Market Review: August 30, 2021

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Closing Recap

Monday, August 30, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Markets open the week on a strong note with new record highs and closes for the S&P 500 and Nasdaq, on track to close out yet another month where each of the major indices were positive. The S&P also set a record intraday high today for the 5th time in the 6 sessions since last week and 11th time in August, which means the index hit a new high on the majority of the month’s 21 trading days. It remains on track to close over 3% on the month, its best performance since April, to extend its monthly winning streak to 7, while the Nasdaq looks to gain about 4%, the Dow 1.5%, and the Russell 2000 rebounded from July’s decline by rising over 2%. Today’s rally was spearheaded by large-cap tech names as Apple enjoyed its first +3% day since March 9 to hit its new all-time high along with FB, GOOGL, and NVDA, and AMZN also had its best day in almost 2 months. This is a quiet week with earnings season unwinding and markets digesting Powell’s dovish commentary at last week’s Jackson Hole symposium, though ZM reports its quarterly results tonight and August non-farm payrolls are reported Friday morning before investors enjoy the 3-day Labor Day weekend. Note the S&P 500 index still hasn’t seen a 5% correction since September of last year (2020) and hasn’t seen a 10% drop hasn’t been since the Spring of 202o (onset of pandemic). Macro concerns such on Kabul, China and now North Korea all failing to dent investor optimism in any way again today.

·     Stock/sector movers: AFRM spikes more than 40% after AMZN partners with it to provide a BNPL option to its customers; credit card names SYF, DFS, COF (also d/g at Stifel) were lower on the news; PYPL jumps intraday after CNBC reports it is exploring a stock trading feature on its app, pressuring HOOD, SCHW, IBKR; large-cap tech outperformed with AAPL, FB, NVDA, GOOGL record highs, AMZN, MSFT also rise; HRC soars to ATH, BAX higher after the WSJ reported advanced merger talks for around $10B; NTES, BILI weak on China limiting children’s gaming time in its latest tech crackdown; airlines, cruises slide after Hurricane Ida forces some cancellations and the EU removes the US as a safe-travel country.


Commodities, Currencies & Treasury’s

·     Oil prices rose with WTI crude +$0.47 or 0.68% to settle at $69.21 per barrel, the highest closing price since Aug. 12, as important offshore oil production in the Gulf of Mexico remains shut down due to Hurricane Ida, and as pipeline shutdowns cause fears of regional fuel shortages. The storm may also be hurting the demand side of oil, as authorities have told Louisiana residents to stay in their homes amid flooding and other issues. But for now, the nearly 100% shutdown of offshore oil production is keeping prices bullish.

·     Gold prices fall -$7.30 or 0.4% to settle at $1,812.20 an ounce (near lows of the day), easing from near a four-week high on Monday, as the dollar ticked up from its lows and investors showed caution in the run-up to the release of a key U.S. jobs report later in the week. The dollar index rose 0.1% after slipping to nearly a two-week low in the wake of Federal Reserve Chair Jerome Powell’s speech to the annual Jackson Hole economic conference last week.

·     The U.S. dollar (DXY) index was flattish most of the day around 92.70 while Treasury yields edged lower, dropping below the 1.30% level for the 10-year for the first time in over a week following the dovish Fed commentary on Friday.






WTI Crude















10-Year Note





Sector News Breakdown


·     Auto sector; TSLA rallied with broader stock market large cap tech despite a negative research call at JLG Research which said the company is likely to miss local China vehicle sales estimates saying that Tesla Inc, citing its source, has sold ~10,400 vehicles in August domestically in China, much lower than brokerage’s estimate of ~30,000 vehicles; electric vehicle space broadly lower with LI sliding despite a Q3 revenue beat – weakness in NKLA, QS, KNDI, FSR

·     Housing & Building Products; GNRC shares gain following the power outages for around 50% of Louisiana residents following Hurricane Ida impact; roofing stocks OC, BECN will be watched as well for support from likely roofing replacement demand post-Ida; Berenberg upgrades construction material supplier EXP to buy from Hold saying its fundamentals have improved faster than anticipated and co is in early stages of multi-year pricing cycle and believes EXP can deliver some of the highest earnings growth within the sector

·     Restaurants; Stifel downgraded shares of PLAY to Hold from Buy and lower 12-month target price to $40 from $58 saying while they expect F2Q to exceed the company’s guidance, they believe it is well understood among investors that the guidance was conservative; it implied a sales deceleration from reported QTD trends; Stifel also downgraded EAT to Hold from Buy and lowered our 12-month target price to $55 from $62 and adjusted our FY22 EPS estimate to $4.25 from $4.85 to reflect slightly lower sales and higher labor costs.



