Market Review: December 08, 2021

Auto PostDaily Market Report

Closing Recap

Wednesday, December 08, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Stocks continue to amaze and defy as less than two weeks after the spread of a new coronavirus variant weighed on global stock markets, it’s almost as if Omicron never happened with the S&P 500 rebounding to pre-Thanksgiving level, moving within 40-points of its intraday all-time highs while the Smallcap Russell 2000 and Nasdaq Composite outperform. Its notable that the S&P 500 (SPX) has failed around the 4,700 level four times since November (11/8, 11/16, 11/18, 11/24 all around that level), and again so today, closing just above it (seems like tough resistance level). Reopen stocks among the best S&P 500 performers with cruise lines (CCL, NCLH), casinos (WYNN, LVS), airlines, hotels, and theme parks jumping for a second day, as headlines from Pfizer (PFE) that data showed three vaccine doses neutralize Omicron variant was enough to rally markets a third day. U.S. stocks struggled for direction the first part of the trading day before rising as Biotech, Smallcaps and tech led. Risks to the stock market (now with a few % points from record highs despite the prior pullback) remains earlier-than-anticipated interest rate hikes next year and expectations of a potentially more-aggressive U.S. Federal Reserve which could slow economic growth. Key inflation data (CPI) later this week which could shake up markets as well as the final FOMC meeting of the year next week (expected hawkish tone following Powell reversal last week). Apple (AAPL) again leading tech, setting another record!

·     Stock and Sector movers: NCLH, CCL, RCL, LVS, UAL, MTCH, EXPE, LYV, CZR, ALK among reopen plays leading the S&P after PFE, BNTX said three doses of their vaccine neutralizes the Omicron variant; SFIX plunges to lowest levels since May 2020 after lowering its full-year guidance, VRA plummets to lowest levels since January after its quarterly miss and lowered guidance, CASY also touches lowest since January on its miss, LOVE soars on its qtrly profit despite an expected loss and beat on revs, comp sales in retail earnings; in staples, BF.B slips as its quarterly miss overshadows its raised guidance and CPB green on its EPS beat; grocers ACI, KR tumble on improving vaccine news; TOL hits record highs, PLAY jumps after both reported strong quarters; CHPT falls after a wider-than-expected loss; ROKU surges after touching 52-week lows earlier this week after they signed a multi-year extension with GOOGL for YouTube, YouTube TV.



·     Oil prices rebound off earlier lows (of $70.91), as WTI crude gains $0.31 or 0.43% to settle at $72.36 per barrel after hitting highest level in two weeks (around $73), while Brent rose $0.38 to settle at $75.82 per barrel as oil prices rallied alongside equities as investors looked to risker assets. Bearish inventory data weighed on prices initially. Gold prices barely budged, edging higher around 0.1% at $1,785.50 an ounce, holding up well despite the “risk-on” trading for stocks again today. Gold remained anchored at $1,780-$1,800 an ounce, awaiting cues from the U.S. Federal Reserve and U.S. Consumer Price Index (CPI) data later this week.


Currencies & Treasuries

·     U.S. Treasury yields rose across the curve, with the 10-year yield hitting highs around 1.54% before paring gains, posting a third straight daily advance. The U.S. Treasury sold $36B in 10-yr notes at a yield of 1.518% vs. 1.514% when issued prior, with the bid-to-cover at 2.43 vs. prior auction 2.35 and indirect bidders awarded 68.84%, directs 17.79% and primary 13.37%. The U.S. dollar index (DXY) tumbled to lows, down around -0.5% as investors fled haven related trades/assets for more risk taking, as the euro jumped +0.7% to around 1.135.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; SFIX shares tumble, and price tgt cut by several analysts after the co provided weaker-than-expected 2Q22 revenue guidance, as near-term customer growth is negatively impacted by a promotion from last year with low retention, and lowered its FY22 revenue and profitability outlook as supply chain disruptions are leading to a 1-4 week delay (which overshadowed Q1 results with revenue and adj. EBITDA margin ahead of expectations); CASY Q2 EPS $2.59 missed the est. $2.89; Q3 revs $3.26B vs. est. $3.2B; Inside same-store sales increased 6.0% compared to prior year with a margin of 40.7%. Fuel gallons increased 2.5% on a same-store basis; VRA reported Q3 adj EPS 18c vs est. 26c on revs $134.7M vs est. $138M, lowered FY21 EPS outlook to 65-70c from 80-95c, sees Q4 EPS 24-29c below est. 40c on revs $155-160M below est. $165.6M

