Market Review: February 02, 2021

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Closing Recap

Tuesday, February 02, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Stocks surge a second day (erasing all last week losses) as large cap names and the reopen trade names (financials, energy, online travel, casinos) help lead markets higher on better earnings and hopes for additional fiscal stimulus as talks heat up in D.C. After trading below 3,700 last Friday and dropping below its 50-day moving average support, the S&P ended around 3,840, about 30 points from new historic highs as nothing seems to keep this market down. Volatility spiked last week with the CBOE Volatility index (VIX) jumping over 45% for January but has been pummeled over the last 2-sessions. Earnings remain a key driver (along with fiscal, monetary stimulus) with results from Amazon and Alphabet (GOOGL record highs) due after the close as well as Dow component Amgen and restaurant chain Chipotle as the busy earnings onslaught continues. Bernstein noted with almost a third of S&P 500 companies having reported their fourth quarter earnings (thru last night), 88% managed to meet or beat analysts’ consensus earnings estimates so far, well above the average of 78% over the last twelve years.

·     The big time unwind in the Reddit/WallStreetBets trades continued as shares of GME (shares fell as much as 60% to drop below $80 briefly before rebounding), AMC, BB, BBBY, EXPR, FIZZ, GSX, NOK, KOSS, PLTR, SLV (others) among top decliners, while broader markets are higher. Barstool Sports founder Dave Portnoy said in a tweet today he lost about $700K following squeeze trades and lays the blame on Robinhood and CEO Vlad Tenev. Robinhood, on whose platform much of the buying and selling has taken place, confirmed on Monday it had raised another $2.4 billion from shareholders following a $1 billion boost last week as it strives to meet demands for additional collateral to cover trades.

·     IPO market heating up again after stellar 2020 with two deals pricing tonight: ONTF 6.31M share IPO expected to price tonight price range $45-$50, and TIXT 33.33m share IPO as well (range $23-$25) ahead of busy week of deals that should see total of 15-16 deals. Wednesday pricing deals expected for ATC, EVAX, LDI, LABP, SANA and Thursday night pricings for ANGN, BOLT, IMCR, LHDX, PHVS, SNSE, TERN, VOR. Also today, Bumble launched with debut set for next Thursday (2/11). Recall the IPO market posted a record year in 2020 as companies raised $167.2 billion through 454 offerings, compared with the previous full-year record of $107.9 billion at the height of the dot-com boom in 1999, according to Dealogic.

·     Sector movers today: Casinos (CZR, MGM, LVS), online travel (EXPE, BKNG), financials (BAC, GS, AXP, JPM lead markets higher); Cannabis stocks (TLRY, CGC, ACB) jump after headlines late yesterday that Democratic senators will try advancing legalization efforts and GTBIF is prepared for its IPO in the U.S.; video games also rise after Jefferies was positive on NTDOY beat-and-raise yesterday and EA gains ahead of tonight’s earnings on announcing the return of their college football game in the future; ATVI also up ahead of earnings this Thursday and $TTWO green in sympathy with the sector (earnings 2/8); energy higher on rising oil and as XOM, COP, MPC each post EPS losses that were narrower than expected, boosting shares of U.S. energy stocks; WAT is the best stock in the S&P, VRTX, PFE slide in biopharma, UPS gains, HOG, CRUS, LITE tumble; short interest Reddit trade unwinds as GME, AMC plunge, each losing more than 50% at their daily lows; M, BB, BBBY, NAKD, KOSS, TR, SLV also plummet; bitcoin leveraged names rise with Bitcoin up 5% (RIOT, MSTR, MARA, SI, GBTC, NCTY)

·     Markets await stimulus: The Senate GOP met with President Biden and unveils $618B Phase 5 COVID-19 disaster relief outline including $1k checks, extend $300 weekly UI checks to June 30, + $160B for vaccines/testing. But Democrats going big, introducing identical $2.15T FY21 budgets to start reconciliation procedure (adds $250B to Biden plan).


Commodities, Currencies & Treasuries

·     Oil prices touched over 1-year highs, rising $1.21 or 2.26% to $54.76 per barrel along with a broader market “risk-on” day and after major oil producers showed they were reining in output roughly in line with their commitments. Commodity markets also remain well bid on hopes and expectations of further stimulus, with Biden’s plan in the range of $1.9 trillion, though Republicans price tag much lower. The rally in crude began a few weeks back as OPEC production increases were less than expected. A winter storm and heavy snow in the U.S. northeast drove the margin for heating oil to an 8-month high of $15.88, lending further support to crude.

