Early Look

Wednesday, December 29, 2021

U.S. and European markets are moving higher, extending record gains into the final trading week of the year as a late surge Tuesday for the S&P came up just short of closing at another all-time high after hitting an intraday high above 4,800 for the first time ever. With only three trading days left in 2021, the S&P 500 (SP500) is up 27.4% YTD, on track to top its 2019’s advance of 28.9% for its best year since 2013 (when it gained 32.4%). The S&P is also on track to outpace the Nasdaq Composite for the first time since 2016 (Nasdaq currently up 23.1% for the year). Apple (AAPL) shares slipped on Tuesday after a four-day rally that put it within striking distance of a historic $3 trillion market value (needs the $182.86 level for that accomplishment). Gold prices are near the lows of the morning, down -0.85% at $1,795 an ounce, while oil slips off one-month highs overnight, and Treasury yields inch higher (10-year around 1.5%). Volume is expected to be muted again in between the Christmas and New Year holidays. In Asian markets, The Nikkei Index declined -162 points or 0.56% to 28,906, the Shanghai Index fell -0.91% to 3,597, and the Hang Seng Index slipped nearly 200 points or 0.83% to settle at 23,086. In Europe, the German DAX is down over -50 points to 15,900, while the FTSE 100 rises +0.9% to 7,435. Heading into the last 3-trading days of the year, the Dow is on pace for its sixth consecutive gain, as investors continue to edge stock markets higher, while shrugging off Omicron concerns.

Market Closing Prices Yesterday

·     The S&P 500 Index slipped 4.70 points, or 0.10%, to 4,786.49

·     The Dow Jones Industrial Average rose 96.29 points, or 0.27%, to 36,398.67

·     The Nasdaq Composite lost 89.54 points, or 0.56%, to 15,781.72

·     The Russell 2000 Index fell 14.95 points, or 0.66% to 2,246.51

Events Calendar for Today

·     7:00 AM ET          MBA Mortgage Applications Data

·     8:30 AM ET          Advance Goods Trade Balance for November

·     8:30 AM ET          Wholesale Inventories for November

·     10:00 AM ET       Pending Home Sales MoM for November…est. +0.5%

·     10:30 AM ET       Weekly DOE Inventory Data

Earnings Calendar:

·     Earnings Before the Open: FCEL

·     Earnings After the Close: none

Other Key Events:

·     The SEMICON Taiwan Semiconductor conference, 12/28-12/31

Sector News Breakdown

Consumer

·     Cal-Maine Foods (CALM) Q2 EPS $0.02 vs est. $0.30 on revenue $390.9M vs est. $387.8M as its 12.5% YoY sales increase was driven by improved shell egg pricing, though their operating results reflect the current inflationary environment with higher costs for feed, labor, packaging, and delivery. They will not pay a dividend due to reporting a net operating loss in the quarter

·     Darling Ingredients (DAR) entered into a definitive agreement to acquire all the shares of Valley Proteins for ~$1.1B in cash.

·     Hain Celestial (HAIN) completed its acquisition of better-for-you snacks company That’s How We Roll from Clearlake Capital Group for $259M in cash

·     In a regulatory filing, Tesla (TSLA) disclosed that its CEO Elon Musk sold $1.02B in common stock on December 28th after exercising shares (Musk has now sold roughly 15.7M shares of stock since saying on Nov. 6 he would sell 10% of his stake if Twitter users agreed – now with a total of $16.4B in proceeds

Energy, Industrials and Materials

·     The American Petroleum Institute (API) said weekly crude inventories fell -3.09M barrels last week; gasoline inventories fell -319K barrels, and distillates fell -700K barrels

·     A Rio de Janeiro court suspended a Petrobras (PBR) gas price hike

·     Hunstman (HUN) announced a review of strategic options for its Textile Effects division and a multi-year compensation plan designed to align the incentives of its management team with the targets presented at its Investor Day in November

Financials

·     Douglas Elliman Inc. (DOUG) will be added to the S&P SmallCap 600 prior to the open of trading on Thursday, December 30, replacing Matrix Service Co. (MTRX), which will be removed from the S&P SmallCap 600 effective prior to the open of trading on Friday, December 31. S&P SmallCap 600 constituent Vector Group Ltd. (VGR) is spinning off Douglas Elliman in a transaction expected to be completed on December 30

·     Velocity Financial (VEL) acquired a majority interest in licensed “Ginnie Mae” issuer Century Health & Housing Capital in a deal that is immediately accretive to EPS and ROE with minimal book value impact

Healthcare

·     Chembio Diagnostics (CEMI US) falls over 20% after saying the FDA declined to review the company’s application for an emergency use authorization for its DPP Respiratory Antigen Panel

·     Quidel Corporation (QDEL) statement from Douglas Bryant, Quidel’s President and CEO, regarding Quidel’s ongoing efforts to evaluate COVID-19 mutations confirms that its antigen tests continue to detect COVID-19 variants such as Omicron

·     Amphastar Pharmaceuticals (AMPH) said the FDA has tentatively approved its Abbreviated New Drug Application (ANDA) for Vasopressin injection, USP 20 Units/mL, 1mL Single Dose Vial.

Technology, Media & Telecom

·     Apple (AAPL) suspended operations at a Foxconn assembly plant in India following a dispute over working conditions and employee safety. The plant, located near the city of Chennai, employs around 17,000 people, and leads assembly of the tech giant’s iPhone 12 as well as iPhone 13.

·     JD.com (JD) increases buyback authorization to $3.0B from $2.0B

·     Calix Inc. (CALX) will replace CIT Group Inc. (CIT) in the S&P MidCap 400 effective prior to the opening of trading on Tuesday, January 4. First Citizens BancShares Inc. (FCNCA) is acquiring CIT Group in a deal expected to be completed soon pending final closing conditions

·     Applied UV (AUVI) priced an offering of 2.67M shares at $3.00 for gross proceeds of $8 mln