales, but they have also raised concerns that they lead to Chinese companies getting their hands on their foreign partners’ technologies.

International automakers are “training their future competitors and receiving only a fraction of what their intellectual property would earn” if they were allowed to go it alone in China, said Mary Lovely, a professor at the Peterson Institute for International Economics.

“It’s no surprise that some domestic Chinese brands resemble American or European models” because of this practice, said Scott Kennedy, a China expert at the Center for Strategic & International Studies.

New technology at stake

The race to develop the cutting-edge technologies that power electric vehicles has intensified concerns.

A report published last week by US Trade Representative Robert Lighthizer claimed that Chinese government rules mean foreign firms have to hand over all of the key technologies used in electric vehicles if they want to sell them in China.

Foreign companies often have to “make difficult choices about managing the trade-off of technology sharing and market access,” said Parker, the US-China Business Council executive. He said that about a fifth of American companies operating in China have been asked to transfer technology to Chinese partners in the past three years.

The true figure could be even higher. Surrendering key technologies and intellectual property to Chinese firms is a sensitive topic.

“Firms currently operating in China may be reluctant to speak out against the practice because they fear it will hurt their current business,” Lovely said.

Companies that refuse to play ball are left on the outside, forced to pay potentially hefty tariffs at the border for the goods they ship to China.

That’s the case with electric car maker Tesla, which has been trying for years to strike a deal to build a factory inside China without a local partner.

CEO Elon Musk voiced his frustration earlier this month, tweeting at President Donald Trump that “the current rules make things very difficult. It’s like competing in an Olympic race wearing lead shoes.”

Boeing’s success

There are exceptions to the rule, though. Boeing has enjoyed bumper sales in China without having to surrender key technologies or expertise.

China is Boeing’s second biggest market after the United States, generating revenues of almost $12 billion for the company last year. But the plane maker only does a small amount of manufacturing in China and doesn’t have any major joint ventures there.

The company runs a Chinese factory in partnership with the country’s state-owned jet maker Comac, but it only puts the finishing touches on planes, like installing seats and stapling carpets. There’s “no real technology transfer,” said Richard Aboulafia, a vice president at the Teal Group, an aviation consultancy.

That’s most likely because China needs Boeing’s planes for its rapidly growing air travel industry. Its airlines have very limited alternatives to Boeing and European plane maker Airbus.

Unlike in the auto sector, China has had difficulty cultivating jet manufacturers that can compete with foreign rivals. Comac’s ARJ21, the Chinese government’s first attempt at building its own jetliner, has struggled commercially.

“Getting into the car industry is much easier than getting into the jetliner industry,” Aboulafia said.

Even Beijing’s new proposed tariffs of 25% on American aircraft imports may leave Boeing largely unscathed. The tariffs would only apply to planes below a certain weight, suggesting most Boeing jets on order in China would be unaffected, according to analysts at equity research firm Vertical Research Partners.

Beijing’s defense

Many foreign companies that are already established in China are also unhappy about how things work there.

In its latest annual survey, the American Chamber of Commerce in China found that almost half of its members feel foreign businesses are treated unfairly by the Chinese government compared with local ones.

They complain about regulations being inconsistently applied and continuing restrictions on their ability to invest across wide swathes of the economy.

Some recent Chinese deals have been blocked in the United States over national security concerns. But international business leaders have pointed out that Chinese companies are often able to carry out takeovers in Europe and North America in sectors that are off limits to foreign investors in China.

Chinese government officials have rejected accusations that foreign companies are treated unfairly and dismissed the findings of the US Trade Representative’s report on intellectual property theft as “unfounded.”

Beijing argues that any tech secrets that firms handed over in the country were part of deals that had been mutually agreed upon. And it insists that it is working to strengthen intellectual property protection in the country more broadly.

“We are ready to look at the specific cases if there is any violation of intellectual property rights … We are ready to deal with these issues in accordance with our own laws,” Cui Tiankai, China’s ambassador to the United States, said this week.

Rebound rally continues as Dow opens more than 100 points higher

A trader works on the floor of the New York Stock Exchange (NYSE).

U.S. stocks opened higher on Thursday as tech shares rose following a roller coaster ride in the previous trading day.

Tech helped lead the move higher, with Facebook jumping nearly 4 percent and Netflix, Amazon and Alphabet all rising more than 1 percent.

Facebook rose after CEO Mark Zuckerberg said told reporters he has not seen a noticeable change in user behavior in the wake of the Cambridge Analytica data scandal.

Chip stocks also rose, as the VanEck Vectors Semiconductor ETF (SMH), climbed nearly 1 percent. Shares of Advanced Micro Devices rose 2.7 percent after Stifel upgraded them to a buy from hold.

The moves Thursday come after a wild trading day on Wall Street on Wednesday. The Dow Jones industrial average closed up over 200 points, having rallied more than 700 points from its session low. Other major indexes erased losses to finish on a positive note too.

