Market Review: February 26, 2021

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Closing Recap

Friday, February 26, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

Stocks end the day lower after a rocky session saw morning gains being sold off before rebounding, though the bounce lost steam in the final 5 minutes of the day. The S&P 500 dropped below its 50-day moving average for the first time in February at the morning’s lows, and the Nasdaq approached its Monday lows around 13,000 before bouncing as tech outperformed on the day. Today’s volatility was highlighted by the VIX briefly topping $30 before retreating back to around $27. Rising Treasury yields has been the focus of markets, and the 10-year yield briefly moved above the S&P dividend yield (1.5%) before moving lower towards the 1.43% level. Precious metals were hit hard today as gold and silver fell sharply with the recovery in Treasury yields and the dollar, while oil prices tumbled from 13-month highs. The Nasdaq experienced its worst weekly performance since October as tech stocks closed the week down nearly 5%. Earnings continued overnight and this morning, but begin to slow down next week, with most of big names behind us for the quarter.

Economic Data

Personal income rises +10.0% vs. est. 9.5% and December unchanged at +0.6%; Personal saving rate 20.5% vs. prior month 13.4%; Personal spending rose +2.4% vs. est. 2.5% and Real consumer spending +2.0% vs. prior Dec -0.8%

January core PCE price index +0.3% vs. est. 0.2%; Jan overall PCE price index +0.3% from +0.4% in Dec ; Jan PCE price index YoY rose +1.5% vs. Dec +1.3% and core +1.5% vs. est. 1.4%

Chicago PMI for February reported at 59.5 below the 61.0 estimate



Oil extends its losses as February draws to a close, with Brent crude oil falling 1.12% to $66.13 a barrel and WTI futures ending down 2.5% at $61.50 a barrel. Both benchmarks remain modestly off recent highs and ended February with more than 18% gains, and have risen now more than 70% since the end of October, however.

Gold slid $46.60, or 2.6%, to settle at $1,728.80/oz as the recent tick up in bond yields and today’s stronger dollar continued to lean on precious metals. Silver lost about 4.5% on the session.

Currencies & Treasuries

The U.S. Dollar hits highest levels in over a week, rising around 0.8% to approach the $91 level before paring back

An overnight jump in U.S. Treasury yields showed some signs of subsiding in cautious European trading on Friday, thanks to a broader retreat in euro zone yields, but worries about rising inflation expectations weighed on sentiment.

Benchmark 10-year U.S. borrowing costs rose to their highest in a year at 1.614% overnight, rocking stock markets yesterday – but was on track to end the day near the lows around 1.44%. Yields are up more than 70 basis points so far this year.

Though bond yields retreated across the yield curve, yields in major government bond markets are still on track to post their biggest monthly rise in years. Benchmark German bond yields are set for their biggest monthly increase since January 2018 with a 27 bps rise.

The rise in bond yields, spurred on by fiscal stimulus hopes in the United States and a post-pandemic economic rebound that could fuel inflation, has reverberated across global markets. But market watchers warn the retreat in yields may be temporary





WTI Crude















10-Year Note





Sector News Breakdown


Consumer, Retailers; FL shares slide misses as Q4 sales of $2.19B missed the $2.29B estimate while Q4 profit topped views, but comps disappoint falling (-2.75) vs. est. +4.9%; CRI shares tumble as posts Q4 adjusted earnings of $2.46 per share, missing the $2.75 estimate on Q4 sales of $989.9M missing expectations of $1.06B noting sales declined in all segments principally due to disruptions related to the COVID-19 pandemic; LB upgraded to neutral from sell at Citi and raise target price from $35 to $58; ETSY surges on Q4 beat as revs rise ~129% to $617.4M, beating estimates of $515.6M with +118% 4Q GMS growth and 31.1% EBITDA margin;

Auto sector; NKLA active on earnings and as an internal review conducted by the company following allegations from a Hindenburg short report last year found that at least nine statements made by the company and former CEO Milton were "inaccurate" in part or whole; FSR CEO said is considering setting up a battery cell manufacturing facility with an unidentified major supplier in Europe or the U.S. in order to maintain a secure supply and its shares rose intraday in response to Morgan Stanley upping their target to $40 from $27

Housing & Building Products; AFI shares rose after selling its production facility, warehouse and real estate property located in South Gate, California to an affiliate of Overton Moore Properties, an industrial developer for $76.7M in cash; BLDR posts Q4 EPS and revenue beats and upbeat guidance; FND reported 4Q results that handily beat sell side comp forecasts as comps accelerated to +24% in January and February despite severe weather impact

Consumer Staples; BYND posted weaker than expected earnings this quarter as strength in retail was partially offset by weakness in foodservice, but announced strategic partnerships with MCD and YUM following recent product tests to further distribute its plant-based products; MNST posted very strong results with net sales +17.6% (est. +11%) and EPS of $0.88 (est. $0.57) as Jan LC gross sales of 17.2% exceeded RBC expectation for +13-15%; SFM shares rally behind better earnings and WW also advanced despite mixed results (EPS miss, sales beat)

