Market Review: July 02, 2021

Auto PostDaily Market Report

Closing Recap

Friday, July 02, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

Another record high for stocks with the S&P and Nasdaq both easily clearing their record highs set earlier this week. The Dow joined them with a record close, though today’s intraday high was nearly 1% off May 10’s record above 35,000. The S&P, which extends its winning streak to 7, set its all-time high every day this week, while the Nasdaq enjoyed its best performance in 13 weeks as the 10-year yield went below 1.43% for the first time in 4 months. In addition to general positive momentum, stocks received a boost today with a strong nonfarm jobs report that pleased investors by hitting a perfect balance between being strong, but not strong enough that it could potentially implore the Fed to accelerate easing its foot off the pedal. The 850,000 jobs added in June was the most since September and topped the consensus 700,000 estimate, concluding a strong week of economic data that included the highest ever reading in the Case Shiller home price index, the strongest May for pending home sales since 2005, the highest consumer confidence reading and fewest weekly jobless claims since before the pandemic, and ADP private payrolls topping 600,000 for the second straight month. Additionally, companies like BBBY, MU, WBA, MKC, STZ, and GIS each reported earnings beats even if the stocks had mixed reactions. Next week is very light on earnings reports, offering investors a brief respite before banks kick off the next earnings season in 2 weeks.

Stock/sector news; SPCE surges at the open, rising as much as 25% after announcing a test flight on July 11 that will have founder Richard Branson on board, though shares pare gains throughout the day; IBM slides as the S&P’s worst performer after their president stepped down; Gun stocks (SWBI RGR VSTO POWW) plunge after the FBI reports the fewest monthly NICS firearm background checks since September; AVGO gives up slight gains on the day and goes red after the FTC charges it with illegally monopolizing the semiconductor component market; RIDE plummets after the Justice Department reports a probe into the company; JNJ gains after data shows its vaccine is effective against Covid variants

Economic Data:

US June nonfarm payrolls +850,000 vs consensus +700,000, May +583,000 (revised from +559,000); Labor Force Participation Rate unchanged at 61.6%; Jobless rate 5.9% (consensus 5.7%) vs May 5.8%

Average hourly earnings all private workers +0.3% (cons +0.4%) vs May +0.4% (revised from +0.5%), to $30.40 vs May $30.30; June year-on-year earnings +3.6%; U.S. June average workweek all private workers 34.7 hrs (cons 34.9 hrs) vs May 34.8 hrs, factory 40.2 vs 40.4, overtime 3.2 vs 3.3

US May trade deficit $71.2B (consensus $71.4B) vs April deficit $69.1B (prev $68.90B); US May exports +0.6% vs April +1.0%, imports +1.3% vs April -1.4%; US May exports $206.02B vs April $204.70B, imports $277.26B vs April $273.78B

US May factory orders +1.7% (consensus +1.6%) vs April -0.1% (prev -0.6%); US May durables orders unrevised at +2.3%; US May nondurables orders +1.0% vs April +0.5%


Commodities, Currencies & Treasuries

Gold prices rose with August gold rising $6.50, or 0.4%, settling at $1,783.30/oz. This was its highest settle in over a week and marked the metal’s third consecutive daily gain in over a month. Oil prices were flat, with WTI crude barely slipping $0.07, or 0.1%, to $75.16/barrel as the OPEC+ decision on new output policy is still being debated after the UAE reportedly rebuffed yesterday’s agreement to add 400k bpd from August through the end of the year. The 10-year yield went below 1.43% for the first time since March 2 after nonfarms payrolls were better than consensus.






WTI Crude















10-Year Note





Sector News Breakdown


Retailers; Cowen lifted their price target on SWBI to $38 from $30.50 and would view any weakness after its recent run and Russell rebalancing as a buying opportunity; Evercore downgraded WISH to In-Line; Gun stocks (SWBI, RGR, VSTO, POWW) moved lower after FBI reports 3.05M NICS firearm background checks, the fewest since September

