Market Review: May 03, 2021

Auto PostDaily Market Report

Closing Recap

Monday, May 03, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     U.S. stocks finish mostly higher outside of modest weakness in the tech heavy Nasdaq Composite, as the Dow Jones Industrial Average neared another fresh record high, and the Dow Transports did touch a new record. Transportation (UPS, FDX), Materials (X, NUE), Consumer (KSS, M, GPS) and Energy (HAL, SLB, VLO) paced the gains, while tech underperformed led by weakness in software and semiconductors ahead of another busy week of earnings (roughly another 30% of S&P 500 reports this week). Economic data was below economist estimates, as investors rotated into Treasury prices, while the dollar slipped. The Dow Transports at a new record high above 15,650 (up over 300 points late day) as look to make it a 14th straight week of weekly gains (the current 13-win streak longest in over 120-years). Markets continue to cheer signals that economic growth is picking up in most developed countries, with companies’ earnings growth and positive outlook adding to the optimism. Earnings remain solid for the quarter, but stock reaction (given the run up into earnings for most names) remains disappointing despite strong results. So far, with about 60% of SP500 reports in the books for Q1 results thus far, seeing a roughly 86% beat rate on EPS line and 78% beat rate on revenue line (both would be the highest beat % since FactSet compiled data back to 2008).

·     Inflation a concern? Outside of Treasury Secretary Yellen and FOMC Chief Jerome Powell, who continue to say rising prices/inflation is “transitory”, the majority of companies and well-respected Wall Street investors (Buffet, Gundlach) have provided contradicting view – thinking its more notable. note consumer related companies such as CMG, PG, WHR, KMB, HSY, CLX, all talked of higher inputs and raising prices during their earnings results over the last 2-weeks.

·     Top sector/stock movers; UPS, FDX extend rally after Wolfe upgrades both to Outperform, leading Transports to its new record high; BKR, HAL, SLB among top performers in the S&P after Barclays upgrades oilfield services and equipment names to OW; EL tumbles after reporting sales that missed expectations due to slumping demand in make-up; Barron’s highlights US cannabis stocks, sending shares of GTBIF, TCNNF, CURLF higher; CDE, HL, AG, NEM, HL precious metals (gold/silver) outperform amid slump in Treasury yields; ON shares slide despite beat and raise as semiconductors extended recent declines as SOX drops below 50-day MA support; consumer discretionary (M, KSS, GPS, URBN) among top gainers today along with energy and housing.


Economic Data:

·     Markit April final manufacturing PMI at 60.5 vs flash 60.6 and final 59.1 in March; manufacturing sector final output index for April at 57.2 vs flash reading 57.2 and final March 55.6 and input prices index for April at 77.2 vs flash reading 78.0 and final March 74.8.

·     ISM U.S. manufacturing activity index reported at 60.7 in April, below consensus 65.0 and the March 64.7 reading while the prices paid index jumped to 89.6 in April (highest level since July 2008) vs. March 85.6; the new orders index 64.3 in April vs. March 68.0; employment index 55.1 in April vs. 59.6 in March.

·     March construction spending rose +0.2%, below consensus for up +1.9% to $1.513 trillion vs. Feb -0.6%; U.S. March private construction spending +0.7%, public spending -1.5%


Commodities, Currencies & Treasury’s

·     Oil prices rise as WTI crude gains $0.91 to 1.43% to settle at $64.49 per barrel, while Brent crude gainer $0.80 or 1.2% to settle at $67.56 per barrel. Gold prices advanced $24.10 or 1.4% to settle at $1,791.80 an ounce, snapping its 4-day losing streak as the dollar fell along with Treasury yields, while volumes are expected to be low due to public holidays in China, Japan, and Britain. Benchmark U.S. 10-year Treasury yields slip after hitting their highest in nearly two weeks last week. Silver gained 3.6% to $26.84 per ounce after hitting $26.98, its highest mark since March 1, while platinum rose 2.6% to $1,229.84. The dollar index (DXY) slipped 0.3%, while benchmark U.S. 10-year Treasury yields also retreated with the 10-year at 1.61% (hit lows around 1.58%).






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; GME said it completed voluntary early redemption of $216.4 mln in principal amount of 10% senior notes 2023 on April 30; PETS reports Q4 EPS and sales that fell short of consensus (34c/$71.68M vs. est. 40c/$74M); CROX positive mention in Barron’s suggesting its prime for a reopen and can continue its strong results and demand for comfortable shoes will last beyond the pandemic; shares of GPS outperformed in retail on no specific news; for gun stocks (RGR, SWBU, VSTO) April NICS figures total 3,514,070 vs. 2,911,128 YoY (but down from March figures of 4,691,728)

·     Auto sector; TSLA shares slipped initially on reports is said to delay starting production in its new Germany facility until the end of January; Tesla originally wanted to open the plant on July 1; monthly auto sales data showed: NIO delivered 7,102 vehicles in April, 125% higher than the company’s deliveries tally from a year ago, but 2% below the level seen in March; LI delivered 5,539 Li ONEs in April 2021, representing a 111.3% year-over-year increase and taking the cumulative deliveries to 51,715; XPEV delivered a total of 5,147 Smart EVs in April 2021, representing a 285% increase year-over-year; monthly auto sales in U.S. showed TM April U.S. sales 239,311 units vs 84,694 year ago

