Market Review: January 24, 2022

Auto PostDaily Market Report

Closing Recap

Monday, January 24, 2022





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     One of the wildest days on Wall Street in some time (and that’s saying something), with major averages surging late amid a massive reversal in Smallcaps as the Russell 2000 spikes and the Nasdaq Composite jumps over 700 points off its lows. Until the final hour, week four of 2022 began with more carnage among equities. The S&P fell as much as -4% to lows of 4,220 but clawed back to highs above 4,400 in a move that comes on the heels of its first 3-week losing streak since September 2020 to start the year. Equities have been hammered following the stunning 22-month rally from the March 2020 pandemic lows with growth names being hit especially hard as they face the pressures of imminent rising rates and profit-taking after their recent outperformance. The Nasdaq’s hit its lowest intraday level since last May before jumping late while the small-cap Russell 2000 touched 52-week lows, falling as much as 20% from highs before rallying all the way back to up +2% in the afternoon to avoid closing in a bear market from its record close in November. Additionally, the XBI (Biotech ETF) and several cryptocurrencies, including Bitcoin and Ethereum, have been cut in half from last year’s record highs and a multitude of recent IPOs traded at record lows – but also surged late day. As it stands right now, the S&P (which bounced about 200-points off lows) and Dow (which snapped its 6-day losing streak in 1,200 pt swing) remain on pace for their worst months since March 2020 and the Nasdaq is on track for its first-ever January with a double-digit decline. Today’s economic data did not provide a bright spot, either, as U.S. January Manufacturing PMI fell to a 15-month low and Services PMI at an 18-month low. Earnings season will ramp up this week with IBM tonight and GE, JNJ, MMM, NEE, VZ, XRX tomorrow morning.

·     Stock/sector news; KSS surges after reports of competing takeover offers of at least $64-65 vs Friday’s closing price below $47, lifts M, JWN, DDS; BTC Bitcoin, ETH Ethereum slumped further to their lowest levels since July as crypto space gets hit hard; COIN hits record lows, RIOT BTBT MSTR slump to 52-week lows more than 75% off record highs, MARA SI plummet; NFLX extends Friday’s post-earnings decline to now fall ~30% after its disappointing earnings to drag other streaming names DIS ROKU to their own 52-week lows for the second consecutive day; $SNAP another notable faller in tech after a Wedbush downgrade; TAN ICLN alt energy, XBI Biotech ETF plunge to 52-week lows amidst a further rotation out of growth names; IP, WRK, PKG hold up well despite market weakness after announcing price increases



·     Oil prices fell alongside stocks on a stronger dollar and concerns over the possibility of quicker increases to interest rates by the U.S. Federal Reserve. WTI crude fell -$1.83 or 2.15% to settle at $83.31 per barrel while Brent slid -$1.62 or 1.84% to $86.27 per barrel, pulling back from 7-year highs early last week and after a 5-week winning streak. The buck rose vs. other currencies, lifted by the tension between Russia and the West over Ukraine and the possibility of a more hawkish stance from the Fed this week. Gold prices end higher, with February gold rising $9.90 or 0.5% to settle at $1,841.70 an ounce as investors looked to haven assets amid the mkt sell-off.


Currencies & Treasuries

·     Dollar Index (DXY) rises to 2-week high of 96.13 before paring gains back below 96 (still up about 0.255) ahead of the FOMC meeting this Wednesday. Bitcoin prices hit lows below $33,000 this morning, more than 50% off its all-time highs of $67,802 on Nov 9, 2021, and has lost more than 24% of its value, in just three weeks – but pared losses late day, rising back near $36K. Ethereum (ETH) dropped to below $2,200 in the morning before paring losses as well late afternoon.

·     Despite the massive carnage in U.S. stock markets over the last week and month, Treasury yields have been steady (minus the original spike in yields the first week of 2022), especially the last few days with the 10-yr ending near the lows at 1.71%. The two-year Treasury yield slipped midday following a strong auction, down 4 bps to 0.95%, while longer term yields were steady.


