Market Review: July 19, 2021

Auto PostDaily Market Report

Closing Recap

Monday, July 19, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     It was a rough day on Wall Street as the Dow Jones Industrial Average posted its steepest one-day decline since late October (falling as much as 900-points midday) as renewed worries about the spread of COVID-19’s delta variant pressured equities. The S&P 500 posted its biggest one day drop since early May (fell as much as 2%, breaking below its 50-day MA support of 4,240), while the Nasdaq Composite Index posted its sharpest slump since mid-May. The Smallcap Russell 2000 also down sharply, falling more than 10% from its closing highs on March 15th (first 10% correction since June 2020). Selling pressure was global as Britain’s FTSE 100 was down 2.40%, at two-month low, Europe’s Stoxx 600 down 2.32% at 8-week low, Germany’s Dax down 2.78%, at two-month low while France’s Cac 40 down 2.71%, Spain’s ibex down 4.13%.

·     The CBOE Volatility index (VIX) jumped more than 30% as markets expressing concern for the first time in months as stocks plunge and Treasury prices jump again with yields making new 5-month lows. The 10-yr yield drops over 11-basis points to 1.18%, the 30-yr down 12 bps below 1.81%, and the 5-yr down 9 bps to 0.68% (lowest since early March). Concerns about the Delta variant have been fueled by U.S. COVID-19 data moving in the wrong direction on a week-over-week basis. Oil prices crushed with WTI crude down over 7% to fall around $66 per barrel as OPEC and its allies struck a deal that allows for monthly supply hikes of 400k b/d until the end of 2021 and variant Covid concerns denting demand.

·     Stock/sector movers: cruise lines tumble as NCLH hits its 2021 low, CCL trades below $20 for 1st time since 2/3, and RCL trades below $70 for 1st time since 2/16 as reopen names fall amidst concerns over the Delta variant (other reopen trades UAL, AAL, MGM, CZR, PLNT, EXPE, SIX at multi-month lows today) on Covid variant spread concerns; as reopen goes lower, rotation into stay-home names sends those names higher: PTON, ETSY, W soar, ACI, KR, CAG outperform in defensive food names; TSCO stumbles despite reporting a Q2 beat and raised FY guidance, while AN rises on its strong beat and additional $1B share buyback authorization; ZM slips after acquiring FIVN for $200.28.share (12.7% premium to Friday’s close) in a $14.7B all-stock deal; banks (JPM, MS, C, BAC, WFC) struggle as the 10-year yield steadily slips, goes below 1.18% for the first time in more than 5 months; energy stocks (MRO, SLB, OXY) among worst S&P decliners as oil prices crater to lowest price since 6/1 on demand concerns given rising global Covid cases and the OPEC+ agreement to increase supply.



·     Oil prices with a sharp drop today, as WTI crude fell -$5.39 or 7.51% to settle at $66.42 per barrel, its lowest levels since late May and largest one-day drop in dollar terms since April 2020, as OPEC prepares to boost production while anxiety that the spread of the Delta coronavirus variant would hold back the global economy also hurting. Brent prices fall -$4.97 or 6.75% to settle at $68.62 per barrel. OPEC and its allies struck a deal that allows for monthly supply hikes of 400k b/d until the end of 2021, putting the group back in control of the crude market. Gold prices fall -$5.80 or 0.3% to settle at $1,809.20 an ounce, adding to Friday’s losses but also coming off its 4th straight week of gains last Friday.


Currencies & Treasuries

·     The U.S. dollar was mixed as the index (DXY) edged higher behind gains vs. the euro and British pound as Sterling extends losses versus dollar, at $1.368 at new 3-month lows and the euro breaking below the $1.18 level. The Japanese yen hits 5-week high vs. dollar, now up 0.5% on day at 109.50 yen per dollar after the buck fell to 109.07 at mid-morning. The risk and yield sensitive pairing driven lower through the morning by the steep dive on Wall Street and in Treasury yields. Crypto assets pressured as Bitcoin tumbled over 3% to around $30,700, while Ethereum fell over 4%, holding just above $1,800.

·     Treasury yields tumble as the benchmark 10-year yield falling to fresh five-month lows below 1.18% (as much as 11 basis points) before paring losses, as investors remain fearful that the spread of the Delta variant of the coronavirus could impede global growth and the reopening of economies. The yield on the 30-year Treasury bond slid over 12 bps to lows below 1.8% while the 5-yr yield drops 7 bps to 0.698% (lowest since early March). Note the recent market disconnect as the CPI has been stronger than expected the last 4 months (including last week) but the yield on the 10-year has done nothing but go down.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; ASO is more than a pandemic play, according to Barron’s saying interest in health and wellness has been enduring, and the company’s manageable debt level will allow it to open more brick-and-mortar stores; CHWY, PTON, Wayfair (W) among gainers as some of the stay-at-home beneficiaries seeing strength with "reopen" sectors selling-off (cruise, airlines, restaurants, theme parks, casinos); TSCO Q2 EPS3.19 vs. est. $2.96; $Q2 sales $3.6B vs. est. $3.46B; Q2 comp store sales rose 10.5% vs. est. 5.5%; raises year EPS view to $7.70-$8.00