·     Energy stock movers; Hurricane Ida made landfall Sunday afternoon on the Louisiana Gulf Coast, slamming metro New Orleans and surrounding areas as a Category 4 storm – and ironically, occurring 16 years to the day that Hurricane Katrina devastated the region in 2005. Oil steadied, giving up most of an earlier rally to a four-week high, as Hurricane Ida weakened after forcing shutdowns of U.S. Gulf oil production, and OPEC+ looked set to go ahead with a planned oil output increase. Within 12 hours of coming ashore, the storm had weakened into a Category 1 hurricane. Nearly all offshore Gulf oil production, or 1.74 million barrels per day, was suspended in advance of the storm

·     E&P and Majors; Truist downgraded EOG to hold calling it one of the top, (if not the top) US operators though they believe its long-term financial approach could continue to cause its stock to underperform its peers in the coming months; the firm also upgraded MGY to Buy as forecast the company will be able to boost each of its upcoming semi-annual dividends by 5% along with repurchasing notable shares; ETR is the power supplier to most of the New Orleans are, as shares down today given there is almost no power in the region post Hurricane Ida.



·     Insurance; Property & Casualty stocks (ALL, CB, HIG, TRV, ACGL) among active names after Hurricane Ida made landfall Sunday afternoon in the low lying coastal region of Louisiana, as a Category 4 event, notably a distance to the southwest of the major port city of New Orleans. Ida’s landfall represents the first major landfall-making hurricane in the U.S. for the 2021 hurricane season. It is too early to estimate an insured loss estimate for the event, but, RBC said they have seen some initial ‘guesstimates’ of $20B of damage which in our view is a good starting point and comparable to totals reached by hurricane’s Harvey and Laura as well as Sandy. Wells Fargo said as a preliminary estimate, they would expect insured losses in the range of $15-20B.

·     Consumer Finance, FinTech & Payments; AFRM surges after late Friday, announced that its flexible payment solution will soon be available to AMZN customers at checkout. Amazon and Affirm are testing with select customers now, and in the coming months, Amazon plans to make Affirm more broadly available to its customers (price tgt raised by several analysts on AFRM); COF downgrade from Neutral to Underperform at Baird citing significant outperformance (up ~78% YTD vs. ~21% SPX) and a generally unattractive risk/reward trade-off; PYPL is exploring a stock trading feature according to CNBC (shares of HOOD, SCHW moved lower on the report). HOOD along with VIRT and SCHW extended declines late day after a Barron’s article cited an interview with SEC chief Gary Gensler noting that a full ban of payment for order flow is "on the table." (Payment for order flow is a practice where brokers send trade orders to market makers that execute those trades in return for a portion of the profits).



·     Biotech movers; MRNA slumped after authorities in Japan suspended the use of a second batch of the drugmaker’s coronavirus vaccine following the discovery of contaminants; REGN Dupixent® (dupilumab) pivotal trial meets all primary and secondary endpoints becoming first biologic medicine to significantly reduce signs and symptoms of moderate-to-severe atopic dermatitis in children as young as 6 months; PFE said its drug to treat patients with moderate to severe atopic dermatitis was statistically superior compared to a rival from REGN/Pfizer said its drug, abrocitinib, met the main goals in a late-stage study; SAVA fell again (4th straight day) after Cantor suspended their rating saying the company’s main product, an experimental Alzheimer’s disease drug, posed a "diligence challenge."

