Market Review: March 04, 2021

Auto PostDaily Market Report

Closing Recap

Thursday, March 04, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     It was another volatile day on Wall Street as inflation concerns weighed heavily on sentiment after Fed Chairman Powell failed to quell concerns, while Treasury yields moved to their highest levels in over a week as the 10-year moved firmly back above the 1.50% level. The U.S. dollar climbed vs. most currencies, with the euro dropping below the 1.20 level as stocks were for sale most of the afternoon led by technology. Concerns for tech include rich valuation pressures, regulatory challenges, shifts in pattern (away from stay-at-home winners as vaccines rollout and more people go back to work and school), but just likely more of a natural repricing of risk as investors pare back exposure to assets where valuations are stretched. Markets now brace for the monthly jobs data tomorrow morning and hints what it could mean for the Fed.

·     Stocks started the roll early afternoon after Fed Chairman Powell said that when the economy picks up, inflation will pick up, although he stressed that it’s unlikely "deeply ingrained" low inflation will fade fast. Those comments sent Treasury yields higher as the 10-year topped 1.55%, in turn taking stock markets lower with it. The Fed has remained vigilant thus far about keeping rates lower for longer, noting the recent uptick in rates is more a factor of an improving economy and that they are willing to overshoot their inflation targets of 2% before looking to hike rates. Energy outperformed on reports Saudi Arabia is considering rolling over unilateral output cut.

·     Broader stories working (lately) include the reopen names (travel, leisure, consumer) as more of the population gets vaccinated/Covid numbers come down; cyclical names rising alongside with industrials, energy, and financials top gainers of late. What’s not working? Momentum trades petering out with massive drop in the Reddit “meme” stocks (KOSS, AMC, EXPR – though GME still performing well), Electric vehicle names crushed (CHTP, BLNK, NKLA), cannabis names tumbling, Bitcoin leveraged stocks coming back down to earth (MSTR, GBTC, MARA, RIOT) and of course large cap tech hurt by surging yields. With today’s decline, the Nasdaq is now down 10% from its record closing high on Feb 12 (correction territory), dropping below its 50-day MA support yesterday of 13,337 and 100-day MA today at 12,616 (before recovering). The S&P 500 index dropped below its 50-day MA support of 3,825 but stayed above its 100-day 3,693. Markets still await guidance out of Washington DC on the $1.9 trillion fiscal policy bill.

·     Sector/top stories today: 2020’s winning trades in solar (ENPH, FSLR) and EV’s (TSLA, BLNK, NIO) also extend YTD declines; Energy ETF is strong again despite broader market weakness as OPEC+ agreed to keep April output unchanged, hits 52-week highs 37% above 2020’s close and 79.5% above 11/6 close before positive vaccine news (FANG, EOG, MRO, APA, XOM) among S&P’s top daily gainers; SNOW rises after last night’s earnings beat to go with a Deutsche upgrade this morning; AEO, BURL both jump to 52-week highs in retail after EPS, rev beats; in tech earnings, SPLK rises early in the session after its rev beat, but rolls to red amid tech weakness, while OKTA plunges on expensive M&A deal; KR, POST, TSN, SAFM, SJM rise food and consumer staple related stocks outperformed as investors turned to defensive stocks; BZH, DHI, TOL homebuilders tumbled as the 30-year fixed rate mortgage has edged up to 3.02%, its highest level since July.

Economic Data

·     Weekly jobless claims rose 9K to 745K, slightly below the 750K estimate while the prior week was revised to 736K from 730K; the 4-week moving average fell to 790,750 in latest week from 807,500 prior week (previous 807,750) and continued claims fell to 4.295M from 4.419M prior week and vs. consensus of 4.3M; the U.S. insured unemployment rate fell to 3.0% from 3.1%

·     U.S. Q4 non-farm productivity revised to down -4.2% vs. est. -4.7% (prior -4.8%), while Q4 non-farm unit labor costs revised to +6.0%, slightly below the 6.6% estimate

·     U.S. factory orders rose 2.6% in January (above est. 2.3%) as manufacturers continued to lead the way for the U.S. economic recovery. Orders for durable goods made to last at least three years climbed an unrevised 3.4% last month. Orders for nondurable goods such as clothing and groceries rose a slower 1.9%.

