Market Review: March 29, 2022

Auto PostDaily Market Report

Closing Recap

Tuesday, March 29, 2022





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Stocks closing just off the highs, rising handily, especially in tech and Smallcaps as the Russell 2000 rises as much as 2.8% with market sentiment overly positive (no fear as VIX falls below 19 level) amid signs of progress in the Russia-Ukraine peace talks. Headlines indicated the meeting was “constructive”, enough for markets to rally behind. Reports out of Ukraine/Russia are still fluid, and far from over, but it was enough to get stocks higher, extending recent market gains. Lower oil prices, as WTI crude briefly fell below the $100 per barrel mark (after topping above $130 this month), helped rally shares of restaurants, retailers, travel, leisure, and transports as it puts money back into investors pockets. On the flip side, shares of energy, materials, and metals, which were the biggest beneficiaries to the conflict in Europe, saw the heftiest declines today. Meanwhile, all eyes on Treasury yield spreads, as the 2 and 10-yr spread went flat (briefly) for the first time since 2019, once again raising recession fears for 2022 – but markets managed to rally to intraday highs following the flat curve. The 2-year yield hit a fresh three-year high (March 2019) above 2.38%, while the 2-year was around 2.9% (off morning highs of 2.53%). CNBC noted that an inverted yield curve doesn’t necessarily mean a recession but notes we have never had a recession without the yield curve inverting (6-times since mid-70’s). Still no fear as VIX index drops below the 19 level in a pure melt-down (down 10 of 11 days).

·     Stock and Sector movers: The strength in big capo tech explains the move in broader markets over the last few weeks: AAPL higher for the 11th straight day as it has now risen more than 17% during this streak to wipe out its YTD loss; TSLA tops $1100 for first time since Jan. 13; HOOD surges to highest levels since January after news it will extend its trading hours to 7AM-8PM as fintech space SQ UPST AFRM SOFI sharply higher; autos among S&P leaders and EV stocks surge led by RIVN back above $50 for the first time in more than 3 weeks and large gains in LCID XPEV NIO QS; ASO spikes after a beat-and-raise report to lift other sporting goods stores as retail gets a boost on lower oil prices; $LULU $RH gain into earnings tonight; CF MOS BLL NUE FANG LHX fall as recent winners during Russia’s invasion of Ukraine broadly lower after constructive progress in negotiations between the two countries; MRNA NVAX BNTX Vaccines climb after the FDA approves a second booster dose for those 50+ and other immunocompromised individuals

·     Amazing stats: AAPL posts its longest win streak since 2003, rising an 11th straight day of gains and TSLA up 10 of the last 11 days (only down day was a -0.3% drop on 3/25), up 43% during this stretch. From the 2022 intraday low, TSLA is up 57%, NVDA 36%, FB 23%, AAPL 18%, AMZN 27% and MSFT 16%. Given those stats in big-cap tech, the Nasdaq is now 15% off the monthly lows, the Dow is 9% off the lows, the S&P 500 is 12% off its lows, Russell is up 12% off its lows.

·     The U.S. initial public offering (IPO) market had its slowest first quarter in six years, according to Renaissance Capital, with just 18 deals raising $2.1 billion. There were just seven IPOs that raised more than $50 million in the period, led by TPG’s billion-dollar deal, which accounted for nearly half of overall proceeds.


Economic Data:

·     JOLTS Job Openings Actual 11.266M vs. previous 11.263M

·     S&P Case-Shiller Jan 20-City Home Price Index Up 19.1% Year Over Year; Jan 20-City Home Price Index Up 1.4% Month Over Month; U.S. National Home Price Index Up 1.1% Month Over Month

·     Consumer Confidence index for March at 107.2 vs. consensus 107.0 and above February revised 105.7 (previous 110.5); the present situation index 153.0 in March vs Feb revised 143.0 and expectations index 76.6 in March vs Feb revised 80.8 (previous 87.5)



·     Oil prices fall but finish well off the lows (of $98.44) as Russia/Ukraine tensions ease on the back of optimistic, constructive talks. WTI crude declined -$1.72 or 1.62% to settle at $104.24 per barrel. Oil demand in China is suffering amid a fresh bout of high-profile Covid lockdown. Markets also await an upcoming OPEC meeting later this week to decide on output levels from May onward. Earlier this month OPEC stuck to its initial plan to increase oil production by 400,000 barrels a day in April despite oil prices pushing above $110 a barrel at the time.

·     Gold futures fall -$27.60 or 1.4% to end at $1,912.20 an ounce, nearly 2-week lows despite a drop in Treasury yields and the dollar. Gold prices dropped along with a broad pullback in commodity prices on hopes of de-escalation of violence in Ukraine as peace talks are ongoing.


