Market Review: August 09, 2021

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Closing Recap

Monday, August 09, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Stocks finish mixed as the Nasdaq posts for its 5th positive day in the last six, while the S&P 500 index ends little changed following its 44th record high last week. Commodities tumbled as investors weighed concerns about a pullback in stimulus and a resurgence in the fast-spreading delta virus variant, with gold and oil prices lower, while investors piled into crypto assets with Bitcoin and Ethereum prices jumping. Vaccine stocks extend gains (MRNA, BNTX, NVAX) while Reuters reported the Pentagon expected to seek President Biden’s approval to make covid-19 vaccines mandatory no later than mid-september -citing U.S. officials. In European trading the moves were modest as the Stoxx Europe 66 closed +0.2% (but finished at record highs), while Germany’s DAX slipped 0.1%, U.K.’s FTSE 100 edged up 0.1%, and France’s CAC 40 -0.1%. Markets also prepare for key inflation data (CPI, PPI) later this week.

·     Stocks/sector movers: Chicken space strong after SAFM agrees to sell itself for $4.5B ($203/share vs Fri close $182.37) and TSN posts a strong quarter and raises full-year guidance; MRNA, BNTX, NVAX each jump over 10% as vaccine names outperform again after Switzerland approves Moderna’s vaccine for 12–17-year-olds, BNTX posts an earnings beat; Energy stocks FANG, APA, CVX, MRO fade as crude prices slide to their lowest since June on demand concerns with rising Covid cases and China halting operations at key ports due to a typhoon; GNOG surges after being acquired by DKNG in a $1.56B all-stock deal; TSLA rises after Jefferies upgraded it to Buy and DRI slumps after Evercore downgraded to In-Line; some earnings decliners include APD as the worst performer in the S&P after its miss, TTD sliding despite a beat, and BLUE plummeting to 7-yr lows after its revenue come in at less than half of the consensus expectation and the FDA places a clinical hold on its eli-cel program due to a safety event in its Ph3 trial; COIN, MARA spike to their highest prices since May, RIOT hits its highest in over a month, MSTR, SI touch their highest since April as the crypto space rallies with Bitcoin rebounding to its highest price since May as well and Ethereum tops $3k for the 1st time for the 1st time since May as well.

·     As per Goldman Sachs, Friday marked the 44th all-time-high close for the S&P so far this year – good for one new “all-time high” every ~3.5 trading days so far this year and on pace for the most ATHs since 1995 (77x in that year). The S&P 500 is now up ~17% on the year thru the first week of Aug, which has happened only 16x since 1928 and the median return for the balance of the year on the prior 16 instances was an additional +3.31% for the balance of the year.

·     Crypto assets surge on technical buying as Bitcoin tops $46,000 (200-MDA was around $45K), its highest levels since mid-May as Ethereum jumps over 8% topping $3,150 while commodity prices get crushed (note Bitcoin prices are up over 55% in the last 20-days as per Bespoke). JOLTS Job Openings coming in at 10.073M, topping the forecast 9.27M, and prior month reading of 9.209M (first time ever job openings topped 10m).

·     In Washington, Infrastructure deal cleared its final serious Senate hurdle over the weekend as the Senate voted 69 to 28 [includes 48 Democrats and 19 Republicans] to support the compromise provisions related to the $1.0T infrastructure proposal. A bunch of proposed amendments were left in limbo.



·     Gold prices extend losses, down another 2.1% to settle at $1,726.50 an ounce, and falling to fresh 4-month lows after strong U.S. jobs data on Friday raised expectations for an early tapering of the Federal Reserve’s economic support measures, lifting Treasury yields and the dollar. Since Thursday’s close, gold prices are down about 4.5% while silver prices tumbled to its lowest in more than eight months, at $22.50 per ounce before paring losses.

·     Oil prices tumble as WTI crude ends lower by -$1/80 or 2.64% to settle at $66.48 per barrel, touching its lowest levels since June earlier ($65.15) as worries about the COVID Delta variant’s impact on global growth increased. Goldman Sachs also cut its forecast for China Q3 and full year GDP but does expect the government to bring the outbreak under control in about a month. Also, China’s crude imports slipped to the lowest since May last month after operations were halted at key ports on the east coast due to a typhoon.