·     MedTech Equipment; BAX is in advanced talks to buy medical-equipment maker HRC for around $10 billion, the WSJ reported in a deal that values Hill-Rom at around $150 a share that could be reached by midweek assuming the talks don’t fall apart (talks follow an earlier bid from Baxter worth $144 a share that Hill-Rom rebuffed) ; VAPO said the FDA has given regulatory clearance to the company’s new respiratory-therapy device, HVT 2.0

·     Healthcare Services; contract drug manufacturer CTLT agreed to buy gummy vitamins maker Bettera Holdings LLC for $1 bln in an all-cash deal to expand presence in nutritional supplements market/also reports Q4 earnings above estimates, FY rev. forecast range tops analysts’ estimates; CVS is expanding its in-store counseling initiative as pandemic drives more people to seek assistance for their mental health.


Industrials & Materials

·     Aerospace & Defense; ASTA falls after the test launch of its rocket LV0006 was ended prematurely about 2-and-a-half minutes after liftoff; said one of LV0006’s engines shut down less than a second after liftoff; UAL jets like the one that lost an engine cover over Colorado in February aren’t expected to fly until early next year, as federal regulators weigh additional safeguards, people briefed on the matter said. United had hoped to resume flying the wide-body jets this summer – Dow Jones reported

·     Metals & Materials; FUL said it is planning to implement an 11% surcharge on global shipments of its products starting Sept. 1, as it moves to combat rising costs of chemical feedstocks and plastic and metal packaging; in the lithium sector, ALB tgt upped to $260.00 from $180.00 at Cowen, LAC to $19.00 (Prior $17.00) and LTHM to $25.00 (Prior $19.00) saying the next generation materials space is receiving increased investor interest amid constructive western policy and near-term supply limits driving lithium and rare earths pricing higher; containerboard stocks (PKG, WRK) on watch with Hurricane Ida likely to disrupt mill production in Louisiana for an extended period as Citigroup noted the sector typically modestly outperform the S&P 500 in the 10 days after hurricane landfalls in Louisiana

Technology, Media & Telecom

·     Internet; NTES, BILI slides after China slashes kids’ gaming time to just three hours a week. China’s regulator announced a new set of tighter regulations over the country’s games industry, including limiting the number of hours that minors can play (said users under the age of 18 will only be able to play games from 8PM-9PM local time on Fridays, weekends, and holidays; PINS downgraded at Argus to Hold from Buy following the co’s disappointing sales guidance where mgmt now expects 3Q rev to grow in the "low-40% range," down from 58% growth in 3Q20

·     Semiconductors; Philly semi-index (SOX) trading new highs, up over 1%, topping prior ATH of 3,451), led by AMD shares up over 2% in push for chip names; MX said that the Committee on Foreign Investment in the U.S. (CFIUS) has identified national security risks with the sale to Wise Road and the deal will be referred to the President Biden for his decision. MagnaChip (MX) said it received a letter on Aug. 27 from the Dept. of Treasury on behalf of CFIUS; SYNA acquires DSPG, a global provider of voice and wireless chipset solutions for converged communications, at $22.00 per share in an all-cash transaction. The combination is anticipated to generate annual run rate synergies of $30 million for the new entity to be realized within 12 months of closing ; MU tgt cut to $95 from $110 at Deutsche bank noting memory stocks have been under pressure as DRAM spot prices weaken and fears of a cyclical peak rise

·     Hardware, Software movers; handful of earnings this week in the software space include CRWD, ZM, DOCU, and OKTA; ADTN announced an agreement to acquire networking services company ADVA in a deal valued at EUR789 million ($931.1 million). Under terms of the deal, each ADVA shares will be exchanged for 0.8244 shares of the stock of the new holding company, which values ADVA shares at EUR14.84 each ; IDC said shipments of smartphones are expected to grow 7.4% in 2021, reaching 1.37 bln units, followed by 3.4% growth in 2022 and 2023, respectively

·     Media & Telecom movers; TMUS downgraded to Sector Weight at Keybanc saying they believe wireless exposure can be achieved through owning Cable operators noting for TMUS, believe: 1) wireless competition is high, and TMUS market share gains are slowing; 2) consensus expects a beat and raise, whereas we are more conservative; BTIG said b proposed class action settlement with U.S. app developers would be a small win for MTCH and b, but not likely a game changer for either as it would fall well short of opening the direct-pay floodgate


Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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