Market Review: April 18, 2022

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Closing Recap

Monday, April 18, 2022





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     U.S. stock averages were choppy, paced higher by some large cap tech (semis rebound), financials (on better BAC earnings) and energy (momentum after oil prices rise again), though NYSE breadth showed decliners leading advancers behind weakness in defensives (staples, utilities, and REITs) amid the return from the 3-day holiday weekend. Treasury prices fell as yields rose again along with another bounce in the U.S. dollar. Gold and Oil both jumped along with other commodity prices (corn, natural gas) as supply fears remain prevalent given disruption in Russia/Ukraine war. Markets in Europe and parts of Asia were closed today following holiday. Few items to watch this week (other than some big-name earnings results: JNJ, TSLA, NFLX, UNP etc. include Fed Chairman Powell speaks Thursday, the final Fed speaker before the 5/4 FOMC meeting (50bps hike expected) and Flash PMIs for April on Friday will give first look at growth/momentum this month. Volume was light and news fairly quiet on the day.

·     Stock & Sector movers: BAC leads banking stocks higher after EPS/revs beats and NII gains; comes on back of disappointing results in banking sector last week; SCHW among biggest decliners in the S&P after top/bottom line quarterly miss; SYF jumps on its earnings in consumer finance sector; ARCH CVE CRK CLR ET GPOR HAL HP HES LBRT MGY MRO MPC MTDR MUR NBR OKE SD SWN among energy names hitting 52-week highs today as oil prices resume upward momentum; natural gas producers jumped as prices hit highest since 2008; NKTR tumbles after clinical development program; TPTX drops after pulling its Ukoniq lymphoma treatment from the market in healthcare; SMH NVDA LRCX QCOM semiconductors outperform in tech following a dreadful week (SOX also down -23% YTD and over 9% in April), while CRWD SPLK TWLO ZEN software names lag in tech.


Economic Data:

·     U.S. April NAHB Housing market index 77 versus 79 in March (from 83 a year ago and down a 4th straight month); April index of current single-family home sales 85 versus revised 87 in March; Index of home sales over next six months 73 versus 70 in March; April index of prospective buyers 60 versus revised 66 in March


Commodities, Currencies & Treasuries

·     Oil prices finish at three-week highs, as WTI crude gains $1.26 or 1.18% to settle at $108.21 per barrel and Brent prices gained $1.46 to $113.16 per barrel, as prices got a lift following disruption at two Libyan ports caused by protests vs. the government, just the latest factor supporting prices (shut in anywhere from 500,000 to 800,000 bpd of crude oil). May natural gas added 52c, or 7.1%, to settle at $7.82 per million Btus, the highest finish since September 2008. Prices buoyed by ongoing concerns about tight supplies with no end in sight for Russia’s war in Ukraine.

·     Treasury yields jump again, with the 10-year hitting highs about 2.88% before paring gains, still up over 5 bps from Thursday closing prices, while the rest of the yield curve remains higher amid broad market expectations of an aggressive Fed rate hike cycle.

·     Gold prices end higher, rising $11.50 or 0.6% to settle at $1,986.40 an ounce, back near highest levels in about a month despite rising Treasury yields and another gain for the U.S. dollar. Precious metals have been strong of late as a hedge against inflation and rotation into haven assets given mkt uncertainty/recession fears.

·     Another day, another advance for the U.S. dollar, as the U.S dollar index (DXY) hits fresh two-year high of 100.85, up nearly 0.5%, while the buck hits a fresh 20-year high vs yen nearing the 127 level. The euro slips further after last week’s dovish ECB monetary policy meeting/statement. Meanwhile the FOMC remains on track with their aggressive rate hike cycle policy, with a 50-bps rate hike now widely expected for the May meeting.

·     Bitcoin prices rebound after hitting lows around $39K, rebounding to around $40,800 and Ethereum back above $3K after hitting lows around $2,900 as investors jump on beaten up prices.

·     Corn futures topped $8 a bushel for first time since 2012 on supply woes following unfavorable U.S. crop weather and the Ukraine war disrupting grain exports. Chilly weather may slow U.S. crop plantings this spring and could potentially reduce yields at harvest time in the autumn.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; GPS upgraded to Equal Weight from Underweight at Morgan Stanley saying the YTD stock decline implies the market appreciates our concerns: broader turnaround uncertainty against recent mis-execution & potentially overly optimistic 2022 EPS guidance; BBBY shares initially slipped for a 10th straight day early following earnings last week, but rebounded off lows; TPR CPRI rise early after Barclays says handbag makers are likely to see a sales boost from fewer promotions and robust luxury goods market

·     Auto sector; DIDI shares fall -20% after reports the co will hold an extraordinary general meeting on May 23 to vote on delisting its shares from the New York Stock Exchange; RIVN CEO is warning that the auto industry could soon face a looming shortage of battery supplies for electric vehicles — a challenge that he says could surpass the current computer-chip shortage, according to a report in the WSJ; APTV downgraded to Underweight at Piper saying they prefer vertically-integrated automakers (TSLA, RIVN); MULN said it will begin electric-vehicle battery pack production out of a facility in California.