·     Auto sector; CHPT reported revenue in the latest quarter at the high end of its guidance and raised its full-year outlook, but posted a wider Q3 loss ($69M vs. $40.9M loss a year ago) while it had roughly 163,000 ports as of Oct. 31, compared with more than 118,000 as of July 31; GT upgraded from Hold to Buy at Deutsche Bank and raise tgt to $32 as believe the company is well positioned for considerable additional earnings growth in 2022 and beyond, driven by favorable market dynamics, deep restructuring benefits, large additional synergies and very favorable mix impact from electric vehicles; TSLA tgt raised to $1,580 from $900 at New Street Research; TSLA reports China-made electric cars sales slipped 3% M/M and +348% Y/Y to 52,859 units in Nov

·     Housing & Building Products; homebuilder TOL reported F4Q’21 EPS of $3.02 vs. Street of $2.44 driven by upside to margins and ASPs, with deliveries roughly in-line/orders also came in better at -13% YoY vs. Street -17%, consistent with mgmt.’s expectations for “down y/y”; in home furnishings, LOVE reported Q3 EPS $0.17 topping the est. for loss (-$0.41) on better sales of $116.7M vs. est. $112.3M as comp sales jumped 47.1%; in home improvement retail, UBS said data suggests that HD same-store-sales growth (SSSG) remains strong in November, similar to October, and above Q3; in tools, SWK unveiled plans to sell the bulk of its security business assets to Securitas AB for $3.2B in cash and to buy back $4B in stock next year.

·     Consumer Staples; Guggenheim downgraded KHC to Neutral with a price target of $33 from $46 on lack of pricing power; UNFI Q1 adj EPS $0.97 vs est. $0.56 on revs $7B vs est. $6.8B; CPB Q1 adj EPS 89c vs est. 81c on re sales $2.24B vs est. $2.27B and reaffirmed its FY22 guidance but said the current quarter is facing margin pressures from higher labor, raw material, and shipping costs; BFQ2 missed with EPS 49c vs est. 53c on sales $994M vs est. $1.05B, but raised FY sales outlook to high-single digit growth from mid-single digits given confidence in its growth momentum despite persistent volatility and uncertainty from the Covid-19 pandemic and supply chain disruptions, as well as a modest positive impact from the suspension of tariffs on American whiskey to the EU on Jan. 1; Benchmark initiated Buy ratings on JJSF with a $171 PT and LANC with a $181 PT due to its above-average revenue growth profile in packaged food; Cowen started TTCF at Outperform with a $24 PT even with their cautious forecast as the stock’s recent sell-off created an opportunity against tempered expectations; Jefferies continues to see TAP as a favored value idea as they say BUD’s shift an organic-driven value creation model at its Investor Meeting is a positive for the US beer industry; BYND announced it hired TSN executives to serve as its COO and newly created Chief Supply Chain Officer while IRI reported that rival Impossible Food had an 85% spike in quarterly retail revenue; grocers ACI, KR, seen as beneficiary during the Covid stay at home, dropped today on the PFE third booster headlines

·     Casinos, Gaming, Lodging & Leisure sector; reopen stocks such as theme parks, casinos, online travel, and hotels saw a big bounce initially after PFE said three vaccine doses neutralize Omicron variant; in towable, THO reported a Q1 EPS and sales beat (Q1 EPS $4.34 vs. est. $3.24; Q1 revs $3.96B vs. est. $3.46B), while expect gross margins to see some downward pressure as global rev mix normalizes; STWD prices its offering of 16 mln shares for approx. $397.1M at price of $24.82;



·     Inventory data showed: EIA showed Crude stockpiles fell -0.2M barrels a smaller than expected draw vs. -1.7M consensus, while gasoline builds rose +3.9M vs. +1.8M consensus and Distillates +2.7M vs. +1.6M consensus. Last night, the API showed a draw of 3.1M barrels of oil for the week ending December 3; gasoline inventories show a build of 3.7M barrels, distillate inventories show a build of 1.2M barrels and Cushing inventories show a build of 2.4M barrels

·     E&P, Majors and Equipment; FTI was upgraded to Buy at Jefferies as view FTI’s recent Capital Markets Day in a very positive light. The Company’s confident growth expectation to 2025 sees our EBITDA increase 51% on that timeline along with materially improved balance sheet; SWN to raise $1.15B in senior notes offering; COP announced agreement to sell its subsidiary that indirectly owns a 54% stake in the Indonesia Corridor Block production sharing contract and a 35% interest in the Transasia Pipeline Company to MedcoEnergi for $1.355B.