·     U.S. mortgage rates, which have hovered at or near historic lows for months and contributed to the housing market bouncing back to above pre-pandemic levels, are now on the rise. Freddie Mac, the U.S. government-owned mortgage holder, reported that the 30-year fixed rate mortgage has edged up 0.6 percentage points to 3.02%, its highest level since July.



·     Oil prices touched best levels since January of 2020, rising $2.55 or 4.16% to settle at $63.83 per barrel (intraday highs $64.86) after OPEC+ agrees to keep oil output unchanged in April. Not only will Saudi Arabia keep its voluntary 1M barrel/day cut for a third straight month in April, OPEC+ also will not raise its production by 500K barrel/day, as had been discussed previously. That news overshadowed the bearish inventory from the day prior as oil prices jumped.

·     Gold prices dropped -$17.10 or 0.9% to settle at $1,700.70 an ounce, moving back near its June lows as a rising dollar and Treasury yields took a toll on the precious metals (commodities in general outside of oil prices). Jeff Gundlach noted the price of gold is down 11% over the past twelve months. The S&P 500 is up 27% over the past twelve months. Bitcoin is up 467% over the past twelve months. Great dispersions often precede great reversions. We shall see he tweeted.


Currencies & Treasuries

·     Big moves to the upside for Treasury yield and the dollar, boosting inflation fears and impacting stock markets which sunk broadly. The U.S. dollar index (DXY) touched highs around 91.65, up around 0.5% (highest since December 1st), while Treasury yields jumped across the board as the 10-year topped 1.55% (up 8 bps) as Fed Chairman Powell failed to alleviate market concerns. Powell said he was monitoring the rise in bond yields and that he would be concerned if financial conditions did tighten…but offered no concrete steps the central bank was taking to tamp down rate moves. "I would be concerned by disorderly conditions in markets or persistent tightening in financial conditions that threatens the achievement of our goals," Powell said. He stressed again that the Fed would be "patient" with higher inflation expected this year, saying it was likely to be a "one time" effect and not price gains that continue year-after-year. As for the dollar, continued strengthening could hurt recoveries in emerging markets that rely more on dollar funding. Against the Japanese yen and the Swiss franc, it is up 4% and 5% respectively this year, while is also 1.7% higher versus the euro. Bitcoin prices down over 5% late day around $48,000.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; BJ said holiday-quarter comp sales growth (ex-gas) rose by 15.9%, down from 18.5% growth in the previous quarter (est. 16.2%) though beats total revenue estimates as membership fee income increased 11%; BURL strong as comps better (Nov -10%, Dec flat, Jan +17%), margins a little weak as expected, inventories -4.7%, and EPS beat on comps – no formal guide; AEO EPS beat, Q4 comp store sales rose 29%, qtrly digital revenue increased 35%, with Aerie up 75% and AE up 20% and said it is reinstating quarterly cash dividend at $0.1375 per share and unsuspended it share buyback plan; PRPL shares tumble as the mattress retailer reported Q4 earnings and revenues that fell well short of consensus (7c/$173.9M vs. est. 11c/$196M)

·     Auto sector; electric vehicle space slides sharply (BLNK, TSLA, CHPT, FSR) despite positive mention at Wedbush after pullback in shares, noting that EV penetration is only 3% today globally and says the firm forecasts it will go to 10% by 2025 with a green tidal wave on the horizon – says sell-off creates a massive buying opportunity to own the Chinese EV players like NIO, XPEV and LI as well as pack leader TSLA; Truist with LBO analyses for auto svcs/aftermarket space as view it is valuable to look at take private scenarios – says KAR presents the most attractive IRR and money-on-money returns with MNRO and CPRT well below what they view as a low IRR target; GM confirmed that in a joint venture with LG Chem, are exploring building a second battery-cell plant and said a decision could come in the first half of this year.

