Market Review: August 16, 2021

Auto PostDaily Market Report

Closing Recap

Monday, August 16, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Another remarkable rally on Wall Street as major averages trade to new all-time highs this afternoon, with the S&P extending the rally from pandemic bottom to 100%. The S&P 500 touched a new record after falling over -0.7% earlier despite overall market breadth remaining negative (market internals remain worse than broader stock market picture as large cap giants boost the indexes). The Nasdaq Composite rebounded more than 170 points off the 14,610 morning lows, led by recovery in large cap tech (AAPL). The continued momentum of buying markets on any dip proves right again this morning ahead of tomorrow’s town hall event by Fed Chair Jerome Powell where they’ll be looking for clues as to whether recent economic data is sufficient progress for the central bank to consider tapering stimulus. It has now been roughly 200 days since the S&P 500 index has seen a pullback of over 5% from its all-time highs, an impressive feat. Earnings for large cap retail names take center stage tomorrow morning with Wal-Mart and Home Depot results upcoming. With today’s close, the S&P posted its 49th record close of the year, the 5th most in a year (with 4.5 months), with the record 77 record highs in 1995.

·     Stocks opened lower initially and dropped further amid weak economic data (industrial production, retail sales) in China, sparking fears of slowing global growth (more economically sensitive sectors were hit the hardest, i.e., consumer discretionary. energy, financials, and materials were among the weakest). Economic data in the U.S. also disappoints as the New York Empire Manufacturing current business conditions index down at 18.3 in August from 43.0 in July (which followed a sharp decline in consumer confidence on Friday to lowest levels since 2011). The rising Covid-variant cases also adding to market concerns as well with the “reopen” names such as cruise lines, airlines, restaurants, retailers getting sold – before rebounding.

·     Stock/sector movers: TSLA sinks after the U.S. NHTSA opened a formal investigation into its autopilot system and NIO drops after a car crash with its driver assistance program turned on; SONO spikes after winning the first round of its patent case against GOOGL and a Jefferies upgrade as the ruling validates the company’s portfolio; OTLY opens strong despite a Q2 miss as its full-year guidance was above estimates, though shares give up gains throughout the day; JPM, GS, AXP among the worst decliners in the Dow as financial names were weak as bond yields fell again; energy stocks FANG, APA, MRO, PSX, HAL underperform as oil prices fall; CPB, KR, WMT rise as S&P 500 consumer staples sector index hits record high amid rotation into defensive.

·     European stocks snapped their 10-day win streak (for the Stoxx 600) following a surprise slowdown in China’s economic indicators, with commodity-linked stocks falling the most. Travel and Leisure also among decliners as the fast-spreading Delta variant of COVID-19 remained a concern, particularly as many Asian economies-imposed movement restrictions.


Economic Data:

·     New York Empire Manufacturing current business conditions index down at 18.3 in August from 43.0 in July and below consensus of 29.0; the new orders index 14.8 in august vs 33.2 in July, the prices paid index 76.1 in august vs 76.8 in July and employment index at 12.8 in august vs 20.6 in July; the six-month business conditions index 46.5 in august vs 39.5 in July


Commodities, Currencies & Treasuries

·     Oil prices slide for a third straight day as WTI crude slides -$1.15 or 1.68% to settle at $67.29 per barrel, but well off the session lows of $65.73 after official data showed that refining throughput and economic activity slowed in China (world’s number one oil importer).

·     Gold prices rise +$11.60 to settle at $1,789.80 an ounce (highest levels in over a week), getting a boost on Treasury yield roll and rotation into defensive assets as stocks sold off initially (pared gains as stocks bounce off lows).

·     Bitcoin prices pullback to around $46K after hitting 3-month highs this weekend ($48,200), sliding as overall risk taking unwind pressured prices – the 200-DMA (45.41k) with resistance higher, May 16’s 49.8k level and the 50k psychological level, and May 13’s 54.8K.

·     Treasury yields fall following weaker economic data as NY manufacturing comes in well below consensus and prior month reading – follows weak University of Michigan confidence data last Friday as well which weighed on Treasury yields; 10-yr bottoms around 1.22% before bounce.






