Market Review: March 23, 2021

Auto PostDaily Market Report

Closing Recap

Tuesday, March 23, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     U.S. stocks finish lower as selling pressure accelerated late day, with declines in the S&P 500, Dow, and Nasdaq, but massive weakness in Smallcaps as the Russell 2000 dropped over 3%, adding to recent underperformance amid a further pullback in cyclicals such as commodities, energy, and financials. Re-open trade really took it on the chin with hefty declines in cruise lines, travel, and leisure names. Stocks slumped despite a pullback in Treasury yields, as the 10-year sunk to 1.63%, off last week highs above 1.75% (13-month best levels) following weaker-than-expected economic data. There were several market catalysts leading to the declining sentiment including: the dollar jumping weighing on commodity prices as oil declined over 6% to 6-week lows (hurting energy stocks), as well as 2) more European lockdowns as Germany is extending its lockdown until April 18 and calling on citizens to stay at home for five days over the Easter holidays to try to break a third wave of the COVID-19 pandemic; 3) AZN shares slid after a U.S. health agency raised fresh doubt on the results of the drugmakers large-scale COVID-19 vaccine trials; 4) somewhat “hawkish” comments from Dallas Fed President Kaplan who said in a CNBC interview this morning that he predicts the FOMC will start raising rates next year as growth and inflation heat up; 5) weaker economic data today in the form of new home sales data among them; Congressional testimony from Fed Chairman Powell and Treasury Secretary Yellen failed to ease market fears. Inflation data could be especially important as bond markets start to bet the Federal Reserve might be underestimating the potential for higher inflation. The Fed’s favored inflation reading, the core PCE price index, will be released on Friday. Inflation below expectations could see a sell-off in the dollar.

·     Sector news; reopen trades CCL, RCL, UAL, PLNT, SIX, CZR were broadly lower, while stay-home and cleaning names ZM, PTON, NFLX, CL, PG jumped on rising cases and lockdowns in Europe, U.S. officials’ concern about the reliability of yesterday’s AZN vaccine data; MSFT shares moved higher after they were reported to be in talks to buy Discord for over $10B; media stocks slide as DISCA was downgraded to Sell at UBS and VIAC announced a $3B offering, weighing on shares of FOXA; IONS plummets after partner RHHBY discontinues dosing in their Phase 3 Huntington’s Disease trial, dragging peers WVE, QURE, PTCT with it; shares of FREQ similarly plummeted on a trial fail as its Phase 2a study showed no significant improvement in patients’ hearing ability.

·     Dallas Fed President Robert Kaplan said in a CNBC interview this morning that he predicts the FOMC will start raising rates next year as growth and inflation heat up. Kaplan said that year-over-year inflation will likely be 2.25% to 2.5% this year and the 10-year Treasury yield will rise to 1.75% to 2% but notes this not a bad thing as the economy improves. Kaplan says his forecast has improved meaningfully, with 6.5% GDP growth this year and unemployment falling to 4.5%.

Economic Data

·     The U.S. current account deficit raced to a 12-year high in 2020, surging 34.8% to $647.2 billion last year – the largest shortfall since 2008. The current account gap represented 3.1% of gross domestic product last year, also the largest share since 2008 and up from 2.2% in 2019. Exports of goods and services to, and income received from foreign residents dropped $578.3 billion to $3.23 trillion in 2020. Imports of goods fell $411.3 billion, to $3.87 trillion.