·     Restaurants; WEN downgraded to Market Perform at BMO Capital and lower tgt to $22 saying against the macro backdrop of rising pressures on discretionary spending, downgrade reflects view that WEN likely is less well positioned for a tighter U.S. consumer spending environment relative to some quick service peers; RRGB was downgraded to market perform at Raymond James saying its depressed valuation is "interesting" with sales improving, but is offset by reduced industry margin visibility against an already pressured margin profile, higher than expected G&A build exiting Covid and a still levered balance sheet



·     Energy stock movers; energy stocks CTRA, VLO, MPC, HAL higher along with rising oil prices early with Russia/Ukraine situation ongoing and reports of disruption at two Libyan ports, caused by protests against the government, the latest factor supporting prices; ARCH among energy names hitting 52-week highs today as energy remains top sector YTD; natural gas prices climb to 14-year-high $7.569, up 103% YTD

·     E&P and Majors; in research, Piper updated estimates and price targets for offshore exposed SMID stocks to better reflect our higher crude price deck as new ’23 EBITDA estimates are +15% above street and may reveal further upside over time (OII, HLX, and OIS are subsector favorites while downgraded CLB); PXD downgraded to Sector Perform from Outperform at Scotiabank; CPE assumed Buy at Roth Capital; PT $80

·     Utilities & Solar; SWX announced plans to explore strategic alternatives, including a sale of the company; said its plan followed the receipt of an "indication of interest well in excess" of the $82.50-per-share cash buyout bid it received from Carl Icahn; Utility stocks normally suffer when bond yields are rising, which typically occurs when the economy is strengthening, but the current round of higher yields has helped utility shares, and Barron’s believes their run-up is not over. Today’s higher yields are a result of the Fed trying to slow economic growth, which is scaring investors into utilities; BMO said it remains positive on the longer-term prospects for residential solar companies NOVA and RUN given substantially higher power prices and rising utility rates that have still yet to fully trickle down to residential customers



·     Bank movers; BAC Q1 EPS $0.80 vs. est. $0.74; Q1 revs $23.2B vs. est. $23.1B; Q1 provision for credit losses included $362M net reserve release, driven mainly by asset quality improvement, offset by reserve build for Russian exposure, loan growth; Q1 global market sales trading revs fell -7% to $4.7B, global markets revs down 15% to $5.29B; BK Q1 EPS $0.86 vs. est. $0.85; Q1 revs $3.93B vs. est. $3.97B; net interest revenue increased 7% to $698 million from $655 million a year earlier, reflecting higher interest rates on interest-earning assets; Provision for credit losses was $2 million, vs. a benefit of $83 million in the prior-year quarter; SCHW posted EPS mis at $0.77 vs. est. $0.84 on light revs $4.67B vs. est. $4.81B

·     Insurance; PGR was downgraded at Piper to Underweight as think stock reflects too much optimism about how fast rising auto insurance prices will improve PGR’s profits. We anticipate PGR will miss future earnings expectations

·     Bitcoin, FinTech & Payments; Bitcoin prices dropped to lowest level in a month, below $39K before rebounding/paring losses while Ethereum prices fall over 3.5% to $2,900. Bitcoin is -13.7% for the month of April and -16.4% year-to-date. Bitcoin is not the only crypto asset to dip in Monday’s early trading, other prominent cryptos have also drifted into negative territory as well.

·     Consumer Finance; in earnings, SYF profit rises as EPS beat by about $0.19 while also approves share buyback program of up to $2.8B; in monthly Master Trust c/c data: BAC delinquency rate for March slipped to 0.93% from 0.95% in February; net charge-off rate of 1.38% increased from 1.26% in February and compared with 3.17% in the year-ago month; Citi (C) credit card net charge-off for March increased to 1.23% from 1.12% in February, still below 2.49% in March 2021; delinquency rate of 0.87% edged up from 0.85% in February and compared with 1.26% in the same month a year ago; DFS credit card delinquency rate 1.09% at March end vs 1.10% at February end; credit card charge-off rate 1.08% at March end vs 1.20% at February end; JPM March credit card delinquency rate of 0.71% was little changed from 0.72% in February and stays well below the 0.89% rate in March 2021; net charge-off rate of 1.09% in March 2022, rose slightly from 1.04% in February and compares with 2.03% y/y

·     REITs; in research, MAC downgraded to UW from Neutral and lowering our price target to $14 from $18 at Piper, dropping our 2022 target multiple to ~7x from ~9x saying rising interest rates and underwriters increasingly critical in their underwriting of all but A+/A malls mean that MAC likely faces higher interest expense; NMRK downgraded to Neutral from OW at Piper and lowering price target to $15 from $20, as believe NMRK’s transactional verticals, including its debt capital markets, are likely to see headwinds if the economy slows as the Fed raises rates



