Market Review: February 01, 2021

Auto PostDaily Market Report

Closing Recap

Monday, February 01, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     After posting the biggest weekly decline since October last week, U.S. stocks were back on the rise Monday, with major averages recouping a large portion (in some cases all) of Friday’s losses as investors again “buy the dip”, led by gains in technology and retail ahead of a big week of upcoming earnings (AMZN, GOOGL). The U.S dollar touched a 6-week high on weaker euro, while commodity prices surged, led by big gains in precious metals with silver posting a 9% daily spike and gold rising alongside. Large cap tech outperformed led by a 4% bounce in AMZN ahead of earnings tomorrow night while AAPL recovered from loss last week. The short squeeze attack by retail investors against the Wall Street community continued today, rotating into silver producers and out of the names that have had meteoric moves over the last two weeks (GME, AMC, BBBY, KOSS, EXPR, among many others) The Cboe Volatility Index (VIX) declines on the day as fear has once again eluded Wall Street, but remains elevated after gaining 45% last month. In Washington, U.S. President Joe Biden will meet 10 moderate Republican senators on Monday to discuss their proposal to shrink his sweeping $1.9 trillion U.S. COVID-19 relief package, even as Democrats prepare to push legislation through Congress without Republican support.

Economic Data

·     IHS Markit January final manufacturing PMI at 59.2 vs. flash 59.1, manufacturing sector final PMI for January at 59.2, a series record, vs. flash reading 59.1 and final December 57.1, new orders index for January at 59.9 vs. flash reading 59.5 and final December 56.5

·     ISM U.S. manufacturing activity index 58.7 in January below the est. 60.0 and below the 60.5 in December; prices paid index 82.1 (highest since April 2011) vs. 77.6 prior, new orders index 61.1 vs. 67.5 in December, employment index 52.6 vs. 51.7 prior

·     Construction Spending for December rose +1.0% vs. est. +0.9% to $1.490 trillion, the highest level since the government started tracking the series in 2002. Data for November was revised higher to show construction outlays surging 1.1% instead of 0.9% as previously reported. Dec private construction spending +1.2%, public spending +0.5%


Commodities, Currencies & Treasuries

·     Gold futures rose $13.60, or 0.7%, to settle at $1,863.90 an ounce, but it was silver futures that grabbed the headlines today, rallying by more than 9% or $2.50 to settle at $29.41 an ounce, its highest % win since February 2013, and biggest dollar daily gain in about ten-year amid a buying frenzy after a post on Reddit last week suggested a short squeeze on the precious metal.

·     Oil prices rose alongside the “risk on” move in broader stock markets, as March West Texas Intermediate crude rose $1.35, or 2.6%, to settle at $53.55 a barrel, helped as the production-cut agreement reached in January by the OPEC+ took effect, including Saudi Arabia’s pledge to unilaterally reduce output by 1 million barrels per day

·     The U.S. dollar was broadly higher, touching new 11-week highs against the Japanese yen around the 105 level, up from overnight lows of 104.61. The Dollar remained bid overall despite the general risk-on conditions seen on Monday, which typically weighs on the buck. Treasury yields dipped modestly with the 10-year down 2 bps to 1.07%.






WTI Crude















10-Year Note





Sector News Breakdown


·     Auto sector; Piper raised their price target on TSLA to street-high $1,200 from $515 after the company was added to the S&P 500 and their forecast implies 894k vehicle deliveries in 2021 before ramping to over 9M in 2030 as the company targets multi-trillion dollar markets and there will be levers for growth; NIO reports a new monthly record with 7,225 vehicles delivered in January 2021 (+352.1% YoY); XPEV also achieved a record monthly delivery of 6,015 Smart EVs in January 2021 (+470% YoY); Wedbush upgraded NKLA to Neutral and raised its target to $25 from $15 as the Biden administration and Democrat senate should be a positive for EV/hydrogen endeavors, and the negative catalysts driving their previous underperform rating, such as the shifting GM partnership, execution risks following Trevor Milton’s departure, and the Badger hype, have mostly played out; LI was initiated at Hold with a $35 target by Deutsche Bank despite at almost a 50% discount to NIO and XPEV on consensus 2022 EV/sales as they await clarity on its BEV and autonomous driving roadmap; AAP added to JPMorgan analyst focus list; Ford Motor Co. (F) and Google (GOOGL) issued a press release announcing a “first-of-its-kind partnership” to accelerate auto innovation, reinvent connected vehicle experience.