Currencies & Treasuries

·     Yield curve inversion was the big topic today as the 2’s caught up with the 10’s, with the spread less than 1 bps late afternoon (2’s around 2.39%), raising recession fears. Three’s, fives, and seven’s already with higher yield than the benchmark 10-yr (all three with yields above 2.5%). The U.S. Treasury auctioned off $47B worth of 7-year notes at a high yield of 2.499%, while the bid-to-cover ratio stood at 2.44 while Primary dealers took 10.52%; direct bidders grabbed 28.55% and indirect bidders took the most at 60.93%. The U.S. dollar tumbled but finished off its lows as major currencies recovered off their recent slide ahead of key economic data tomorrow and this week (GDP, inflation, and jobs). Germany’s two-year yield briefly turned positive for the first time since 2014 as optimism around Russia-Ukraine peace negotiations pushed surging borrowing costs even higher.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; ASO Q4 topped consensus with EPS $1.61 ahead of est. $1.37 on revs $1.81B vs est. $1.76B and comp sales +13.1%, and they see FY23 adj EPS $6.70-7.25 vs est. $6.14 on sales $6.56-6.77B vs est. $6.69B, comp sales down (-4%) to (-1%); CONN shares slide after top and bottom line miss as Q4 total revenue rises more than 9% to $402.5M but below ests. $409.1M and EPS of $0.33 missed the $0.46 estimate; DTC Q4 adj EPS 45c vs est. 32c on revs $176.5M vs est. $174.4M, sees Q1 revs $82-85M below est. $92.3M and FY revs $540-570M vs est. $554.3M; Credit Suisse downgraded REAL to Neutral after last week’s Analyst Day included 2025 EBITDA forecasts below consensus and a significantly longer path to profitability that requires much more GMV vs its initial IPO model, as well as their view of an unlikely shift in sentiment; TJX raised its dividend by 13% and said it plans to repurchase $2.25-2.5B of shares in FY23

·     Auto sector; BLBD aid it received an order for 30 zero-emission school buses for California’s Modesto City schools; ZEV shares fall as guides 1Q revs $5-6Mm vs est. $10.4Mm and adj EBITDA -$15Mm to -$17Mm vs est. -$12.6Mm; in auto retail, AZO was upgraded from Hold to Buy w/ $2,210 PT at Argus noting earnings have rebounded from their pandemic lows, and have now topped Street expectations for the past seven quarters; Ford (F) rises, helping lead auto rebound

·     Housing, Home Improvement, & Building Products; Treasury yields extend recent surge to best levels since 2019, pressuring homebuilders and home improvement names as mortgage rates spike; thus far in 2022, the homebuilder ETF ITB has declined 26% coming into the day vs. a 5% drop in the S&P 500. February 2022 was another month of double-digit declines in inventory, -22% Y/Y, and double-digit gains in median prices, +15% Y/Y; in furniture, LOVE Q4 sales rose 51.3% to $196.2M vs est. $174.3M, total comp sales +50%, and EPS $2.03 crushed est. $0.58

·     Consumer Staples & Restaurants: the drop in oil prices helped casual diners early as discretionary spending improves with lower energy costs; MKC Q1 EPS $0.63 vs consensus $0.62 and revenue $1.52B vs consensus $1.47B; GM 36.8% vs consensus 36.6%; OM 14.9% vs consensus 15.4%; reaffirms FY EPS $3.17-$3.22; PLAY Q4 revs declined -1.2% from 2019 levels at $343.1M, missing the $364.5M estimate and said it is still facing COVID-19 headwinds including vaccine requirements in certain markets



·     Energy stock movers; as broader stocks rally given the hopes of a cease-fire and resolution of terms between Ukraine and Russia that has entered its second month of war, energy stocks tumbled in reaction to tumbling oil prices which are down over 10% this week. Energy giants such as XOM, CVX, OXY and others pulled back along with declines in other commodity sectors (aluminum, gold, grains etc.). UBS (ahead of the roll in oil prices this morning on constructive talks comments between Ukraine/Russia) raised its 2022 Brent forecast to $95/bbl from $81/bbl, 2023 to $85 from $80 and 2024 to $80 from $75 while 2025 and long-term Brent forecast is unchanged at $75/bbl driven primarily by the impact of the Russia-Ukraine war



·     Brokers & Bank movers; as Treasury yields fell, and the curve inverted, banks failed to rally with broader market; JEF jumps following as quarterly EPS and revenue; HOOD prices jumped after saying it is extending hours to trade from 7 A.M. To 8 P.M. ET; in insurance, MetLife (MET) investment management achieves record $6.0B in global agricultural mortgage originations in 2021

·     Bitcoin, FinTech & Payments; SI announced it has issued a $205 million term loan under its Silvergate Exchange Network (SEN) Leverage program to MSTR; SQ tgt raised to $215 from $190 at Mizuho saying they granular build suggests that Cash App ex-Afterpay could grow 30-35% in 2022, likely exceeding most investor expectations.



