Mid-Morning Look: January 06, 2022

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Mid-Morning Look

Thursday, January 06, 2022






DJ Industrials




S&P 500








Russell 2000






A very choppy start to the trading day, with major averages falling sharply in the first 30 minutes of trading, with high growth tech names again pacing the losses, while financials, energy and consumer staples helping support the S&P 500, as investors keep a close eye on rising Treasury yields – but prices have since rebounded off lows/key technical levels. The 10-year hit morning highs above 1.75% (which would be its highest closing level since January 2020) amid a flurry of mixed economic reports (rise in jobless claims, a larger trade deficit and as ISM said the services industry activity slowed more than expected in December). The Nasdaq is trying to recover after posting its biggest daily loss since February 2021 after minutes of the Federal Reserve’s most recent meeting showed officials eyeing a faster timetable for raising rates. Treasury yields remain on track to rise for a fourth consecutive day. Global markets followed Wall Street lower as tech stocks retreated in Europe, helping to pull the Stoxx Europe 600 down. Oil prices sharply higher, helping lift energy stocks to top gainers in the S&P 500.


Economic Data

·     Weekly jobless claims rose to 207K in the latest week, above est. 197K, while prior week revised to 200K from 198K; the 4-week moving avg rose to 204,500 in latest week; continued claims rose to 1.754M from 1.718M (est. 1.688M) and the U.S. insured unemployment rate unchanged at 1.3% in latest week

·     November trade deficit was (-$80.17B) vs. est. deficit (-$77.1B) and compared to Oct deficit (-$67.16B), as Nov exports +0.2% vs Oct +8.2% and imports +4.6% vs. oct +1.0%; U.S. Nov exports $224.22 bln vs oct $223.86 bln, imports $304.39 bln vs oct $291.01 bln

·     U.S. services industry activity slowed more than expected in December, as the ISM said its non-manufacturing activity index fell to 62.0 last month from 69.1 in November, which was the highest reading since the series started in 1997, and below ests of 66.9; new orders received dropped to a reading of 61.5, the lowest in 10 months, from a record 69.7 in November; measure of services industry employment fell to a reading of 54.9 from a seven-month high of 56.5

·     Factory Orders MoM actual 1.6% (Forecast 1.5%, Previous 1.0%); U.S. Nov. Factory orders ex trans rise 0.8% from month ago







WTI Crude















10-Year Note





Sector Movers Today

·     Consumer Staples; in spirits, STZ boosted its 2022 EPS outlook to $10.50-$10.65 from $10.15-$10.45 forecast prior (est. $9.88) after beats Q3 comparable EPS and net sales expectations and also said it struck a deal with KO to launch Fresca-branded ready-to-drink cocktails in the U.S.; in food, CAG said it sees FY organic net sales growth about +3%, above prior about +1%, while Q2 EPS of $0.64 missed the $0.68 est. on slightly better sales of $3.1B; LW Q2 EPS $0.50 topped the $0.32 estimate on in-line sales of $1.01B and better adj Ebitda of $180.9M; SMPL was upgraded to Outperform at Credit Suisse after posted solid F1Q results and raised guidance; Evercore initiated ACI as a Tactical Outperform as they see potential for shares to rise 6-8% with a likely Q3 beat and constructive Q4 outlook in its earnings 1/11; HELE Q3 EPS $3.72 vs. est. $3.11; Q3 revs $624.9M vs. est. $566.5M; raises FY22 adj EPS view to $11.73-$11.93from $11.26-$11.56 (est. $11.21); boosts FY22 revenue view to $2.095B-$2.115B from $2.024B-$2.067B