Investors have to come to terms that “market choppiness is here to stay,” said Wasif Latif, vice president of equity investments at USAA. “The market is transitioning [away] from an environment with low volatility. We were in an environment where any bad news would be shrugged off.”

Markets have been on edge in recent sessions amid concerns of a potential trade war between China and the U.S. On Wednesday, China announced fresh tariffs on 106 U.S. products, including cars, whisky and soybeans — less than 24 hours after the U.S. administration issued a list of Chinese imports that it would target.

The news initially sent stocks lower before bouncing back as the Trump administration tried to play down trade-war worries.

In economic news, weekly jobless claims totaled 242,000, more than the expected 225,000. Still, claims remained near their lowest levels since the 1970s.

‘Epic’ market bubble is ready to burst and stocks could plunge, strategist warns

A trader (c) on the New York Stock Exchange looks at stock rates 19 October 1987 as stocks were devastated during one of the most frantic days in the exchange's history.

Stock markets could see sharp falls before the end of year as valuations have hit disproportionate levels, one strategist told CNBC’s “Squawk Box Europe” Thursday.

In the wake of the 2008 financial crisis, central banks around the world have pumped trillions of dollars into the global economy to boost lending and encourage growth. However, this massive market intervention has led to a sharp increase in stock prices — taking them to “epic bubble levels,” according to Paul Gambles, the managing director at Thailand-based advisory firm MBMG Group.

“We had a policy response to the global financial crisis (and) at that point stocks were cheap and they had an enormous tailwind behind them in terms of fiscal support,” he said. “This is quite a dangerous situation and it is creating a bubble, and that bubble has just got bigger and bigger and bigger … There isn’t any doubt now (that) in valuation terms we’re in epic bubble proportions, probably the biggest bubble of all time.”

Gambles added that markets could be experiencing a moment similar to 2007, just before the historic market crash. “We now think that there are conditions out there that are prime for that bubble to actually be pricked,” he added.

These conditions include unsynchronized global growth, tighter monetary policy and “chaos” surrounding U.S. politics with the administration’s tougher stance on global trade, according to Gambles.

However, Gambles noted that there were a range of outcomes for markets that were “probably wider than it’s ever been at any time in history.” “We could have a good stock market year, we could have a 20, 30, 40 percent plus correction,” he added.

Continued support from central banks has made investors more confident on the performance of stock markets over recent years. Looking at the S&P 500, from the trough of March 2008 until now, the index has risen by around 287 percent. In Europe, the benchmark Stoxx 600 has risen 134 percent in the same period.

Speaking to CNBC Wednesday, Jeffrey Gundlach, founder of DoubleLine Capital who is also known as a “bond king,” said that stocks will end the year in negative territory. He cited rising bond yields and a plunge in cryptocurrencies as evidence that equities will move lower.

The yield on the 10-year Treasury yield has been carefully watched by investors. The spike in the yield earlier this year led to a market correction on fears that inflation would be kicking in at a faster pace than markets were expecting. However, such concerns have eased in the last couple of weeks, as central banks confirmed a gradual increase in interest rates. Higher inflation and a faster pace of interest rate increases are usually harmful to stocks, as they impact companies’ earnings.

But such negative views on stock prices are not shared by every analyst. A strategist at Goldman Sachs told CNBC Wednesday that it’s unlikely that stocks will enter an interrupted period of falling prices.


4 Cheap Stocks Earning Money And Paying Dividends

If the price/earnings ratio of the stock is significantly below the p/e of the market as a whole — and if it’s  trading for less than its book value, some analysts place it on the list of “cheap stocks.” Using the Financial Visualization website, I screened to see if any such stocks existed right now and I found these few. Just to be sure, I screened to see if they had steady earnings records, held reasonable debt levels and paid regular dividends. Here’s 4 of those that made it through the initial screens:

Entercom Communications — they own and operate hundreds of radio stations. Audio provider. Media company. Whatever they’re calling it these days. With a p/e of 4 and now trading at about half its book value, this one definitely makes the cheap stock list.

Entercom chart

Entercom’s got a 5-year record of profitability and the company made a lot of money last year. They have slightly more long-term debt than equity, a concern. The dividend comes to 3.8%. The short float is 10% — should these short sellers ever be forced to cover, it might be good for the stock. Full disclosure: I used to work with COO Weezie Kramer when we were both kids at WKQQ in Lexington, Kentucky, but I haven’t talked to her in about 30 years.

LG Display Company — this South Korean technology/diversified electronics company is New York Stock Exchange traded and its price/earnings ratio right now is 5. LG is trading at 62% of its book value.

LG Display chart

The dividend is 1.86%. The company’s levels of debt are low. Earnings have been solid both on a 5-year look and for the last 12 months. In January, Morgan Stanley analysts moved LG from “underweight” to “overweight.” The stock traded as high as 17 last summer and now sits at 11.85.

SK Telecom Co., Ltd — the technology/wireless communications company based in South Korea trades on the New York Stock Exchange and can be purchased at an 8% discount to its book value.