Currencies & Treasuries

·     U.S. Treasury yields edged higher (best in 3-weeks), with the 10-year yield touching highs around 1.32% (after hitting 6-month lows around 1.13% earlier last week) ahead of U.S. inflation data later this week (CPI 8/11, PPI 8/12) and $126 billion in new supply later this week. On Friday, Treasury yields climbed to a two-week high after July’s strong employment report was seen as moving the U.S. Fed closer to a policy decision on unwinding stimulus measures put into place last year. Another round of sharply higher inflation data this week “could” push yields even further – though recall yields declined last month despite “hotter” inflation readings. In June, consumer prices increased 0.9%, the largest gain in 13 years, after advancing 0.6% in May. In the 12 months through June, the CPI jumped 5.4%, the largest increase since August 2008. The U.S. Treasury plans to auction $58 billion of three-year notes on Tuesday, $41 billion of 10-year notes on Wednesday and $27 billion of 30-year bonds on Thursday. The dollar, after an early pullback on covid concerns added to Friday gains, sending Treasury yields higher. The euro fell 0.2% to its lowest level since April, breaking Friday, and July’s lows at 1.17545, with only a modest further distance to fall to reach March’s 1.1704 low of the year.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; KSS rolled out the Sephora shop within Kohl’s stores on Friday with several analysts attending and 5 have positive comments on the Sephora – Bank America said think this rollout can add 200bp to 2H comps and over time can be 15% accretive to EPS, without taking any cross-shopping into consideration; DLTR downgraded from Buy to Hold at Deutsche Bank and lowering our PT to $102 from $129, as now see more balanced risk/reward, especially with renewed concerns around building inflationary pressures; ENR Q2 EPS of $0.74 topped the $0.67 estimate on better revs $721.8M vs. est. $661M and posts organic growth +5.8% vs consensus (1.6%)

·     Auto sector; TSLA upgraded to Buy from Hold at Jefferies and up tgt to $850 from $700 as sees higher global battery electric demand, more battery and assembly capacity coming on stream, a broader and mix-accretive model line-up with more Model Ys and the new S and no legacy issues to contend with; UBER announces proposed $1.5 billion senior notes offering; VNE said its board has determined that QCOM’s proposal to acquire the company would reasonably be expected to result in a "Superior Proposal"; RIDE slips early after WKHS discloses that it sold 72% of its RIDE ownership shares and is expecting proceeds of nearly $79M from the sale of the 11.9M shares; EV charging stations BLNK and CHPT shares spiked this afternoon after Reuters reported 28 U.S. house democrats urge congress to spend $85 billion on electric vehicle charging infrastructure

·     Housing & Building Products; ZG upgraded to Buy from Hold at Zelman stating that cyclical risks are better reflected now in the stock price; SPB mentioned positively in Barron’s, calling it an undervalued stock that lets investors bet on multiple Covid-era trends at once. It has the defensive characteristics of a consumer- staples brand and its debt problems appear to be easing; HVT new $25M share repurchase program

·     Consumer Staples; Cargill and Continental Grain Company to acquire SAFM for $203 per share in cash in an all-cash transaction valued at $4.5B ; TSN Q3 sales of $12.48B tops the $11.5B estimate and raises 2021 sales forecast to $46B-$47B from $44B-$46B prior saying it benefited from strong demand for its beef products after restaurants and hotels resumed businesses across the country; USFD Q2 EPS $0.58 vs. est. $0.34 and revs $7.66B vs. est. $6.94B, while EBITDA $332M vs. est. $249.2M; total case volume +53.5%

·     Restaurants; Evercore/ISI said following recent TXRH earnings and follow up discussions with industry friends (restaurant operators and protein suppliers), the firm lowers calendar 2022 restaurant margins, EPS estimates and price tgt for both EAT and DRI and downgraded DRI

·     Leisure and Lodging; NCLH received a preliminary injunction to operate cruises from Florida with 100% vaccinated guests and crew; for movie theatres (CNK, AMC, IMAX), the WSJ cautious saying that even though movie theaters are reporting explosive y/y increases thanks to easy comparisons, they’re down significantly vs 2019