·     Housing & Building Products; U.S. mortgage rates jump north of 3% for first time since July, something to watch for homebuilders (KBH, LEN, TOL, MTH, PHM); UBS reiterated positive call on homebuilders and select building products FBHS, TREX noting as interest rates have moved higher in recent months, homebuilding and building products stocks have been under pressure on the investor assumption that demand will soon drop in response to higher mortgage rates – nit the firm said they disagree as the move to date of ~30 bps in the 30 year mortgage rate isn’t enough to derail housing’s momentum.

·     Consumer Staples; KO, PG among early leaders in the Dow as investors look to defensive consumer staples with high tech growth sliding; KR beats estimates for Q4 same-store sales and profit while guides annual EPS $2.75-$2.95 vs. est. $2.69, relying on cost-savings initiatives but sees year comp sales down (3%-5%) vs. estimates for decline of about (2.5%); UNFI extends its primary wholesale grocery distribution relationship with Whole Foods Market by entering into an extension of the current distribution agreement; SFM announces $300M share buyback

·     Leisure and Gaming; DKNG will become UFC’s first-ever "Official Sportsbook and Daily Fantasy Partner" in the United States and Canada; PLNT downgrade from Outperform to Market Perform at Cowen saying its long-term prospects remain exceptional as the company will take share from a leadership position., but survey echoes that consumers remain somewhat cautious on returning to gyms and valuation appears full; VICI 60M share Secondary priced at $29.00



·     Energy stock movers; sector was biggest gainer in the S&P, led by gains in APA, EOG, PXD, MRO, COP after oil prices reach new 1-year highs (WTI topped $64 per barrel) on reports OPEC+ agrees to keep oil output unchanged in April; SMLP Q4 adj EBITDA $61.8M (-20% YoY) vs est. $60M, sales $96.41M vs est. $93.11M, distributable cash flow $44.8M (-5% YoY), and confirmed FY21 guidance of adj EBITDA $210-230M, capital spending $20-35M; WTI posted Q4 EPS loss (5c), narrower than est. (31c) loss, on revs $94.75M (-37.62% YoY) vs est. $81.3M; CNQ reported Q4 adj EPS C$0.15 vs est. C$0.11; CVX and SLB announced a collaboration with MSFT to develop a carbon capture and sequestration plant in Mendota, CA designed to produce carbon-negative power and is expected to remove about 300k tons of carbon dioxide annually, which is the equivalent emissions from 65,000 homes; Citi said FANG is a smart beta play on oil without too much risk and their DCF still suggests another 33% upside in current pricing

·     Utilities & Solar; Raymond James upgraded BE to Outperform as a high-beta, aggressive growth idea that is not fully appreciated, and assert that it is not a valuation-based upgrade even as shares have fallen 35% since 2/8; ATO was upgraded to Buy with a $99 target at Mizuho; CLNE and its largest shareholder TOT announced terms of a new joint venture on Thursday focused on renewable natural gas production with an initial firm commitment of $100M to build renewable gas production facilities; ETR wrongfully charged customers more than $1B over eight years in upgrading its problem-plagued Grand Gulf Nuclear Station in Mississippi, according to allegations in a federal complaint filed by three of the utility’s regulators; Wells upgraded WEC, PCG, BEP, BEPC and downgraded SJI, SR, CWT and sees real value in the space for the first time in several years after the sector has underperformed the S*P 500 by nearly 16% since the 11/9 vaccine news and over 8% YTD



·     Brokers & Exchanges; Piper upgraded CBOE to Overweight with a $108 target on attractive valuation given strong volumes and revenue per contract; JPMorgan moved SCHW to OW with a $79 target due to seeing the recent surge in retail trading as an opportunity to create long-term investing clients for the brokerage, in addition to cost and revenue benefits from their recent Ameritrade acquisition, and the potential for further revenue growth as interest rates rise; NDAQ reported February U.S. equity options volume 284M contracts vs 185M contracts

