Market Review: March 08, 2021

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Closing Recap

Monday, March 08, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Stocks finish mixed as the Dow Jones Industrial Average and Dow Transports index each touch fresh all-time highs (though finished well off their best levels), along with gains in the Russell 2000 index, but the tech heavy Nasdaq Composite erased earlier gains to finish sharply lower (down over 2% late to its 100-day MA support), led by another round of selling pressure in large cap tech. Apple (AAPL) sunk to 3-month lows and has now lost over 18% since the Jan. 26 record close of $143.16. A close below $114.53 would put the stock in a bear market. The semiconductor index (SOX) approached key technical support levels as investor attention has turned to lofty tech valuations with 10-year Treasury yields climbing over the last few weeks to 1-year highs above 1.6% while the dollar strengthened, raising inflation fears. Brent pulled back from a surge above $71 a barrel after Saudi Arabia was hit by another oil attack yesterday, as oil pulls back from 2-year highs. Stocks opened higher as the $1.9 trillion fiscal stimulus bill inches closer and upbeat market comments from Appaloosa’s David Tepper. David Tepper told CNBC: "Basically I think rates have temporarily made the most of the move and should be more stable in the next few months, which makes it safer to be in stocks for now." Tepper believes another catalyst for stocks in the near term is the fiscal stimulus package that was just approved by the Senate. He said he finds it difficult to be bearish on stocks right now and thinks the sell-off in Treasuries that has driven rates higher is likely over”. His comments helped boost risk appetite early – but failed to hold with an afternoon swoon.

·     Dow Transports surge to new all-time highs, up as much as 2.5% topping the 13,900 level (prior record around 13,700) before paring gains; reopen related stocks again picking up steam with big gains in theme parks (SIX, SEAS, DIS), cruise lines (RCL, NCLH), retailers (HBI, ROST, TPR), online travel (BKNG, EXPE), leisure (MSGN, LYV, WWE); while 2020 stay-at-winners (ZM, ROKU, TDOC, PTON) dropped again; the January Reddit short squeeze movers were back in action today, with big gains in GME, AMC, KOSS, EXPR and BBBY; technology shares faded after bouncing on the open, with sell-offs in large cap tech (FAANG) and semiconductors, while software was mixed; also no slowing media stocks with massive gains again in VIAC, DIS, FOXA, DISCA as stocks touch record highs.


Commodities, Treasuries and Currencies

·     Oil prices closed lower, pulling back from last week’s 7.5% advance that left prices at their highest since April 2019 after OPEC decided to maintain production cuts. Crude prices temporarily zoomed higher overnight on reports of an assault targeting Saudi petroleum tanks with WTI nearing $68 and the global benchmark Brent topping $71. But those gains were lost after indications the port is still operating normally. Natural gas prices slide to 5-week lows at $2.664 mln btu on mild weather forecasts.

·     Gold prices dropped on Monday as April gold slides -$20.50 or 1.2% to settle at $1,678 an ounce, its lowest settlement since April of 2020. The recent resurgence in the U.S. dollar (DXY up 0.5% today at 92.35 – highest levels since mid-November around the election – along with 1-year highs for Treasury yields and expectations of rising inflation possibly pushing the Fed to ease back on monetary policy measures has pressured precious metals. Treasury yields edged higher, but off their highest levels of the day around 1.6% for the 10-year. Bitcoin prices outperformed, rising back near the $52,000 level, up on the day.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; sector seeing early strength following the stimulus bill passage this weekend (HBI, ROST, PVH among top S&P leaders early); GME said its board has formed a ‘Strategic Planning and Capital Allocation Committee’ to identify initiatives that can further accelerate the company’s transformation; MYTE is at a bargain price as more luxury buyers opt for online shopping during the pandemic, according to Barron’s. The company should get a further boost from its expansion in the U.S. and China. It’s trading below its IPO price and at a lower multiple than FTCH and REAL; TGT upgraded to Buy with $200 tgt at Guggenheim, using last week’s 6% pullback in the shares as an opportunity; PTON was upgraded to Buy from Neutral, price target $130 at MKM Partners; VFC upgraded to buy from Hold, price target $94 from $86 at Pivotal

