Mid-Morning Look: June 25, 2021

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Mid-Morning Look

Friday, June 25, 2021






DJ Industrials




S&P 500








Russell 2000






Stocks are edging higher on the final trading day of the week, with major averages looking to build on the record highs set this week for the S&P 500 and Nasdaq, on track for healthy gains (S&P +2.7%, Russell +4.5%, Down +3.4%, Nasdaq +2.45 WTD) behind an infrastructure agreement yesterday between the White House and bipartisan senators (for about $1 trillion), as well as dovish Fed commentary (for the most part outside of Kaplan and Bullard) on the rate outlook and tapering of assets view. The stock market continues to shrug off rising inflation data as investors focus on industrials, materials, and metals amid hopes of more infrastructure spending pushing cyclical stocks higher. Banking stocks rise after Fed stress tests last night showed 23 of the largest firms would suffer a combined $474 billion in losses under a hypothetical severe downturn, but would still leave them with more than twice as much capital required under Fed rules. Treasury yields near morning highs, but still only a modest climb with the 10-year at 1.51% even with core PCE inflation showing the highest annual rise since 1992 (Fed continues to preach that inflation spikes are transitory, easing investor fears). Dow component Nike (NKE) soars on strong quarterly earnings while FDX drags transports lower after its earnings results and Blackberry (BB) slides post its results. Cryptocurrencies ending a very volatile week lower (for now) as Bitcoin drops back below 33K (after topping 35K yesterday) and Ethereum down over 8% falling to around $1,850 an ounce.


Economic Data

·     Personal income for May fell -2.0%, better than the -2.5% estimate (April had fallen -13.1%); Personal spending for May unchanged, below the 0.4% estimate (April revised to 0.9% from 0.5%); Real consumer spending fell -0.4% vs. April +0.3%

·     Inflation readings: Overall May PCE price index rises +0.4% vs April +0.6%, the May core PCE price index +0.5% below est. +0.6% (April was +0.7%); on a YoY basis, PCE Index rises 3.9% vs. April 3.6% and core PCE YoY rose 3.4% vs. April +3.1%

·     University of Michigan surveys of consumers sentiment final June 85.5, slightly below consensus 86.5 and the preliminary June reading of 86.4; the expectations index final June 83.5 and current conditions index final June 88.6 vs prelim June 90.6







WTI Crude















10-Year Note





Sector Movers Today

·     Auto sector; DIDI the Beijing-based ride-hailing company, is targeting a valuation of $62B-$67B in its IPO, according to its latest public filing (is looking to raise $3.9 billion in the initial public offering by selling 288M American depositary shares – price range $13-$14); Panasonic Corp sold shares in TSLA for about 400B yen ($3.61B) during the financial year ended March, a company spokesperson said on Friday; KMX rises after 1q revenue beats estimates – Q1 adj EPS of $2.63 on revs $7.70B tops ests of $1.63/$6.24B, as retail used-unit sales doubled to 270,799 units in Q1, helped by strong demand for personal vehicles over public transport (shares of AN, PAG, LAD, SAH among movers in sympathy); LAZR upgraded to Outperform with $30 tgt at Baird saying the stock is poised to outperform peers calling it well positioned to upward-revise its order book and raise its medium-term revenue outlook, driven by standard adoption of L3 hardware in next-generation vehicles including with Volvo

·     Solar; Citi initiated ENPH at Buy with a $220 target as its top pick despite its lofty valuation as they see secular tailwinds from solar and storage installation growth, GNRC at Buy with a $475 target as the best way to play the burgeoning backup power, grid services and distributed generation themes, and SEDG at Neutral with a $300 target as they benefit from the same tailwinds as ENPH but have lost some share in the residential inverter market and is playing catch up on the storage side; Stephens initiated Overweight ratings on RUN ($82 PT), ENPH ($215 PT), SEDG ($336 PT), NOVA ($56 PT), and FSLR ($102 PT); JKS Q1 EPS 4c vs. est. loss (2c) on revs $1.21B vs. est. $1.19B, solar module shipments 5,354 (+33.7% YoY), and sees Q2 revs $1.2B-$1.25B, below est. $1.4B, and Q2 gross margin 12%-15%