·     Consumer Finance; SQ purchased a majority stake in Tidal, a music streaming service, for $297M and will add Jay-Z to its board after the purchase (SPOT rolled on headlines); in services; LPRO was initiated at Outperform by Blair; Wedbush lifted their estimates on COOP with a new pt of $43 from $34 as they see the mortgage market equaling $3.5T in 2021 and the firm’s potential buyback in the fall possibly equaling 12-24% of its float

·     REITs; Mizuho moved to Equal-weight on the Triple Net sector and downgraded O (Realty Income) and SRC to Neutral as the economic recovery and ahead of schedule vaccine distribution has led to the 10-year yield rising, and they are unsure if REITs / Triple Nets can work in a rising rate environment; Argus downgraded REG to Hold as recent outperformance has pushed the stock past their $53 target and to full valuation in their eyes, though they would consider upgrading it again if there is a non-fundamental pullback in name; KeyBanc upgraded KRG and SITC to OW and downgraded RPAI to Sector Weight; DX 3.5M share Spot Secondary priced at $18.35; SKT, MAC were active as communities in places like Reddit pushed the name higher



·     Pharma movers; LLY disclosed data from its SURPASS-2 clinical trial comparing its Tirzepatide against Novo’s semaglutide showing superior A1C and body weight reductions from baseline across all three doses compared to 1mg injectable semaglutide; LPCN announced the publication of preclinical results supporting the therapeutic potential of LPCN 1144 in NASH; SNGX announced the publication of pre-clinical immunogenicity studies for CiVax, the company’s heat-stable vaccine candidate for the prevention of COVID-19

·     Biotech movers: AMGN agreed to acquire FPRX for $38 per share, in deal valued at $1.9B. Five Prime’s lead asset is bemarituzumab, a "Phase 3 ready" treatment for gastric cancer ; BIIB announces plans to build a new gene therapy manufacturing; PASG was upgraded to Buy at Goldman Sachs ahead of first-in-human data from Ph1/2 gene therapies PBGM01 in GM1 gangliosidosis in mid-2021

·     Healthcare services and providers; INNV 16.667M share IPO priced at $21.00; ANTM upgraded to Buy and increasing tgt to $375 at Truist saying a diversified mix of business, ongoing tailwinds in Government and solid trends in Commercial underpin attractive core trends; Citigroup noted telehealth stocks (TDOC) recently sold off broadly today on press reports that Amazon Care’s clinical partner (Care Medical) has applied to do business in 17 new states and has joined a coalition with major providers (Moving Health Home) to advocate for more home health care

·     MedTech and Equipment; CFMS shares slip following Q4 revenue miss and softer Q1 forecast due to pressure on its business from reduced elective procedures into 2021; LMNX said it has received Emergency Use Authorization from the U.S. FDA for a new expanded version of its NxTAG(R) Respiratory Pathogen Panel that includes the SARS-CoV-2 virus for high-throughput respiratory testing; BDX acquired GSL Solutions, a privately-held company that develops smart medication devices for the storage and tracking of controlled substances


Industrials & Materials

·     Industrial & Machinery; GE tgt raised to $17 from $13 at Morgan Stanley saying sees the company’s upcoming investor day on March 10, as a starting point for free cash flow over next several years; CMI was upgraded to Buy at Jefferies with $325 tgt noting they recently won two medium/light duty engine contracts with Isuzu and Daimler; DY downgraded to Equal at Wells Fargo, but raises tgt to $88 calling it a valuation call with DY’s stock rallying +254% over the previous 12 months as firm remains fully on-board with the longer-term story

