Market Review: February 04, 2021

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Closing Recap

Thursday, February 04, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     What a difference a week makes! After major averages posted their worst weekly returns since October, major averages are at or near all-time highs today, as the Russell 2000, Nasdaq Composite and S&P 500 all eclipsed their prior bests. Energy has been a beast, as oil prices rise a 4th straight day to fresh 1-year highs, while banks jump gain with Treasury yields pushing higher. The S&P 500 and Dow made it a 4th straight day of gains after a better round of economic data (ahead of monthly payrolls tomorrow morning). Between the hopes for new stimulus ($1.9 trillion proposed by Biden), vaccine rollout in effect, earnings crushing this quarter, economy improvement expectations, Fed policy remains accommodative, its hard to see what derails this market (though soaring valuations, a surge in the dollar to 2-month highs, higher yields are worth watching). The recent short interest “meme” squeeze trades that originated from Reddit and WallStreetBets forums have come crashing down to earth, with GME trading below $60 per share today after spending much of last week above the $300 level, along with big drops off massive spikes for the likes of AMC, KOSS, EXPR, and BB. Investors are awaiting next steps on a new fiscal stimulus package in the U.S. In a Wednesday evening call with House Democrats, President Biden said he’s willing to send the next round of checks to a smaller, more targeted group of people. The CBOE Volatility index (VIX) dropped to around the $22 level, down -3% on day, off highs above 37 from Monday (down 36% last five).

·     Top stock/sector news: Pandemic winners PYPL, EBAY, ALGN each continue higher to new record highs after eps/rev beats attract several PT hikes; other winner PENN also touches new ATH despite its miss on positive data from its MI launch; retail was busy as GOOS surges on a strong quarter driven by e-commerce sales, TPR jumps on its results, LB, KSS spike on better guidance, and RL rises despite missing quarterly estimates; in semis earnings, QCOM sinks after revs miss estimates and QRVO stumbles despite its beat as it underperformed rival SWKS quarter; DKNG, SKLZ rise after the NFL signs agreements with both companies; NFLX gains intraday after announcing a price raise in Japan; DIS, SEAS, SIX shares jumped late day on reports California legislators sponsor bill to reopen theme parks.

Economic Data

·     Weekly Jobless Claims fell to 779,000 in latest week below the consensus 830,000, while prior week was downwardly revised to 812,000 from 847,000; the 4-week moving average fell to 848,250 from 849,500 prior week; continuing claims fell to 4.592M vs. est. 4.7M; U.S. insured unemployment rate fell to 3.2% from 3.4% prior.

·     U.S. Q4 non-farm productivity dropped -4.8%, below the consensus -2.8% vs Q3 +5.1%; Q4 non-farm unit labor costs jumped +6.8%, above consensus +4.0% and vs. Q3 -7.0%

·     December Factory Orders rose +1.1%, topping the +0.7% consensus while the prior month was revised up to +1.3% from +1%; shipments rose +1.7%.


Commodities, Currencies & Treasuries

·     Oil prices recovered from earlier losses to end the day higher, as WTI crude gained $0.54, or 1% to settle at $56.23 per barrel, extending recent gains as trades at best levels since last January. WTI crude’s increase marks four straight sessions of gains and is on course for one of its biggest weekly gains in months. Another “risk-on” day helped boost stocks and oil prices, with defensive, safe-haven assets (gold, bonds) abandoned. Oil prices have been fortified by shrinking stockpiles and continued investor optimism the economy will strengthen in the coming months. Natural gas prices rose to their highest levels since November following the recent cold weather impact.

·     Gold prices dropped -$43.90 or 2.4% to settle at $1,791.20 an ounce as investors pour money again into stocks and now the dollar (at more than 2-month highs) and out of safe-haven and defensive assets as markets again exhibiting zero fear. March silver settled at $26.234 an ounce, down 65c, or 2.4%, settling at their lowest since late November.

