Mid-Morning Look
Monday, August 16, 2021
Index |
Up/Down |
% |
Last |
|
||
DJ Industrials |
-142.28 |
0.40% |
35,373 |
|||
S&P 500 |
-25.28 |
0.57% |
4,442 |
|||
Nasdaq |
-172.97 |
1.19% |
14,645 |
|||
Russell 2000 |
-23.06 |
1.03% |
2,200 |
|||
For the first time in a while, U.S. markets with a straight downdraft, pulling back from all-time highs Friday as a combination of weaker economic data from China sparked fears of slowing global growth, while investors also await Tuesday’s town hall event by Fed chair Jerome Powell where they’ll be looking for clues as to whether recent economic data is sufficient progress for the central bank to consider tapering stimulus. Markets due for a pullback? It has now been roughly 200 days since the S&P 500 index has seen a pullback of over 5% from its all-time highs. Note today’s weakness comes despite record highs Friday (for S&P and Dow) when The University of Michigan’s preliminary sentiment index fell by 11 points to 70.2, the lowest since December 2011, data released Friday showed (did not impact markets). Today more weak data as the New York Empire Manufacturing current business conditions index down at 18.3 in August from 43.0 in July. Smallcap names tumble (Russell 2000) and market internals showing more signs of weakness (breadth been mostly negative). The rising Covid-variant cases adding to market concerns as well with the “reopen” names such as cruise lines, airlines, restaurants, retailers getting sold. Oil prices hitting 15-month lows as WTI crude futures fall below $67 per barrel, hitting energy stocks. Meanwhile, President Joe Biden’s decision to remove U.S. troops from Afghanistan is scrutinized by journalists, commentators and the Republican Party after the Taliban took control of the capital city, Kabul this week. Defensive sectors seeing gains as the S&P 500 consumer staples sector index hits record high, along with gains in the utility sector. Tesla and Chinese EV stocks slammed by regulatory concerns. Treasury yields tumble (10-yr low 1.22%) as investors look to safety trades (bonds and gold prices rise). China activity data showing further slowdown in industrial production, retail sales and fixed asset investment growth.
Economic Data
· New York Empire Manufacturing current business conditions index down at 18.3 in August from 43.0 in July and below consensus of 29.0; the new orders index 14.8 in august vs 33.2 in July, the prices paid index 76.1 in august vs 76.8 in July and employment index at 12.8 in august vs 20.6 in July; the six-month business conditions index 46.5 in august vs 39.5 in July
Macro |
Up/Down |
Last |
|
||
WTI Crude |
-1.72 |
66.72 |
|||
Brent |
-1.82 |
68.77 |
|||
Gold |
11.80 |
1,790.00 |
|||
EUR/USD |
-0.008 |
1.1783 |
|||
JPY/USD |
-0.40 |
109.17 |
|||
10-Year Note |
-0.06 |
1.237% |
|||
Sector Movers Today
· Consumer Finance & Lending; monthly credit card data out today: BAC credit card delinquency rate was 0.92% at July end vs 0.97% at June end and credit card charge-off rate was 1.59% in July vs 1.74% in June; ADS said July net charge-offs as a percentage of average receivables dropped to 4.2% from 4.8% in June and 5.2% in May 2020 and that the delinquency rate of 3.4% rises from 3.3% in May but declines from 4.7% a year ago; COF July net-charge offs were 1.45% vs. 2.1% at end of June and compared to 3.82% YoY and delinquencies 1.71% vs. 1.68% at end of June and compared to 2.44% YoY; SYF reported charge-offs for July of 2.24%while July delinquencies 1.37%; UWMC 2Q results that missed estimates
· Housing & Building Products; JELD said its largest shareholder, Onex Corp. is selling off nearly half its stake in the building products company (14.88M shares priced at $28.75 of its 32.1M disclosed stake), equating to about 15% of the shares outstanding, with the company planning to buying back close to half of the shares being sold; RH price tgt raised to $850 from $750 at Cowen, calling it their pick into 2Q given high-end home strength, large backlog, luxury positioning with inelastic demand, and positive sentiment ahead of Intl. openings; Raymond James said home and land improvement retailers (HD) are clearly facing tough comparisons for the remainder of 2021, but valuation levels have come back down some relative to this spring
· Consumer Staples & Restaurants; defensive staples such as WMT, KR, CPB, CLX among the top S&P gainers in a rotation out of growth names this morning; OTLY posted Q2 results mostly in-line with estimates (53.3% increase in quarterly revs to $146.2M vs. est. $147.2M) while it forecast full-year revenue ahead of analysts’ estimates citing solid demand for vegan milk alternatives; CMG was downgraded to Outperform from Strong Buy at Raymond James due entirely to valuation following the stock’s 37% gain in the past six weeks as raising price target to $2,025, offering upside of ~7.5% from current levels
· Pharma movers; FDA approved an expanded label for LLY’s rapid-acting insulin, Lyumjev 100 units/mL indicated to improve glycemic control in adults with type 1 and type 2 diabetes, to include administration via continuous subcutaneous insulin infusion with an insulin pump; ENLV rises after obtaining authorization from Israel’s ministry of health to initiate a clinical trial evaluating the safety and effectiveness of its Allocetra therapy on Covid-19 patients; RCKT announces FDA lifts clinical hold on Danon Disease trial of RP-A501; TVTX announces positive topline interim results from the ongoing phase 3 protect study of sparsentan in IGA nephropathy; EWTX receives fast track designation for EDG-5506 for the treatment of individuals with Becker Muscular Dystrophy; TEVA loses bid to revive 3 migraine patents challenged by LLY
Stock GAINERS
· CPB +1%; strength in consumer staples (defensive) and food related names as growth stocks slip
· DUK +1%; utility stocks similar action to staples, as defensive stocks moving higher
· ENLV +17%; after obtaining authorization from Israel’s ministry of health to initiate a clinical trial evaluating the safety and effectiveness of its Allocetra therapy on Covid-19 patients
· OTLY +3%; posted Q2 results mostly in-line with estimates (53.3% increase in quarterly revs to $146.2M vs. est. $147.2M) while it forecast full-year revenue ahead of analysts’ estimates
· SONO +9%; after the company won the first round of its patent case against GOOGL – Jefferies upgraded to Buy and raised tgt to $50 saying ruling validates strength of Sonos’ patent portfolio
Stock LAGGARDS
· JRJC -39%; a financial news, market data & information co. for Chinese audiences announced after the close on Friday that they would be delisted from Nasdaq
· MRNA -7%; down for a 4th time in 5-days (well off the record highs of $497.49 on 8/10)
· NIO -6%; following several reports of a fatal accident involving the company’s self-driving features – fatal crash took place this past week in China and involved the company’s ES8 SUV
· SESN -33%; downgraded to Neutral from Buy at HC Wainwright following the sharp decline on Friday August 13, after the company announced that the company received a Complete Response Letter from the FDA regarding the Biologics License Application for Vicineum (oportuzumab monatox-qqrs) for the treatment of BCG-unresponsive non-muscle invasive bladder cancer
· TSLA -4%; after the U.S. National Highway Traffic Safety Administration (NHTSA) opens formal safety probe into TSLA’s driver assistance system, Autopilot, after a series of crashes
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.