Mid-Morning Look: August 13, 2021

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Mid-Morning Look

Friday, August 13, 2021

Index

Up/Down

%

Last

 

DJ Industrials

15.46

0.04%

35,515

S&P 500

3.32

0.07%

4,464

Nasdaq

6.76

0.05%

14,823

Russell 2000

-13.66

0.61%

2,230

 

 

Steady open for major U.S. averages, with the S&P 500 and Dow each making new all-time highs (again) with investors continuing to buy stocks, fueling the upward momentum. Coming into today, it has now been 323 calendar days since the S&P 500 last ended, on a closing basis, a decline of 5% or more from a record high (according to Reuters). That move has come in the face of a pandemic as companies navigate around labor shortages and rising shipping/material costs. But the Fed and the U.S. gov’t’s endless string of stimulus and low borrowing costs have kept stocks rolling, fueling the rally. Europe remains on a roll as well with the Stoxx 600 up for a 10th straight day at record highs, as France, Germany also trades record highs. Still no fear in global stock markets as the CBOE Volatility index (VIX) tumbles to lows, down -2.45% around 15.20 level. Stocks hung on to gains despite a much weaker-than-expected consumer confidence reading (which did send Treasury prices higher/yields lower). Gold prices extend gains following the roll in yields post data. Big week of earnings coming up for large-cap retail with WMT, TGT, HD, LOW, Macy’s, KSS reporting next week.

 

Economic Data

·     Import Prices for July MoM rose +0.3% vs. est. +0.6% (prior month revised to +1.1% from +1%), while YoY rose +10.2%; July Export prices MoM rose +1.3% vs. est. +0.8% and June unrevised at +1.2%, while YoY rose +17.2%

·     University of Michigan consumers sentiment prelim Aug 70.2 well below the 81.2 estimate and far below the July Final 81.2; the current conditions index prelim Aug 77.9 vs final July 84.5; the consumers expectations index prelim Aug 65.2 vs final July 79.0

 

 

Macro

Up/Down

Last

 

WTI Crude

-0.01

69.09

Brent

0.02

71.33

Gold

24.20

1,776.00

EUR/USD

0.0057

1.1784

JPY/USD

-0.50

109.88

10-Year Note

-0.063

1.303%

 

 

Sector Movers Today

·     Biotech movers; the FDA amended the emergency use authorizations granted for PFE and MRNA COVID-19 vaccines on Thursday, allowing their use as booster shots in certain immunocompromised individuals; MRNA shares active after a new study concluded its vaccine provided antibodies for the majority of people who received it against variants of concern & interest for 6 months; RIGL slides after the FDA declines to approve fostamatinib COVID-19 EUA

·     Consumer Staples; PPC rises after JBS SA, the world’s largest meatpacker, said it has proposed buying the remaining common shares in the poultry producer for $26.50 per share https://on.mktw.net/3yNCECX; recall earlier this week, rival company SAFM agreed to sell itself for $4.5B ($203/share) to Cargill and Continental Grain Company; HNST shares slip after Q2 revs of $74.6M missed the $78.M estimate as revs from diapers/wipes fell 2% in Q2 as demand slowed from last year’s pandemic-induced panic buying; FIGS

·     Transports; in railroad sector, KSU said its board has determined that the latest unsolicited proposal from CP does not constitute a superior proposal, and reaffirms its support of a merger with CNI (earlier this week, CP submitted a new $300 per share offer that values KSU at $31B. Under the terms of the CNI, KSU holders would receive $200 in cash and 1.129 CNI shares); in trucking, XL slides as Q2 EPS ($0.08) vs est. ($0.06) on revs $3.7M vs est. $4.4M; OEMs have pushed out the opening of new orders and extended lead times, indicating the shortage of its new commercial fleet vehicles will stretch into 2022; FDX raises surcharges for peak season beginning Nov. 1st

·     Software movers; ATVI upgraded to Buy from neutral at Citigroup saying they believe that the current concerns about Blizzard’s execution and China regulatory risk are more than priced into ATVI’s equity at current levels; Wedbush noted that according to NPD data for video game industry (EA, ATVI, TTWO), July U.S. console and handheld software sales were $180 million, down 4% year-over-year, and below their estimate of $198 million; LTCH slides as Q2 revs of $9mn came in at the low end of guidance and missed consensus estimates of $10mn and lowered year revenue guidance of $38-$42mn, down from $47-$51mn, driven primarily by global supply chain issues and labor shortages delaying new construction and retrofit projects

 

Stock GAINERS

·     DIS +3%; reported a strong recovery for its Parks business and a solid quarter for its Disney+ streaming service at 116.0M vs. est. 113.1M as both quarterly earnings and revenues toped consensus

·     MRNA +2%; after a new study concluded its vaccine provided antibodies for the majority of people who received it against variants of concern & interest for 6 months

·     PPC +22%; after JBS SA, the world’s largest meatpacker, said it proposed buying the remaining common shares the poultry producer for $26.50 per share https://on.mktw.net/3yNCECX

·     RKT +6%; Q2 results missed consensus with adj EPS 46c vs est. 49c on revs $2.67B vs est. $2.92B, but its Q3 guidance was strong with their outlook of Q3 closed loan volume $82-87B topping est. $65.9B

·     UPST +8%; Barclays upgraded to OW with a $230 PT from $130 after their earnings report this week showed their improvements are more sustainable and there is additional upside from the auto vertical and a normalization of the credit environment

·     ZIP +3%; better 2Q results and raised guidance as paid Employers meaningfully accelerated to 169K (120% y/ y and 47.5% q/q) and noted a significant increase in both new employers and employees entering its marketplace

 

Stock LAGGARDS

·     ABNB -2%; disappointing guidance for 3Q weighs (indicated 3Q bookings should be lower vs. 2Q (on seasonality and COVID variants) overshadowed meaningful Q2 bookings upside

·     CRCT -22%; despite Q2 results beating, downgraded at both Morgan Stanley citing slower growth and investments putting pressure on the company’s forecast – firm said Q2 results make clear that Connected Machine revenue growth and overall user engagement are decelerating faster

·     DASH -4%; posted Q2 EPS loss (-$0.30), wider than estimates as it spent heavily to expand internationally and into a crowded market for grocery, saying total expenses more than doubled to $1.34 billion, as it also incurred higher advertising rates

·     FUBO -4%; after enters $500M common stock sales agreement

·     HNST -24%; after Q2 revs of $74.6M missed the $78.M estimate as revs from diapers/wipes fell 2% in Q2 as demand slowed from last year’s pandemic-induced panic buying

·     LTCH -12%; Q2 revs of $9mn came in at the low end of guidance and missed consensus estimates of $10mn and lowered year revenue guidance of $38-$42mn, down from $47-$51mn, driven primarily by global supply chain issues and labor shortages delaying new construction

·     RIGL -13%; after the FDA declines to approve fostamatinib COVID-19 EUA

·     SOFI -13%; slides after Q2 EPS loss (48c) missed est. (6c), adj revs $237.2M top est. $218.6M, but Q3 guidance disappointed as sees revs of $245-255M, weaker than expected $260.3M

·     WISH -28%; as the e-commerce company says demand slowed, costs rose more than expected (downgraded by multiple firms as Q2 top-line missed as revenue declined 7% from last year and came in 9% below consensus and quarter’s monthly active users were also 12% below ests)

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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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