Market Review: May 24, 2021

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Closing Recap

Monday, May 24, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     U.S. stocks were up across the board as the Dow climbs nearly 200 points to start the week, led by shares of tech shares and reopening trades, while the Nasdaq Composite outperforms (Nasdaq 100 even a bigger move higher behind AAPL, AMZN, FB, GOOGL) helped by low yields and more momentum buying. U.S. stocks, overall, rise all day as investors’ worries about the inflation outlook ease and cryptocurrencies rebound from Sunday’s dip. The S&P 500 gained over 1%, boosted by the tech and communication services sectors while stocks benefiting from the economic reopening gained (airlines, cruise lines) but there was little news behind the advance as major averages surged on light volumes ahead of a busy week of economic data and Fed speakers. Crude oil jumps over 3% topping the $66 level in another day or “risk-on” trading. Investors await to hear this week if Federal Reserve speakers will stick to a patient policy – though today, a few Federal Reserve officials affirmed their support to keep monetary policy accommodative for some time, dampening recent expectations the Fed would reduce bond purchases. They are also waiting for data, including on U.S. gross domestic product, jobless claims, and durable goods later this week along with several Treasury auctions.

·     Stock/sector movers: NCLH, RCL, CCL rise on news they expect the CDC to allow cruises to resume; casinos AMC, IMAX, CNK, NCMI movie theaters also outperform after a strong weekend release of Fast & Furious 9 in Asia; CZR, DKNG, PENN, MGM another reopen segment jumping on the day; BYND spikes after Bernstein issues double upgrade to Outperform from Underperform given a recovery in consumer mobility and their MCD partnership; SPCE tops $25 for the first time in more than a month after its successful test flight over the weekend; COG, XEC shares both slump after announcing an all-stock merger valued at ~$17B; semiconductor stocks were strong with NVDA continuing its strength from last week’s announced stock split, AMAT rebounds after slipping despite strong earnings on Friday and giving a lift to LRCX, MU rising on an double-digit expected increase in DRAM and NAND contract prices; CSCO leads the Dow after a positive Barron’s mention over the weekend as a beneficiary of businesses reopening; Bitcoin jumped after a volatile weekend, getting a boost late day after TSLA CEO Elon Musk tweeted “Spoke with North American Bitcoin miners. They committed to publish current & planned renewable usage & to ask miners WW to do so. Potentially promising” – Bitcoin topped $39,000 late day following the comments (after lows below $32K Sunday).



·     Oil prices jump with WTI crude gaining $2.47 or 2.88% to settle at $66.05 per barrel, its biggest one-day gain since March 24 as investors bet on strong summer demand, and as worries subside regarding Iranian crude barrels potentially flooding the market. WTI crude fell by nearly 3% last week on bets Iran and the US were nearing a nuclear deal that could end Iran’s oil sanctions. But statements from top government officials over the weekend suggest the two sides are still rather far apart, and that could mean tight supplies this summer.

·     Gold prices finish higher, with June gold rising $7.80 or 0.4% to settle at $1,884.50 an ounce (to highest levels since beginning of January) as a weaker dollar and U.S. Treasury yields once again boosted the appeal of precious metals. A recent crash in Bitcoin (and other crypto names) has also possibly supported gold prices as a rotation takes place into other inflation hedges.


Currencies & Treasuries

·     The U.S. dollar remains near three-month lows against a basket of major currencies (DXY stays below the 90 level) as investors again rotate back into riskier assets with stocks and oil prices sharply higher on the day. The DXY lows were 89.76 (just off Friday three-month low of 89.64). Next up personal consumption and inflation figures due Friday for any warning signs that U.S. inflation could be gathering pace and putting pressure on the Federal Reserve to taper policy. Bitcoin rebounded by 7% to just shy of $38,000, but is still down after crashing in recent days, falling as much as 17% to $31,107 on Sunday (well off April’s record peak of $64,895).

·     U.S. Treasury prices rose, pushing yields lower in quiet trading, as investors grow nervous about volatility in risk assets such as stocks and cryptocurrencies. Markets remain concerned about the potential tapering of asset purchases by the Federal Reserve in the face of strong economic data after comments by several Fed participants last week/FOMC minute). The U.S. 10-year yield dipped to two-week lows below the 1.60% level, while 20-year and 30-year yields slid to their lowest levels as well in 2-weeks as investors piled into stocks and bonds. Markets are also prepping for this week’s auction of U.S. 2-year, 5-year, and 7-year notes.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; KSS shares fell this week after earnings, but Barron’s said the stock looks like a bargain after incredible earnings; DG downgrade from Neutral to Underperform at Bank America with $190 tgt saying higher gas prices and convenience store traffic recovery could pressure stock, return of grocery store promos pressures 2021 comps; UBS raised tgt prices on BURL to $339 (from 289), COST to $430 (from 395), FL to $65 (from 62) and lower VFC to $90; PTON announces it will build its first U.S. factory in Ohio, committing about $400 million to the facility.