·     Refiners: sector was active yesterday after months of delay, the EPA finally released its proposed rules for 2020, 2021 and 2022 Renewable Volume Obligations (RVO) under the Renewable Fuel Standard (RFS) program. Piper said while still subject to adjustment prior to final approval, and uncertainty, particularly regarding Small Refinery Exemptions (SREs), they see the rules as broadly positive for the refiners (PSX, DK, PBF, VLO), as in-line with recent expectations, and likely modestly negative on the margin for renewable diesel producers REGI, DAR as ~1.0 Bn gal shifted from BBD to ethanol

·     Utilities & Solar; in solar, SOL slides on Q3 miss as Q3 adj EPS $0.02 was below est. $0.04; Q3 revs $15.5M vs. est. $20.24M; sees Q4 revenue $21M-$27M vs. est. $30.73M on weaker year rev outlook as well; Barclay’s rolling water utility valuations forward to 2024 and upgrading WTRG to Overweight as anticipate overhangs to clear in 2022, and downgrading AWR to Underweight as strong execution has pushed valuation above what we view as fair.



·     Bank movers; Wells upgraded SIVB to OW as they see the bank being positioned to be the largest beneficiary in their group once rated begin to rise and they benefit from a technology and innovation sector that remains at its strongest with benign credit losses; Morgan Stanley downgraded EVR to Equal-Weight as they focus on large deal activity, which is likely to face headwinds in 2022 on increased antitrust scrutiny; BX has authorized the repurchase of up to $2B of the company’s common stock and Blackstone Holdings Partnership Units, replacing the company’s prior authorization of $1B; PZN reports prelim assets under management of $49.8B for November 2021 compared to $40.7B in year ago month and $53B in October 2021; Stephens raised their PT on FSBC to $35 from $32 and reiterated their OW rating even with shares +55% vs their $20 IPO pricing in May; BLK said it is pulling ~$2T in assets out of STT’s safekeeping as it entered into custodian agreements for its $2.3T iShares ETFs with Citi (C) to now manage 40%, JPM 30%, BK 15%, and STT keep 15%.

·     FinTech & Payments; Visa (V) launches cryptocurrency advisor service for financial institutions and merchants; PSFE reported its CEO bought $1M in shares on 12/3 and other executives purchased ~$1.8M from 11/12-12/3; Spruce Point issued a Strong Sell opinion on NVEI with 40-60% downside due to what they call a pattern of business failures, lack of organic growth, and a web of relationships with individuals connected to Ponzi Schemes/alleged fraudulent activities (shares fell over 50% on the report – but pared losses after Citron Research said in tweet shares were way oversold; co grew 92% in 2021 and said no proof of fraud)

·     Consumer Finance & Service; HOOD files to terminate its registration statement for the resale of class A common stock received by certain shareholders; VRRM 8.2M share offering prices at $14.85 (Platinum Equity divests remaining 5.3% stake); KFY Q2 adj EPS $1.53 vs est. $1.37 on revenue $639.4M that jumped 47% YoY and beat est. $604.7M, and guided Q3 adj EPS $1.48-1.58 vs est. $1.10 on revs $640-660M vs est. $577.7M

·     REITs; Raymond James upgraded MFA to Outperform with a $5.25 given strong 3Q results, the expectation of continued attractive portfolio returns, and shares trading at a 10%+ discount to economic book value; STWD priced its 16M share offering at $24.82



·     Pharma movers; PFE said that three vaccine doses neutralize Omicron variant – says data indicate that third dose of BNT162b2 increases neutralizing antibody titers by 25-fold compared to two doses against omicron variant. Their own study followed updates out of South Africa yesterday afternoon which garnered significant attention for a significant where patients dosed with the PFE/BNTX vaccine saw +41x drop in neutralizing titers; ZTS announces authorization of $3.5 billion share repurchase program and raises quarterly dividend by 30%; DARE rises as the FDA approved Xaciato for the treatment of bacterial vaginosis in females 12 years of age and older; HOTH entered into an agreement to license its lupus drug candidate back to Zylo Therapeutics; CORT shares tumble after revealing gets U.S. Attorney subpoena on Korlym

·     Biotech movers; RDUS falls after saying WearABLe study didn’t meet primary endpoint of NI for Abalo-TDS 300 micrograms (UG) vs. TYMLOS 80 Ug in % change from baseline in lumbar spine bone mineral density; NBIX announces positive phase 3 data for Kinect-HD study evaluating valbenazine for chorea associated with Huntington disease; plans to submit supplemental new drug application to FDA in 2022; SAGE and BIIB announce new analyses from the LANDSCAPE clinical development program of Zuranolone in MDD presented at the ACNP Congress

·     Cannabis sector: Provisions that would allow cannabis companies in the U.S. to do business with banks was excluded from a larger defense bill currently under discussion by both chambers of Congress. The SAFE Banking Act passed the House in September as part the National Defense Authorization Act for fiscal year 2022. Rep. Ed Perlmutter (D-Colo.), who has spearheaded efforts for the SAFE Banking Act, said, "My work on this bill is far from over…going forward, I plan to pursue every possible avenue to get SAFE Banking signed into law."