·     Auto, electric vehicle sector; WKHS shares jumped after a group of U.S. House Democrats on Monday are introducing legislation Monday that would award $6 billion to the U.S. Postal Service (USPS) to buy tens of thousands of additional electric delivery vehicles; XPEV Q4 EPS (15c) loss on revs $436.99M vs. est. $411.82M as quarterly deliveries were 12,964 vehicles; said Q4 loss narrowed 42% from the same period in 2019

·     Housing & Building Products; LOW mentioned positively in Barron’s saying its far more than a pandemic play, noting its turnaround efforts are going well and foot traffic saw bigger increases than peer HD between Nov-Jan; homebuilders edged higher (PHM, KBH, LEN) on the day after recent volatility given the upswing in Treasury yields and mortgage rates

·     Consumer Staples; KO upgraded to outperform from sector perform and raise tgt to $60 at RBC Capital as believes shares are poised to benefit from improved mobility and should emerge from COVID-19 stronger than it went in due to an organizational re-design; CPB checks give RBC comfort with being ahead of consensus, but with staples out of favor and rising input cost fears, he does not anticipate this quarter to be a positive catalyst

·     Leisure and Gaming; California officials said theme parks and stadiums can reopen as soon as April 1 provided, they meet local requirements and take precautions against the coronavirus (helped boost sentiment on theme parks (DIS, SIX, SEAS); SEAS was downgraded to neutral at Citigroup saying benefits from recent initiatives likely baked in and the upside from prevailing levels may be relatively muted; CNK demanded a discount to show "Raya and the Last Dragon" since it was debuting simultaneously on the Disney+ streaming service, but Disney wasn’t willing to give much up; BYD and FanDuel are partnering to launch Stardust-branded online casinos in New Jersey and Pennsylvania.



·     Energy stock movers; JPMorgan still sees further upside in energy after the sector’s run since November and upgraded CVE to Neutral and remain OW on CNQ, CVX, XOM Neutral on COP, MEG, SU and underweight on OXY; Credit Suisse keeps their $35 target on BE and upgrades it to Outperform after its recent pullback with tailwinds around the Gen 7.5 launch, 10-15% annual cost reduction for natural gas-based fuel cells, and lifted their target on LNG to $86 from $69 on compelling FCF yield; Truist maintained its Buy rating on OVV and upped its target to $43 from $30 as they forecast the company to hit its YE2022 debt goal of $4.5B potentially by this year on stronger than expected FCF and EBITDA, raised its price target on Buy-rated FANG to $105 from $80 and DVN to $35 from $30 on 2022 EBITDA projected to be ahead of current street estimates; Goldman upgraded IMO to Buy from Sell and lifted its target to C$36 from C$26

·     Utilities & Solar; FSLR was upgraded to Neutral from Underperform at Credit Suisse after the recent pull back, with an unchanged $70 pt; ENPH was upgraded to Market Perform from Underperform at Raymond James after being hit harder than other clean tech stocks in the recent pullback (-18% YTD vs -9% for benchmark ECO index), though valuation is still too rich for a more bullish stance; NEE was upgraded to Outperform at Credit Suisse on valuation after recent underperformance with unchanged 2021-22 estimates but slightly lowered their pt to $85 from $87; KeyBanc downgraded ETR to Sector Weight on regulatory concerns; Bank of America downgraded DTE to Neutral from Buy with a $133 pt



·     Bank movers; Wells raised their target on SBNY to $300 and cemented its status as their top mid-cap pick after the bank’s presentation at a conference on Friday showcased its Digital Assets vertical and Signet platform and strong pipeline; Truist raised their targets on banks across the board on improving revenue growth outlook as vaccines are distributed and they see the greatest opportunity in SNV and ACBI given their significant discounts to historical P/E valuation levels