·     New Home Sales for February fell –18.2% MoM to 775K vs. 875K expected and 948K prior (revised from 923K) as home sales in Northeast -11.6%, Midwest -37.5%, South -14.7% and West -16.4%; Feb new home supply 4.8 months’ worth at current pace vs. Jan 3.8 months; Feb median sale price $349,400, +5.3% from Feb 2020 ($331,800)

·     Philadelphia Fed non-manufacturing regional business activity index 38.6 in March vs 3.9 in Feb; non-manufacturing new orders index 19.9 in March vs 4.0 in Feb; non-manufacturing firm-level business activity index 33.5 in March vs 7.5 in Feb

·     Richmond Fed composite manufacturing index +17 in March vs +14 in Feb and shipments index +22 in March vs +12 in Feb


Commodities, Currencies and Treasury’s

·     Oil prices tumbled on the day, as WTI crude drops -$3.80 or 6.17% to settle at $57.76 per barrel (6-week lows), while Brent crude dropped -$3.83 or 5.93% to settle at $60.79 per barrel, as the energy sector continues to be hit by concerns over new pandemic curbs and slow vaccine rollouts in Europe as well as a stronger dollar. Both benchmarks traded near lows not seen since Feb. 12. The front-month Brent spread flipped into a small contango for the first time since January. Contango is where the front-month contracts are cheaper than future months.

·     Gold futures finished lower, slipping-$13.00 or 0.8% to settle at $1,725.10 an ounce, pulling back along with a bounce in the U.S. dollar as the precious metal settled at its lowest level in over a week. Prices opened and stayed lower, showing little reaction to congressional testimony from Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen.

·     The U.S. dollar rose 0.5% against rivals, while U.S. benchmark Treasury yields dipped with the 10-year down at 1.65% (more than 10 bps decline from last week 1-year highs above 1.75%). Economic data was weaker than expected today, as investors rotated into bonds. The U.S. Treasury to auction $183 billion of notes this week alone, with today’s $60B in 2-year notes at a yield of 0.152%, with a bid-to-cover (demand) at 2.54 and indirect bidders awarded 50.69%.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; GME, the face of the short squeeze Reddit, WSB momentum trades in January set to report earnings after the bell tonight; BURL downgrade from Buy to Hold at Berenberg while raise tgt to $314 from $255 as no longer view BURL’s risk/reward profile as favorable amid outperformance since November 2 (+58% vs. S&P500 +19%); DG extending gains from last week post earnings – positive analyst calls last two days as well as expectations to benefit from latest round of fiscal stimulus for discount stores

·     Restaurants; CMG announces further expansion into Canada; Wells Fargo positive on QSR saying they see drivers beyond the re-opening of the Canadian economy leading to a positive inflection in Tim Horton’s Canada comp sales in the coming months, which given the importance of this brand to aggregate EBITDA/FCF, should translate into multiple expansion for shares; DRI tgt raised to $151 and raise 3Q EPS estimate to $0.81 (from $0.60) at RBC ahead of earnings this week given casual dining’s improvement in January and stabilization in February

·     Casinos and Gaming, Lodging & Leisure sector; PENN tgt raised to $153 from $139 at Goldman Sachs and DKNG tgt raised to $87 from $79; movie theatre names slid (AMC after DIS said intends to open both of its key summer theatrical releases "Cruella" and "Black Widow" simultaneously in theaters and on Disney+ with Premier Access, which typically costs $30 for subscribers, in most Disney+ markets on May 28 and July 9, respectively



·     Crude oil prices continue to slide as concerns persist about a third COVID wave in Europe denting demand. WTI futures drop back below $60 per barrel for the first time since the beginning of March after Germany says it is in a "new pandemic," with the British COVID strain dominant, prompting a hard lockdown and more restrictions through April 18

·     Energy movers; Jefferies said they continue to favor CVX over XOM after they both hosted investor days; Goldman initiated DVN as a Conviction Buy with a $30.75 target; MPC said its sale of Speedway to 7-Eleven is now expected to close in Q2, later than the previous expectations of Q1; Citi lifted their price targets on Buy-rated DVN (to $29 from $24), FANG ($100 from $82), EOG ($88 from $72), HES ($84 from $72), PXD ($196 from $154) and Neutral-rated MRO ($12 from $9), OVV ($28 from $18), RRC ($10.50 from $7.50), SWN ($4.75 from $3.50); CRC shares slip, note the co named its interim chief executive as its permanent CEO, effective immediately

