Market Review: June 30, 2021

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Closing Recap

Wednesday, June 30, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

As we hit the halfway point on the calendar, the S&P just barely cracked 4,300 late in the session to set a new intraday high today for the 5th straight day, and its closing level is a record for the 34th time this year already, surpassing the 33 records it set in all of 2020. Today’s performance reversed some recent trends, as the Nasdaq underperformed in favor of the Dow today despite tech’s recent rally that has outpaced the Dow. For June, the Nasdaq enjoyed its best month of the year so far to rebound from May’s decline with a gain exceeding 5%, the S&P’s monthly win streak now stands at 5 after rising 2%, and the Dow fell slightly to snap its 4-month winning streak. For the quarter, the Dow was up almost 4%, the S&P climbed about 8%, and the Nasdaq rose over 9%. This was the 5th consecutive quarter that these three indices were all higher as the stock market’s staggering recovery from 1Q20’s tumultuous pandemic-related selloff has continued unabated. Additionally, oil prices have been boosted by economic reopening and have soared more than 40% YTD, the best first-half performance for a year since 2009. Meanwhile, economic indicators are rosy heading into the back half of the year. This week alone has seen the highest ever recording in the Case Shiller home price index, the strongest pending home sales for May in 16 years, ADP posting back-to-back monthly gains of more than 600k private payrolls as every month in 2021 has now been above +100k, and consumer confidence, the VIX, and TSA throughput traffic all returned to their best levels since February 2020 before the pandemic. Investors are now focused on tomorrow’s OPEC+ meeting and Friday’s June nonfarm jobs report before enjoying a 3-day holiday weekend.

Stock/sector news; BBBY surges after its results and strong guidance, GIS STZ each rise after their beats; DIDI, YOU, AVTE, S, LZ, XMTR, CVRX, IAS each open above their IPO prices in a busy day of debuts; Energy (COG NOV MRO APA) leads after crude inventories had larger drawdown than expected, COP also seeing a lift after increasing 2021 share buybacks by $1B; Gene editing space continues strength after NTLA CRISPR trial data on Monday – those shares rise double digits and topped $200 at today’s highs (128% above Fri close of $88.63), EDIT BEAM VERV also gain more than 10%, CRSP DTIL BLUE outperform; ALT plunges after halting development of intranasal Covid vaccine following a Ph1 trial fail; AMD soars to its highest level in 4.5 months after winning unconditional EU approval to buy XLNX and receiving a pt bump at Bank of America on compelling valuation and catch-up potential; APP stumbles on Morgan Stanley’s double-downgrade, while SPCE was pressured on Bank of America’s double-downgrade, but bounces as much as 11% off morning lows to mitigate some losses


Economic Data:

ADP Employment change reported at +692k for June, above est. 600k, and issued downwards revision for May to +886k from +978k

U.S. May Pending Home Sales index +8.0 pct (consensus -0.8 pct) to 114.7, +13.1% vs May 2020. This is the highest home sales data for May since 2005 and the best month-over-month and year-over-year increases ever for the month of May

US Chicago PMI Actual 66.1 (Forecast 70, Previous 75.2)

US EIA Crude Oil Inventories Actual -6.718M (Forecast -3.85M, Previous -7.614M)


Commodities, Currencies & Treasuries

Gold prices rallied with August gold rising $8, or 0.5%, to settle at $1,771.60/oz, though this was still the worst monthly performance for the precious metal since November 2016. On the other hand, the dollar index (DXY) moved higher for the 6th consecutive day and closed out its best monthly performance since November 2016 after more hawkish statements from Fed officials and strong economic data this month, and ahead of a jobs report Friday that is expected to be strong, which could accelerate the central bank’s adoption of more hawkish policies.

Oil prices rose with WTI crude oil futures higher by $0.49, or 0.67%, to settle at $73.47/bbl, boosted by a strong inventory drawdown data from the API last night and EIA this morning. An OPEC+ meeting is scheduled for tomorrow where the organization is expected to hike production in response to greater demand.