·     Auto sector; in auto retail, AN with a big Q2 beat (Q2 EPS $4.83 vs consensus $2.81 and revenue $6.98B vs consensus $6.07B) as CEO notes that demand continues to outpace supply for new vehicles and they expect this to continue into 2022; TSLA posts fifth straight session of losses amid broader stock market weakness and after Electrek reports Tesla is closing its first Supercharger station at its design studio in Los Angeles, reportedly over security concerns; VLDR CEO Dr. Anand Gopalan said he is stepping down as CEO and a member of the Board, effective July 30, 2021; LAZR acquiring exclusive lidar chip partner and specialized fab; Chinese EV makers Great Wall, Chery recall about 18,000 cars over battery safety concerns

·     Consumer Staples & Restaurants; defensive food related stocks outperform in market sell-off (CAG, CPB, KR, SJM) – note the sector was one of last week’s biggest winners as well along with utilities and REITs; CALM Q4 EPS loss (-$0.09) below the $0.18 estimate; reports Q4 revenue $349.8M vs. est. $404.67M; average sales price for shell eggs was $1.32 per dozen for q4 compared with $1.58 per dozen for same period last year; reopen sectors such as casual dining and restaurants seeing selling pressure today (DRI, EAT, BJRI, RRGB); UBER expands grocery delivery to 400 cities, including NYC and San Francisco

·     Casinos, Gaming, Lodging & Leisure sector; cruise operators CCL, RCL, NCLH decline along with a decline in other European travel and leisure stocks on worries that the fast-spreading Delta variant could hamper travel demand and slow the ongoing global economic recovery; SIX falling along with weakness in “reopen” related trades as well as report its Texas water park evacuated this weekend after chemical spill sends dozens to the hospital



·     Energy stock movers; oil prices tumble as OPEC and its allies struck a deal that allows for monthly supply hikes of 400k b/d until the end of 2021, putting the group back in control of the crude market. Starting in August, they’ll pump out an extra 400K barrels a day through the end of 2022, restoring all the cuts they made at the start of the COVID-19 pandemic. UAE will have a new baseline of 3.5m bpd, Iraq/Kuwait baselines will increase by 150k bpd each, Saudi/Russian baselines will be adjusted to 11.5m bpd

·     E&P and Majors; Credit Suisse upgraded OVV to OP and RRC to N, and raised their 2021-23+ Brent and WTI price forecasts as demand continues to surprise to the upside and OPEC+ and US E&Ps have shown strong discipline; BMO sees the pullback in E&P equities versus oil prices as a favorable setup and opportunity to add high-quality names, and they prefer COP, say HES is a top pick, and see significant value in DVN, OVV

·     Oil Equipment & Services; SLCA said its Industrial and Specialty Products business will increase prices for most of its non-contracted silica sand, diatomaceous earth, and clay products; NOV upgraded from Underperform to Market Perform at BMO Capital as think order growth is near an inflection point driven by increased international upstream spending.; MKM upgraded CPE to Buy and raised their PT to $54 from $47 given higher oil price outlook; Barclays upgraded RNGR to OW and upped their target to $13 from $5 on the company’s synergies from cross selling its plug & perf business by moving legacy trucks up from the Permian to the Bakken; Bank of America added HAL to its US1 List as a beneficiary of accommodative OPEC+ policy.



·     Brokers and Exchanges: Robinhood Markets Inc (HOOD) is targeting a valuation of up to $35 billion in its IPO in the U.S., the company revealed in a filing on Monday, setting the stage for one of the highly anticipated stock market listings of the year. The company was previously aiming for an IPO valuation of up to $40 billion and will offer about 55M shares at an expected price between $38-42 to raise over $2.3B; IBKR introduces a new simple flat fee structure of a flat 3 EUR or 3 GBP per trade (trades up to 6,000 EUR/GBP in value) for stock trading in Europe

·     Bank movers; Shares of major U.S. banks (GS, JPM, C, BAC, MS, etc.) dip in conjunction with another slide in treasury yields as rising COVID-19 cases dent expectations of economic growth in 2021, and the 10-year yield hits a 5-month low below 1.22%; BMRC posted Q2 EPS 71c vs est. 61c on in-line revs $26.6M, raised its quarterly dividend to 24c from 23c, and will buyback up to $25M in shares over the next 2 years; GNTY Q2 adj EPS 78c vs est. 74c on revs $29.4M vs est. $28.2M; BSRR reported Q2 EPS 76c vs est. 66c on revs $34.1M vs est. $34.5M; Jefferies downgraded FNB to Hold as they think last week’s merger with HBMD was priced aggressively

·     Insurance; Citi opened a positive catalyst watch on EQH and named AMP, AON as their top picks ahead of earnings and feel the brokers may be best positioned in the space given the pullback in interest rates and concerns over inflation impacting P&C underwriters; Raymond James downgraded KMPR to Outperform from Strong Buy as the overhang from accident frequency normalization and inflation should limit the upside in the near-term; insurers lower as falling Treasury yields hit sector (AIG, TRV, PRU) – higher interest rates help bolster insurers’ profitability