·     Utilities & Solar; WES 10M share Spot Secondary priced at $17.35; Goldman downgraded SPWR to Neutral with a $32 target from Buy as they see less upside versus other solar residential peers after shares have increased almost eight-fold over the past year, and they also upgraded RUN to Buy with a $77 target, reversing their 9/30 downgrade on valuation as they see attractive risk-reward now after the stock’s recent sell-off on macro factors; Roth reiterated their Buy rating on CSIQ and upped their price target to $55 from $50 on valuation and Citi also kept the name at a Buy but lowered their target to $63 from $71; Bank of America upgraded NWE to Neutral from Underperform; JE shares were suspended from trading on the NYSE after the close yesterday and are now trading on the OTC Pink Market under the symbol JENGQ; BLDP filed a registration statement covering the potential sale of various securities totaling up to $1.5B



·     Bank movers: the sector has been pressured the last few days on Fed news and as treasury yields pull back from more than 1-year highs – but saw a bounce off morning lows; SCHW announces depositary shares offering; SIVB 2M share Spot Secondary priced at $500.00; in insurance; HIG’s board unanimously rejected CB’s March 11, 2021, unsolicited proposal to acquire Hartford, deciding that entering merger talks wouldn’t be in the best interests of co or holders; LDI announces launch of private offering of senior unsecured notes

·     Bitcoin related stock news: SI announced Coinbase Custody, one of the global leaders in qualified digital asset custody, as a custodian for SEN Leverage. SEN Leverage provides secure, institutional-grade access to capital through U.S. dollar loans collateralized by bitcoin; MOGO announced it has entered a binding letter of intent to acquire 100% of Moka Financial Technologies, a Canadian saving and investing apps, in an all-stock transaction. The proposed acquisition will increase Mogo’s member base by over 40% to more than 1.7 million; NCTY said identified inadvertent error, determined to restate unaudited interim consolidated financial statements as of & for 6 months ended June 30, 2020



·     Vaccine news; AZN shares volatile as the company, responding to charges (from the National Institute of Allergy and Infectious Diseases) that they had provided outdated information regarding its Phase 3 U.S. trial for COVID-19 vaccine, issued a statement saying that the results published yesterday had a data cut-off of 17 February. The company said it expects to release data from the primary analysis within 48 hours; HOTH announced new in vitro data demonstrating SARS-CoV-2 antiviral activity for its lead peptide candidate for HT-002 for Covid-19

·     Pharma movers; NVS said that a phase 3 study with radioligand therapy 177Lu-PSMA-617 in patients with advanced prostate cancer met both primary endpoints of overall survival and radiographic progression-free survival; HEPA said it saw positive results from an in vivo study of CRV431 in a diet-induced animal model of non-alcoholic fatty liver disease; VRCA 2.034M share Spot Secondary priced at $14.75; XOMA purchased potential future milestones & royalties associated with VIRX existing licenses relating to 2 clinical-stage drug candidates; Viracta Therapeutics to receive $13.5 million upfront cash payment; FREQ plunges after its lead drug aimed at treating sensorineural hearing loss didn’t lead to any hearing benefit when given in a four-dose schedule, the company found in a Phase 2a study.

·     Biotech movers; IONS shares fall after its partner Roche decided to discontinue dosing in the Phase III GENERATION HD1 study of tominersen in manifest Huntington’s disease (HD) – shares of WVE, PTCT and QURE down in sympathy which are other players in the HD space; INCY announces approval of Pemazyre in Japan; INSM was granted Japanese approval for Arikayce in chronic lung disease; REGN said its antibody cocktail significantly reduced the rate of Covid-19 hospitalization or death in a large clinical trial; the treatment appeared to work just as well at half the dose currently in use, which could effectively double the available supply; PSTV entered into a master services agreement with Piramal Pharma solutions

