Mid-Morning Look: August 02, 2021

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Mid-Morning Look

Monday, August 02, 2021






DJ Industrials




S&P 500








Russell 2000






Stocks kicking off the new month with gains, as the S&P 500 index looks to make it a 7th straight month of outperformance amid a broad bounce across various sectors. Several record highs today as major averages continue to build on earnings optimism and infrastructure deal hopes, while putting Covid variant concerns aside (DHR, MOH, PAYX, CRL, ETN, MS just a handful of names making record highs). The Philly semiconductor index (SOX) tops 3,400 for the first time, setting record highs behind ON beat and raise quarter. Another further tumble in Treasury yields as 10-yr drops to 1.18% now. Large cap tech seeing a rebound with TSLA surging. The payments sector getting lots of attention this morning after Square (SQ) announced a $29 billion deal to acquire Australian buy-now, pay- later platform Afterpay. Retailers among top gainers in the S&P 500 (UA, PVH, GPS, RL) ahead of back-to-school buying. Oil slips, gold prices rebound, and stocks remain generally higher ahead of another busy week of earnings.


Economic Data

·     IHS Markit July final manufacturing PMI at 63.4 (vs flash 63.1) and final June 62.1; Markit U.S. manufacturing sector final output index for July at 59.7, highest since January, vs flash reading 59.5 and final June 58.9; final input prices index for July hits record at 86.7.

·     U.S. manufacturing continued to grow in July, though the pace slowed for the second straight month. The Institute for Supply Management (ISM) said its index of national factory activity fell to 59.5 last month, the lowest reading since January, from 60.6 in June and below est. 60.9. New Orders to 64.9 from 66.0; Production to 58.4 from 60.8; Employment to 52.9 from 49.9.

·     U.S. Construction Spending for June MoM rose 0.1% vs. est. 0.5%.







WTI Crude















10-Year Note





Sector Movers Today

·     Auto sector; monthly Chinese auto updates released as 1) LI delivered 8,589 Li ONEs in July 2021, up 11.4% M/M and 251.3% Y/Y; YTD, total deliveries are 38,743, bringing cumulative deliveries of Li ONE to 72,340 since its market debut; 2) NIO said it delivered 7,931 vehicles in July 2021, down 1.8% M/M, up a strong 124.5% Y/Y; YTD, cumulative deliveries of the ES8, ES6 and EC6 reached 125,528 vehicles; XPEV said 8,040 smart EVs delivered in July, a 228% increase y/y and a 22% jump from June; has delivered 38,778 vehicles year-to-date, a 388% increase year-over-year; in other news, RMBL delivers 100% year-over-year revenue growth and 131% gross profit growth in the second quarter 2021 as total vehicle unit sales was 5,711, a 55% increase from 3,694 YoY; in earnings, RACE revenue and earnings rose in Q2 and it lifted part of its guidance for the year, expecting annual revenue of around EUR4.3B and adjusted Ebitda of between EUR1.45B-1.50B and raised its full-year guidance for industrial free cashflow

·     Retailers; FL said it is buying two smaller retailers in separate cash deals, with acquisitions of athletic retailer WSS for $750 million and Atmos, a Japan-based streetwear and sneaker shop, for $360 million; LEVI was initiated with a new Buy and $38 tgt at Stifel saying it is benefiting from secular and structural shifts that improve the growth prospects, margins, and return characteristics vs. pre-COVID expectations; CPRI upgraded to Buy at MKM Partners with $75 tgt amid increased conviction in sustainable momentum + luxury re-rating

·     Industrial & Machinery; GE completed its one for 8 reverse stock split on Friday as shares trade above $100 per share; PH reached an agreement to buy British engineer Meggitt for 6.3 billion pounds ($8.8 billion) in cash to boost its aerospace operations; ATCX is a cheap way to play infrastructure spending, according to Barron’s saying U.S. lawmakers appear to be on the cusp of passing a massive and long-awaited infrastructure-investment bill, totaling some $1 trillion. The legislation should be a boost to businesses like VMC and MLM, which make concrete and asphalt; CAT, TEX, which make construction equipment; and URI, which rents the machinery; GWW downgraded at Raymond James while firm upgraded LKQ to Outperform

·     Pharma movers; ALKS said the FDA grants fast track designation to the company’s immunotherapy candidate, nemvaleukin alfa, for the treatment of mucosal melanoma; GSK turnaround could be accelerated, according to Barron’s saying there is an opportunity for Glaxo to break out of its slump as it is spinning off the consumer-healthcare joint venture it created with PFE in 2019. Glaxo has signaled those plans for years, but there’s something new now, namely the involvement of activist hedge fund Elliott Management; CYTK announces that it has opened enrollment for a late-stage trial of reldesemtiv in patients with amyotrophic lateral sclerosis (ALS); TGTX reported 2Q revenues of $1.5M (vs. $3.6M cons), with total revenues since the February approval of $2.3M



·     ALKS +1%; received FDA Fast Track designation for nemvaleukin alfa, the company’s immunotherapy in development for the treatment of mucosal melanoma

·     ATCX +21%; mentioned positively in Barron’s calling it a cheap way to play infrastructure spending, as U.S. lawmakers appear to be on the cusp of passing a massive and long-awaited infrastructure-investment bill, totaling some $1 trillion

·     FSLR +2%; upgraded to Positive with $120 tgt at Susquehanna following management’s positive commentaries on module demand and pricing on its 2Q call

·     ON +13%; after beat and raise as Q2 EPS $0.63 vs. est. $0.49; Q2 revs $1.67B vs. est. $1.62B; guides Q3 EPS $0.68-$0.80 above the $0.51 est. and sees Q2 revs $1.66B-$1.76B vs. est. $1.61B

·     SQ +6%; the Street likes its announced a $29 billion deal to acquire Australian buy-now, pay- later platform Afterpay; shares of rival BNPL firm AFRM rises early as well

·     TSLA +4%; upward momentum continues, above $720 – up a 4th straight day

·     UAA +6%; among top gainers in the S&P 500 ahead of back-to-school buying



·     IMVT -22%; shares now down over 26% as Roivant Sciences makes strategic investment of $200M in Immunovant, taking its stake to 63.8% from 57.5% – but shares fall as appears to rule out buyout

·     PYPL -0.5%; competition fears after Square $29 billion deal to acquire Australian buy-now, pay- later platform Afterpay

·     TDOC -2%; downgraded to Hold from Buy at Argus amid continued operating losses. The company is showing strong revenue growth, but its costs for marketing, sales, and technology are rising faster than revenue

·     ZM -2%; software names pulling lower initially; company also agrees to pay $85 mln to settle a lawsuit claiming it violated users’ privacy rights by sharing personal data


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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