·     The U.S. dollar extends recent gains, rising a 5th straight day, with the dollar index (DXY) up 0.45% around the 91.50 level (up 1.7% YTD), nearly a 200 bps move off lows early January amid increasing confidence in the U.S. economy given better data, and an upswing in Treasury yields. The euro fell to below the $1.20 level for the first time since Dec. 1, while the buck rises to its best levels since around the election against the Japanese yen (105.50 level). The benchmark 10-year yield was up 1.5 bps at 1.1461% and at one point reached 1.16%.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; RL Q3 Non-GAAP EPS $1.67 misses by $0.06 and GAAP EPS of $1.61 misses by $0.08, revenue $1.43B (-18.3% YoY) misses by $40M, and comparable store sales -21% miss consensus -9.2%; KSS sees Q4 EPS to exceed company expectations with significant improvement from the third quarter, as the projected comparable sales decrease of 11% would mark the third consecutive quarter of sequential improvement; TPR reported Q2 adj EPS $1.15 vs est. $1.00 on sales $1.69B vs est. $1.63B; GOOS delivered a strong quarter with Q3 adj EPS C$1.01 topping est. C$0.86 on revs C$474M that also beat est. C$413.1M, boosted by a surge in online sales and demand for luxury parkas in China as global e-commerce rev increased over 39% and DTC rev in mainland China rose over 41%; BKE posted January net sales $63.1M (+34% YoY) and comp store sales +35.3%; SBH reported Q1 EPS 50c vs est. 47c on revs $936M vs est. $968M, and comp sales -3.7% YoY vs est. -0.9%; LB increased its Q4 EPS guidance to $2.95-$3.00 from $2.70-2.80 and expects comp sales to increase 10% following its strong January results; RCII sees EPS and adj EBITDA ahead or prior guidance and also announced an offering of $450M of senior notes; BBY upgrade to Buy at Bank America as 1) it should come out of COVID stronger 2) there is steady room for growth in multiple segments and 3) valuation is attractive at 14x

·     Auto sector; XPEV said it has shipped the second batch of over 200 G3 smart electric SUVs for the European market; achieved a record monthly delivery of 6,015 Smart EVs (3,710 P7s and 2,305 G3s) in the Chinese market in January 2021, representing a growth of 470% Y/Y; XL is partnering with Curbtender as the companies will jointly develop a series of all-electric, plug-in hybrid and hybrid electric refuse truck models; HYRE 2.2M share Spot Secondary priced at $11.75; Auto supplier LEA beats for Q4 EPS and revenue

·     Consumer Staples; CLX 2Q EPS $2.03 vs. est. $1.78 on sales $1.84B vs. est. $1.75B; sees FY21 sales +10-13% vs. est. +9%, sees FY21 EPS $8.05-8.25 incl $0.45-0.50 from increased stake in Saudi JV vs. est. $8.18 (but now expects back-half sales to be about flat when it starts to lap some very tough comparables); HSY sales beat forecasts, as North America strength offsets international weakness; PM revenue fell in the fourth quarter, but profit rose as costs decreased; UL shares slip after eps, dividend cut, restructuring; COST reported January net sales $13.64B (+17.9% YoY), comp sales +15.9% (est. +11.7%, ex gas comps +15.7%), and net sales $79.11B for the 22 weeks ending Jan 31

·     Restaurants; YUMC beat on the top and bottom line for Q4 while overall comp sales fell (-4%) with KFC comp sales down (4%) and fell (5%) for Pizza Hut on better margins; YUM said internationally, sales trends have been softer in current qtr; seen a slight deceleration from q4 trends

·     Leisure and Gaming; PENN Q4 EPS and revs fell short of consensus (7c/$1.02B vs. est. 24c/$1.08B) – Most importantly gave incrementally bullish color on Barstool/MI launch. MI did a $27.5m handle in first 10 days; Truist raising 2021 ests. for the three park operators (FUN, SEAS, SIX) to reflect the findings of a recently-conducted consumer survey. Not only did the park-going experience remain remarkably positive during 2020, but season pass renewal intention and park visitation plans for ’21 were each noticeably stronger; Cruise lines (RCL, CCL) early strength



·     Energy stock movers; after outperformance on Wednesday with oil prices touching 1-year highs, the energy complex took a breather today; RDS reported Q4 adj eps $0.05 vs est. $0.08 ($0.37 YoY) on revs $43.99B vs est. $47.45B ($84.01B YoY), and it will keep its Q4 dividend unchanged but expects to raise its 1Q21 dividend by about 4%; SU reported Q4 operating EPS loss of (C$0.09) / ($0.70) vs est. loss of (C$0.21) on revs C$6.59B vs est. C$6.71B; PTEN posts Q4 loss of (57C) vs. est. loss (44c) as Q4 revenue fell 55% to $221M and expects Q1 rig count will average 69 rigs, of which five are expected to be idle but contracted