·     Auto sector; Wedbush said electric vehicle bellwethers will continue to face heavy selling pressure due to chip shortages, increasing competition and lofty valuations – sees the deep sell-off in the sector as a short-term pullback in a bullish multi-year upward rally; NIO renews manufacturing agreements with Jianghuai Automobile Group Co (JAC) and Jianglai Advanced Manufacturing Technology (Jianglai) for May 2021; KNDI unveils K32 premium fully enclosed electric 4WD utility terrain vehicles in Hainan Factory; LAZR rises early after an Inside EVs report late last week suggested that TSLA is testing the company’s lidar on vehicles (original story was reported on 5/20); SFT shares slide after offering privately $75M in 5-year convertible notes

·     Housing & Building Products; Cowen said they like both WSM (5/26) & RH (early June) into earnings but risk/reward is better at RH given greater likelihood for EPS and stock upside; BLDR entered into a definitive agreement to acquire Cornerstone Building Alliance SW, LLC for approximately $400 million, subject to certain closing adjustments.

·     Consumer Staples & Restaurants; BYND upgraded to Outperform from Underperform at Bernstein saying 2022 sales ests have come down by 35% from pre-pandemic levels but says this is not a broken growth story; CPB downgraded to Hold from Buy at Jefferies saying risk/reward more balanced with elevated at-home HH penetration sustainability a risk, and away-from-home exposure lower vs. peers; OLLI upgrade from Underweight to Equal-weight at Morgan Stanley on balanced R/R with stock trading below the co tgt; Piper said they believe the beauty backdrop should benefit ELF into their Q4 print and see results topping estimates; WTRH announced today a new partnership with PBPB

·     Casinos, Gaming; DKNG, PENN surge as online betting names outperform; GAN announces addition of Soaring Eagle Casino & Resort as its fourth client in the state of Michigan; Leisure sector; cruise lines active (RCL, CCL) after NCLH announces return to cruising in the United States, with Alaska cruises sailing from Seattle beginning Aug. 7; in movie theater, IMAX tgt raised to 425 at Benchmark as firm raises global box office projections based on reported results, movie-goer momentum, and a compelling film slate while Cineworld said on Monday its UK reopening weekend had topped expectations; Chinese online learning names fall a second day (TAL, EDU, GOTU) after Chinese President Xi Jinping stressed the need for regulations for both online and offline after-school training institutions; ABNB announces 100+ innovations and upgrades across its entire service – doubles down on flexible search, improves the host flow ahead of summer



·     Energy stock movers; Goldman Sachs said it expects oil prices to climb to $80 per barrel in the fourth quarter of this year, arguing that the market has underestimated a rebound in demand even with a possible resumption in Iranian supply. Overall, oil prices climbed on Monday helped by the Goldman Sachs outlook as well as reports of a potential snag emerging in reviving the 2015 Iran nuclear deal that could add more oil supply. Oil prices fell almost 3% last week.

·     E&P and Majors; merger deal announced this morning as COG and XEC agree to merge to create a company with an enterprise value of about $17B where XEC shareholders will receive 4.0146 shares of COG’s common stock for each Cimarex share owned – deal expected to close in Q4, and implies an offer value of $71.50 per share ; BP confirmed it agreed to sell its 27.5% stake in the U.K. North Sea’s Shearwater field to private equity-backed Tailwind Energy for an undisclosed sum.



·     Bank movers; in asset managers, TROW said it plans to reduce expenses across its suite of target date mutual funds and trusts; in insurance; AEL slides after announced late Friday its CEO, Anant Bhalla, will be taking on additional responsibilities as interim CFO with longtime CFO, Ted Johnson, expected to no longer serve as CFO effective today; in services & Consumer Finance; HRB says it increases mkt share after strong tax season; sees year revs $3.4B-$3.415B vs. est. $3.45B; sees year PS $3.36-$3.39 vs. est. $3.28; STNE rises after saying it will invest $417 mln in SoftBank Group backed Brazilian digital bank Banco Inter SA; Bloomberg reported late afternoon that SQ’s plan appears in hidden code included in app update that it plans to offer business checking, savings accounts