·     Casinos & Gaming; busy sector as DKNG entered an agreement to acquire Golden Nugget Online Gaming Inc. (GNOG) in an all-stock deal valued at about $1.56 billion. As part of deal, DKNG to form a new holding co called New DraftKings, which will be the going-forward public firm. GNOG shareholders will receive 0.365 shares of New DraftKings’ stock for each share held ; SGMS reported Q2 revenue $880M, topping the $765M estimate with strong sequential growth across all businesses; BALY Q2 adj EPS $0.48 vs. est. $0.46; Q2 revs $267.7M vs. est. $225.3M; in research, Bank America upgraded CZR to Buy and downgraded WYNN to neutral saying the heart of these moves are 1) recent data, 2) catalyst paths ahead and 3) the backdrop for longer-term growth, which we think favors domestic and Digital gaming over Macau and international exposures.



·     Energy stock movers; following the more than 3% decline in oil prices lowest levels since June, shares of major oil companies, along with services, E&P and equipment names saw pressure as worries about the COVID Delta variant’s impact on global growth increases. Goldman Sachs cut its forecast for China Q3 and full year GDP but does expect the government to bring the outbreak under control in about a month.

·     E&P and Majors; VNOM entered into a definitive purchase and sale agreement to acquire certain mineral and royalty interests from Swallowtail Royalties LLC and Swallowtail Royalties II LLC in exchange for 15.25 million units of Viper common stock and $225 million of cash

·     MLPs & Pipelines: GLP downgraded to Underweight at Barclays as prefer refined products levered MLP peers with less volatile cash flows. GLP’s volumes have recovered along with the improved macro backdrop, but GLP’s earnings are sensitive to both commodity price movements as well as changes in the shape of the forward curve



·     Bank movers; large cap banks (GS, JPM, WFC, C) and regional banks (KRE) saw upward momentum late morning, about the same time that Treasury yields saw a push higher, adding strength after several Fed members (Clarida, Kaplan) calls for a faster bond asset purchase tapering following the better monthly jobs report; HBAN announces launch of private offering of subordinated notes

·     Bitcoin, FinTech & Payments; names leveraged to crypto related assets such as Bitcoin, Ethereum, and others outperformed as prices jumped across the board. Bitcoin topped its 200-day MA of $45K, as prices jumped over 7% to its best levels since mid-May around $46K, while Ethereum prices spike over 8% to $3,150. Shares of Bitcoin related miners such as RIOT, MARA, as well as Bitcoin bank SI, investors suck as OSTK, MSTR and COIN all saw massive surges.



·     Pharma movers; SGEN and REGMY entered into an exclusive worldwide licensing agreement to develop and commercialize disitamab vedotin, a novel HER2-targeted antibody-drug conjugate, in a deal which could be worth as much as $2.6B; ALNY completes enrollment in HELIOS-B phase 3 study of investigational vutrisiran in patients with transthyretin-mediated (ATTR) amyloidosis with cardiomyopathy; BNTX posts Q2 results and FY forecast – said expects 15.9 bln euros in revenue from the vaccine in 2021, up from a May forecast of 12.4 bln euros; ELAN posted Q2 results above consensus while lowered its FY adj EPS guidance to $0.97-$1.03 (from $1.00-$1.06), with dilution from its KindredBio acquisition, higher logistics costs and inflationary pressures; ETON slips as its antiepileptic topiramate oral solution FDA action date has been delayed three months to November 6, 2021, according to an SEC filing after a decision was expected on Friday