·     Utilities & Solar; SPWR downgraded to Underweight at Morgan Stanley following outperformance with an unchanged price target of $27 (has outperformed solar installer and equipment stocks by 120%-200% over the last 3 months, trades at a significant premium to peers despite a lower revenue growth and EBITDA margin outlook); in coal, BTU falls after saying sees 1q results lower vs 4q due to reduced volumes across all segments – weighing on other coal names HCC, ARCH



·     Bank movers/investment management; sector has been rallying behind a bounce in Treasury yields to start the year – no different today as yields rise (JPM, WFC, C); JHG a beat on Performance fees +$0.16, Management fees (+$0.03) and other revenues (+0.02) helped by higher fee rate (51.6bps vs 51bps forecast). Net Revenues +$0.21. Expenses +$0.02; APAM upgraded to Op at KBW Inc. due to improved flow momentum, strong profitability (forecast 43.3% operating margin given strong revenue tailwinds), and a still-high forward current yield of about 9%; in exchanges, ICE Q4 revenue increases 29%, reflecting its acquisition of Ellie Mae, combined with growth in its exchanges and fixed income and data services segments.

·     Insurance; busy night of earnings as ALL posted a more than $2.00 beat on earnings at $5.87 while revenues of $12.0B blew past estimates; AFL Q4 profit rose 22% with EPS of $1.35, up from $1.06 YoY and above estimates of $1.04 and an improvement in revs to $5.91B; LNC posted a miss on the top and bottom line ($1.78/$4.14B vs. est. $1.93/$4.61B); MET Q4 earnings of $2.03 beat the $1.52 estimate – insurers benefitted from the stay-at-home restrictions as customers drove less boosting earnings for their segments; CB announced a $1B stock buyback plan; THG beat on Higher investment income & reserve releases, as well as a lower CLR and Cat; auto insurer names posting strong results due to Covid restrictions, less people traveling – less claim frequency

·     Consumer Finance; PYPL leads contactless payment names higher after quarterly beat on higher revs with a year outlook calling for high 20s volume growth, 19% revenue growth and 17% adj. EPS growth; SC upgraded to Overweight and up tgt to $28 from $22 at Piper after co handily beat estimates this quarter as credit strength combined with wider spreads drove better than expected results

·     REITs; Raymond James upgraded EXR to Outperform from Market Perform (target price $125), upgrading PSA to Market Perform from Underperform, downgrading CUBE to Underperform from Market Perform, and reiterating our Outperform rating on LSI (target price to $89, +$9) ahead of what we expect to be a strong 4Q20 earnings season and issuance of 2021 guidance. Our revised 2021 estimates increase ~9% due to better-than-previously expected outlooks for occupancy, rates, and external growth activity; WD got a pop after Motley Fool named as a second runner up pick for the year



·     Pharma movers; MRK Q4 EPS miss of $1.32 vs. est. $1.38 and revenue also light $12.5B vs. est. $12.68B, though year guidance comes in above views – $6.48-$6.68 vs. est. $6.41 and announced that Kenneth C. Frazier, chairman and chief executive officer, will retire as CEO, effective June 30; BMY posts better-than-expected quarterly profit, helped by strong sales of blood cancer drugs and raises year forecast (though in-line with ests); LCI drops after lowering 2021 sales outlook to a range of $480M-$500M from $520M-4545M citing new competitive approvals on certain key products; SANA leaps in IPO debut, opens at $35 after pricing at $25

·     Biotech movers; 23andMe, a consumer genetics company, is going public via a merger with Richard Branson’s SPAC VG Acquisition Corp. (VGAC), in a deal with an enterprise value of about $3.5 billion, the companies said Thursday; KPTI announces Xpovio® (Selinexor) receives regulatory approval in Israel for the treatment of patients with multiple myeloma and diffuse large b-cell lymphoma

·     Healthcare services and providers; in managed care, CI EPS missed but beat on revs (+14.1% YoY) while Medical care ratio worsened to 85.8%, compared with 82.3% in the prior year quarter; in the dental space, ALGN shares jump as reported above-consensus 4Q results with encouraging trends across revenue and case volume, but issued no year guidance; CLOV shares tumble after being mentioned negatively by Hindenburg Research; PAHC posted an in-line F2Q on the top line, though beat fairly sizable on EBITDA, EPS and gross margins; ABC rises on higher guidance; GDRX shares jumped after being mentioned as a runner up pick for year for Motley Fool

