Mid-Morning Look: July 22, 2021

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Mid-Morning Look

Thursday, July 22, 2021






DJ Industrials




S&P 500








Russell 2000






Stock trading opens subdued after data showed an unexpected rise in weekly jobless claims, while a steady flow of positive earnings reports offered markets some support. Treasury yields rolled to lows, with 10-yr hitting 1.265% (off morning highs of 1.315%) after weaker jobless claims data – U.S. weekly jobless claims rose to 419,000 in the latest week, well above the consensus of 350,000, while the prior week was upwardly revised to 368,000 from 360,000. On the flip side, housing data mixed as existing home sales rise, but short of expectations though Median home price hits record high $363.3K, up 23.4%. Earnings dominating headlines this morning (expected to do so for the next 4-weeks), with transports mixed (airlines down on AAL, LUV, rails up on CSX, UNP), semis lower as TXN issues conservative guidance (ahead of INTC tonight) and homebuilders slide on softer orders from DHI. Infrastructure and debt limit developments this week are firming up a fall catalyst for the passage of an infrastructure package according to one report, supported by Wednesday’s Congressional Budget Office (CBO) estimate that Treasury’s extraordinary measures to keep the U.S. under the federal borrowing limit would likely be exhausted in October or November. Gold flat, oil edges higher and Treasury yields dipping in early market action.


Economic Data

·     U.S. weekly jobless claims rose to 419,000 in the latest week, well above the consensus of 350,000, while the prior week was upwardly revised to 368,000 from 360,000; the 4-week moving average rose to 385,250 from 384,500 prior week; continued claims fell to 3.236M from 3.625M and above est. 3.100M; U.S. insured unemployment rate unchanged at 2.4%

·     Existing Home Sales rise 1.4% to 5.86-million rate, slightly below estimate 5.90M but above May reading of 5.78M; inventory of homes for sale 1.25 mln units, 2.6 months’ worth; and the June national median home price for existing homes $363,300, +23.4% from June 2020







WTI Crude















10-Year Note





Sector Movers Today

·     Transports; earnings picking up steam with earnings results today from LUV (slightly wider than expected loss), AAL Q2 EPS loss (-$1.69) vs. est. loss (-$1.96); Q2 revs $7.5B vs. est. $7.34B; sees Q3 revs down about 20% and ALK; AAL sounded a cautious note about the third quarter and LUV reported a wider-than-expected loss while ALK’s 2Q op revs slightly above estimates; in rails, UNP Q2 EPS $2.72 tops consensus of $2.50 on better revs of $5.5B, saying business volumes, as measured by total revenue carloads, increased 22%, while CSX reported a 33% jump in its Q2 revenue to $2.99B, topping ests, driven by growth across all its business units and said expenses decreased 9% y-o-y to $1.30 bln and operating income improved to $1.69 bln in the qtr

·     Casinos, Gaming, LVS said Q2 losses narrowed as revenue recovered from less tourism and more restrictive measures to limit the spread of Covid-19 last year – Adj prop EBITDA was $244m below Bofa $282m, saying miss was mostly all Macau; BALY announced a five-year sports betting partnership with Sportradar, a leading global provider of sports betting and sports entertainment products and services; GAMB said it expects to price its downsized IPO at $8-$9 per share after an original target range of $11-$13; Bank America notes online sports betting handle (DKNG, PENN) for states that have reported for June was $1.7B vs. $1.8B during May, +439% Y/Y, -16% Q/Q & -6% M/M, while iGaming (online casino) GGR was $295M for June compared to $310M in May, +117% Y/Y, +15% Q/Q and -5% M/M

·     Metals & Materials; RS 2Q EPS $5.08 vs est. $4.89 on sales $3.42B vs est. $3.17B, qtrly avg selling price/ton sold $2,418 vs $1,681 yr-ago; expects metal prices to remain strong in 3Q, sees 3Q avg selling price/ton sold +7-9%, sees 3Q tons sold -1% to +1% sequentially; CLF reported Q2 EPS $1.33 that missed est. $1.55 on revs $5.05B vs est. $4.97B, adj EBITDA $1.36B vs est. $1.3B, and sees Q3 adj EBITDA ~$1.8B; NUE recorded Q2 EPS $5.04 vs consensus $4.74 on net sales $8.79B (+103% YoY) vs est. $8.3B, shipments 7.48M tons (+37% YoY), and sees Q3 earnings to be the highest quarterly earnings in the company’s history; FCX posted Q2 EPS 73c vs est. 76c on revs $5.75B vs est. $5.77B, sees Q3 copper sales volume 1.035B lbs; NEM Q2 adj EPS 83c was in-line with on sales $3.07B vs est. $3.04B and sold its entire stake in Probe Metals for C$23.9M