Leisure and Lodging; ABNB 4Q solid and better than feared as gross bookings declined 31% y/y, 14% above consensus, while EPS loss of ($11.24) was significantly worse consensus/GBV of $5.9B exceeded Street estimates of $5.3B and revs of $859M was 14% above Street estimates; movie theater chain CNK posts wider than expected Q4 loss as revs $98.24M, down 88% on the year, but missed on the bottom line with a loss per share of ($2.03)

Casinos and gaming; DKNG boosted FY21 revenue guidance to range of $900M to $1B from a prior range of $750M to $850M which reflects mobile sports betting in Michigan and Virginia and said average revenue per MUP was up 55% to $65 and unique players in Q4 to 1.5M; CZR reported mixed 4Q results as same-store Adj. EBITDAR of $346mn (down 40% y/y) was consensus of $399mn with disappointing regional results in the quarter, but co had positive tone and messaging around Vegas



Energy stock movers; DK was downgraded to Neutral with a $28 pt from Buy at Mizuho; Stifel downgraded INT to Hold as shares have recovered to pre-Covid levels and its Q4 results were worse than expected; EOG Q4 adj EPS 71c nearly doubled 36c estimate on revs $2.97B (est. $2.75B, $4.32B YoY); SWN posted Q4 EPS 18c on sales $779M vs expectations of 14c on $701.1M sales; SLCA rises after reporting a smaller than expected Q4 loss and revenues that fell by a third from a year ago but jumped 29% Q/Q.

Utilities; EIX reported an in-line 4th quarter with EPS $1.39 on revs $3.16B and held off from providing 2021 guidance until an ALJ decision on Track 1 of the GRC is received; SRE Q4 adjusted EPS $1.90 vs. estimate $1.60 on revenue $3.17B (+7.7% YoY) vs estimate $3.12B as FY20 EPS $8.03 topped its guidance range $7.20-7.80, and maintain FY21 EPS guidance $7.50-8.10; PNM reported Q4 EPS 15c as FY20 EPS $2.28 was in-line with consensus ($2.16 in FY19), and reaffirmed its FY21 EPS guidance $2.27-2.37; Credit Suisse upgrade NOVA to Outperform and raised their TP to $56 due to the company increasing their customer additions in 2021 by +25%

Al energy and Solar; FSLR shares slip after earnings as management guided to weaker than expected module gross margins for 2021 in-part given the ramp up expense and underutilization costs; RUN 4Q revs $320.4Mm vs. est. $303.5Mm, 4Q reported EPS ($0.88) vs. est. $0.12; expects solar energy capacity installed growth to be +20-25% for FY pro-forma for Vivint Solar; Truist reaffirmed their Buy rating on PLUG but lowered its target to $65 from $80 given pressure from the market’s outlook for higher interest rates and the cost of capital, and Cowen similarly restated their Buy rating with a lower price target ($72 from $82)



Bank movers; banks still gathering strength amid the rising yields, with many large cap and regional banks pushing to 52-week highs; in consumer lending, RKT reports total Q4 rev increase of 144% YoY to $4.7B and adj EPS of $1.14 bot above views of $3.9B and 87c and announces special dividend of $1.11 and says formed new partnership with Morgan Stanley to originate and service conforming mortgages

REITs; CUBE Results in the quarter exceeded expectations by a wide margin, with FFO of $0.47/sh coming in $0.05/sh (+12%) ahead of consensus driven by a stronger than expected same store result (+5.1% SSNOI growth); KeyBanc notes RLJ 4Q results points to accelerating fundamentals, as occupancy has posted week-over-week gains each week in February averaging in the mid-40% range at open hotels or nearly 800 bps above its 4Q20 average; STOR reported a 4Q AFFO miss, but overall results in the quarter were steady and management’s initial 2021 AFFO guidance is 1% above consensus at the midpoint




Pharma movers; JNJ a focus as markets anticipate emergency use for its Covid-19 one shot vaccine; BGNE announces closing of collaboration with NVS to develop and commercialize anti-pd-1 antibody tislelizumab in North America, Europe and Japan as BeiGene will receive an upfront cash payment of $650 million and is eligible to receive up to $1.3 billion upon the achievement of regulatory milestones, $250 million upon the achievement of sales; GHSI announced a 1 for 6 reverse stock split; ABUS and partner ASMB initiate a mid-stage study in patients with chronic hepatitis B virus (HBV) infection; LLY said the U.S. government agreed to purchase a minimum of 100,000 doses of bamlanivimab 700 mg and etesevimab 1400 mg together; in cannabis, CRON posted a wider-than-expected loss for the fourth quarter, but revenue that beat estimates; Credit Suisse upgraded ELAN to Outperform on its achievable growth potential following its beat-and-raise report on Wednesday

