Market Review: December 22, 2020

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Closing Recap

Tuesday, December 22, 2020





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     U.S. stocks finished mixed on Tuesday as the tech heavy Nasdaq Composite and Smallcap Russell 2000 outperformed, while the Dow gave back some of yesterday’s gains and the S&P 500 was little changed ahead of this holiday shortened trading week. Worries over a new strain of COVID-19 and downbeat economic data dampened enthusiasm over the passage of a long-awaited pandemic relief bill in Washington. Apple (AAPL) paced the gains on Wall Street following plans to roll out an electric passenger vehicle by 2024, while banks slipped after rallying yesterday as Fed stress test headlines opened the door to buyback and dividends. Congress passed a long-awaited pandemic relief package overnight to the tune of $892 billion to provide support to individuals and small businesses faltering under the pandemic lockdowns. Expectations that the recent FDA approved emergency use authorization for Pfizer and Moderna vaccines will help a return back to normalcy has also provided strength for markets. The Nasdaq Composite did touch a fresh all-time intraday record high (12,840.57) but failed to close at a new record (prior record close high 12,809.60). There was also some optimism that current vaccines will be effective against the new U.K. coronavirus variant, after Pfizer partner BioNTech CEO said “the likelihood that our vaccine works. is relatively high." Still, talks of new lockdowns across the globe (current travel restrictions in the UK), as well as threats to movement over the holidays remains a concern. At the same point, the amount of exuberance in the market today for select tech, Bitcoin, SPAC, Electric Vehicle (EV) and IPO names is approaching 1999-2000 levels, something to keep an eye on as we roll into 2021 shortly at or near all-time highs for stocks.

Economic Data

·     The U.S. economy improved slightly in Q3 as GDP (third estimate) rose +33.4% vs. +33.1% consensus and +33.1% previous estimate which primarily reflects larger increases in personal consumption expenditures and nonresidential fixed investment (partly offset by a downward revision to exports to 59.6% from 60.5%). The PCE price index +3.7%, unchanged from prior estimate, Core PCE price index +3.4% vs. prior estimate of 3.5%


Commodities, Currencies & Treasuries

·     Oil prices slumped ahead of weekly inventory data as WTI crude slips 95c or 1.98% to settle at $47.02 per barrel on rising virus strain fears. Gold price end lower, as February gold slides -$12.50 or 0.65% to $1,870.30 an ounce (off earlier highs around $1,889) as the dollar rebounded off recent 2 year plus lows as optimism about a U.S. stimulus bill that Congress passed overnight was tempered by concerns about a new coronavirus mutation in Britain. The euro and British Pound each slipped after trading to multi-year highs recently as investors bail on safe-have currencies. The 10-year yield remains in a tight range, holding between 0.90% and 0.95% over the last week or so.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; SPWH is being acquired for $18 per share in cash by privately held Great American Outdoors Group , which already owns Bass Pro Shops, Cabela’s, White River Marine Group and nature-based resorts ; VSTO was upgraded to outperform at Cowen in the sporting goods space as well; PTON surges after agreeing to acquire commercial fitness company Precor for $420 million in a bid to dominate hotels, college campuses and offices ; CTRN announces the authorization of another $30M share repurchase program in what it calls the next step in its continued capital return program; FIT shares slipped after Australia’s competition regulator delayed for three months its decision on Google’s plan to buy fitness gadget maker Fitbit for $2.1 billion; the U.S. sued WMT accusing them of fueling the opioid crisis in the country and ignoring warning signs from its pharmacists

·     Auto sector; in car retail, KMX slides despite beat on top and bottom line, same-store used unit sales fell 0.8%, compared with the FactSet consensus of a 3.5% increase; ; in electric vehicle (EV) space, BLNK shares outperformed after announcing Lehigh Valley Health Network agreement; JG jumped after announced that it has entered into a partnership agreement with a global leading new energy vehicle manufacturer; UBER called "The new year’s resolution stock to own in 2021" at Bernstein saying rideshare was always a ‘recovery play’ and positive vaccine developments should have investors looking ahead to 2022

·     Restaurants & Consumer Staples; CVGW shares tumbled after reporting 4Q adj EPS $0.34, well below the consensus est. $0.64 on light revs $234.4Mm vs. est. $256.1Mm and weak guidance; tobacco names were weak (PM, MO), headlines earlier that Lawmakers probe tobacco companies, e-cigarette ADS during pandemic; food stocks remain weak (CPB, GIS, K); KR’s health unit Kroger Health will provide Covid-19 vaccines across the nation, as federal and state authorities try to broaden the vaccine’s rollout to the U.S. population.