WTI Crude















10-Year Note





Sector News Breakdown


Retailers; BBBY reported Q1 adj EPS 5c vs est. 9c on net sales $1.95B vs est. $1.87B, total enterprise comp sales growth +3% vs 1Q19, sees Q2 adj EPS 48-55c that sandwiches est. 52c, Q2 net sales $2.04-2.08B above est. $2B, guides FY adj EPS $1.46-1.55 vs est. $1.46, and raises views for Q2-Q4 comp sales growth to low-single digits from flat, and full-year views for net sales to $8.2-8.4B (est. $8.13B) from $8-8.2B and adj EBITDA to $520-540M from $500-525M; BNED Q4 EPS ($0.86) vs est. ($0.57) on sales $222.8M vs est. $230.5M, retail comp sales -6.9%; Wells reiterated their Buy rating on GPS as they see their upcoming Yeezy line from Kanye West potentially adding up to $990M in sales and 50c to EPS in FY22, before adding up to $1.50 by FY26

Auto sector; LMPX Q1 adj EPS 13 vs est. (5c) loss on sales $33M vs est. $30M, sees Q2 revs $147.6M vs est. $116M; XPEV listing price for Hong Kong public offering set at HK$165 per share (~$42.52 per ADS) and is expected to raise HK$14B; NKLA holder Tumim Stone Capital to sell up to 18M shares; FSR opened several operating areas at MGA’s facility in Austria that are dedicated to the production for the Fisker Ocean SUV; F (Ford) will cut output at 9 plants that make the F-150 pickup, Super Duty Pickup, and Explorer SUV in July due to chip and parts shortages; TRUE June 2021 total new vehicle sales +16% YoY, -16% MoM

Housing & Building Products; Goldman downgraded PHM to Neutral on valuation and upgraded MAS to Buy as the seasonal rotation in housing takes hold

Consumer Staples; GIS posted Q4 adj EPS 91 vs est. 85c on net sales $4.52B vs est. $4.37B, sees 2022 organic net sales declining -1% to -3% and adj EPS between 0 to -2% vs FY21’s $3.79; STZ Q1 adj EPS $2.33 on revs $2.027B, both narrowly topping consensus ($2.32, $2.021B), raised FY22 adj EPS guidance range to $10-10.30 (est. $10.02) from $9.95-10.25

Casinos, Gaming, Lodging & Leisure sector; DIDI raised $4.4B in its IPO, pricing it at $14/ADS at the top end of its indicated range and upsizing it to 317 million ADS vs the planned 288 million ADS; the company opened on the NYSE today at $16.65; BTIG said that UBER could be valued at $100/share based on its stake in DIDI and given current revenue multiples on DASH; SGMS had its price target raised at Truist (to $90 from $68), Stifel (to $86 from $66), and Jefferies (to $95 from $62) after yesterday’s announcement of their plans to divest their lottery and sports betting businesses; Morgan Stanley initiated SCR at EW with a $22 pt as a unique gateway into the attractive US and Canadian sports betting/iGaming markets, but high competition in the US drives a wide risk/reward; HTZGQ successfully exited Chapter 11 bankruptcy



Energy data; US API Crude Oil Stock Change Actual -8.153M (Forecast -4.460M, Previous -7.199M); US EIA Crude Oil Inventories Actual -6.718M (Forecast -3.85M, Previous -7.614M)