Biotech movers; BMRN Q4 revenue came in slightly ahead of consensus, but commentary on potential Roctavian filing timelines disappointed, as did guidance; NVAX and TAK finalize license agreement for Novavax’ covid-19 vaccine candidate in Japan; Takeda initiates phase 1/2 trial in Japan; PBYI and CANbridge Pharmaceuticals agreed to terminate their 2018 license agreement, while PBYI and French pharmaceutical company Pierre Fabre have agreed to extend the terms of the 2019 license agreement; RHHBY said that the European Medicines Agency’s Committee for Medicinal Products for Human Use has issued an opinion supporting the use of the REGN-COV2 antibody cocktail proposed for the treatment of Covid-19 patients; PRTA upgraded to outperform and raises PT to $28 at RBC following the announcement that the co has reached an agreement with the FDA towards a potential path-to-market for Birtamimab in the AL market; TCDA shares plunged after disclosing the receipt of an Appeal Denied Letter (ADL) regarding the CRL it received for veverimer

Healthcare services, providers and MedTech; UHS posted results well below expectations as it dealt with a cyberattack; LMAT reported solid 4Q results which beat our forecast on both the top and bottom lines; HCAT reported solid 4Q20 revenue which was slightly ahead of the Street with EBITDA losses directionally better than expectations


Industrials & Materials

Industrial & Machinery; MTZ reported 4Q20 adj. EPS of $1.75, which beat consensus of $1.67, and exceeded the high end of quarterly EPS guidance range, driven by EBITDA margins coming in ~100 bps better than expected; FLR tumbles 16% after rising initially post mixed earnings – issued weaker guidance (50c-80c vs. est. $1.09)

Transports; KeyBanc on truckers saying take a slightly cautious near-term stance ahead of upcoming less-than-truckload mid-quarter updates expected the week of March 1 (prefers ODFL, XPO for exposure); NAT reported Q4 EPS loss (19c) vs est. loss (16c) on revs $16.3M (-72% YoY) vs est. $23.1M, and cut its quarterly dividend in half to 2c from 4c; ATSG Q4 adj EPS 38c vs. est. $0.34 on revs $399.4M vs. est. $414.3M and expects FY adj EBITDA at least $525M (est. $542.9m); Wolfe downgraded LSTR to Peer perform from Outperform

Aerospace & Defense; SPCE shares fell after saying it is delaying the next test flight of its SpaceShipTwo suborbital as part of a revamped flight test program that will postpone flights of space tourists out until 2022 (pushed out its scheduled powered flight test by eight to nine weeks as it cited electromagnetic interference which it is addressing); AXON reported much better than expected 4Q sales results driven by a large international TASER7 transaction and additional TASER7 sales into newer markets. As a result, the strong sales drove a quarterly best 28.7% adjusted EBITDA margins in over six years

Metals & Materials; CLW was at the lower end of its pre-announced adj. EBITDA range in 4Q and guided below consensus for 1Q; TMST 4Q20 adjusted EPS of +$0.01 vs. Street’s loss of $0.20 and adjusted FIFO EBITDA of $21M handily beat the Street’s $11.3M via strong q/q improvement in manufacturing efficiencies and volume upside


Technology, Media & Telecom

Software movers; ADSK beat expectations for Q4, with a 3% beat on rev, 1% beat on op. margin and 3% beat on billings, while FY22 guidance was in line with rev expected to grow 13-15%, but Q1 guidance fell a bit short; VMW posted in-line or better results across most key metrics, including total revs (driven entirely from better on-premise license sales, -2% instead of the -7% we were modeling), OMs (90bps above the guide), cRPO growth (12% versus our 6% estimate); WDAY guided lower than expectations, despite posting better-than-expected 4QF21/Jan cRPO/backlog growth of 19%, well above the total backlog growth guidance of 14-16%; SAIL ‘21 rev guidance was above expectations despite a 12 pt headwind from an increasing SaaS-mix with increased visibility provided into both SaaS revenue and ARR; CRM shares were the worst performer in the Dow despite earnings that topped consensus as Q4 adj EPS $1.04 vs. est. $0.75, revenue $5.82B vs. est. $5.68B, and guidance that was also better than expected with the company seeing Q1 adj EPS 88c-89c vs. est. 76c and revenue $6.875B-$6.885B vs. est. $5.72B; DASH reported Q4 EPS ($2.67) loss in its first earnings as a public company with revs $970M (est. $938M) and total orders more than tripling YoY; SOS was named in short reports by both Hindenburg and Culper Research

Media & Telecom movers; AT&T Inc. (T) agreed to sell a stake in its Pay-TV unit DirecTV to private-equity firm TPG and carve out the struggling business – AT&T will retain a 70% stake in the business. TPG will pay $1.8 billion in cash for a 30% stake (deal values the new company at $16.25B with about $6.4B on of debt (well below the $49B – about $66B debt they paid); ticket and event companies LYV and EB both active following earnings

Hardware & Component news; HPQ posted F1Q21 results well above expectations on WFH and remote learning demand across both PCs and consumer printers. Printing supplies returned to growth after a tough 2 years, and resulting margins drove the large EPS upside; DELL Q4 adj EPS $2.70 vs. est. $2.14; Q4 revenue $26.1B vs. est. $24.49B; ended the year with total deferred rev of $30.8 bln, up $3 bln YoY and qtrly recurring rev about $6 bln, up 8%; VMW Q4 EPS $2.21 vs. est. $2.05, revenue $3.3B vs. est. $3.23B, subscription and SaaS revenue $707M (+27% YoY)


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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