Morning Preview: October 18, 2021

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Early Look

Monday, October 18, 2021









S&P 500










U.S. equity futures are looking lower after posting strong gains last week, with oil prices extending their near-term rally into a ninth consecutive week, as concerns over surging inflation pressures and the weakest China growth rate in more than a year tamed optimism linked to a strong start to the third quarter earnings season. Chinese Q3 GDP missed, rising +0.2% q/q vs 0.5% consensus, and was +4.9% y/y vs 5.2% consensus amid a rolling power crisis, supply chain disruptions and a crackdown on the tech sector. In the U.S., the earnings flood begins this week with 72 names in the S&P 500 expected to report quarterly results this week. In corporate news today, Apple (AAPL) is holding its second major launch event of the Fall where it is expected to unveil the first redesign of its MacBook Pro laptop in at least five years (starts at 1:00 PM ET). In Asian markets, The Nikkei Index dipped -43 points to 29,025, the Shanghai Index slipped a few points to settle at 3,568, and the Hang Seng Index rose 78 points to 25,409. In Europe, the German DAX is lower by -0.6% or nearly 100-points to drop below 15,500, while the FTSE 100 dips -0.3% to hold above the 7,200 level. U.S. stocks look to build on last week’s gains where large-cap tech names propelled the advance Friday, with shares of (AMZN) and Tesla (TSLA) each rising more than 3% on no specific news, while the SmallCap Russell 2000 underperformed, falling -0.35% as investors bailed on value stocks for growth stocks. Strong quarterly earnings from Dow component Goldman Sachs (GS) also boosted financials as investors prepare for a flood of reports next week. Shares of cryptocurrency and blockchain-related firms gained last week as bitcoin topped $60,000 for the first time since April, with expectations growing that U.S. regulators would allow a futures-based ETF.


Market Closing Prices Yesterday

·     The S&P 500 Index jumped 33.11 points, or 0.75%, to 4,471.37

·     The Dow Jones Industrial Average rose 382.20 points, or 1.09%, to 35,294.76

·     The Nasdaq Composite climbed 73.91 points, or 0.50%, to 14,897.34

·     The Russell 2000 Index declined -8.52 points, or 0.37% to 2,265.65


Events Calendar for Today

·     9:15 AM ET         Industrial Production MoM for September…est. +0.2%

·     9:15 AM ET         Capacity Utilization for September…est. 76.5%

·     10:00 AM ET      NAHB Housing Market Index for October…est. 76

·     4:00 PM ET         Net Long-term TIC Flows for August


Earnings Calendar:

·     Earnings Before the Open: ACI, GNTY, STT

·     Earnings After the Close: CFB, ELS, FBK, FNB, HXL, PACW, SFBS, STLD, ZION


Other Key Events:

·     Apple (AAPL) announces October 18th event (New MacBooks, a Mac Mini, and AirPods are anticipated)





















10-Year Note





World News

·     China’s industrial output rose +3.1% in September from a year earlier, missing expectations of up +4.5%, and slowing from 5.3% in August, official data showed. Retail sales grew +4.4% in September on-year, compared with a forecast 3.3% increase and a 2.5% rise in August. Fixed asset investment increased +7.3% in the first nine months from the same period a year earlier, missing expectations for a +7.9% rise

·     Chinese Q3 GDP missed, rising +0.2% q/q vs 0.5% consensus; +4.9% y/y vs 5.2% consensus; Chinese Q3 GDP YTD missed +9.8% y/y vs 10.1% consensus; Chinese Sep Unemployment Rate lower: 4.9% vs 5.1% consensus


Sector News Breakdown


·     Lennar (LEN) said its board increased share repurchase authorization by up to the lesser of $1 billion in purchase price, or 25 million in shares, of the outstanding Class A or Class B common stock

·     Zillow Group (ZG) is taking a break from buying U.S. homes after the online real estate giant’s pivot into tech-powered house-flipping hit a snag, Bloomberg reported saying after buying more than 3,800 homes in Q2, it will stop pursuing new home purchases as it works through a backlog of properties already in its pipeline


Energy, Industrials and Materials

·     U.S. crude oil futures closed at fresh seven-year highs last week at $82.28 for WTI crude and $8.86 for Brent as a natural gas supply crunch in Europe and optimism about demand in the U.S. continued to propel the recent rally. For the week, WTI rose 3.7% and Brent added 3%, the eighth straight weekly gain for both.

·     Occidental Petroleum (OXY) upgraded to Buy from Hold at Truist

·     Steel Dynamics (STLD) downgraded to Equal Weight from Overweight at Morgan Stanley and firm also downgraded U.S. Steel (X) to Underweight from Equal Weight

·     Virgin Galactic (SPCE) downgraded to Sell from Neutral at UBS with $15 tgt



·     Biogen Inc’s (BIIB) said a late-stage experimental treatment for an inherited form of amyotrophic lateral sclerosis (ALS) failed to reach its main goal, but secondary measures and biomarkers showed favorable trends. Tofersen is designed to suppress the production of SOD1, a protein that can accumulate to toxic levels in ALS patients with mutations in a specific gene.

·     Revance (RVNC) shares fell over -30% late Friday after the FDA declined to approve its frown line injection treatment, citing issues with the company’s manufacturing facility; o other concerns were raised by the agency

·     Avadel (AVDL) shares slide over -20% after saying the U.S. FDA notified the co that the agency is still reviewing the marketing application of its sleep disorder drug, FT218, and the decision will likely not be taken this month (prior review was expected by Oct. 15)

·     Omeros Corporation (OMER) said they received a Complete Response Letter (CRL) from the U.S. FDA regarding its Biologics License Application (BLA) for narsoplimab in the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy (HSCT-TMA).

·     PTC Therapeutics (PTCT) downgraded to Underperform from Neutral at Bank America with a $38 price target

·     Oyster Point Pharma (OYST) announced that the FDA has approved Tyrvaya Nasal Spray 0.03 mg for the treatment of the signs and symptoms of dry eye disease

·     MeiraGTx (MGTX) mentioned positively in Barron’s saying shares could more than double as the company will present its gene-regulating “switches” at next week’s conference of the European Society of Gene and Cell Therapy, and to Wall Street investors in mid-December. Notes shares have fallen from a 2019 peak of $30 to a recent $14, leaving its market cap below $600 million

·     The plan to roll out Merck & Co’s (MRK) promising antiviral pill to treat COVID-19 risks repeating the inequities of vaccine distribution, potentially leaving the nations with the greatest need once again at the back of the line, international health groups say – Reuters


Technology, Media & Telecom

·     Dell Inc. (DELL) with a positive mention in Barron’s saying the company is about to become much more attractive to investors as it prepares to spin off its valuable stake in software maker VMware (VMW) in early November, arguing that Dell will emerge with a solid balance sheet and simpler structure.

·     Netflix (NFLX) estimates that its latest megahit, “Squid Game,” will create almost $900 million in value for the company, and only cost about $21M to make. Netflix estimates that 89% of people who started the show watched at least 75 minutes – more than one episode – and 66% of viewers, or 87 million people, have finished the series in the first 23 days

·     Disney (DIS) downgraded to Equal Weight from Overweight at Barclays and cut tgt to $175 from $210

·     Members of a congressional committee questioned whether Amazon (AMZN) executives misled them during an investigation of the company’s business practices and if they may have lied under oath – WSJ reports

·     Upstart (UPST) downgraded to Underperform from Neutral at Bank America saying the LT thesis intact, but near-term upside priced in


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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