Mid-Morning Look: July 09, 2021

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Mid-Morning Look

Friday, July 09, 2021






DJ Industrials




S&P 500








Russell 2000






Stocks in rally mode after yesterday’s broad market sell-off, with U.S. stocks tracking gains in Europe despite big tech being in the crosshairs of Washington. The White House has come out with an executive order of 72 actions that include reining in Big Tech, including increased scrutiny on acquisitions. Also on macro front, the Biden administration to add more than 10 Chinese companies to its economic blacklist over alleged human rights abuses and high-tech surveillance in Xinjiang, Reuters first reported. U.S.-listed Chinese technology companies rebounded in premarket trading after tumbling for several days following a probe by Beijing into data practices (DIDI, BIDU, BABA). In vaccine news, PFE and BNTX said they would ask for regulatory approval to distribute a Covid-19 booster vaccine. They are also developing an updated version of the shot designed to better protect against the Delta variant. Treasury yields rebounding as the 10-yr tops 1.35% after touching Feb lows of 1.25% Thursday, while commodity prices rebound led by oil and gold prices. Markets have been hurt this week as a rise in cases of the delta coronavirus variant reduced risk appetite and prompted a flight to safety – but closing out week strong.


Banking space also in focus (ahead of earnings season kick-off next week with GS, JPM reporting Tues; Weds: BAC, BLK, C, PNC, WFC; Thurs: BK, MS, TFC, USB; Fri: STT) as in President Biden’s sweeping executive order designed to increase competition in the American economy, the president will order the Department of Justice and agencies responsible for banking to update guidelines on banking mergers “to provide more robust scrutiny of mergers,” the White House said in a fact sheet. Those agencies include the Federal Reserve, the FDIC, and the OCC, which could put a damper on mergers in the banking industry, which had picked up under the Trump administration.







WTI Crude















10-Year Note





Sector Movers Today

·     Insurance; EU antitrust regulators cleared AON’s $30B bid for WTW after the company agreed to divest central parts of WTW’s business to AJG; Piper upgraded CINF to Neutral and still think property-casualty insurance sector stocks should perform well over the course of 2021; Bank of America added PGR to its US 1 List and removed ACGL; Credit Suisse said MBS issuance has PFSI, COOP, and HMPT tracking better than estimated and UWMC, FOA, LDI, and RKT below expectations, and the recent decline in rates reinforces near-term upside potential to volume estimates; RBC said CB ranks their favorite large cap idea as the stock still hasn’t rebounded from its M&A foray and they remain keen on ACGL, MKL and KNSL as well in P&C, and also say life names merit a fresh look, especially MET, VOYA since they are less sensitive to interest rates

·     Oil Equipment and services; Morgan Stanley cautious on more-defensive service companies such as BKR and CLB (which was downgraded to EW from OW) given substantial share price appreciation and more balanced risk-reward following its rally, while firm said expects both HAL and SLB to reiterate their double-digit y-o-y growth targets for 2H21 during earnings; MS also constructive on NEX and PTEN and cautious LBRT, RIG, while says equipment suppliers have the most upside to consensus earnings expectations as they upgraded NOV to equal-weight

·     Consumer Staples; Bank America raising tgt prices for HSY, BRBR, MDLZ and PEP heading into 2H21 as expect focus to be on consumption patterns as mobility increases and pricing power vs. inflation; SAFM downgraded to Equal Weight from Overweight with an unchanged price target of $190 at Stephens; int tobacco, PM agreed to buy U.K. pharma company Vectura, valuing it at GBP1.05 billion ($1.44 billion), while MO said that the company subsidiary UST LLC has agreed to sell its Ste. Michelle Wine Estates business to private-equity firm Sycamore Partners Management LP for around $1.2 billion

·     Bank movers; President Joe Biden’s planned executive order to promote greater U.S. competition will target bank mergers by pushing the Federal Reserve and the Department of Justice to update merger guidelines and increase scrutiny of deals, according to a source familiar with the matter, Reuters reported; Earnings next week for large cap banks (Tues: GS, JPM; Weds: BAC, BLK, C, PNC, WFC; Thurs: BK, MS, TFC, USB; Fri: STT); Raymond James initiated Outperform ratings on GNTY ($40 pt) on tailwinds from a strong Texas economy, deposit cost advantage over peers, superior credit quality, and growing scarcity value, and on PFHD ($22 pt) as they see it as an early stage, tech forward growth story which will narrow its profitability gap vs. peers; Credit Suisse reiterated their OP on SBNY and raised their price target to $270 from $260 ahead of earnings; Piper initiated BSBK at Neutral with an $11 price target; RBC upgraded DB with EUR11 target as they are running out of reasons to be critical, though the speculative risk remains



·     BABA +2%; seeing a rebound early in China ADRs after the country said earlier this week it will step up supervision of domestic firms listed offshore

·     DFS +6%; Citi assumed coverage at Buy from Neutral with a $150 tgt from $101 saying it has the clearest path to benefit from the return of consumer card spending and lending

·     GALT +40%; after saying it saw positive top-line clinical data from the extension cohort of a Phase 1b clinical trial of Belapectin in combination with Keytruda in patients with metastatic melanoma and head and neck cancer

·     LEVI +2%; after reporting earnings that beat and raised its full-year outlook above analysts’ projections ($1.29-$1.33 vs. est. $1.15) saying Q3 revs will be above ’19

·     NOV +5%; upgraded at Morgan Stanley in broad sector call on oil service/equipment

·     NOVN +6%; initiated Buy and $30 tgt at Cantor lifts shares as think peak sales potential for lead pipeline asset SB206 is underappreciated

·     PVH +5%; broad strength in apparel retail early (GPS, LB, TPR)

·     STMP +65%; agreed to be acquired by Thoma Bravo in a cash deal that values the web-based mailing and shipping services company at $6.6B, with holders to get $30 per share in cash, a 67% premium to Thursday’s closing price of $197.72 https://on.mktw.net/2Vfbd63



·     ADBE -1%; broad weakness in software names early

·     AMZN -1%; profit taking after setting several all-time highs this week, up 4-straight days

·     SGH -6%; announced the launch of a proposed underwritten public offering of 3 million shares

·     SPCE -4%; profit taking after surging yesterday following the recent news that Sir Richard Branson will be on the second test flight on July 11

·     XL -5%; downgraded to Neutral at BTIG saying while continues to expect the electrification of the commercial fleet to gain momentum over the next few years, thinks 2021 is shaping up to be more of a transition year owing to supply chain issues


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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