·     Pharma movers; cannabis names slip early after Senate Majority Leader Chuck Schumer is delaying the release of his revised cannabis legalization bill until July (was previously expected this month); TGTX shares fall after pulling its Ukoniq lymphoma treatment from the market after a study showed a possible increased risk of death in patients taking the drug; OCGN amends agreement with its Indian partner, Bharat Biotech, to expand commercialization rights of their COVID-19 vaccine Covaxin to Mexico; RXRX downgraded to Neutral from Buy at Bank America

·     Biotech movers; BIIB upgraded to Overweight from Equal Weight at Wells Fargo with a price target of $265 from $235 as believes the company’s base-business may be worth more than what Street thinks and sees value at $180-$200/share in sum-of-the-parts scenario; NKTR tumbles after the co and BMY said are ending a clinical development program for bempegaldesleukin in combination with Opdivo, based on the results of a late-stage study; BGNE said the China National Medical Products Administration has granted approval to its anti-PD-1 antibody, tislelizumab; ESPR files for mixed shelf of up to $400 mln; vaccine stocks MRNA, PFE decline following broader pullback in biotech

·     MedTech Equipment; NTUS said it will be bought by an affiliate of ArchiMed, a healthcare-focused investment firm, for about $1.2B with shareholders to receive $33.50 per share in cash, which represents a premium of 28.6% to NTUS’ last closing price; BDX filed an 8K late Thursday post close indicating its Embecta spinoff was not as accretive as previously expected


Industrials & Materials

·     Industrials, Aerospace & Defense; BA shares active after China Eastern Airlines Corp Ltd resumes Boeing 737-800 usage for commercial flights less than a month since a crash killed 132 people and led the company to ground 223 of the aircraft; in the agricultural sector, DE, AGCO, CNHI early gainers as corn hits $8 a bushel for first time since 2012 on supply woes

·     Transports; airlines UBS upgraded shares of DAL to Buy from Neutral and raise tgt to $53 from $44 saying the implied 12% improvement in TRASM in 2Q22 vs. 2Q19 is well ahead of the mid-SD they thought possible, while downgraded UAL to Neutral saying the operational picture could be less smoot; FWRD guides Q1 above views as sees EPS $1.52-$1.61 above ests $1.21 and revs $$453M-$481M vs. est. $445.6M; FDX mentioned positively in Barron’s noting its share price has changed little over the past five years, badly trailing the S&P 500, but with a new CEO set to take over for founder Fred Smith on June 1, and with a focus on improving its ground business, the company could catch up to rival UPS; Oppenheimer noted via a Form 4 filing after the 4/14 close, XPO founder, chairman of the board and CEO Brad Jacobs sold 5.447M shares of XPO on 4/13/22. The sale represents approximately half of his remaining ownership position in the company.

·     Metals & Materials; industrial metals were mixed heading into earnings season; chemicals active as AXTA downgraded to Hold from Buy at Deutsche Bank and lowers target to $27 as believe Q2 and ’22 consensus estimates for Axalta are too high given persistent raw material inflation and supply chain constraints; the firm upgraded FUL to Buy from Hold after investor meeting last week reinforced view that Fuller has slowly but steadily become the world’s best adhesives company with more to go on growth, margins, and earnings; gold and silver miners saw strength early GOLD as precious metal prices rose.

Technology, Media & Telecom

·     Semiconductors: strength early in the Philly semi-index (SOX) after tumbling the week prior as investors added to weakness; QCOM downgraded to Neutral from Outperform, lowering estimates, and lowering price Target from $215 to $155 at SMBC Nikko as struggle to find many positive catalysts in the next 6-12 months, noting concerns regarding smartphone demand and supply chain disruptions; strength in equipment names early AMAT

·     Software movers: group was generally weaker, underperforming other tech stocks with CRWD lower; CRWD, OKTA, and PANW named top picks in cyber security at Oppenheimer this morning saying bullish stance on CrowdStrike reflects its growing "best-of-platform" leverage and ability to drive growth for its cloud, identity, and XDR security modules. For Okta, see a large growth opportunity as it gains CIAM share and leverages an expanding identity portfolio (IGA in beta, PAM in 2HCY22). And we’re positive on Palo Alto, viewing it as well positioned to deliver a fully integrated, end-to-end security platform

·     Hardware, Components & Services; CASA shares jump after saying VZ will buy about $40 million worth of shares, taking a nearly 10% stake in the company and said it has also received a multi-year contract from Verizon in which it will provide its 5G Core Network Functions to Verizon.

·     Internet, Media & Telecom movers; FB said expanding Instagram product tagging to everyone in U.S. (weighed on shares of PINS); SIRI downgraded to Underweight from Equal Weight at Morgan Stanley with a $7 price target noting shares, taking a cautious outlook as sees rising risk to self-pay net additions because of macro headwinds in the auto market; RDBX downgraded to Neutral from Buy at BTIG in the wake of the company’s 10-K and 8-K filings last Friday as operating results were shy of our recently lowered estimates, especially on the Digital side where revenue came in $10.8MM vs. our $16.0MM estimate; VZ raises the minimum wage for new employees to $20 an hour for customer service, and $20 an hour–when base salary plus target commission are combined–for its retail and inside sales employees.


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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