Economic Data:

·     Markit Manufacturing PMI Flash Actual 55 vs. est. 56.7 and prior 57.7; Markit Composite PMI Flash Actual 50.8 (lowest since July 2020) vs. previous 57.0 and Markit Services PMI Flash Actual 50.9 below est. 55.4 and prior 57.6






WTI Crude















10-Year Note





Sector News Breakdown (note many sectors with sharp rebounds in the final hour reversed earlier losses)


·     Retailers; KSS shares surge after the WSJ reported over the weekend that activist hedge fund Starboard Value was behind a group that made a $9 billion bid for Kohl’s that values the retailer at $64 a share. (M, JWN move higher in sympathy – Macy’s has faced calls to separate its e-commerce business from brick-and-mortar stores); PTON is being targeted by an activist investor that wants the fitness product company to fire Chief Executive John Foley and explore a sale ; CASY reaffirms sales guidance, expects 3q net income up YoY

·     Consumer Staples; one of few areas holding up well with broader market meltdown; the Financial Times reported this weekend that Nelson Peltz’s activist hedge fund Trian Fund Management has built a stake in Unilever (UL), adding pressure on CEO Jope after a failed bid to buy GlaxoSmithKline Plc’s consumer-health unit; RBC with EPS preview as expect KMB to be negatively impacted by high cost inflation in the quarter, although we see signs of an improvement with pulp coming down sequentially with pulp capacity (later in the year). See potential downside at MO with soft scanner data reflecting the impact of higher gas prices and consumer trade down. See potential topline upside at MDLZ with cost pressures likely limiting profit upside. Have a negative bias into CL’s print with elevated commodity inflation likely to weigh on 2022 guidance, particularly in the first half of the year

·     Restaurants; MCD ests trimmed slightly below consensus at Oppenheimer to account for industry-wide challenges to begin the year while BTIG maintains Buy and $285 tgt saying checks suggest domestic unit growth to accelerate materially despite labor shortage; voice ordering could become more prevalent in 2022; UBS said following a notable pullback YTD, see solid upside for CMG shares given: good visibility into a compelling multi-year growth opportunity,

·     Casinos, Gaming, Lodging & Leisure sector; in cruise lines (CCL, NCLH, RCL), Bank America maintains more cautious stance on cruise, saying in last monthly pricing survey, began to see minor pricing weakness in 2H22 (down about -1% vs Nov) after holding steady prior months; in casino, NY Post reported WYNN is attempting to sell its WynnBet online gaming app and has reduced the price to $500M after scrapping a deal to take WynnBet pubic through a $3.2B SPAC transaction with Austerlitz Acquisition Corp. I (AUS) in November

·     Auto sector; broad based sell-off hitting autos and suppliers as well with costs rising and demand waning; Ford (F) told dealers today that it is suspending customer orders for the new $20K Maverick pickup truck because it is already straining to fill a backlog. The company will resume taking orders for the 2023 Maverick in the summer – WSJ reported



·     E&P and Majors; Energy stocks fall, tracking crude prices which took a hit from a stronger dollar and investor concerns over a quicker-than-expected U.S. rate hike later this week; HAL Q4 adjusted EPS $0.36 vs. est. $0.34; Q4 revs $4.3B vs. est. $4.09B; Q4 FCF $478M; raises qtrly dividend to 12c from 4.5c; Stifel raised their target on SLB to $44 from $38 after it delivered results modestly better than expected; EXTN surges after Canada-based Enerflex Ltd signs deal to buy EXTN for about $735 mln, or an enterprise value of $1.5 bln

·     Refiners: RBC raised their Q4 EPS estimates on PSX, VLO, PBF on macro tailwinds and lowered them on PARR, HFC DK on company-specific headwinds and slightly lowered estimates on MPC as a slower pace of buybacks

·     Utilities & Solar; Truist lowered their price targets on GNRC, ENPH, SEDG, RUN, SPWR, NOVA, SHLS, ARRY, PLUG, BLDP, BE as the sector has been disproportionately impacted by US policy uncertainty and a broad rotation out of growth and they expect Q4 may be show muted demand; Wolfe downgraded WEC to Underperform from Peer-Perform; Mizuho cut their PT on NEE to $88 from $91 to account for current market multiples but says its recent underperformance vs peers mostly reflects the stalled Build Back Better legislation rather than a fundamental change in growth prospects; FTCI was downgraded to Hold at Roth



·     Bank movers; GS leading banks lower initially, extending last week’s earnings related earnings, as investors rotate out of banks and into move defensive sectors; CBU, BOH among earnings results this morning; Barron’s said GS may still be a buy despite shares falling 10% last week on an earnings miss, now down nearly 20% (Bear mkt territory) below their November high; no bounces in FinTech and payments, with MA, Visa (V), AFRM, UPST, GPN, SQ, PYPL tumbling early