·     Bitcoin news; solid rebound in crypto space following volatility last week and into this weekend; COIN initiated with new Buy and $306 pt tgt at Goldman Sachs as believe it brings 1) leverage to an ecosystem that has seen strong growth driven by increasing adoption of digital currencies, 2) a leading consumer platform with strong customer acquisition trends as well as a robust and rapidly growing institutional business, 3) an attractive business model that thrives on elevated cryptocurrency volatility, and 4) significant opportunities to add additional features and capabilities; MARA entered into a binding letter of intent with Compute North to host approximately 73,000 of Marathon’s previously purchased Bitcoin miners as part of a new 300-megawatt data center located in Texas; HSBC CEO Noel Quinn told Reuters that the bank does not intend to launch a cryptocurrency trading desk or offer digital currencies as an investment to customers, since they are too volatile and lack transparency



·     Pharma movers; PFE said it is testing its experimental 20-valent pneumococcal conjugate vaccine in combination with a booster dose of its COVID-19 vaccine in adults who are 65 years old or older; MRK receives positive EU CHMP opinion for Keytruda® (pembrolizumab) in combination with chemotherapy as first-line treatment for certain patients with esophageal cancer or her2-negative gastroesophageal junction adenocarcinoma; BMRN said the European Medicines Agency grants co’s request for accelerated assessment of drug to treat severe hemophilia A – a blood clotting disorder; VSTM said the FDA grants breakthrough therapy designation for its investigational ovarian cancer treatment

·     Biotech movers; NGM shares plunged after the company reported that its 24-week Phase 2b ALPINE 2/3 study of Adlafermin in NASH did not meet primary endpoint of fibrosis improvement by ≥1 stage with no worsening of NASH versus placebo – said it is ending development of Adlafermin for certain patients with nonalcoholic steatohepatitis; MRNA said it reached an agreement with Samsung Biologics to produce Moderna’s Covid-19 vaccine this weekend; SBBP to be acquired by XERS in deal valued at $267M, paying about $2.72 per share; BYSI reports plinabulin combo data in lung cancer at ASCO meeting 2021

·     MedTech Equipment; ISRG tgt raised to $900 from $840 and maintain buy at Argus as believe that Intuitive is well positioned for the future of robotic-assisted surgery, which has reduced the time needed for procedures and resulted in better clinical outcomes; MDT tgt raised from $135 to $141 at Cowen ahead of earnings; MYGN signed a definitive agreement to sell Myriad RBM, Inc. to Q2Solutions


Industrials & Materials

·     Industrials, Aerospace & Defense; airline and travel related names seeing strength today on reopen stock purchases, better travel data – Bank America noted airline card spend, domestic flight searches and TSA check-ins all recorded new COVID-era highs at -24%, -22% and -33%, respectively – said Las Vegas Strip credit card spend declined -2% vs. 2019 (+1% LW); SPCE shares jump after the co’s rocket-powered SpaceShipTwo VSS Unity reached more than 55 miles above the Earth in test flight on Saturday; the Baltic dry index rose 12 points, or 0.4%, to 2,881; the Capesize index rose 28 points, or 0.7%, to 3,958, average daily earnings for capsizes increased by $232 to $32,825, the panamax index fell 15 points, or 0.5%, to 2,840, declining for a second day

·     Metals & Materials; NTR was upgraded at HSBC Holdings to a Buy rating and downgraded MOS to hold noting Nitrogen prices are close to 8-year highs driven by strong fundamentals as well as plant outages. Next wave of capacity additions in the works as current prices are 20% above break-even price of a US brownfield project


Technology, Media & Telecom

·     Semiconductors; MU shares jump (along with rip in rest of semis) after Digitimes reported that DRAM and NAND flash memory contract prices are set to register double-digit increases in the third quarter of 2021, according to industry sources; overall Philly semiconductor index (SOX) outperformed, easily topping the 50-day moving average of 3,106 in the morning and climbing all session long with broader tech (up over 6% last 5-days).

·     Software movers; PLTR it will support the United States Space Force and United States Air Force by providing its software to the critical missions of the Department of the Air Force in award totaled above $32M; several analysts with previews ahead of busy week of software earnings (CRM, DOMO, PLAN, WDAY, VEEV); Cowen said they have bullish previews for DOMO , solid checks into the print for SNOW; neutral update for WDAY and mixed on SPLK this qtr; Needham said they are most positive in PLAN and WDAY into earnings, and remain cautious on CRM, while for VEEV they believe continued healthy trends in both the commercial and vault segments will drive upside to heightened billings expectations and for YEXT, recent conversations with management and customer checks indicate continued strength in Answers adoption.

·     Components & Services; Citigroup upgraded HPQ to Buy given their view of more resilient PC demand, as well as comments on underlying print demand improvements (Canon) – says DELL remains top pick given PC demand resiliency, potential for enterprise data centers to resume in 2H; DOX announces becoming a Microsoft preferred Industry Priority Scenario Partner; CSCO leads the Dow after a positive Barron’s mention over the weekend as a beneficiary of businesses reopening


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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