·     Energy stock movers; group failed to rally as oil prices slipped ahead of inventory data tonight and tomorrow and as fears of a new virus strain in the UK led to expectations of decreased demand globally; in stock news, COP announced a new oil discovery in production license 891 on the Slagugle prospect located 14 miles north-northeast of the Heidrun Field in the Norwegian Sea; in research, PXD upgraded to buy at Truist saying investors currently get a rare chance to purchase shares without any peer group earnings premium and with one of the best future large cap FCF yields. Further, Texas state data suggests strong October production that coupled with current strong rig/frac activity should result in a strong start to 2021; in solar, MAXN rises after solar panel technology patent was upheld



·     Bank movers: banks were among the top gainers in the S&P on Monday after last week’s Fed stress test headlines opened the door to buyback and dividends on a limited basis (JPM announced a share buyback); regional banks also moved higher; USB among the first regionals to announce a stock buyback with a $3B call announcement today

·     Insurance; S&P SmallCap 600 constituent KNSL will replace TCO in the S&P MidCap 400 (TCO being acquired by SPG) while SMPL will replace Kinsale Capital Group (KNSL) in the S&P SmallCap 600. S&P 500 / 100 constituent Simon Property Group, Inc. (SPG) is acquiring Taubman in a deal expected to be completed soon pending final conditions

·     Consumer Finance; SQ tgt raised to $295 from $220 at BTIG saying they believe the extraordinary growth of SQ’s Cash App during the COVID-19 pandemic has demonstrated its relevance to large groups whose underserved needs only increased during the crisis

·     REITs; commercial real estate names (STWD, LADR, BXMT, CLNC) worth watching into 2021 with ~$430B in commercial and multifamily real estate debt maturing next year, lenders and borrowers will have to come to terms on the properties’ values in a post-COVID-19 world. Property owners who have fallen behind on debt payments will have to put more money into their properties, sell a fire-sale prices, or turn their property back to the bank next year.



·     Pharma movers: AZN and AMGN aid that the 48-week Phase 3 trial of the potential new medicine Tezepelumab–aimed at treating severe asthma–didn’t meet the primary endpoint; SNGX slumps after saying its experimental drug, SGX942, to treat chemotherapy-induced mouth ulcers in head and neck of cancer patients did not meet main goal in a late-stage trial; VCYT rises after news they will collaborate with Bayer to advance the Precision Oncology Patient Identification Program in thyroid cancer.

·     Biotech movers; BCRX said it expects the National Institutes of Health, a funding partner for its COVID-19 program, to discontinue pursuit of a COVID-19 indication for its antiviral drug galidesivir – says NIH likely to continue to support development of galidesivir as a biodefense drug; Piper named CCXI, XNCR, AGLE top picks in biotech for 2021 – naming 2021 top picks ChemoCentryx for avacopan approval and launch in AAV, Xencor for bispecific antibody data and pipeline progress, and Aeglea for Phase III PEACE data on pegzilarginase in ARG1-D

·     Medical equipment, Healthcare services and providers; ECOR says Pro Medical Baltic UAB will be the exclusive distributor of its gammaCore Sapphire for patients in Lithuania, Latvia, Belarus, Kazakhstan and Ukraine; ILMN upgraded to overweight from neutral at Piper saying core business and GRAIL opportunity underappreciated


Industrials & Materials

·     Transports; airlines UAL, AAL were both quietly down a 5th straight day in the airline sector, with DAL, LUV also showing weakness amid coronavirus impact on travel after the UK announced travel restrictions yesterday amid reports of a new and more contagious strain of Covid; cruise lines (CCL, RCL, NCLH extend recent losses, sliding into year end after rallying in November on economic recovery hopes and vaccine related news

·     Metals & Materials; CLW raises Q4 adj. EBITDA view to $71M-$76M from $52M-$62M due to significantly greater than expected demand in tissue, strong operating performance, and favorable cost trend; gold miners (AEM, NEM, AUY) slipped, tracking bullion prices as the dollar advances after release of strong U.S. economic data amid new coronavirus strain in the UK; iron ore stocks active (CLF, BHP, VALE) as iron ore prices give back a chunk of their recent rally, pulling back from recent 9-year highs ($176.90/ton on Monday)


Technology, Media & Telecom

·     Internet; FB and GOOGL agreed to "cooperate and assist one another" if they ever faced an investigation into their pact to work together in online advertising, according to an unredacted version of a lawsuit filed by 10 states against Google last week – WSJ ; SHOP and ETSY both jumping today, setting new all-time higher in E-commerce

·     Hardware, Services; Reuters reported late Monday that AAPL plans to produce a self-driving vehicle with "breakthrough" battery tech by 2024 – the news lifted EV-related stocks, Lidar (light detection and ranging) stocks (VLDR, LAZR) and Apple’s supply chain such as LITE (which supplies 3D-sensing products that enable Apple’s Face ID sensors) as well as CREE (which has moved away from its lighting and LED roots to focus on the SiC and GaN semiconductor chips used in electric vehicles and 5G); CLA shares of blank check company (a SPAC) Colonnade Acquisition Corp surges after taking Lidar start-up Ouster public

·     Software; PAYC shares trade at all-time highs after tgt raised to $465 at Stifel today and Citi raised to $513 (from $457); Citigroup also announced a positive 90-day catalyst watch on PLAN saying the stock notably underperformed high-growth software peers in 2020 reflecting both company specific and macro challenges, but easier comps and better execution make for a favorable set-up into FY4Q21 reporting in late February (also said top Ideas: AVLR and PAYC

·     Media & Telecom movers; FUBO tgt raised to $60 from $30 at Needham saying they believe FUBO will continue to have strong upside momentum into 2021 owing to taking share from competitors, its Hisense partnership lowers SAC, upside from sports betting; OTT multiple expansion, short covering and CTV upside; TMUS upgraded to outperform from perform at Oppenheimer with $160 tgt noting the company has outperformed churn expectations with limited competitive response as its peers seek to maximize free cash flow


Market commentary provided by Catena Media Financials US, LLC, 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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