·     Utilities & Solar; for the week in utilities, AGR kicked off 2Q earnings season with a raise in guidance. AEP, NEE, and FE are scheduled to report later this week. SC PSC approved the multiparty settlement in the DESC electric rate case; FERC ruled with PJM in favor of D’s plan to exit the PJM with its current FRR plan; the back and forth between activist Elliott and DUK continued as both exchanged letters; FE requested PUCO to quash two subpoenas regarding information about a payment made by FE in 2019; and KY regulators partially rejected a proposal by AEP for upgrades to its WV coal plant; VST upgraded to Buy from Neutral at Guggenheim based on our view that the shares’ persistently high FCF yield does not reflect what should be increasing comfort around the medium-term viability of VST’s FCF generation



·     ARVN +9%; PFE announced a billion-dollar deal with ARVN to develop and commercialize its experimental breast-cancer treatment as Pfizer will make a $650M upfront payment to Arvinas, in addition to a $350M equity investment with up to $1.4B in potential milestone payments

·     CROX +11%; as beat all estimates across the board and guided Q3 revenue growth +60% and 70% y/y vs. estimate ~40%, and FY Rev growth +60-65% vs. prior 40-50%

·     CSX +4%; strength in rails, as UNP Q2 EPS $2.72 tops consensus of $2.50 on better revs of $5.5B, while CSX reported a 33% jump in its Q2 revenue to $2.99B, topping ests

·     DPZ +9%; touching new all-time highs as reported Q2 earnings and revenue beat expectations, while U.S. same-store sales grew 3.5%, topping ests for a (-1.4%), and international same-store sales growth of 13.9% was ahead consensus for 8.7% growth

·     MMC +2%; as reports top and bottom line beat as posted the strongest underlying rev growth rate in two decades

·     NRXP +14%; announces it has validated the first commercial formulation of Zyesami (aviptadil), its investigational drug for COVID-19 patients, for intravenous use



·     AAL -2%; Q2 EPS loss (-$1.69) vs. est. loss (-$1.96); Q2 revs $7.5B vs. est. $7.34B; sees Q3 revs down about 20%

·     CLF -6%; reports record EPS of $1.33 but was below the $1.52 estimate on revenue of $5B which was mostly in-line with estimates

·     DHI -4%; raised its revenue guidance for the year as it continues to expect a strong housing market after a Q3 beat (expects revenue of $27.6B-$28.1B, compared with its prior outlook of $26.8B-$27.5B) – shares dip as Q3 net orders rose only 2%

·     DIDI -8%; shares weak after Bloomberg reported China is weighing an unprecedented penalty for the ride hailing company following its IPO last month

·     ENV -3%; Jefferies downgrades to Underperform from Buy while lowering PT to $63 from $95, a new Street low

·     FE +3%; after the Ohio-based utility said it reached an agreement with the U.S. Attorney’s Office to pay $230 million to resolve an investigation by the Department of Justice into allegations of bribery disclosed in July 2020

·     MCRB -52%; said its drug to treat mild-to-moderate ulcerative colitis did not meet the main goal of a mid-stage clinical trial; consequently, MCRB would close the open label and maintenance portions of the study

·     NTGR -13%; as posted Q2 rev and adj EPS below Street consensus, citing worldwide supply chain constraints and said for 2H, expect the market growth to moderate further to approximately 20% above second half 2019 levels

·     TXN -5%; Q2 EPS and sales top consensus but forecasts Q3 revenue slightly below estimates, hit by concerns that a shortage of chip components as sees Q3 revs$4.4B-$4.76B, with the midpoint below analysts’ expectations of $4.59B

·     UL -5%; after saying that sales increased at a healthy 5% clip in the three months through June, compared with the same period of 2020, but warned operating margins are expected to be flat in 2021, down from the slight increase it was targeting just three months ago

·     WSM -3%; was downgraded to Sell at Goldman Sachs saying comps are more difficult than other hardline peers



·     Absci (ABSI) 12.5M share IPO priced at $16.00

·     Couchbase (BASE) 8.3M share IPO priced at $24.00

·     Instructure (INST) 12.5M share IPO priced at $20.00

·     Natera (NTRA) 4.5M share Secondary priced at $113.00

·     Ryan Specialty Group (RYAN) 57M share IPO priced at $23.50

·     Zenvia (ZENV) 11.5M share IPO priced at $13.00

·     Zevia (ZVIA) 10.7M share IPO priced at $14.00


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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