·     Gold and silver prices drop as the strength in precious metals just the day prior evaporates; gold prices fell -$30.50 or 1.6% to settle at $1,833.40 an ounce while silver erases its 9% gains the day prior, falling -$3.02 or 10.3% to settle at $26.40 an ounce as the Reddit/WSB short squeeze trade unwinds (which had lifted silver and silver producers the last few days)

·     The 10-year Treasury yield rises 2 basis points to 1.10%, indicating investors are more confident about prospects for the economy, while the U.S. dollar showing strength, as the dollar index rises another 0.2%, topping 91 for its best level since late November and off January lows around 89.50 (interesting the generally perceived safe-haven currency rallying despite a spike in stocks).






WTI Crude















10-Year Note





Sector News Breakdown


·     Auto sector; UBER said it is buying on-demand alcohol marketplace Drizly for about $1.1B in stock and cash sending shares higher; TSLA is planning to recall 134,951 Model S and Model X cars due to issues with touchscreens; HOG posted an unexpected Q4 EPS loss of (-$0.44) vs. est. profit $0.14 on weaker revs $725M vs. est. $773M as Q4 motorcycle shipments down 48% YoY and Q4 Dealer Retail Motorcycle Unit Sales down 14% YoY; RACE Q4 revs and profit rises buy outlook for 2021 was seen as somewhat disappointing, as guided adjusted EBIT target of between EUR0.97B and EUR1.02B as well as the industrial FCF guidance of around EUR0.35B as underwhelming; VWAGY said presales of additional ID.4 models will start later this month in around 30 European countries including Germany, as well as in the U.S.

·     Consumer Staples & Restaurants; SYY said quarterly profit plunged 82% while Q2 sales were down 23% to $11.56B from $15B last year) as pandemic weighed on food service demand as EPS and rev both miss estimates; BYND shares active after Impossible Foods said it is cutting suggested retail prices for its plant-based meat substitute products by 20% in the 17,000 grocery stores they are in across the U.S.; CMG to report earnings tonight; SAM rises as four-week dollar sales for SAM’s Truly were up 133.3% Y/Y to break above the +117.3% 12-week trend, while Twisted Tea sales were up 52.3% to rise above the 12-week growth rate of 42.3%; HRL rises after the Wall Street Journal reports Skippy peanut butter maker nearing deal to buy Planters snack business from KHC

·     Leisure and Gaming; PENN tgt raised to $118 at Stifel as believe remains the most difficult stock under our coverage to analyze given it’s extremely tough to parch out what’s currently embedded in the share price for both their core operations as well as the long-term opportunity around sports betting/iGaming; DKNG another online gaming name that outperformed today



·     Energy stock movers; XOM reported Q4 adj EPS ($4.70) loss, though it was profitable after accounting for a $19.3B write-down which ends 3 consecutive quarterly losses, revs $46.5B missed estimates and fell -30.7% YoY, Q4 production 3.69M boe/day (-8.2% YoY), and the company said it exceeded cost-reduction objectives as FY20 capital spending $21B was $2B below target while cash operating expenses fell more than 15% YoY; COP Q4 adj EPS loss (19c) was narrower than the expected (26c) loss as crude oil prices recovered from their pandemic-driven lows, and its Q4 total average realized price fell 29% YoY to $33.21/boe; BP reported Q4 EPS 3c on sales $44.79B, both missing estimates of 8c on $46.61B, and its FY20 EBIT $1B also missed consensus $1.41B; in refiners, MPC posted Q4 adj EPS loss (94c), narrower than est. (1.41) loss, on revs $18.19B vs est. $17.07B, capex $491M vs est. $536.4M, and cut its 2021 capital spending outlook by $350 million from 2020 to $1.4 billion, excluding the midstream business MPLX LP, as the company works to reduce debt; IMO Q4 EPS loss was larger than expected and a 26% YoY decline in revenues to C$6.03B, also missing analyst estimates while taking a C$1.17B non-cash charge related to Canadian unconventional nat gas assets it believes will never be developed



·     Bank movers; JPMorgan anticipates bank stocks outperforming over the course of 2021 as vaccines get distributed and economic activity rebounds, and they favor BAC among money centers, CFG among regional banks, and RF in the medium-term; IBTX reported Q4 adj EPS $1.34 vs est. $1.32 on revs $152.7M vs est. $150.8M; NDAQ authorized up to $1B in share buybacks; CME reported average daily contract volume for Jan. of 19.2, a +2% increase

·     Insurance; JPMorgan resumed their coverage on ALL at Overweight with a $127 target as the best combination of a strong franchise, healthy business trends, and attractive valuation in the P&C sector, especially given reduced tail risk following the sale of the majority of the annuity and life blocks; RBC reiterated GSHD as Outperform and raised their price target to $155 from $120 as they expect continued growth and margin improvement through 2021 and 2022; Credit Suisse bumped their target on TRV to $142 from $127 on a stronger EPS outlook, which is a discount to its recent valuation vs the S&P 500 given its potential exposure to COVID-19 losses and to commercial lines policyholder exposure declines; KMPR posted $1.59 topped est. $1.55 and revs $1.392B topped est. $1.18B