·     MedTech Equipment; PHG announces that its Philips Patient Monitors MX750 and MX850 have received 510(k) clearance from the FDA; n research, BDX downgraded to neutral from Overweight at Piper citing lack of catalysts (revenue, margin, or otherwise) that they see for shares over at least the next six months combined with nagging uncertainty regarding the achievability of consensus margin targets later this year; LUNG upgraded to Overweight from Neutral at Piper as fully acknowledge may be early in upgrade with limited visibility into improvements in procedure cadence due to still-elevated COVID hospitalizations and near-term unknowns with ICU staffing levels and the Omicron variant; BRKR to raise $500M in senior notes for supporting strategic growth objectives

·     Healthcare Services; drug distributor MCK boosted its full year adjusted earnings guidance to $22.35-$22.95, from prior $21.95-$22.55 while boosts share buyback program by $4 billion and said it is reaffirming its commitment to its oncology and biopharma services; CDMO posed F2Q revenue and EBITDA that were both above consensus, helped primarily by higher (and high margin) unutilized reserved capacity fees while mgmt held FY22 revenue guidance flat at $115-117M


Industrials & Materials

·     Industrial & Machinery; HON downgraded to Neutral from Buy and cut tgt to $245 from $270 at Bank America saying supply chain headwinds, sluggish defense to drag on 1H; Bank America also upgraded ITT to Buy from Neutral and raise tgt to $130 from $112 as believes has significant room for positive earnings revisions and multiple re-rating while downgraded ALLE to Neutral citing continued earnings headwinds; POWL reported Q4 EPS 28c vs est. (4c) loss on revs $130M vs est. $116.1M and anticipates profitability to improve in 2H22 from 1H22; CNM had its price target raised at Deutsche and Credit Suisse after yesterday’s strong earnings report, but Citi downgraded it to Neutral following its outperformance of +20.3% since its July IPO vs S&P +6.2%; Stifel raised their price target on WM to $180 from $165 as they can drive enough price in FY22 to offset the margin pressure from inflation; FREY announced a strategic partnership between its partner and VWAGY to manufacture next-generation lithium-ion EV batteries

·     Transports; after recent outperformance, with many of the names in the rails and trucking space hitting new highs (KNX, CSX, UNP, FWRD, GATX), the index took a breather today; in airlines, LUV raised its outlook for Q4 revenue and cut its estimate for fuel costs as now expects revenue for the current quarter to be down 10% to 15% from the same period in pre-pandemic 2019, compared with previous guidance for a decline of 15% to 25%; RBC flagged CP as one of their highest conviction buy ideas as the recent downward pressures were expected and are temporary, and they recommend investors further accumulate stock ahead of KSU acquisition


Technology, Media & Telecom

·     Semiconductors; Philly semi index (SOX) opens lower after hitting all-time high yesterday at 4,002, but pares losses throughout morning; NXPI was initiated a new Sell rating at UBS with $170 tgt saying while they believe the co will remain a leader in its product categories with a solid business, they expect the automotive division’s growth (50% of revenues) to underperform the automotive semis market; PLAB beats estimates for Q4 revenue, profit, helped by demand for design-driven products accelerating while guides Q1 revs $178M-$186M vs. est. $170.7M

·     Software movers; PD delivered a strong quarter highlighted by accelerating revenue and billings growth of +34%/+40% that topped expectations of +30%/+32% and a 124% DBNRR/Enterprise and mid-market remained strong with +35% growth in customers with +$100K in ARR; SentinelOne Inc (S) shares dropped after Q3 results top expectations, and Q4 revenue forecasts above estimates; shares slip due to deceleration in new customer adds as well as pressure due to the impending lock-up expiration on Dec. 9, in which 200 mln shares will be freely tradable; WEAV tumbles following earnings and guidance

·     Internet, Hardware, Components & Services; AAPL upward momentum continued, touching new all-time highs yet again today and approaching the $3 trillion mkt cap; ROKU shares rose after signing a multi-year extension with GOOGL for YouTube on its service; EPAM will replace KSU in the S&P 500 effective prior to the opening of trading on Dec. 14; AAPL got a reprieve from the Court of Appeals in the Epic case for App store business, a positive for shares as well as GOOGL while independent app names BMBL, RBLX, MTCH fell off highs in reaction


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