Mid-Morning Look: February 01, 2021

Auto PostDaily Market Report

Mid-Morning Look

Monday, February 01, 2021






DJ Industrials




S&P 500








Russell 2000






Major averages in the U.S. jump to start the trading week, looking to rebound after Friday’s plunge to post the biggest weekly fall since October. Last week, the S&P fell 3.31%, the Dow lost 3.28%, and the Nasdaq slumped 3.49% on mixed vaccine data late week, mixed economic data, a busy start to earnings (which have come in better generally) and the biggest story being the short squeeze attack by retail investors against the Wall Street community. The short squeeze news that sent shares of GME, AMC, BBBY, KOSS (among many others) higher, are mostly down today as the attention has turned to the precious metals market over the last week. Silver futures rose over 10% after earlier topping $30 an ounce (highest level since February 2013), now in the crosshairs of the retail investor frenzy sweeping through markets (shares of silver miners surging ASM, CDE, AG, SVM, HL, MUX, FSM, GATO, PAAS among them). Stocks overall look strong early ahead of a jam-packed week of earnings with AMZN, GOOGL highlighting a big tech week, along with healthcare giants PFE, MRK, BIIB, ABBV and video gamers EA, ATVI. Among the S&P’s 11 major sectors, most are higher with technology leading the gains and defensive real estate, consumer staples, utilities lagging the most (which were last week’s winners). The Cboe Volatility Index (VIX) declines early but remains elevated after gaining 45% in January.


Economic Data

·     IHS Markit January final manufacturing PMI at 59.2 vs. flash 59.1, manufacturing sector final PMI for January at 59.2, a series record, vs. flash reading 59.1 and final December 57.1, new orders index for January at 59.9 vs. flash reading 59.5 and final December 56.5

·     ISM U.S. manufacturing activity index 58.7 in January below the est. 60.0 and below the 60.5 in December; prices paid index 82.1 (highest since April 2011) vs. 77.6 prior, new orders index 61.1 vs. 67.5 in December, employment index 52.6 vs. 51.7 prior

·     Construction Spending for December rose +1.0% vs. est. +0.9% to $1.490 trillion, the highest level since the government started tracking the series in 2002. Data for November was revised higher to show construction outlays surging 1.1% instead of 0.9% as previously reported. Dec private construction spending +1.2%, public spending +0.5%







WTI Crude















10-Year Note





Sector Movers Today

·     Retailers; WSM was downgraded to Sell at UBS who believes the risk-reward of shares is skewed to the downside based on the current valuation not capturing risks related to recent performance overstating earnings and overinflating 2021 consensus estimates, in addition to risks as the sector returns to normalcy; Barclays downgraded GOOS to Equal-Weight after its +12% YTD performance has brought the stock to within 10% of their $37 price target, leading to unfavorable risk-reward at these levels as the company and investors have an extended wait for a top-line return to sales growth; Needham lifted its target on RL to $112 from $82 ahead of its Q3 earnings report on Thursday after encouraging Q4/holiday results thus far and positive January consumer survey and on TPR to $37 from $26 after its recent Q4/holiday updates; Guggenheim said ASO story continues to progress as expected, with strong, above-consensus 4Q sales/EBITDA, an ongoing healthy balance sheet, and the beginning of the sponsor sell-down

·     Auto sector; Piper raised their price target on TSLA to street-high $1,200 from $515 after the company was added to the S&P 500 and their forecast implies 894k vehicle deliveries in 2021 before ramping to over 9M in 2030 as the company targets multi-trillion dollar markets and there will be levers for growth; NIO reports a new monthly record with 7,225 vehicles delivered in January 2021 (+352.1% YoY); XPEV also achieved a record monthly delivery of 6,015 Smart EVs in January 2021 (+470% YoY); Wedbush upgraded NKLA to Neutral and raised its target to $25 from $15 as the Biden administration and Democrat senate should be a positive for EV/hydrogen endeavors, and the negative catalysts driving their previous underperform rating, such as the shifting GM partnership, execution risks following Trevor Milton’s departure, and the Badger hype, have mostly played out; LI was initiated at Hold with a $35 target by Deutsche Bank despite at almost a 50% discount to NIO and XPEV on consensus 2022 EV/sales as they await clarity on its BEV and autonomous driving roadmap