·     FinTech & Payments; Mizuho still sees ample upside in AFRM but trimmed their price target to $76 from $90 as AAPL’s new BNPL option warrants a lower multiple, and Loop said Apple’s BNPL is a serious threat to AFRM and others (Afterpay, Quadpay, Klarna, etc.) given Apple Pay’s userbase of over half a million users that is still growing and acceptance at over a million retailers; Wedbush said PYPL, FIS are their top picks in payments ahead of earnings as PYPL continues to aggressively expand their ecosystems and FIS’ strong results in both merchant and FI segments should address concerns over the competitive landscape

·     REITs; KRG and RPAI entered into a merger agreement with KRG continuing as the surviving public company, with the combined company expected to have an equity market capitalization of ~$4.6B and a total enterprise value of ~$7.5B and each RPAI common share will be converted into 0.6230 newly issued KRG common shares in a 100% stock-for-stock transaction; PLD Q2 FFO $1.01 vs est. 99c on revs $1.15B vs est. $1.11B and raised its 2021 core FFO view to $4.02-$4.06 (est. $4) from $3.98-$4.04; In multi-family, Raymond James upgraded CSR (to OP) and ESS (to MP) and raised their estimates and price targets on stocks within the sector ahead of Q2 earnings as rental demand soars, and BMO sees an earnings tailwind for CPT, MAA, IRTand CSR as Sunbelt markets remain well above 2019 levels and have asking rents higher than coastal peers; MNR said an unnamed private investment firm increased its unsolicited acquisition proposal by 18c/share to reflect a new purchase price of $19.51 that includes a termination fee for the company to terminate its current merger agreement with EQR valued at about $3.4B; Piper upgraded RWT to OW with a $14 pt from $12 after the company pre-announced Q2



·     Pharma movers; PFE said the FDA accepted its application for full of the COVID-19 vaccine it developed with BNTX/the FDA sets a decision date based on the rules of the Prescription Drug User Fee Act for applications that receive what is called Priority Review; NRXP said its drug Zyesami helped prevent cytokine storm in patients with Covid in a mid-to-late stage study; Reuters reporting over the weekend that JNJ is exploring a plan to segment out liabilities associated with talc liabilities into a legal entity that would seek bankruptcy protection

·     Biotech movers; BNTX said it plans to buy one of GILD’s clinical manufacturing facilities and its platform for T-cell receptor therapies; FGEN said privately held Chinese Eluminex Biosciences exclusively licenses global rights for the development and commercialization its technology to treat patients with corneal blindness (FGEN may receive up to a total of $64 million in future milestone payments, as well as $36 million in commercial milestones)

·     MedTech Equipment; AHCO shares slide after a short report from Jehoshaphat Research which alleges the "roll-up" company appears to be using questionable financial reporting practices; NTRA guides Q2 prelim revs $138M-$141M, above the $127.6M estimate; NVRO said it received FDA approval for its Senza System for the treatment of chronic pain associated with Painful Diabetic Neuropathy (PDN); QDEL announced a partnership with the State of Delaware for a COVID-19 testing program aimed at reopening the state’s K-12 schools in the fall.


Industrials & Materials

·     Metals, Industrial & Machinery; CSL is acquiring Henry Company, a provider of building envelope systems, from units of private-equity firm American Securities LLC for $1.575 billion in cash; IR confirmed that on June 10, it made an all-cash non-binding proposal to FLOW to acquire it for $85 per share, a 37% premium over last Friday’s closing price ; USAP raises a base price by 3% to 10% on all long products; increase is effective immediately for all new orders, and current material and energy surcharges will remain in effect; STLD earnings tonight, first in the steel sector

Technology, Media & Telecom

·     Semiconductors; QCOM upgraded from Sell to Neutral with $148 tgt at Goldman Sachs as believe the company is poised to benefit from multiple tailwinds in H2 including an earlier iPhone launch and improving supply situation; AEHR said it received a $10.8 million single purchase order from its lead silicon carbide test and burn-in customer; NVDA 4 for 1 stock split expected to take effect tomorrow; semi-equipment names (KLAC, LRCX) active into INTC earnings this week on hopeful cap-ex spending comments

·     Software movers; ZM to acquire FIVN in an all-stock transaction valued at approximately $14.7 billion with FIVN holders to receive $200.28 per share; FIVN holders will receive 0.5533 shares of Class A common stock of Zoom for each share of Five9, Inc. ; BILL has acquired Invoice2go in a stock and cash transaction valued at ~$625M, comprises of 75% in stock and 25% in cash.

·     Media & Telecom movers; DISH signs 10-year deal worth at least $5B to make AT the primary network services partner for its wireless customers/AT&T will provide voice, data, messaging services to customers of Dish-owned mobile virtual network operators Boost Mobile, Ting and Republic Wireless; ERIC downgraded to Hold from Buy at Argus as co now believes it will not win new contracts in China, reflecting push-back from Chinese decision-makers after rival Huawei was excluded from numerous European network build-outs.


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