·     MedTech and Equipment; CSII came in $1.3M below consensus, as ramping COVID case counts throughout the quarter depressed procedure volumes with pressure felt most acutely on the Peripheral side of the business; BDX posted Q1 profit and raised its 2021 outlook to rev growth of 12%-14% from 10%-12% prior on better EPS as well; DGX posts Q4 revenue of $3 bln, beating analysts’ estimates of $2.93 bln, on higher revs amid robust demand for COVID-19 testing; BAX Q4 EPS slightly above expectations (80c vs 76c est.), FY21 EPS guide was below expectations ($3.35-$3.43 vs $3.47 est.). Q1 EPS guide also below expectations


Industrials & Materials

·     Industrial & Machinery; CMI Q4 EPS $3.36 vs. est. $2.80; Q4 revs $5.8B vs. est. $5.19B; says plans to return 75% of op cash flow to holders through dividends and stock buybacks – shares fell after weaker margins and expects China demand to moderate in 2021 after record year in 2020 an; PH a higher mover on earnings; SNA Q4 net sales increased by ~12% YoY to $1.07B and +10.6% on organic basis and adj. net earnings increased by 23% YoY to $209.9M.

·     Metals & Materials; VALE Q4 iron ore production fell 4.7% QoQ but rose 7.9% YoY to 84.5M metric tons, as weather and restrictions on waste disposal at some mines slowed operations; APD shares dropped posted a Q1 EPS miss of $2.12 vs. est. $2.19; PPG said it raised its takeover offer for Finnish paints maker Tikkurila including debt, topping prior bid from Akzo Nobel; BLL slipped after saying expects capex to exceed $1.5B in 2021, higher than it spent last year and is positioned to exceed long-term diluted earnings per share growth goal of 10% to 15%


Technology, Media & Telecom

·     Internet; EBAY advanced after guiding Q1 revenue of $2.94B-$2.99B, well above the $2.53B estimate following a beat in Q4 as active buyers rose 7% to a total of 185 mln; BABA rises after Reuters reported its financial affiliate Ant Group plans to divest its consumer-credit data operations as part of restructuring plans to get its suspended IPO back on track; Cameras on Google (GOOGL) Pixel smartphones will be able to measure heart and breathing rates starting next month, in one of the first applications of AI to its wellness services; earnings tonight from SNAP, PINS; NFLX jumps after price increase in Japan

·     Semiconductors; QCOM shares fell after posting slightly weaker Q1 sales of $8.24B below the consensus $8.27B saying semiconductor supply constraints that have roiled the industry contributed to fiscal Q1 sales; QRVO reported a good DecQ rev/EPS of $1.1B/$3.08 and guided to a strong MarQ at $1.04B/ $2.42 (cons. $944M/$2.01) ~10% above consensus but below peer SWKS guide of 24% above consensus; SIMO shares rising after Q3 eps beat – Q4 EPS 86c/$143.9M vs. est. 71c/$139M – and issued upbeat Q1 and FY guidance; semi-equipment names higher after KLAC beat and raise as expected given ASML and higher cap –ex commentary from big chip players of late (TSM)

·     Software movers; APPS upgraded to Buy wit $73 tgt at Ladenburg as co reported another impressive quarter with revenues of $88.6 million, up 146% year/year, and roughly $15 million ahead of our model; INOV 4Q results were generally inline with the January pre-announcement, highlighted by accelerating revenue growth and strong new ACV; FVRR shares jumped after mentioned as a re-pick selection by Motley Fool

·     Media & Telecom movers; IAC reports a 27% rise in Q4 rev to $848.8M beating the $809M estimate as sales from online video platform Vimeo jumped 54%, driven by a 24% growth in subscribers to 1.5M and revs from its ANGI segment rose 12% to $359.3M; SKLZ shares jumped after signing a multi-year gaming agreement The National Football League; MTCH rebounds after positive analyst comments post earnings (shares fell yesterday post results); MDP rises after topping expectations with double-digit revenue gains and hitting a digital ad milestone.

·     Hardware & Component news; NTGR Q4 results featured another quarter of upside to revenue, profit dollars, and EPS while CHP demand remains strong while supply constraints persist, particularly within Wi-Fi 6 product set; DGII rises as reported top and bottom line beat but didn’t provide guidance but noted they hope to grow q/q in March; XRX downgraded to underweight at Morgan Stanley saying it faces the conundrum of digesting a shrinking end market while needing to invest in new categories to drive long-term 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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