·     Asset managers; WDR reported Q4 EPS 41c (est. 46c) on revs $27.068M (est. $267.05M) and AUM $74.82B; VRTS Q4 adj EPS $5.15 topped est. $4.95, AUM increased 21% YoY to $132.2B, and net inflows $2.6B vs. $300M YoY; BEN reports Q1 EPS 67c missed consensus by 5c on mostly in-line revs of $2.0B as operating margin fell YoY to 20.5% from 27.8%, total AUM increased 6% or $79.1B to $1,498B at December 31, 2020 during the quarter due to $93.8 billion of net market change; IVR 24M share Spot Secondary priced at $3.83; BX acquired Interior Logic Group, a leading, data-driven provider of design solutions to homebuilders, for $1.6B; RMR posted Q1 Adj EPS 41c on sales $156.95M, both beatings estimates (38c, $146.12M); BPY Q4 FFO 30c (est. 24c, 48c YoY) on revs $1.43B ($1.89B YoY)

·     REITs; ARE reported Q4 FFO of $1.84, in line with consensus and its 2021 FFO guidance was unchanged at $7.60-$7.80, in-line with consensus at $7.70-7.71; KRC Q4 FFO 95c was below est. 97c and revs $229.3M also missed est. $233M; Cowen upgraded COR to Outperform and increasing their PT to $152 from $132 as they believe company execution has improved on both the sales and construction fronts at Cowen; PLYM was initiated at Outperform with $17 pt at JMP



·     Pharma movers; PFE Q4 adj EPS 42c misses the 48c estimate on revs $11.7B vs. est. $11.43B and raised its ’21 guidance expecting eps of $3.10 to $3.20 (vs. $3.00 to $3.10), with the company pointing to refinements of its COVID-19 vaccine revenue forecast; VRTX revenue beat consensus, though EPS came in slightly short – revenues of $1.626bn was ahead of consensus of $1.585bn, while guidance slightly below consensus; BMY said it psoriasis drug met main goals in late-stage study; MBRX rises after a preclinical study in animals demonstrated a potentially significant therapeutic benefit of Annamycin against metastatic osteosarcoma; SAVA shares rose as much as 200% after the company focused on neurodegenerative disease treatments announced upbeat results from a study of its treatment for Alzheimer’s disease.

·     Biotech movers; PRTA announces that it will go ahead with a confirmatory Phase 3 AFFIRM-AL study for its AL amyloidosis treatment birtamimab following multiple discussions with the U.S. FDA, with the aim of initiating the trial by mid-2021 (updated to Buy at BTIG after news); DRRX rises after saying the FDA approved Posimir bupivacaine solution for infiltration use in adults for administration into the subacromial space under direct arthroscopic visualization; TVTX said its Phase 3 study of sparsentan in focal segmental glomerulosclerosis achieved its interim partial remission of proteinuria objective after 36 weeks of treatment.

·     Healthcare services and providers; HCA EPS beats by $0.51, beats on revenue, reinstates dividend and buyback (up to added $6B) while FY 21 rev guidance $53.5B-$55.5B vs. $54.24B est. and EPS of $12.10-$13.10 vs. $11.88 consensus – other hospitals moved early (CYH, UHS); OMCL upgraded to Overweight and $147 tgt at Piper as reported a strong Q4 and FY20 with bookings, revenue and adjusted EPS all handily beating 10/27/20 guidance and modestly ahead of the company’s 1/13/21 preliminary results; ALGN tgt to $610 from $525 at Piper as remain bullish ahead of 4Q results being released tomorrow with orthodontic channel checks and several measures of consumer interest in Invisalign supportive of both upside to 4Q; MCK reported 3Q revenue of $62.6B (vs $61.8B cons) and EPS of $4.60 (vs. $4.15 est. and raised F21 guidance expecting EPS of $16.95 to $17.25 (from $16 to $16.50 prior)

·     MedTech and Equipment; IDXX reported 4Q results, with revenue of $721M (est. $681M) and EPS of $1.62 (est. $1.40), with Companion Animal (+17% organic) as 2021 guidance calling for revenue of $3.065B to $3.12B vs. est. $2.96B on better EPS; FMS pre-reported preliminary 4Q results relative to financial targets and indicated that impacts from COVID are expected to have a significant negative effect on 2021 net income; WAT rises as Q4 EPS and sales come in well above estimates ($3.65/$787M vs. est. $2.89/$713M) and issues upside FY21 guidance along with repurchase program