Auto sector; TSLA Q2 deliveries 201,250 vs est. 204,160; F (Ford) June total vehicle sales 115,789 (-26.9% YoY, in-line with ests), June EV sales +117% YoY, ending 1H with a record 56,570 sales, Mustang Mach-E sales +26.7% vs May, best 1H SUV retail sales in 20 years on strength from new products; LI delivered 7,713 Li ONE vehicles in June (+320.6% YoY) and total Q2 deliveries 17,575 (+166.1%) exceeded the top end of its guidance range; BMWYY Q2 brand unit sales 96,561 units (+89.5% YoY, +15% vs 2019) North America Q2 sales 105,901 (+89.5%), total brand sales for the 1H +52.2% YoY, +8.9% vs 2019; Wedbush’s retail checks show HOG Q2 sales up vs 2019; The Justice Department is in the early stage of its probe into RIDE

Consumer Staples; Citi initiated VWE at Buy with a $14 target as a way to invest in premium wine; Several analysts raised their price targets on SMPL after their earnings report yesterday; Jim Chanos reiterated his short position in BYND and said growth has come to a screeching halt and does not support current valuation; WTER postponed its earnings call since the 10-K has not been filed yet

Casinos, Gaming, Lodging & Leisure sector; Raymond James initiated CWH at Outperform with a $45 tgt given its attractive valuation and unique position in a very healthy domestic RV industry to continue to gain meaningful market share, driven primarily by growing its dealer footprint and expanding into higher margin and less cyclical sources of revenue, WGO at Market Perform as it should benefit from a healthy industry backdrop but faces tougher competition in motorhomes, and THO on concerns about share erosion in North American towables; Cowen is now well above the street consensus on hotels after raising estimates and PTs on MAR ($170 from $130), HLT ($135 from $110), and H (Hyatt) ($85 from $55) on evidence of a travel boom already building that could put US hotel REVPAR at record levels as early as the end of summer; China announced a cybersecurity review of DIDI that will prevent users from registering for the service during the review


Energy stock movers; PTR said it expects to return to profitability in 1H21 due to increasing demand and higher average crude prices; Tudor upgraded CVR to Hold; After last week’s SCOTUS ruling on back-dated SRE waivers and ahead of 2021 renewable volume obligations (RVO), Piper said the outlook for RIN balances suggests some relief to refiners (HFC, PBF) while maintaining a tight RIN market that supports the agricultural and biofuels industry (REGI, DAR)

Utilities & Solar; Argus maintained EIX at Buy but cut its price target to $63 from $75 as it has invested in new technology to prevent wildfire damage and trades below the average peer multiple


Bank movers; SCHW said it has been cooperating with the SEC on an investigation concerned with the company’s historic disclosures tied to its Intelligent Portfolios digital advisory business, and it also expects to record a liability and related non-deductible $200M charge in Q2; PNC was upgraded to Outperform from Underperform at Wolfe after their BBVA acquisition was completed and as it is ahead of peers in its cloud journey, which should give it an edge in product development and innovation; Wells raised their PT on GS to $420 from $385 due to higher dividends, roll forward of estimates, and higher comps, though they lower their Q2 EPS estimate; CME June average daily contract volume 18.4M, daily contract volume +5%; APO said it would buy a stake up to 24.9% in fintech investor Motive Partners that values the company at ~$1B

Consumer Finance; Santander Holdings submitted a proposal to SC yesterday to acquire all outstanding shares of common stock of SC not already owned by SHUSA for $39.00 per share in cash, a 7.4% premium to Wednesday’s closing price. SHUSA currently owns approximately 80% of SC’s outstanding shares of common stock and, if the transaction is completed, SC would become a wholly-owned subsidiary of SHUSA; Credit Suisse said loan balances are not rising as fast as credit quality at card issuers and believes SYF, DFA will likely have the best balance growth, COF valuation could be improved by aggressive buybacks and a potential NII beat, and AXP could lag COF as its spending is more transactor-focused, and they raise 2021-22 EPS estimates on all 4 names

REITs; Baird initiated NSA at Outperform with a $54 pt as strong tailwinds for organic growth, a healthy deal pace, and favorable capital markets offset a high valuation; Wolfe initiated IIPR at OW with a $249 PT on the belief that the timeframe to produce outsized growth is longer than that which is priced into the stock