·     Healthcare Services; UNH agreed to buy in-home healthcare service provider LHCG in a deal worth $5.4 billion, with holders to receive $170 per share (vs. Monday closing price of $157.23); UNH said its subsidiary Optum will combine with LHC Group; CVS was downgraded to Hold from Buy at Deutsche Bank with $110 tgt Buy as now see a risk/reward profile that skews negative driven by multiple factors including the potential for near term negative revisions in the pharmacy segment from manufacturer participation in the 340B program; AVAH slides as 2022 guidance of $190M – $205M about 15% below consensus, following top/bottom line Q4 miss; WOOF added to Wedbush Best Ideas List as the company’s holistic premium pet care business model is gaining momentum and should deliver durable market share gains; NEO tumbles following the departure of CEO and Board member Mark Mallon, effective immediately, company suspended its revenue and EBITDA guidance for 2022 and said it may miss the low end of its Q1 revenue guide and will miss its Q1 EBITDA guide

·     Pharma & Biotech movers; IGMS rises following a collaboration with SNY; DNA delivered a Q4 revenue consensus beat ($148M vs cons: $95M) and guided to 2022 revenue of $325-$340M (cons: $306M); ALBO completes enrollment in pivotal phase 3 assert study of Bylvaytm (odevixibat) in Alagille syndrome; BDTX downgraded to neutral at Wedbush as see little upside to shares in the interim, as well as a tough current financing environment. Reducing our price target to $4 (from $22) with model changes including removal of potential revenues from BDTX-189, and addition of BDTX-1535 in GBM, and relevant EGFRm NSCLC patients; PFE and BNTX Receive Expanded U.S. Emergency Use Authorization for an Additional COVID-19 Vaccine Booster in Individuals Aged 50 Years and Older


Industrials & Materials

·     Industrials, Aerospace & Defense; EVTL rises early after Avolon, one of the world’s largest aircraft lessors, said that it has exceeded its whole 500-unit pre-order of Vertical’s VX4 electric aircraft within nine months; shares of defense names lagged early on peace efforts in Europe between Ukraine and Russia, with RTX, LMT, GD, NOC among movers

·     Transports; airline and other travel, transport stocks saw early strength given a sharp retreat in oil stocks amid signs of improving peace talks in Ukraine; FDX announced Raj Subramaniam to become President and CEO as Fred Smith steps down; Frederick W. Smith to serve as Executive Chairman; UPS to announce an expansion of its 2019 deal with Alphabet Inc.’s Google Cloud as the logistics company rolls out new data initiatives, according to reports

·     Metals & Materials; shares of aluminum producers AA, CENX, uranium CCJ copper FCX, fertilizer MOS, CF, iron ore/steel CLF, VALE, X, STLD and industrial metals in general tumble with prices on signs of improvement between Ukraine talks; BLL announced that it is immediately reducing its operations at its three beverages can plants in Russia and that it is pursuing a sale of its Russian business which represented roughly 4% of total sales in 2021, but 8% of adjusted EBIT; REYN was downgraded to Sell from Buy at Goldman Sachs and cut tgt to $26 from $34 as they revisit estimates, price targets across the majority of HPC coverage, effectively marking-to-market for recent commodity and currency moves while also embedding curtailed activities in Russia

Technology, Media & Telecom

·     Software movers; general strength in software names as investors continue to pile into high growth stocks despite the fact of a rising interest rate environment; FTNT was upgraded to Overweight from Equal weight and raise tgt to $395 from $364 at Barclay’s while the firm downgraded SentinelOne (S) to Equal Weight; NLOK downgraded from Overweight to Equal weight at Morgan Stanley saying slowing topline and macro suggest downside risk to FY23 consensus rev estimates, while NLOK faces an uncertain regulatory path for closing the proposed Avast transaction; another day, another rally in AAPL as shares came into the day with a 10-day win streak; IQ said it launched its eponymous channel on ROKU devices in the US and Canada.

·     Internet, Media & Telecom movers; PINS downgraded to Equal Weight at Morgan Stanley at Morgan Stanley amid challenging user trends and cuts tgt to $30 from $53; NLSN agreed to sell itself to a consortium led by Elliott Management Corp.’s private-equity arm and Brookfield Asset Management Inc. in a deal valued at $16B, with holders to receive $28 a share for the company ; ETSY downgraded to Hold at Loop Capital, cut tgt to $140 from $185 and cut ests as now expect 15% GMS growth this year, down from prior estimate of 19%


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