·     Consumer Staples & Restaurants; EL lower by 3% as misses analysts’ estimates for Q3 sales, hurt by weak demand for its premium products (cosmetics and makeup products took a hit during the COVID-19 pandemic) – total net sales rose 16% to $3.86B, missing est. of $3.94B (shares of rival make-up companies active in sympathy ELF, COTY, LRLCY, ULTA); TSN says it is expanding its offerings for the Raised & Rooted brand with three new products said to meet the increased demand for plant-based protein options

·     Casinos, Gaming, Lodging & Leisure sector; in casinos (WYNN, MLCO, MGM), gross gaming revenue (GGR) in Macau was up 1,014% YoY to $1.1B in April to fall short of the consensus estimate for a gain of 1,054% against the soft pandemic period comparable. Macau GGR was ahead of the $1.04B recorded in March, but down about 64% from the GGR generated in April of 2019; Loop raised their pt on its top Gaming REIT pick VICI to $37 from $33 after its earnings last week with Jefferies who lifted theirs to $37 from $34 with increased FY22 estimates for revenue and adjusted FFO, though Morgan Stanley downgraded the stock to Equal-Weight with a $33 pt from $28 as shares are up 25% YTD and trading near their new price target; DKNG upgraded to outperform from market perform at Cowen



·     Energy stock movers: energy sector outperformed with higher oil prices, and oil services outperformed after Barclay’s upgraded HAL, BKR, WHD, NEX, PTEN all upgraded to Overweight, raising price targets across the board as upgrade Industry View on the Oilfield Services & Equipment sector to Positive as believe the sector is poised to outperform over the next several years as the global oil markets recover by 2023. Barclays said they view the OFS sector as highly undervalued as the stocks are barely discounting a recovery to 2023 let alone continued spending out to 2025, on which we apply normalized multiples. After years of global underinvestment, the global S/D balance is set to be extremely tight post-recovery with US shale ideally positioned to take advantage and fill any potential supply gaps.

·     Utilities & Solar; WEC reported Q1 EPS $1.61 vs est. $1.47 on revs $2.69B vs est. $2.37B and said it expects to reach the top end of its FY21 EPS guidance range of $3.99-4.03; Wells upgraded PCG to OW with a $15.50 pt from $12 as the stock’s 15% YTD underperformance vs utilities now provided compelling risk/reward; Bank of America downgraded DTE to Underperform with a $131 target and upgraded FSLR to Buy with a $91 target as shares fell following the company’s earnings report last week despite its positive update and medium-term pricing outlook being one of the best; JPMorgan initiated NJR at Neutral with a $43 target as they see shares being fairly valued after its outperformance since November; Scotiabank upgraded ES to Sector Perform with an $87 pt; Roth downgraded REGI to Neutral as the steep appreciation in feedstock prices so far this year has compressed profits and brings the company’s profitability into question for the second half of the year; BLDP announced a strategic partnership with Linamar (LIMAF) for the co-development and sale of fuel cell powertrains and components for class 1 and 2 vehicles, weighing up to 5-tons, in North America and Europe



·     Insurance, banking news: BRK hit all-time highs after reporting a Q1 profit of $11.71B; CNA core Q1 EPS of 96c beats by 3c as property & casualty combined ratio 98.1% vs. 97.5% YoY; big week of earnings for FinTech payments sector (SQ, PYPL); IBKR with 2.181 mln daily average revenue trades (darts) for April, 27% higher than prior year and 27% lower than prior month

·     Bitcoin news; Strength in the crypto currency space continues as Ethereum extends its recent winning streak, topping $3,000 for the first time (above $3,300) – now up over 1,350% YoY (was $208 same period a year ago), while Bitcoin cash (BCH) tops the $1,000 level and Bitcoin trades to $58,500; CME launched Micro Bitcoin futures, further expanding its suite of crypto derivatives offerings; MOGO said it has purchased approximately 146 Ether at an average price $2,780.

·     REITs; RBC upgraded WELL to Outperform and raised their target to $82 as they see near-term improvements from demographic tailwinds as well as the operating environment improving to pre-pandemic levels in 2023-24, and downgraded MPW to Sector Perform with a lower target of $23 as they prefer more aggressive stocks with shorter lease durations and the ability to quickly re-price their portfolio if inflationary trends accelerate more meaningfully; Evercore upgraded AVB to Outperform, double-upgraded ESRT to Outperform from Underperform, and downgraded ESS, VER to in-line; Compass Point downgraded CTO to Neutral with a $55 target



·     American cannabis names outperform (CURLF, GTBIF, TCNNF, CRLBF) after Barron’s noted American cannabis companies have licenses to operate in states that allow weed under their laws, but the industry has been bedeviled by marijuana’s illegality under U.S. federal law – but now, events are breaking in favor of the American operators