Pharma movers; RNLX was initiated with a Buy rating and $38 pt at Berenberg; Credit Suisse reiterated their OP rating on SHC as they see a court ruling on a preliminary injunction in New Mexico as unlikely to materially affect operations; Ladenburg initiated coverage on HROW at Buy with a $14.25 PT; JNJ announced data that demonstrated its single-shot COVID-19 vaccine generated strong, persistent activity against the rapidly spreading Delta variant and other highly prevalent SARS-CoV-2 viral variants the immune response lasting at least eight months, the length of time evaluated to date; Truist raised their PT on LLY to $262 from $225 after moving up its projected timeline for FDA approval of donanemab to 2023 from 2025

Biotech movers; ARCT new OW with $71 PT at Cantor who sees the market underestimating how long Covid vaccines will be needed and upside beyond Covid driven by the company’s early pipeline in influenza and rare diseases; Mizuho sees CNCE as the best-in-class treatment for alopecia areata after data in its CTP-543 trial was superior to competitors and had no new safety signals; The FDA said it found deficiencies in its review of ITRM’s urinary tract infection treatment; ALEC reached a $2.2B collaboration deal with GSK to co-develop treatments for neurogenerative diseases, such as Alzheimer’s and Parkinson’s; JPMorgan reiterated APLS as a Top Idea ahead of their Ph 3 DERBY / OAKS results and forecast shares reaching $85-$115 on a trial home-run, but up to 80% downside on a miss

Healthcare Services; Deutsche upgraded EHC to Buy with a $104 pt on favorable risk/reward after underperforming peers over the past several quarters; Stephens initiated OW ratings on HQY ($100 pt) and DOCRF ($5 pt); ZTS donated more than 11,000 doses of its experimental Covid vaccine for over 100 species


Industrials & Materials

Aerospace & Defense; a BA 737 cargo jet was forced to make an emergency landing off the coast of Hawaii after experiencing a serious engine problem; SPCE announced its next test flight will be July 11 and founder Richard Branson will be a passenger, 9 days ahead of Jeff Bezos’ Blue Origin flight; TATT signed an additional new strategic MRO and lease agreement with HON for the maintenance repair and overhaul of Honywell’s 131 Series of Auxiliary Power Units; RTX won a $2B Air Force contract to produce a nuclear-armed cruise missile with design and manufacturing expected to be completed in February 2027; Canaccord was positive on the space sector (SPCE, ASTR, NVSAU) on elevated investor interest and upcoming catalysts such as test flights; Truist said investors should seize the opportunity in BWXT to acquire a predictable and differentiated asset with numerous organic growth levers that is expected to have a superior margin profile and return characteristics relative to defense peers after shares have lagged YTD and now trade at a 12% discount to peers

Transports; Loop said investors should not overlook signs that UPS is telegraphing a big dividend increase next year; RYAAY June passenger traffic 5.3M (0.4M YoY) with over 38,000 flights and a 72% load factor, and expects more than 8M passengers in July with a mid-70% load factor

Technology, Media & Telecom

Semiconductors; TSM was reiterated on Goldman’s Conviction List ahead of earnings, and AAPL and INTC emerged as the first adopters o the company’s next-gen chip ahead of its deployment as early as next year; The FTC charged AVGO with illegal monopolization and orders the semiconductor supplier to cease its anticompetitive conduct

Software movers; DDOG partnered with CRM to provide real-time monitoring and threat protection; CRNC will join the D&P MidCap 400 index starting July 7

Hardware, Components & Services; Barclays downgraded KEYS to EW as they see limited margin expansion after the company’s successful market share grab and margin expansion over the past few years and given a deceleration in the 5G cycle; Needham upped their price target on ZBRA to $580 from $525 after their acquisition of Fetch Robotics; IBM President Jim Whitehurst announced he is stepping down; Bernstein said the consolidation math if HPQ pursues a deal with XRX again (XRX withdrew its hostile takeover bid of HPQ in March 2020 due to Covid) is compelling and accretive, though they would still be surprised if a deal happens

Media & Telecom movers; SHEN declared an $18.75 special dividend; the NYSE immediately suspended trading in GTT and began the delisting procedure due to the company’s inability to file restated financial statements and delayed filings before the end of the additional cure period; The Information reported DIS internal data shows Dis+ subscriber growth has slowed sharply in recent months


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