E&P and Majors; FTI announced it was awarded a subsea contract by PBR for the Buzios 6-9 fields located in the Santos basin offshore Brazil; Citi cautioned against a super-cycle and upgraded RDSA to N and downgraded EQNR to Sell, and view TOT, COP as the best value/potential in the space; COP increased its 2021 share repurchase plan by $1B, reduced its 2021 capital and adj operating cost guidance, and expects 3% oil and gas production growth; UBS downgraded CDEV to Neutral as they reduce the rating tied to risk/reward as the stock has been the best performing E&P YTD and since mid-4Q20; Capital One resumed coverage on CHK at EW, $57 pt that is 18% above current levels vs the peer median upside of +30% as its shrinking cash flow profile leads to declining FCF yields over time vs most comps who show yields that grow over the same timeframe and modest EV/EBITDA multiple expansion over time while most comps benefit from multiple compression

Utilities & Solar; SHLS was initiated at Piper at OW with a $43 PT and said it is a core holding for energy transition investors due to best-in-class operating margins, best-in-class growth, and limited competition; Bank of America downgraded SRE to Neutral; RBC initiated PLUG at Outperform with a $42 target as it looks to become a vertically integrated producer and distributor of hydrogen who makes it easier for would-be customers to switch to hydrogen, and its international partnerships are in regions where hydrogen may inflect faster than in the US


FinTech & Consumer Finance; Robinhood was fined $70M by FINRA, the largest ever financial penalty imposed by FINRA, due to significant harm to millions of customers who received false or misleading information from the firm, millions of customers affected by the firm’s systems outages in March 2020, and thousands of customers the firm approved to trade options even when it was not appropriate for the customers to do so; OCN was initiated at Buy with a $36 target at Jefferies due to its business transformation and position to benefit from rising mortgage rates



Pharma movers; CERE filed for an offering of 14M shares; TWST acquired iGenomX, an NGS library preparation maker, for $35M; HC Wainwright initiated REGN at Buy with a $703 as shares have underperformed the XBI over the past year and 2 years and they see Dupixent achieving mega-blockbuster status with sales above $10B; Cannabis stocks (MJ, CGC, TLRY, CRON, SNDL, etc) pared losses after CURLF CEO said he expects Sen. Schumer to introduce a bill in July

Biotech movers; ALT discontinued development of AdCovid, its intranasal Covid vaccine candidate, after its Phase 1 trial did not stimulate an adequate immune response in healthy volunteers, though Guggenheim made the stocks its Best Idea in biotech despite the trial miss as they believe the company has significant upside with its Alt-801 for NASH/obesity; CDMO Q3 revs $27.6M vs est. $21.6M, guides FY22 revs $115-117Mm vs est. $112.2Mm; AVAV Q4 adj EPS $1.04 vs est $0.81 on revs $136M vs est $147.2M, FY revs guidance $560-580M was in-line with est $571.5M; Mizuho initiated Buy ratings on CABA ($22 pt), ELOX ($3.10 pt), and ARQT ($58 pt); Roth raised its price target on DARE to $11 as its DARE-HRT1 could be a blockbuster opportunity given up to ~18M women were being treated with HRT in 2007, prior to published concerns around HRT, and the number of women on HRT are once again rising given novel options

MedTech Equipment; POAI was initiated at Buy with a $5 tgt at HC Wainwright because PeDAL, its AI-driven drug discovery platform can create unique precision oncology drug discovery capabilities, as well as the potential for broad interest in their AI assets to capture market opportunities in precision medicine; INFU launched a $20M share buyback plan; Citi re-initiated APR at Buy with a $33 target as they should benefit from the shift to more care at home

Healthcare Services; Cantor initiated SMTI at OW with a $45 target as they expect upwards earnings estimate revisions, pipeline expansion, and potential business development to drive upside to the stock


Industrials & Materials

Aerospace & Defense; POWW Q4 adj EPS 4c vs est. (1c) on sales $24.2M vs est. $23.95M; Bank of America issued a double-downgrade on SPCE to Underperform from Buy and kept their $41 target as shares fell to $30 the last time they were above $55 (Feb) and they also see the stock’s premium dwindling as more commercial space companies go public; Credit Suisse is more constructive on the commercial aero space and upgraded HXL to N with a $64 PT from $47 as the stock no longer looks expensive with the higher commercial aero rev forecast; LDOS was awarded a $2.5B contract with NASA to support its IT operations; Raymond James reiterated their Strong Buy on AXON and upped its target to $200 from $150 and its estimates to street highs with an upward bias to forecasts through CY22