·     Bitcoin news; Bitcoin leveraged stocks adding to last week sharp losses, with many names approaching or at 52-week lows amid the 50% pullback in Bitcoin prices off November record highs above $69,000 (last down below $34K) while Ethereum falls below $2,200; watch RIOT, MARA, RIOT, SI, MSTR, OSTK, BTBT, NCTY among others



·     Biotech & Pharma movers; not much in way of stock news ahead of earnings for large cap Pharma in next 2-weeks, but Biotech again extends declines, with XBI down over 20% to start the year – JNJ earnings tomorrow morning in large cap; MRK announced this am that it received a Complete Response Letter for its NDA for gefapixant in refractory or unexplained chronic cough in adults, with the CRL indicating the FDA was seeking additional information related to measurement of efficacy. This comes a week after gefapixant received approval in Japan; OPK slips after saying the FDA issued a Complete Response Letter for the Biologics License Application for Somatrogon; VKTX said the FDA has placed clinical hold on its Phase 1b trial of VK0214 in patients with X-linked adrenoleukodystrophy


Industrials & Materials

·     Aerospace & Defense; defense names held up well today (LMT, NOC); Boeing (BA) to invest an additional $450 million in Wisk to support development of future pilotless flying taxis, they said today; Barclays transferred/upgraded BAH to Overweight from EW in U.S. Aerospace & Defense Govt Services citing accelerating earnings on budgets & capital deployment – overall remain Overweight on BAH, CACI and Equal Weight on SAIC; Wells Fargo said among A&D/Gov Services coverage, favor TDG into earnings, where we expect strong aftermarket growth and increased focus on capital deployment, with fears around recent DoD IG report/Congressional hearing overblown, while also like CACI

·     Metals, Industrial & Machinery; industrial metals stocks tumble (CLF, FCX, X) on slowing growth fears as Fed rate hike cycle expected this year (FOMC meeting Wednesday with expectations for them to say rate hikes to start at March meeting); HOLI revealed that it received a buyout bid that would value the company at about $1.53 billion; said a buyer consortium submitted in December a bid to buy the co for $25 a share in cash 

·     Transports; Dow transports fell further below its 200-day MA support breached last week (stood at 15,330), pulling back today with broader markets; Bank of America reported that U.S. airline bookings (AAL, DAL, LUV, UAL) are improving across all channels saying late December-early January period may have marked the worst of the COVID Omicron impact; GOL said it has signed a deal with U.S. private equity firm Castlelake LP to get up to $600 million in financing to purchase new Boeing 737 Max 8 aircraft; SAIA was upgraded to Buy at Deutsche Bank


Technology, Media & Telecom

·     Internet; SNAP downgraded to Neutral at Wedbush and cuts tgt to $36 from $56 saying seen little evidence of progress against IDFA since SNAP reported 3Q earnings, with our checks indicating continued headwinds across digital advertising; weakness across the board in high growth sectors ahead of earnings (and follow thru weakness after NFLX sub disappointment last week); SHOP extends declines after Friday news reports indicated that Shopify is terminating contracts with several of its 3PL partners that would effectively cut its fulfillment capacity in half; social media names a drag as TWTR gets at least three PT cuts to between $36 and $56; GS slashes to $36 from $60 and firms down play ests into earnings FB, SNAP, TWTR

·     Semiconductors, Software, Hardware, and Equipment movers; tech in general hammered again, with the Nasdaq falling over 12% MTD on rising rate hike fears (no room to hide); Philly semi index (SOX) latest to break below 200-day MA support (was 3,420), down over 2% to 3,360 before paring losses; SPLK upgraded to Buy at BTIG saying recent channel checks have been improving and lead us to believe that the company is turning a corner with its cloud product and observability platform; ANET upgraded to buy from neutral at Citigroup following more than 17% YTD pullback in the shares through Friday, and with several positive catalysts in the near term; PSTG said partners with FB on AI Research SuperCluster (RSC)

·     Media & Telecom movers; CMCSA and CHTR both upgraded to outperform from sector perform at RBC Capital saying Wall Street’s negativity over the competitive threats to cable operators across broadband has become too punitive – Following a strong multi-year run, cable stocks like ATUS, CHTR, and CMCSA are now down between 19-50% since August as sentiment has quickly turned negative driven by a slowdown in broadband subscriber growth and competition fears; in media, FOXA upgraded from Neutral to Buy w/ $50 PT from $42 at UBS saying within traditional Media, believe Fox is better positioned given sports betting optionality, measured DTC spend and leadership within the legacy (albeit declining) Pay TV bundle with its sports & news focus.


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.

Live Trading

Open an Account

Paper Trading