Mid-Morning Look

Tuesday, December 29, 2020

Markets roll shortly after stock averages open at fresh record highs in a bout of profit taking, with Smallcaps down the most after hitting record intraday highs Monday. The S&P 500, Dow Jones Industrials and Nasdaq Composite all opened at new peaks as the same market catalysts that have propelled stocks the last 2-months continue to be the main drivers: an accommodative Fed, additional Covid relief stimulus, and the ongoing rollout of emergency use authorization for vaccines to fight the Covid-19 virus. Sentiment got a boost overnight after Congress approved sending $2,000 stimulus checks to many Americans, a day after President Trump signed a Covid-19 aid bill but said $600 payments were too small. Senate Majority Leader Mitch McConnell hasn’t commented on whether he will take up the bill in the Senate. Overall, investors continue to make bets that fiscal additional relief aid will speed up a vaccine-led recovery in the economy, with market momentum pushing stocks higher into end of year as investors keep buying in the face of stretched valuations and record high margin debt. Treasury prices fall amid hopes Congress will substantially increase the value of stimulus checks to Americans, sending the 10-year yield up to 0.94%. Stocks have pulled back from the open, as the Nasdaq Composite fails around the 12,973 high (now down more than 100-points from those levels). Coming into today, the S&P 500 index has climbed over 15% this year, building on its 29% surge in 2019, while the Nasdaq Composite Index has gained over 43% in 2020 alone.

Sector Movers Today

·     Pharma movers; ARCT shares fall after provided the clinical and preclinical data for its COVID-19 vaccine candidate, ARCT-021. Arcturus also announced that the Singapore Health Sciences Authority has signed off its Phase 2 clinical study backed by favorable Phase 1/2 study results, as well as supportive preclinical data; BHC said it is planning to pay down another $275 million of senior secured term loans, using cash on hand and cash generated from operations; ALKS said the FDA has acknowledged receipt of its New Drug Application resubmission for ALKS 3831 for the treatment of adults with schizophrenia and adults with bipolar I disorder; MNOV said its experimental drug, MN-166, along with immunomodulators to treat progressive multiple sclerosis, gets a new patent from the U.S. Patent and Trademark office; AMPH said the FDA has approved the generic version of Glucagon for Injection Emergency Kit, 1 mg for the treatment of severe hypoglycemia – the co said it plans to launch their generic version within two months

·     Transports & Aerospace; Dow Transports slip modestly, outperforming broader market averages (but notable that well off recent record highs – sliding over the last week or so); AAL restarted the Boeing (BA) 737 MAX commercial flights on Tuesday morning with its first flight to be between Miami and New York’s LaGuardia. Recall the MAX was given the go-ahead by Federal Aviation Administration last month after BA agreed to software upgrades and new safeguards on a key flight control system linked to both fatal crashes

Stocks movers

·     AMPH +7%; says the U.S. FDA has approved the generic version of Glucagon for Injection Emergency Kit, 1 mg for the treatment of severe hypoglycemia – the co said it plans to launch their generic version within two months

·     ARCT -52%; downgraded by several analysts after the company announces data from early-to-mid stage study of its COVID-19 mRNA vaccine ARCT-021; Baird downgrades calling the data underwhelming

·     BA +1%; as AAL restarted the Boeing (BA) 737 MAX commercial flights on Tuesday morning with its first flight to be between Miami and New York’s LaGuardia

·     KNDI +4%; rises after announcing credit agreement with Hangzhou Branch of the Agricultural Bank of China

·     NTLA -18%; pullback in gene editing names after strong run recently (EDIT, CRSP)

·     SNAP +9%; tgt was raised to Street high $70 (from $42) at Goldman Sachs noting the company has announced a number of tech innovations and product partnerships that, along with the favorable macro backdrop for online advertising that has increased the likelihood of revenue growth acceleration well beyond consensus forecasts in Q4