·     Pharma movers; OCGN rises as announces that in a new study, scientists have found that Covaxin demonstrated potential effectiveness against the Brazil variant of SARS-CoV-2, B.1.128.2. In the results of the Phase 3 clinical trial, the vaccine showed 78% overall efficacy and 100% in severe COVID-19 disease; AMPH received regulatory approval for its morphine sulphate injection in a prefilled syringe system from the U.S. FDA; TEVA announced new data from the 3-year open-label extension study of AUSTEDO Tablets that studied patients with tardive dyskinesia will be presented at the 2021 American Psychiatric Association; LLY announced $5B share buyback

·     Biotech movers; MRNA said it had signed a deal with the international organization Gavi to supply 34 million doses of its Covid-19 vaccine to low- and middle-income countries in Q4 through the vaccine access group COVAX; FOLD has successfully completed a Type B Pre-Biologics License Application (BLA) meeting with the FDA for AT-GAA, its investigational two-component therapy for the treatment of Pompe disease; SRPT reports positive clinical results from phase 2 momentum study of srp-5051 in patients with Duchenne muscular dystrophy amenable to skipping exon 51; NVAX plunged despite saying it has expanded its Phase 3 clinical trial for its COVID-19 vaccine candidate to include 12 to 17 year old in the U.S. Novavax’s experimental vaccine is currently being tested in a late-stage trial that began in December in the U.S. and Mexico; VXRT shares slide after Q1 results missed estimates citing higher R&D costs and a fall in Inavir related royalty revenue which plunged over 80% to $0.51M, mainly due to a reduction in royalty revenue related to Inavir sales in Japan


Industrials & Materials

·     Transports; Dow Transports looking to make it a 14th straight week of weekly gains (the current 13-win streak longest in over 120-years); in a sign of improving demand for air travel (AAL, DAL, UAL, JBLU), the TSA reports U.S. screens nearly 1.63 million people at airports on Sunday, highest number since March 2020; FDX and UPS both upgraded to Outperform at Wolfe Research; FWRD upgrade from Outperform to Strong Buy at Raymond James following stellar 1Q21 results and a robust 2Q21 guide in the wake of one of the toughest PT environments they can recall.

·     Metals & Materials; SON it is increasing prices for all rigid paper containers and closures sold in North America by 9.5%, effective with shipments on, and after, June 3, 2021; steel stocks (X, NUE, STLD) mentioned cautiously in Barron’s saying when steel prices soar, the return to earth is usually swift and painful-and that goes for steel stocks too – however, the steel names were among the top gainers on the day led as S&P Materials index reaches record highs; precious metals miners (silver and gold) outperform, with CDE, HL, AG all strong

·     Aerospace, Defense and Industrials; SPCE shares tumble after saying late Friday it delayed its Q1 results by about a week to May 10, following accounting guidance issued for blank-check companies by the U.S. SEC as they questioned whether warrants issued by hundreds of SPACs could be considered equity instruments

Technology, Media & Telecom

·     Internet; EBAY announces a 3-part notes offering; CVNA upgraded to buy at Bank America with $350 tgt and raises ’21 rev growth to 61% from 50% and 2022 to 37% from 28% as data shows improving web traffic, inventory and ASP trends; Cathie Wood’s Ark Invest funds bought over 1.3 million shares of TWTR amid the stock’s sell-off, CNBC reported; EBAY CEO said exploring opportunities on how to enable NFT selling on EBAY (from earlier interview on CNBC); TWTR cut losses midday after Bloomberg reported Paul Singer’s Elliott Management was said to buy over $200 million twitter shares on dip from last week; Squarespace says expect class a common stock to begin trading on or about May 19 under symbol SQSP

·     Semiconductors; ON Q1 EPS 35c vs. est. 34c; Q1 revs $1.48B vs. est. $1.46B; sees Q2 EPS 44c-54c above est. 33c; sees Q2 revenue $1.57B-$1.67B above est. $1.46B; sees Q2 gross margin 35.8%-37.8%; overall semiconductor space lags broader tech with most big earnings in the rear-view mirror, with many names sliding last week after SWKS, CRUS disappointed

·     Software, Components & Services; Francisco Partners and TPG Capital entered into a definitive agreement with DELL to acquire Boomi, a leading provider of cloud-based integration platform as a service (iPaaS) in a cash transaction valued at $4 billion; SWCH to acquire Data Foundry, Inc., a carrier-neutral colocation provider, for $420 million in an all cash transaction

·     Telecom & Media movers; APO is acquiring Verizon Media from VZ, which includes AOL and Yahoo, for $5B as Verizon will retain a 10% stake in the media business, which will be called Yahoo after the deal closes ; MDP announced a deal to sell its Local Media Group to GTN in a deal valued at $2.7 billion. Under terms of the deal, Meredith will spin off its National Media Group to shareholders, who will receive $14.50 per share in cash and a 1-for-1 equity share in the company after the deal closes.


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