·     Transports; index pulls back after nearly topping record highs the day prior – pullback in airlines on the day, though overall transports down with broader markets; Truckers upgraded at Bank America as raised ratings to Buy on JBHT (tgt to 171 from 151), KNX (tgt to 52 from 46), SNDR (tgt to 28 from 24), WERN (tgt to 52 from 44) and USX (tgt to 12 from 7.50), while downgraded SAIA to underperform with 202 tgt

·     Aerospace & Defense; the U.S. will temporarily suspend retaliatory tariffs on goods imported from the U.K., in a major easing of trade tensions from a long-running dispute over subsidies to aircraft manufacturers Boeing (BA) and Airbus; OSIS receives $15 million for airport security inspection systems

·     Metals & Materials; DOW said that it plans to make a $1 billion voluntary contribution to its U.S. pension plan by the end of this month, and said it was freezing pension benefit accruals, effective Dec. 31, 2023, which will reduce benefit obligations by $350 million to $375 million; KeyBanc noted that IP has announced a $100-155/mton increase on fluff pulp for April 1 ($100 in China and $155 in NA/Europe), for the largest monthly hike on record and follows increases of $30-40 in January, $40-60 in February and $80-115 in March (firm notes increases are a big issue for IP, but proportionally even more important for UFS)


Technology, Media & Telecom

·     Internet; FB, GOOGL strong throughout the day despite broader tech weakness; FVRR upgraded to neutral from sell at MKM being opportunistic given the stock’s 35% pullback from its all-time high set on February 8, but to be clear, this is not a valuation-based upgrade; YEXT plunges on weaker-than-expected growth outlook for FY22 as calls for 6% rev growth at midpoint in FY22, well below consensus as headwinds from location-based businesses are impacting upsell activity as well as new customer growth; VRM share fall as reported 4Q results that were below expectations as eCommerce unit growth of 74% compared to +79% consensus and eCommerce GPPU grew 12% y/y to $1,821 (below Stifel $2,130) and also delivered lower-than-expected 1Q21 guidance

·     Semiconductors; index tumbled more than 6% at its worst levels before paring losses as tech hammered; QCOM upgraded to Overweight from Neutral at Piper as feel current levels represent a compelling long-term entry point and up tgt to $160 from $150 and believe the company’s core business remains robust, with 5G handsets growing 150%+ in 2021; MRVL reported results and guidance largely in-line on the bottom line but slightly beating expectations on the top line; for COHR, CNBC David Faber notes final bids are due tomorrow (recall on Feb 12, IIVI with $260 offer – topping prior bids from LITE ($226) and MKSI ($240)

·     Software movers; SNOW delivered strong FQ4 results with a 7% beat on product revenue, 9% upside on gross profit, and substantially better than expected operating income and FCF – also Q1 revenue guidance was slightly ahead of street estimates and the full year guide was in-line and announced an uptick in $1MM+ customer growth (upgraded at Deutsche Bank); OKTA reported solid Q4 results with billings (by 10%), revenue (by 6%) and OMs exceeding consensus estimates and raised its full year rev guidance, but its $6.5B acquisition of privately held Auth0 caught the Street by surprise (paying a lofty price >30X+ on a NTM ARR according to Mizuho); SPLK held off on giving a full year outlook for FY22 on both ARR and total revenue after Q4 revenue beat but guided next quarter revs below consensus

·     Media & Telecom movers; DIS said it will close at least 60 Disney retail stores in North America this year, about 20% of its worldwide total, to focus on e-commerce and is also evaluating a significant reduction of stores in Europe as well; NLSN was upgraded to outperform at BMO Capital as don’t believe GOOG’s announcement about alternative identifiers is overly material; DISH selects DOX cloud-based billing platform to support 5G services

·     Hardware & Component news; CIEN Q1 EPS of $0.52 on revenue of $757.1M topped the $0.45 and $750M estimate; JBL entered a strategic collaboration agreement with global drug delivery device company E3D; MRNA and IBM plan to collaborate on covid-19 vaccine supply chain and distribution data sharing


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