·     Insurance; ATH to be acquired by APO for the stake it doesn’t already own in stock transaction valued at around $11B as ATH holders to received a fixed ratio of 1.149 shares of Apollo, reflecting a roughly 16.5% premium over Athene’s closing price on Friday; LMND was upgraded to Outperform with a $110 target at Oppenheimer after falling more than 50% off its all-time highs ($188.30 on 1/12)

·     Consumer Finance; Citi said FOUR offers a compelling recovery play after its in-line 4Q20 results, strengthening balance sheet, improving market share, and VenueNext acquisition that adds to the company’s re-open exposure; MA expands its Engage platform, making it easier for its customers to connect with a growing network of technology and fintech partners to help them build Digital First solutions; PYPL acquired Curv, a crypto custody firm, to accelerate and expand its initiatives to support cryptocurrencies and digital assets; LDI was initiated at Outperform with a $23 pt by Raymond James on its growing market share and positive risk-reward given its discount to peer RKTand at Neutral with a $22 target by Goldman who sees potential in the stock but wants to see the company gaining more market share from RKT before assigning a higher multiple on it

·     Financial Services; WEX announced that it has reached an agreement with Ford (F) Smart Mobility, whereby FSM will have the opportunity to refer its commercial fleet customers to WEX; COUP was upgraded to Conviction Buy with a $413 pt from Buy at Goldman, who says the company’s analyst day provides a near-term catalyst given the expectation that management discusses its Coupa Pay opportunity; VRSK was upgraded at Deutsche Bank to Buy with a $196 target and Raymond James to Outperform with a $190 target after falling about 19% YTD and strong near-term organic revenue growth; DA Davidson downgraded HMST to Neutral but raised their pt to $49 from $43



·     Pharma movers; AZN slipped early on reports Austrian authorities said they have suspended the use of one batch of Covid-19 vaccine from the co as a precautionary measure, after reports of a death and an illness among vaccine recipients, Reuters reported; VRTX mentioned positively in Barron’s saying the recent pullback in shares after a setback on a new drug can be an opportunity for investors to buy; MRK with partner RidgeBack Biotherapeutics reported positive preliminary top-line results from a Phase IIa study that demonstrated a significant reduction in time to negativity of infectious virus isolations in SARS-CoV-2 patients treated with molnupiravir; in animal health space, ZTS was upgraded at both Raymond James and Bank America; VTRS downgraded to neutral at Goldman Sachs and firm upgraded AMRX to buy from Sell; SLNO drops after the FDA said an additional controlled clinical trial will be necessary to support a new drug application submission for once-daily DCCR extended release tablets in Prader-Willi Syndrome

·     Biotech movers; ANAB shares fall after Phase 2 clinical trial of imsidolimab for the treatment of moderate-to-severe palmoplantar pustulosis failed to meet its primary endpoint; PASG said the FDA has granted Fast Track designation to the company’s three lead investigational gene therapies: PBGM01 for the treatment of GM1 gangliosidosis (GM1), PBFT02 for frontotemporal dementia with granulin mutations (FTD-GRN), and PBKR03 for Krabbe disease; ADPT announced that the U.S. FDA issued an Emergency Use Authorization for T-Detect COVID to confirm recent or prior COVID-19 infection; OPGN reports peer-reviewed publication of final study results showing that its diagnostics panel was able to rapidly identify bacterial co-infections in hospitalized patients with COVID-19 pneumonia; RARE said the FDA gives go-ahead to proceed with its Investigational New Drug application for UX053, an investigational mRNA therapy being evaluated for the treatment of Glycogen Storage Disease Type III (GSDIII).

