Before the Bell: Tight Inventories Lift Refiners, Judge Tells AMC 'No' 

Premarket action on Thursday had the three major U.S. indexes trading (barely) mixed. The Dow Jones industrials were up 0.01% while the S&P 500 was down 0.04%, and the Nasdaq 0.28% lower.

Seven of 11 market sectors closed lower on Wednesday. Consumer cyclicals (−2.04%) and industrials (−1.3%) posted the day’s worst losses. Real estate (2.57%) and health care (1.73%) posted the largest gains. The Dow closed up 0.24%, the S&P 500 down 0.25% and the Nasdaq down 1.07% on Wednesday.

Two-year Treasuries fell five basis points to end Wednesday at 3.79%, and 10-year notes also dropped five basis points, closing at 3.30%. In Thursday’s premarket, two-year notes were trading at around 3.75% and 10-year notes at about 3.29%. Ten-year notes have closed lower for seven consecutive days and two-year notes have closed lower for four.

Wednesday’s trading volume was below the five-day average. New York Stock Exchange losers outpaced winners by 1,872 to 1,125, while Nasdaq decliners led advancers by about 2 to one.

U.S. markets will be closed Friday, but federal agencies will not be. The monthly report on nonfarm payrolls will be released at 8:30 a.m. ET.

The Energy Information Administration reported a decline of 3.74 million barrels in U.S. commercial crude inventories last week. In the previous week, the crude inventory level fell by 7.50 million barrels.

Before markets open on Thursday, the weekly report on new claims for jobless benefits will be released. Economists have forecast a week-over-week increase of 5,000 to 203,000 new claims.

Oil refiner Phillips 66 (NYSE: PSX) was Wednesday’s best-performing S&P 500 stock, with a gain of 6.26%. Crude oil dipped by about 0.5% for the day, perhaps setting a ceiling at around $80 a barrel for crude. Refiners like Phillips 66, Valero Energy and Marathon Petroleum are starting their runs of summer-grade gasoline, and demand for gasoline is expected to rise as it does every summer. Gasoline inventories are low, crude inventories are low and refineries are still running at less than 90% of capacity. Refiners have a license to print money for a while.

Shares of electronic trading platform MarketAxess Holdings Inc. (NASDAQ: MKTX) dropped 13.91% on Wednesday to post the day’s biggest loss among S&P 500 index stocks. The company reported monthly and first-quarter volume data that was good but apparently not impressive enough for investors.

AMC Entertainment Holdings Inc. (NYSE: AMC) is nothing if not entertaining. The company on Monday announced that it had reached an agreement with unhappy holders of AMC’s common stock who did not support the company’s plan to convert its AMC Preferred Equity shares (NYSE: APE) to common stock and then effect a 10-for-1 reverse stock split. All AMC needed was the court’s approval to lift its status quo order, allowing the company to avoid the usual course of the transaction and get the deal done more quickly.

On Wednesday, Delaware Chancery Court Judge Morgan Zurn said there was “no good cause to lift the status quo order.” That means that until Judge Zurn approves the settlement and investors can be officially notified of the transaction, there is no settlement. And given the machinations AMC went through to get to this point, it is not difficult to believe that more hurdles will pop up before the transaction is completed.

AMC common stock closed up 3.58% on Wednesday and traded up more than 12% in Thursday’s premarket. Preferred shares closed up 1.79% on Wednesday and traded down by about 13% Thursday morning.

For the year to date, APE shares have risen by more than 21%, and AMC shares have dropped by half a point. Since the APE shares were issued in late August, they have lost nearly 74% of their value, while AMC shares are down about 56% in the same period.

Warehouse retailer Costco Wholesale Corp. (NASDAQ: COST) on Wednesday reported disappointing sales numbers for March and shares traded down about 2.6% in Thursday’s premarket session.

Optical and photonics manufacturer Lumentum Holdings Inc. (NASDAQ: LITE) closed down more than 2% Wednesday and traded down by around 12% on Thursday morning, after reporting lower-than-expected preliminary results for its fiscal third quarter that ended April 1. One of the company’s biggest customers also said it would not accept any new deliveries from Lumentum in the new quarter, forcing the company to issue downside guidance for the quarter.

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