·     Biotech movers; NVTA rises on a late Friday Bloomberg report that EXAS approached the company about a possible merger, while saying the companies are not in active talks, and if a deal materializes, it could be an all-stock deal with a low premium ; AXSM shares tumble over 40% as announces AXS-05 Achieves Primary and Key Secondary Endpoints in the MERIT Phase 2 Trial in Treatment Resistant Depression, but said FDA identifies deficiencies that preclude labeling discussions for major depressive disorder treatment – Recall the company has an 8/22/21 PDUFA date for AXS-05; EDIT upgrade from Hold to Buy with $80 tgt (up from $55) at Truist in CRISPER space as think co is poised to close the valuation gap to its peers over the next 12 to 18 months; EPZM announces a deal with Hutchmed China to develop Tazverik, but shares slide after earnings and CEO succession plan; DARE said the FDA granted priority review to the company’s NDA for DARE-BV1 for the treatment of bacterial vaginosis; ITCI posted Q2 EPS loss (-$0.85) vs. est. loss (-$0.80); Q2 revs $20M vs. est. $19M and says Bipolar Depression launch preparations are on track; MRNA rises after the company’s COVID-19 vaccine granted a provisional authorization in Australia to adults who are at least 18 years old.

·     Healthcare Services; for CI Raymond James reiterate Strong Buy rating while decreasing our price target to $275 (-$42) after increased COVID-related costs drove MCR above management targets and added uncertainty to a return to more normalized cost levels for 2022


Industrials & Materials

·     Industrial & Machinery; HVAC stocks CARR, LII, TT and JCI have all reported strong calendar Q2 earnings and are up an average of more than 40% this year, according to Barron’s. Article notes the HVAC business is rapidly becoming one of the most consistent end markets in the industrial universe, and it’s also becoming an important ESG play; TT was downgraded to underweight at JPMorgan as think the standing valuation embeds a growth forecast we think will prove optimistic, around which we see downside potential

·     Transports; Dow Transports pressured, led by weakness in airlines, though nearly all components in the index are lower; in trucking, WERN and MRTN both downgraded to sector weight from overweight at Keybanc saying they expect a robust, elongated truckload and intermodal fall peak supported by elevated import activity and lean inventories – shift preference to names with idiosyncratic growth catalysts such as KNX, JBHT, SNDR, HUBG;

·     Chemicals & Materials; APD shares slide on EPS miss as Q3 adj EPS $2.31 vs. est. $2.36; Q3 revs $2.6B vs. est. $2.49B; sees Q4 adj EPS $2.44-$2.54 vs. est. $2.51; SON implemented a $70 per ton price increase for all grades of uncoated recycled paperboard (URB) in the United States and Canada, effective with shipments beginning September 7, 2021; IPI announced an $80/ton increase to Ag potash price at all locations and for all product grades. Intrepid is now posted at $200/ton above the 2021 summer-fill price levels announced in May 2021; FTSI upgraded to Buy with $32 tgt at Stifel saying the co emerged from bankruptcy in late November 2020 with solid assets, a track record of execution, and a strong balance sheet and is too cheap to ignore


Technology, Media & Telecom

·     Semiconductors & Internet; relatively quiet news for two of the more volatile sectors, with most earnings behind them; TTD Q2 revs $280M vs. est. $261.1M; sees Q3 revs at least $282M vs. est. $274.5M; Q2 EPS non-GAAP EPS $0.18 vs. est. $0.13; AMD upgraded to market perform from underperform at BMO Capital saying that its view toward consensus earnings estimates for the chipmaker in 2022 had proven to be overly pessimistic

·     Software movers; ATVI downgraded to Hold from Buy at Argus saying they expect the allegations and the Wilmer Hale investigation to result in more bad news for Activision, along with some type of financial settlement with current and former employees and California authorities; ZI slides holders including funds affiliated with TA, Carlyle, 22C and an entity affiliated with ZoomInfo’s co-founders sold 20M share Spot Secondary priced at $63.00

·     Media & Telecom movers; DISH Q2 EPS $1.06 vs. est. $0.89; Q2 revs $4.49B vs. est. $4.43B; Q2 Net Pay-TV subscribers decreased approximately 67,000, compared to a net decrease of approximately 96,000 in the year-ago quarter; closed the quarter with 10.99M Pay-TV subscribers, including 8.55M DISH TV subscribers and 2.44M SLING TV subscribers; CBB rises after the California Public Utilities Commission recommended approving its $2.9B sale to Macquarie Infrastructure Partners; AVYA dropped after the company posted solid June quarter results, but offered a less upbeat outlook for the current three months than expected; TGNA Q2 adj Ebitda $227.7M rose +83% YoY above ests $222.6M on better revs $732.9M and EPS


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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