·     Healthcare services and providers; Keybanc raised its tgt on SYNH to $90 from $76 and upgraded IQV to Overweight saying the clinical CRO space has likely permanently changed post-COVID-19 with respect to the acceptance of digital health/virtual clinical trials, and the large CROs seem to be gaining share – also downgraded PRAH after agreeing recently to be bought by ICLR; HSIC announces reinstatement of share repurchase program;


Industrials & Materials

·     Industrial & Machinery; GE is nearing a $30 billion-plus deal to combine its aircraft-leasing business with Ireland’s AER, according to people familiar with the matter, the latest in a string of moves by the industrial conglomerate to restructure its once-sprawling operations -WSJ ; UBS think that the recent dip in PWR presents a buying opportunity and they see upside to earnings from major grid investments

·     Transports; Dow transports touching all-time highs today, topping the 13,900 level; AAL said it intends to privately offer notes worth about $5 billion to pay down government debt; Credit Suisse cut Q1 rail estimates (CNI, NSC, CP) as severe weather across Canada and the U.S. has created notable disruptions across the supply chain (with many customers and production facilities slow to come back online in the TX/Gulf area), while unusually cold temps forced the rails to run shorter trains at slower speeds and with more power

·     Metals & Materials; DD paying $2.3B for Lard Performance Materials, 15X EBITDA, strengthening its advanced electronic materials segment for smart/autonomous vehicles; FNV and WPM upgraded to Outperform from Market Perform at BMO Capital saying trends at GMM are positive for royalty and streaming companies, with an optimistic outlook for the sub-sector in general; AA said it is planning to offer $500 million of bonds through its Alcoa Nederland Holding V.V. subsidiary; WPM upgraded to outperform at RBC Capital saying it maintains known costs and no direct operating exposure, insulating its business from operator cost inflation and dampening the impact of current commodity price volatility


Technology, Media & Telecom

·     Internet; TTD upgraded to Overweight from Sector Weight at KeyBanc with an $851 tgt as believes advertising technology stands to benefit from Google’s changes by offering an authenticated solution that delivers stronger return on investment; large cap tech led market pullback late morning with AAPL, AMZN, FB, GOOGL, NFLX all sliding

·     Semiconductors; high flying semi winners of 202 led the declines in the Nasdaq today; COHR said it plans to accept a revised takeover proposal from IIVI and scrap its prior deal to be acquired by rival LITE as Coherent’s board determined that II-VI’s new bid, which includes $170 in cash and 1.0981 shares, represents a superior proposal to LITE’s offer – However, MKSI later this morning revised its bid for COHR to $250 per share ($135 cash and $115 in shares); MRVL upgrade from Market Perform to Outperform with $50 tgt at BMO saying a yield-driven sell off along with a harsh reaction post the recent earnings call offer an opportunity; INTC to Collaborate with MSFT on DARPA Program

·     Software movers; MCFE rises after saying it would sell its cybersecurity business for companies to a group led by Symphony Technology Group, a private equity firm focused on software providers for $4 billion in cash as it looks to focus on consumer needs for digital security; in research; COUP upgraded to Conviction Buy list at Goldman Sachs with $413 tgt as sees Coupa continuing to benefit from the increasing pace of digital transformation in the office of the CFO; Goldman also added CRM and MSFT to conviction buy they are well positioned to capitalize on digital transformation spending, which believe will outpace overall IT budgets for future

·     IT Services & Consulting; PS and Vista Equity Partners have reached a new go-private agreement that raises Vista’s offering price for Pluralsight to $22.50 in cash, an increase from the previous agreement at $20.26 a share; ACN upgraded to positive from neutral at Susquehanna and raise tgt to $290 from $267 as sees signs of life in the financial tech spending space with signs of aggressive hiring to meet pent up demand taking place

·     Media & Telecom movers; EB said for February event ticketing trends indicated a MoM increase of 18% in paid ticket volume led by growth in paid tickets to in-person events, which increased 23% M/M – outside U.S. paid tickets grew 23% and within U.S. growth stood at 15%; CABO was upgraded to Outperform at Raymond James and to Buy at Truist with $2,100 tgt


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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