WTI Crude















10-Year Note





Sector News Breakdown


·     Auto sector; TSLA shares slide after the U.S. National Highway Traffic Safety Administration (NHTSA) opens formal safety probe into TSLA’s driver assistance system, Autopilot, after a series of crashes. The auto safety regulator says it opened a preliminary evaluation of Autopilot in 2014-2021 TSLA models Y, X, S, and 3; NIO shares slide following several reports of a fatal accident involving the company’s self-driving features – fatal crash took place this past week in China and involved the company’s ES8 sport-utility vehicle

·     Housing & Building Products; JELD said its largest shareholder, Onex Corp. is selling off nearly half its stake in the building products company (14.88M shares priced at $28.75 of its 32.1M disclosed stake), equating to about 15% of the shares outstanding, with the company planning to buying back close to half of the shares being sold; RH price tgt raised to $850 from $750 at Cowen, calling it their pick into 2Q given high-end home strength, large backlog, luxury positioning with inelastic demand, and positive sentiment ahead of Intl. openings; Raymond James said home and land improvement retailers (HD) are clearly facing tough comparisons for the remainder of 2021, but valuation levels have come back down some relative to this spring

·     Consumer Staples & Restaurants; defensive staples such as WMT, KR, CPB, CLX among the top S&P gainers in a rotation out of growth names this morning; OTLY posted Q2 results mostly in-line with estimates (53.3% increase in quarterly revs to $146.2M vs. est. $147.2M) while it forecast full-year revenue ahead of analysts’ estimates citing solid demand for vegan milk alternatives; CMG was downgraded to Outperform from Strong Buy at Raymond James due entirely to valuation following the stock’s 37% gain in the past six weeks as raising price target to $2,025, offering upside of ~7.5% from current levels: LWAY says Q2 net sales increased 16.6% from a year earlier to $29.2M; HNST downgraded to Equal-Weight from Overweight, price target $11 at Morgan Stanley while Guggenheim upgraded to Buy after pullback with $14 tgt

·     Casinos, Gaming, Lodging & Leisure sector; PLNT was upgraded to Buy with $100 tgt at Roth Capital as see potential for new revenue streams and/or increased pricing to further leverage COVID normalization; in lodging, VAC positive mention in Barron’s saying one of the top companies in the timeshare industry with high exposure to Hawaii and Orlando, could produce 20% annual returns for shareholders in the coming years; Hyatt Hotels (H) announced that it has entered into a definitive agreement to acquire Apple Leisure Group from affiliates of each of KKR (KKR) and KSL Capital Partners for $2.7 billion in cash



·     Energy stock movers; oil stocks tumble as WTI crude touches 15-month lows below $67 per barrel after official data showed that refining throughput and economic activity slowed in China in an indication that COVID-19 outbreaks are crimping the world’s second-largest economy. China’s economic activity slowed more than expected last month. Citigroup said they believe the recent pull-back in E&P stocks, which has been ~2x the pull-back in crude, presents an opportunity and we remain bullish on the group (top picks DVN, FANG, PXD, and PDCE)

·     Utilities & Solar; S&P utility sector outperforms, as investors rotate into defensive related names given pullback in growth names; PCG was upgraded to Outperform at RBC Capital with $14 tgt saying while remains a risky investment within a utility context due to ongoing concerns with wildfires, they think that the risk/reward is currently skewed to the upside



·     Bitcoin, FinTech & Payments; Bitcoin prices pullback to around $46K after hitting 3-month highs this weekend ($48,200), sliding as overall risk taking unwind pressured prices – the 200-DMA (45.41k) with resistance higher, May 16’s 49.8k level and the 50k psychological level, and May 13’s 54.8K – Bitcoin leveraged names (COIN, BTBT, NCTY, SI, SQ, RIOT, MARA, MSTR) fell after opening mostly higher (but rebounded into the afternoon)

·     Financial services; JRJC tumbles after the financial news, market data & information co. for Chinese audiences announced after the close on Friday that they would be delisted from Nasdaq; ADP was downgraded to Neutral from Outperform at Credit Suisse but maintain $215 target saying the fundamental thesis has not changed but believe there is limited upside potential as the stock has reached our target price and hovers around all-time highs