·     MedTech, Healthcare services and providers; EHTH shares active after Starboard Value LP reports 6.9% stake as of March 11, 2021 based on belief that shares were undervalued; BLFS rises after Stirling Ultracold, an Ohio-based manufacturer and provider of the most energy efficient, sustainable ultra-low temperature (ULT) biorepositories has entered into a definitive agreement to merge with BioLife Solutions; BSX slipped after Reuters reported NY Attorney General files lawsuit accusing the co of concealing risks of surgical mesh devices


Industrials & Materials

·     Transports; Dow Transports pulled back from all-time highs the weak prior, as a decline in airlines (UAL, JBLU, AAL) weighed on the index which fell back near the 14,000 level (off recent ATH’s of 14,451); sector got a boost yesterday maid M&A in the rail sector with $25B tie-up between CP and KSU was upgraded to buy from Hold with $68 tgt at Argus as view Southwest as one of the best low-cost carriers, with a record of stable earnings prior to the pandemic and a strong management team; Reuters reported U.S. Postmaster General confident in decision to award multi-billion-dollar next-generation delivery vehicle to OSK steepened decline on news)

·     Metals & Materials; Global crude steel production rose 4.1% to 150.2 million tonnes in February from a year earlier, World Steel Association data showed on Tuesday. Crude steel output from China, the world’s top producer and consumer of the metal, increased 10.9% to 83 million tonnes in February; gold miners sink (NEM, AEM, AUY, GOLD) after bullion slipped as a firmer dollar outweighed a dip in U.S. Treasury yields

Technology, Media & Telecom

·     Internet; NFLX upgraded to Buy from Hold with $650 tgt at Argus noting the company is expanding globally, adding new subscribers, and strengthening its industry position; Chinese online video site BILI said it will raise HK$20.2 billion ($2.60 billion) in Hong Kong secondary listing after pricing its shares at HK$808.00 each.

·     Semiconductors; LITE increased their bid for COHR to $230/share in cash and 0.6724 shares of LITE for each COHR share held in a $7B deal from $220/share and 0.61 shares of stock to contend with IIVI’s proposal last week of $220/share in cash and 0.91 shares of IIVI for each COHR share held; Longbow upgraded MCHP to Buy with a $188 target as they say the company can reach its recently raised GM and EBIT margins a year earlier than the Street’s current forecast of March 2023 given the favorable industry environment, and they also upgraded TXN to Buy as the company has the highest internal capacity among diversified semis and should gain market share given its increase in DTC sales (63% of Q4 sales vs <40% YoY); Bank of America raised their price target to $150 from $150 and maintained the stock as a Buy as they see their semi sales accelerating and EPS approaching $9 by 2025; Jim Cramer called MRVL the ultimate 5G wireless play last night on “Mad Money”

·     Hardware & Software movers; MSFT is in discussions to acquire video-game chat platform Discord Inc. for more than $10 billion, Bloomberg reported ; TTWO buys HookBang LLC’s video game division that will become part of Visual Concepts; FEYE awarded U.S. Patent titled ‘system and method for detecting malicious scripts through natural language processing modeling; ROKU tgt raised to $439 from $389 to reflect the extension of Roku’s reach to linear TV and a stronger CTV advertising market; reiterate Buy at Berenberg; in 3D space, shares of DM, DDD, SSYS, XONE slide after SPAC JAWS Spitfire Acquisition confirmed a deal to take 3D printer Velo3D public in a deal that values Velo3D at $1.6B

·     Media & Telecom movers; media names slide; VIAC shares fall after it started an offering of $3 billion worth of equity securities which follows a 55.6% month to date to close Monday at a record of $100.34, marking a 12th record close so far this month (equity offering includes $2.0 billion of Class B common stock and $1.0 billion of Series A mandatory convertible preferred stock); DISCA downgraded to Sell from neutral saying they see the streaming opportunity as more than priced in, but nearly doubles the price target from $24 to $46 – says early app data shows Discovery+ as the fifth most downloaded SVOD app, and Nielsen data shows that about 14M U.S. SVOD homes watch at least 20 hours of flagship Discovery brands per month


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