·     Transports; Deutsche upgraded CAR to Hold since shares have declined over 45% since their 11/2 downgrade; Wolfe cut their sector weighting on Trucking to UW with KNX, CVLG, USX, LSTR also being downgraded to Underperform due to their expectations of TL spot rates inflecting negative during 1Q22 and TL capacity rising over the next two years as supply chains improve, and they upgraded CHRW to Outperform as they expect it can be a relative outperformer after lagging their transport index for the past 3 years, while issuing downgrades to Peer Perform on FWRD, TFII after their large gains last year and WAB on continued EPS risk after consensus estimates moved slightly lower last year even as the stock materially increased

·     Bank movers; Goldman upgraded MC to Neutral as shares have more than doubled since being added to their sell list due to stronger revenue growth and a larger capital return, HLI to Buy as its acquisition of GCA materially improves its near-term growth profile, and downgraded EVR to Neutral while removing it from its Conviction Buy list with shares +143% since its upgrade to Buy in August 2020; KBW downgraded CS to Underperform, initiated FHB, BANC CVBF, WAFD, HFWA at Outperform and WABC, TCBK, TBNK, GBCI, BANR, BOH at Market Perform; GS was downgraded to Neutral at Bank America as see limited potential for upside surprises in a moderating capital markets backdrop and say although trading at a higher valuation, consider buy-rated MS as more defensible given a diversified revenue mix, rate sensitivity, deal synergies and exposure to higher growth; firm also upgraded CMA to Neutral from Underperform and downgrade ZION to Underperform from Neutral in regional banks



·     BBBY +8%; Q3 adj EPS loss (25c) vs est. 0c on sales $1.88B vs est. $1.95B, sees Q4 adj EPS 0-15c vs est. 70c on sales $2.1B vs est. $2.26B (but shares rebounded on better margins)

·     CMA +2%; as banks again outperform behind higher Treasury yields, helping lending margins for the financial industry, while also upgraded at Bank America today

·     DKS +2%; raised its full year 2021 EPS guidance to $13.70-13.79 from $12.88-13.06, adj EPS to $15.50-15.60 from $14.60-14.80, and same store sales to increase 25.8-26.1% from 24-25% (shares of ASO, BGFV, HIBB moved in sympathy early)

·     HES +4%; oil stocks again among S&P leaders early as oil prices resume upward momentum (APA, FANG, MRO, OXY, DVN among top movers)

·     LW +7%; Q2 EPS $0.50 topped the $0.32 estimate on in-line sales of $1.01B and better adj Ebitda of $180.9M

·     VCRA +26%; after SYK said it would acquire VCRA, a provider of communication solutions for mobile workers in healthcare, hospitality for $79.25 a share in a deal that represents a total equity value of about $2.97B or $3.09B including convertible notes https://on.mktw.net/31zkUQu

·     WBA ; after Q1 EPS $1.68 topped $1.36 est. as sales of $33.9B beats the $33B estimate and raised its full-year forecast from flat to low-single digit growth



·     BLI -34%; after announced that the company would miss their 4Q guide, while also putting forth a growth forecast for 2022 that puts revenues below consensus ($110M vs. the Street’s $123M) and that Eric Hobbs moving to another internal role, while a new CEO is found

·     HEAR -4%; said prelim full year 2021 revenue was about $365M, the low end of its guidance of $365M-4380M; prelim FY 2021 Adjusted EBITDA at lower end of guidance range of $36M-$44M

·     HUM -10%; shares slide after lowers net membership growth estimate for individual Medicare Advantage products for the year ended December 31, 2022 to a range of 150K-200K from prior range of 325K-375K

·     MARA -5%, along with weakness in other Bitcoin/crypto related stocks (miners, etc.) RIOT, COIN, MSTR, SI, NCTY as Bitcoin slumps to touch its lowest level since a December flash crash amid growing expectations of rising borrowing rates

·     STLC -9%; said Q4 2021 shipments lower than expected due to unplanned outages and covid as related impacts on demand and production q1 2022 guidance issued at or below Q4

·     TSLA -4%; early weakness in electric vehicle stocks with big declines in RIVN, TSLA, CHPT, BLNK, NIO, QS and others as momentum names slide


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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