·     Consumer Finance & Lending; monthly credit card data out today: BAC credit card delinquency rate was 0.92% at July end vs 0.97% at June end and credit card charge-off rate was 1.59% in July vs 1.74% in June; ADS said July net charge-offs as a percentage of average receivables dropped to 4.2% from 4.8% in June and 5.2% in May 2020 and that the delinquency rate of 3.4% rises from 3.3% in May but declines from 4.7% a year ago; COF July net-charge offs were 1.45% vs. 2.1% at end of June and compared to 3.82% YoY and delinquencies 1.71% vs. 1.68% at end of June and compared to 2.44% YoY; SYF reported charge-offs for July of 2.24%while July delinquencies 1.37%; UWMC 2Q results that missed estimates.



·     Vaccine news; PFE and BNTX announced that they have submitted Phase 1 data to the U.S. FDA to support the evaluation of a third, or booster dose of the companies’ COVID-19 vaccine (BNT162b2) for future licensure. These data also will be submitted to the European Medicines Agency (EMA) and other regulatory authorities in the coming weeks; overall vaccine related plays (MRNA, NVAX, BNTX) extend last week losses

·     Pharma movers; FDA approved an expanded label for LLY’s rapid-acting insulin, Lyumjev 100 units/mL indicated to improve glycemic control in adults with type 1 and type 2 diabetes, to include administration via continuous subcutaneous insulin infusion with an insulin pump; ENLV rises after obtaining authorization from Israel’s ministry of health to initiate a clinical trial evaluating the safety and effectiveness of its Allocetra therapy on Covid-19 patients; RCKT announces FDA lifts clinical hold on Danon Disease trial of RP-A501; TVTX announces positive topline interim results from the ongoing phase 3 protect study of sparsentan in IGA nephropathy; EWTX receives fast track designation for EDG-5506 for the treatment of individuals with Becker Muscular Dystrophy; TEVA loses bid to revive 3 migraine patents challenged by LLY

·     Biotech movers; MRNA said its MRNA-3705 granted orphan drug and rare pediatric disease designation by the U.S. FDA; CVAC second-generation COVID-19 vaccine candidate, jointly developed with GSK, shows improved immune response and protection against the virus in preclinical study in cynomolgus macaques; SESN downgraded to Neutral from Buy at HC Wainwright following the sharp decline on Friday August 13, after the company announced that the company received a Complete Response Letter from the FDA regarding the Biologics License Application for Vicineum (oportuzumab monatox-qqrs) for the treatment of BCG-unresponsive non-muscle invasive bladder cancer

·     Healthcare Services; WBA introduced the new myWalgreens Credit Card program, featuring two industry-first retail health and wellness credit cards, issued by Synchrony Bank (SYF); defensive healthcare service names and hospitals (UHS, THC) saw strength early when major averages were broadly lower


Industrials & Materials

·     Transports; Dow Transports holding steadily higher most of the morning, though still holding below the 15K level (all-time highs remains 16,170 on May 10th). The Baltic Dry Index, which tracks rates for ships carrying dry bulk commodities, jumped to its highest in over a decade on Monday, powered by rising demand across vessel segments. The overall index, which factors in rates for Capesize, panamax, Supramax and handysize shipping vessels, jumped about 3% or 103 points at 3,606, the highest level since mid-2010. The Capesize index rose 244 points, or 5.3%, to 4,852, a peak since May 11.


Technology, Media & Telecom

·     Semiconductors; only a handful of names, but big ones in the semiconductor space reporting this week with NVDA on Wednesday night and semi-equipment maker AMAT late Thursday; STX was upgraded from Neutral to Buy with $105 tgt at UBS as they expect STX to benefit from structural changes under way in the HDD segment

·     Hardware, Components & Services; SONO rises as the U.S. International Trade Commission (ITC) issued a decision on a case involving GOOGL – SONO won the first round of its patent case against GOOGL while Jefferies upgraded to Buy and raised tgt to $50 saying ruling validates strength of Sonos’ patent portfolio; PING prices 6 mln shares by selling shareholders at $23.85 per share


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.

Live Trading

Open an Account

Paper Trading