·     Biotech movers; MRNA downgrade from Neutral to Underperform w/$150 pt at Bank America; NVAX said it expects to make 150M vaccine doses per month by May/June; GILD boosted its ownership in RCUS to 19.5% from ~13% after buying 5.65M additional shares at $39 per share; CHRS agrees to pay China-based Junshi Biosciences $150 mln upfront for developing and selling its cancer drug toripalimab in Canada and the United State; SGEN downgraded to Sector Perform at RBC Capital and lowers tgt to $186 ahead of Q4 earnings given rich valuation, risk from Q3’s slowdown in Padcev sales and recent market volatility; CNCE plunged as announced that its Phase 2 trial evaluating CTP-692 as an adjunctive treatment in patients with schizophrenia failed to meet the primary endpoint or other secondary endpoints

·     Software movers; video game earnings this week with price tgts raised at Credit Suisse (ATVI to $106 vs. prior $96, EA target $153 vs. prior $150, and TTWO $199 vs. prior $175) saying looking beyond the tougher comparisons this year, lasting changes should be in the form of 1) a step function increase in digital downloads mix vs physical retail and 2) higher conversion rates as users become increasingly more comfortable with in-game/app purchases; big earnings week for software in general as FEYE, FTNT, PFPT, CHKP, NLOK, TENB all on deck in security software, and SaaS where DT, NEWR, APPS, PCTY, U and ZEN have a tough bar following NOW beat last week



·     AG +21%; amid the “squeeze” in silver/precious metal names, a new focus of Reddit

·     ARQT +27%; after saying it has achieved positive top-line results evaluating roflumilast cream as a topical treatment for plaque psoriasis in Phase 3 studies

·     DVAX +25%; signs agreement with Coalition for Epidemic Preparedness Innovations to support the supply of its CpG 1018 advanced adjuvant to be used in approved COVID-19 vaccines

·     GRTS +9%; and GILD entered into a collaboration, option and license agreement to research and develop a vaccine-based immunotherapy to find a curative treatment for HIV infection

·     HOLI +5%; after the consortium including co-founder and former Hollysys CEO Shao, Ace Funds and Chinese P-E firm CPE Funds Management sweetened its bid offer to acquire the company after the board earlier rejected $15.47 per share take-over proposal https://bit.ly/36wxAH7

·     IFF +9%; DD agreed to sell its DuPont Clean Technologies business for $510 million as it concludes a review of non-core businesses and the combination of its nutrition and biosciences unit with IFF

·     ON +5%; reported Q4 results that beat w/revs rising to $1.45B and $0.35 EPS, both above views as the global auto recovery drove the co to record automotive revenue of $491M in the quarter

·     VIE +52%; acquired by HZNP for $53.00 per share cash, representing equity value of ~$3.05B https://bit.ly/3pCFOVB



·     AAL -4%; amid further pullback in airline stocks – downgraded to Neutral at Seaport Global

·     CNCE -40%; announced that its Phase 2 trial evaluating CTP-692 as an adjunctive treatment in patients with schizophrenia failed to meet the primary endpoint or other secondary endpoints.

·     DD -5%; agreed to sell its DuPont Clean Technologies business for $510 million as it concludes a review of non-core businesses and the combination of its nutrition and biosciences unit with IFF

·     GME -25%; seeing a little air come out of the recent short interest squeeze names, as BBBY, GM, KOSS, GSX, EXPR pulling back early

·     NWSA -2%; pullback in some of the media related names that have jumped lately


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.

Live Trading

Open an Account

Paper Trading