Mid-Morning Look: October 23, 2020

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Mid-Morning Look

Friday, October 23, 2020






DJ Industrials




S&P 500








Russell 2000






U.S. markets appear to be in holding pattern, with stocks mixed to little changed as major averages remain on track to finish the week with declines, snapping a three-week winning streak. The markets have remained hopeful of a near $2 trillion stimulus deal out of Washington for weeks now, with the two sides saying this week they are getting closer to helping small businesses, individuals and unemployment benefits – but as of now, no deal in place and chances lessen with the Presidential election looming in 11-days. Technology underperforms early as weaker revenue from INTC pressures shares in semi’s, while small caps outperform a second day led by energy and financials. Fairly light data today, though overall business activity in the U.S. quickened its expansion pace in October, rising at the fastest rate for 20 months and business optimism improving markedly, preliminary data from IHS Markit showed Friday. The flash reading for the U.S. Composite Output Index came in at 55.5 in October, up from the 54.3 registered in September. European markets higher despite the rise in Covid cases (broadly and quickly) starting to put stricter measures in place to contain it as European countries like Italy, Austria, Croatia, Slovenia and Bosnia reported their highest single-day coronavirus cases on Thursday (as per Reuters). Treasury yields looking to end the week near highs and best levels since June, while the dollar has sunk on the week. Busy week of earnings took place for select tech and banks, but next week the busiest of quarter, highlighted by earnings from Apple, Amazon, Facebook, Alphabet and Twitter next Thursday. More than a quarter of companies on the S&P 500 had reported through Thursday, and 83% of them had beaten analysts’ forecasts for earnings-per-share, according to FactSet.


Economic Data

·     IHS Markit October flash manufacturing PMI at 53.3 in-line with Sept while services sector flash PMI for October at 56.0 (consensus 54.6) vs 54.6 in September and at the highest since February 2019. Manufacturing sector flash PMI for October at 53.3 (consensus 53.4)







WTI Crude















10-Year Note





Sector Movers Today

·     Retailers; UAA tgt raised to $20 from $15 at Raymond James as believe the company is reaching the latter stages of a multiyear restructuring process and will return to growth in 2021 and beyond; MAT rises as results came in solidly above expectations, helped by low inventories exiting 2Q20, and sustained POS momentum throughout 3Q into the holiday’s (was upgraded at Davidson to buy); CRI posts Q3 adj profit of $1.96 topping view of $1.57 driven by curtailed spending and growth in e-commerce sales (no outlook provided)

·     Internet; big week coming up for large cap internet as four major names report Thursday oct 29th (AMZN, FB, GOOGL, TWTR) – which follows blowout results from SNAP earlier this week; BMO Capital raised its price tgts on GOOGL to $1,900, AMZN to $3,800, FB to $275, and TWTR to $45 saying they like GOOGL most into the Q as it has the worst sentiment and investors know travel is still bad; and #2 preference in this group, AMZN, while remain Market Perform on FB (targeting headwinds and safety and security spending risk) and TWTR (and we are cautious into the print)

·     Bank movers; sector looked to add to recent gains on improving Treasury yields and a strong of better earnings in regional banks this week; WFC is exploring a sale of its asset management business, Reuters reported, saying the arm, which managed $578B as of the end of June, could fetch more than $3B in a sale; FHN 3Q adj EPS of 35c beat the 21c estimate on better revs $1.36B; SIVB strong quarter with robust balance sheet growth, very strong core fees and gains, and a reserve release due to improved economic forecasts

·     Software movers; CTXS downgraded at Morgan Stanley saying despite a string of beats & raises on rev/EPS in recent qtrs., slower progress on cloud creates debate on the durability of LT growth which has weighed on shares; FSLY downgraded to underweight at Piper saying fundamentals and risks are not appropriately reflected in the stock at these levels; MANH shares fell after Q20 reflected upside across every key metric while RPO is the best proxy for new cloud demand and the company significantly exceeded our expectations but issued a lower 2021 outlook



·     COF +5%; earnings for the quarter easily topped consensus as earned $2.4 billion, or $5.06 a share, in the quarter, and sales rose to $7.4 billion from $6.7 billion a year ago

·     CVAC +3%; said its potential Covid vaccine candidate CVnCoV, produced immune cells called neutralizing antibodies and activated T-cells in hamsters and mice

·     FSLR +1%; as solar stocks (SPWR, SEDG rise early after Democratic Presidential nominee Biden said went over plans on clean energy talking about his plan during the debate last night

·     GILD +5%; announced that the U.S. FDA has approved the antiviral drug Veklury (remdesivir) for the treatment of patients with COVID-19 requiring hospitalization

·     MAT +6%; results came in solidly above expectations, helped by low inventories exiting 2Q20, and sustained POS momentum throughout 3Q into the holiday’s (was upgraded at Davidson to buy)

·     SAM +16%; reported 3Q EPS ahead of consensus ests, despite softer volume due to supply constraints, driven almost entirely by lower ad expenses while provided strong FY20 guidance that implies a meaningful acceleration in 4Q ships



·     AXP -2%; after EPS of $1.30 misses by 3c and revs of $8.75B slightly above est. $8.65B (though revs fell 20% due primarily to declines in card member spending amid the pandemic) – Provisions for credit losses declined to $665 million from $879 million

·     EHTH -5%; posted a smaller than expected Q3 loss but guides FY GAAP EPS $2.91-$3.47 and revs $630-$670Mm vs. est. $655Mm, bit below the midpoint of guidance $3.33 and $655M

·     FSLY -6%; downgraded to underweight at Piper saying fundamentals and risks are not appropriately reflected in the stock at these levels

·     INTC -11%; pulled lower after saying data centric revenue was down -10% Y/Y overall with DCG down -7% Y/Y to $5.9B, below the $6.22B consensus (after in-line EPS and revs for Q3)

·     LLNW -28%; reported a mixed quarter, with revenue in line and AEBITDA below, however, the company lowered its full year revenue and profit forecast

·     STX -3%; shares slipped after Q1 results beat profit estimates but missed on revenue, reporting a 10% Y/Y decline to $2.31B, slightly missing estimates

·     UBER and LYFT -1%; as the two ride hailing companies must classify their drivers in California as employees, a state appeals court ruled Thursday

·     USX -17%; shares tumbled after reporting Q3 EPS and revs below consensus



·     Foghorn Therapeutics (FHTX) 7.5M share IPO priced at $16.00

·     Milestone Pharmaceuticals (MIST) 8.571M share Spot Secondary priced at $5.25


Market commentary provided by Catena Media Financials US, LLC, 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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