Transports; Bank of America downgraded USX to Neutral ahead of Q2 earnings as they expect rising costs and its decreased operational fleet to have a disproportionate impact on profitability versus peers; Credit Suisse is incrementally more bullish on rails and sees Q2 beats, naming NSC as their top pick and remain positive on UNP, CSX; KeyBank trimmed estimates for CHRW to reflect lower NAST net revenue margins partially offset by ongoing global forwarding strength

Metals & Materials; MP initiated at Outperform with a $45 PT at Baird who says the stock deserves a premium to peers given its unique asset in Mountain Pass, non-China status, and sustainable business practices; BMO upgraded BHP to Outperform as they see an attractive entry point for a high-quality stock that should be trading at a premium to its peers with a near-term 8% dividend yield and also upgraded NSTYY to Outperform as they see the 34% decline since its October IPO (vs GDX -11%) as overdone given its rare combination of size and organic production growth, in exclusively tier-one jurisdictions; Citi expects strong earnings in 2Q and even stronger earnings in 3Q for fertilizer names as realized prices follow spot pricing by roughly 60 days (urea prices up ~90% YTD, DAP up ~50%, potash up ~40%), initiated a pair trade of CTVA over FMC and ranked fertilizers NTR, CF, MOS

Technology, Media & Telecom

Internet; CRTD hit 30k Vocal+ subscribers and confirmed its revenue guidance; The FTC is reviewing AMZN’s proposed acquisition of movie studio MGM

Semiconductors; Rosenblatt initiated COHU at Buy with a $65 target and believes we’re in a "Mother of All Cycles" period in Semiconductor and the company is now on the train with the auto and industrial markets heating up; AMD won unconditional EU merger approval to buy XLNX; BMO upgraded MU to Outperform with a pt of $110 from $90 after raising estimates, particularly for FY22, due to the potential for a continued constrained supply environment into 2022 driven by a combination of supply dynamics/CapEx discipline, and demand drivers;

Software movers; QUMU reported preliminary Q2 results and expects revs $5.7-5.9M vs est. $6.57M, Q2 net loss $4.9M-$4.3M; Morgan Stanley double-downgraded APP to UW from OW as the stock has risen 57% since its Q1 results, and their unchanged $68 PT implies 18% downside, and they also initiated U (Unity) at EW with a $115 pt; JPMorgan initiated TTGT at Neutral with an $81 pt; Barclays downgraded OTEX to EW as they see current valuation being fair vs other legacy software names and CDAY to UW as it has the lowest adjusted growth rate compared to other HR names (WDAY, PAYC) in addition to questions about the speed of the labor recovery, and AUDC to EW as the current price reflects management’s shift towards software and away from hardware; MDB filed an offering of 2.5M shares to raised $889M

Hardware, Components & Services; DA Davidson initiated VOXX at Buy with a $21 price target as one of the most durable consumer electronics companies, with a diverse portfolio set of products spanning automotive, biometrics, and premium audio; Roth initiated RSSS at Buy with a $4.35 target as stable business with potential for accelerating growth; Barclays upgraded STX to EW and raised their estimates on WDC after updating their HDD model that reflects more HDD unit growth; MSFT found new NTGR firmware vulnerabilities

Media & Telecom movers; WOW announced it will sell 5 service areas in 2 separate deals for a combined $1.8B as it aims to lower its debt; Loop said FOXA was the most attractive stock of the traditional media companies and is attractively valued by all metrics (P/E, EBITDA, FCF, private market value); VERI announced a new partnership with Sports Illustrated to serve as its official video technology and licensing partner; Deutsche started AST with a Buy rating and $35 target


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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