·     Industrial & Machinery; among one of the best performing sectors yesterday after President Biden said he had reached an infrastructure agreement with a bipartisan group of senators in a deal that will include about $600 billion in new federal spending on investments for new roads, clean energy, and other projects, and cost nearly $1 trillion over the next five years. Analysts weighed in today on the potential impact of several names; GMS was upgraded by three analysts (Baird, Stephens, and RBC) after reported a strong beat across the board and ahead of guidance, largely driven by price improvement with some volume growth and SG&A leverage; ROK agreed to buy privately held SaaS company Plex Systems for $2.22 billion in cash

·     Infrastructure analyst calls: Jefferies upgraded shares of MLM (tgt to $424 from $360) and VMC (tgt to $207 from $180) after the bipartisan group of Senators and President Biden agreed on a framework for infrastructure package worth $1.2T over eight years firm sees both being positioned to outperform from a potential infrastructure bill and recovery in non-residential construction; Citigroup said they view the agreement for a ~$1tr Bipartisan Infrastructure Framework as incrementally positive for infrastructure exposed companies under U.S. construction materials (VMC, MLM, SUM, and EXP) and industrials (ACM, J, MTZ, and PWR).



·     GMS +3%; upgraded by three analysts (Baird, Stephens, and RBC) after reported a strong beat across the board and ahead of guidance, largely driven by price improvement with some volume growth and SG&A leverage

·     JKS +10%; Q1 EPS 4c vs. est. loss (2c) on revs $1.21B vs. est. $1.19B, solar module shipments 5,354 (+33.7% YoY), and sees Q2 revs $1.2B-$1.25B, below est. $1.4B, Q2 gross margin 12%-15

·     KMX +4%; after 1q revenue beats estimates – Q1 adj EPS of $2.63 on revs $7.70B tops ests of $1.63/$6.24B, as retail used-unit sales doubled to 270,799 units in Q1

·     NFLX +1%; upgraded to outperform at Credit Suisse saying subscriber growth expected to normalize in 4Q21 and a survey by CS of U.S. consumers reinforced the stream platform’s strong competitive position and high user satisfaction

·     NKE +13%; shares surge to record highs after the sportswear maker reported better-than-expected 4Q results (strength in North America) and forecast FY revenue surpassing $50B for the first time, prompting several analysts to increase their price targets on the stock

·     OSMT +34%; announced an agreement with Alora Pharmaceuticals to sell its portfolio of legacy products and Marietta, Georgia manufacturing facility for up to $170M

·     SPCE +21%; as co receives approval from U.S. Federal Aviation Administration to allow co to fly customers to space – marks the first time the FAA has licensed a Spaceline to fly customers



·     ABBV -2%; after the FDA informs company that the agency will not be able to provide a decision regarding expanded use of its rheumatoid arthritis drug Rinvoq by the prior set target date

·     BB -5%; posted Q1 EPS loss (5c) vs. est. loss (5c); Q4 revs $174M vs. est. $171.25M (and down from $206M a year earlier); Q1 gross margins 65.5%; said its auto business has been strong despite global chip shortages

·     C ; Fed bank stress tests generally better, but UBS notes COF, MS, BAC, PNC, TFC and USB stand out as positives, while see Citi, WFC as laggards

·     DAR -2%; and REGI slide on headlines Supreme Court backs refineries on biofuel-quota exemptions (separately, DAR was upgraded at BMO saying it should continue to enjoy among the best fundamentals across our coverage group, driven by the shift toward renewable diesel, while the fear around the EPA’s RVO decision creates a compelling entry point)

·     FDX -4%; reported 4Q adj EPS $5.01 vs est. $4.99 on revs $22.6B vs est. $21.5B and guided FY22 adj EPS $20.50-21.50 vs est. $20.37, sees CAPEX $7.2B, though shares were under pressure as the quarterly beat did not meet bull case expectations and the company continues to face headwinds and cost pressures related to rising labor and gas costs

·     RAD -4%; adds to yesterday declines post weak earnings; JPMorgan downgraded RAD after disappointing guidance yesterday given fading vaccine tailwinds and underlying retail pharmacy profits given weak OTC cough/cold/flu sales



·     Elevation Oncology (ELEV) 6.25M share IPO priced at $16.00

·     Graphite Bio (GRPH) 14M share IPO priced at $17.00

·     Mister Car Wash (MCW) 31.25M share IPO priced at $15.00

·     Theravance Biopharma (TBPH) 6.7M share Spot Secondary priced at $15.00


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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