Industrials & Materials

·     Industrial & Machinery; EMR Q1 EPS and revs top views (83c/$4.16B vs. 69c/$3.98B) and raises FY adj eps view to $3.70 to $3.80, from prior $3.40 to $3.50 and remain committed to plan of total company restructuring spend of approximately $200 million; ETN Q4 EPS and sales topped consensus saying qtr was stronger than expected, with organic sales down 5%, at the high end of our guidance range and up 3% QoQ while issued 2021 guidance above estimates; LII Q4 EPS $2.89 adj vs. est. $2.65 and revs $914m vs. est. $884.8Ml reit 2021 rev growth guidance of 4%-8%

·     Transports; UPS posted a top and bottom line beat in package delivery ($2.66/$24.9B vs. est. $2.14/$22.8B) is not providing revenue Fy21 guidance and said U.S. domestic revenue grew 17.4% to $15.74 billion, and international revenue jumped 26.8% to $4.77 billion; overall transport stocks outperformed behind the UPS numbers and into AMZN earnings

·     Aerospace & Defense; HUBB Q4 profit fell as sales fell due to the coronavirus pandemic as EPS miss $1.76 vs. est. $1.77) as sales fell to $1.04B from $1.1B YoY and below ests $1.06B; SPCE opened at record highs around $58 per share before slipping; HOL to take rocket startup Astra public in a $2.1 bln blank-check deal, the companies said today as deal includes $200M private investment led by funds and accounts managed by BlackRock

·     Metals & Materials; silver short squeeze seems to be pulling back along with the broader overall market squeeze after a strong run for several names the past week (AG, PAAS, MUX, CDE, HL); in steel (X, NUE, STLD), BMO noted U.S. spot prices increased further the last two weeks, with spot HRC prices +4.8% to ~$1,147/st, a record high (+10% m/m, +91% y/y); Copper prices fell towards six-week lows ahead of a seasonal demand lull during the Lunar New Year holiday in China, which accounts for 50% of global consumption


Technology, Media & Telecom

·     Internet; AMZN and GOOGL earnings are tonight with high expectations for both, marking another potential market moving catalyst for big tech and online shopping, freight names; BABA shares active following its earnings results this morning

·     Semiconductors; NXPI 4Q20 results were quite strong ($2,507M/$2.22 vs Street $2,460M/$2.11) with upside in auto and mobile in the quarter, and strong customer pull from the channel and issued upside guidance; CRUS slides after results as Cowen noted a significant beat and in-line (conservative) guidance likely causes shares to trade off after other Apple suppliers set a high bar this quarter (downgraded at Hallum)

·     Software movers; PANW upgraded to outperform from neutral at Credit Suisse and raise the tgt by $40 to $425 as sees durable growth at a reasonable price, supported by a strong spending environment, powerful brand and a large installed base; MSTR said it had purchased about 295 bitcoins for $10.0 mln in cash, at an average price of about $33,810 per bitcoin/as of Feb. 2, 2021, holds about 71,079 bitcoins acquired at an aggregate purchase price of $1.145 bln; AI along with RDSA, BKR and MSFT launch the Open AI Energy Initiative, an ecosystem of Ai solutions to help transform the energy industry; SWI dipped after Reuters reported Chinese hackers used SolarWinds bug to spy on U.S. payroll agency

·     Media & Telecom movers; Bumble Inc. is aiming for a valuation of nearly $6 billion in its initial public offering (IPO), as the co, in a regulatory filing said it would sell about 34.5 million shares, raising over $1 billion at the upper end of the price range; GTN announced that the company had entered into an agreement to acquire Quincy Media for $925mm; SIRI active after quarterly results

·     Hardware, Services & Component news; DELL upgraded to buy from neutral and raise tgt to $96 from $68 at Goldman Sachs; DC shares fell after ATOS walked away from deal y’day; PBI shares drop over 205 early following mixed quarterly results; ST falls despite Q3 beat (85c/$906M vs. est. 78c/$897M) as guidance weighs on sentiment – sees Q1 EPS 67c-77c vs. est. 74c

·     Optical and Networking; FN posted a strong quarter, noted improving conditions across a number of lines, offered strong above Street guidance, and announced due to this strength, they are accelerating new production capacity build-out plans and doubling the size of the planned addition to 50% of global capacity; LITE slides on mixed Q2 results as EPS beat but revs of $478.8Mm missed the $480.7Mm estimate; in comm infrastructure; Cowen upgraded COR & downgraded LLNW saying are most positive on QTS, COR and AKAM and most cautious on EQIX and LLNW (downgraded as believe LLNW is facing pricing pressure resulting from its high customer concentration that will have an outsized impact on revenue growth)


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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