·     Retailers; AMZN shares surge ahead of earnings this week; WSM was downgraded to Sell at UBS who believes the risk-reward of shares is skewed to the downside based on the current valuation not capturing risks related to recent performance overstating earnings and overinflating 2021 consensus estimates, in addition to risks as the sector returns to normalcy; Barclays downgraded GOOS to Equal-Weight after its +12% YTD performance has brought the stock to within 10% of their $37 price target, leading to unfavorable risk-reward at these levels as the company and investors have an extended wait for a top-line return to sales growth; Needham lifted its target on RL to $112 from $82 ahead of its Q3 earnings report on Thursday after encouraging Q4/holiday results thus far and positive January consumer survey and on TPR to $37 from $26 after its recent Q4/holiday updates; Guggenheim said ASO story continues to progress as expected, with strong, above-consensus 4Q sales/EBITDA, an ongoing healthy balance sheet, and the beginning of the sponsor sell-down

·     Consumer Staples & Restaurants; Restaurants; Piper said looking to the second week of earnings, believe CMG expectations are lower than +6% consensus (firm ups tgt to $2,000), says SYY is most contrarian call to action, with our out-year estimates 10% higher than the street and firm reit Overweight on DRI shares following recent market conditions.

·     Leisure and Gaming; AMC downgraded to sell from neutral with $1 tgt at MKM Partners noting the recent volatility and spike in the company’s stock, thanks to the Reddit/WallStreetBets crowd, has decoupled AMC’s share price and its valuation – notes equity shareholders have been diluted by roughly 75% over the last couple months and there is still about $5.7B of debt; CLAR announced positive preliminary 4Q results above consensus as results driven by strength in Black Diamond and a strong contribution from the recently acquired Barnes bullets business; EXPE upgraded to outperform from neutral and raise tgt to $130 at Wedbush saying their recent consumer survey points to pent-up demand for travel overall and untapped demand for alternative accommodations in particular



·     Energy stock movers; strength early in energy companies before slipping, as oil rose following back-to-back weekly declines. With headline prices largely range-bound over the past couple of weeks, the more significant market moves have been in the structure of the oil futures curve. In energy news, XOM and CVX spoke about combining the oil giants after the pandemic shook the world last year, according to people familiar with the talks, testing the waters for what could be one of the largest corporate mergers ever as per the WSJ ; in oil services, HAL was upgraded to Overweight and BKR remains a top pick at Piper as boosts estimates and outlooks across large cap OFS following more beat and raise earnings results.



·     Bank movers; Raymond James upgraded UBSI to Outperform from Neutral with a $36 target, FRME to Outperform, LEVL to Strong Buy from OP, raised their target on CSTR to $16 from $13 and maintained its Outperform rating, and downgraded HBT to Market Perform following the companies’ respective earnings reports; Janney upgraded WTFC and INBK to Buy from Neutral; Boenning upgraded OCFC to Outperform with a $24 pt; RF was upgraded to OW with a $20 target at Stephens on the bank’s improved credit profile and 2021 net charge-off outlook; Credit Suisse upped its target on SF to $68 after its earnings exceeded estimates driven by its institutional capabilities reporting record revenues in 2020 as client and market activity remain elevated and now face less expense constraints than peers in 2021

·     Consumer Finance; FIS raises dividend by 11%, approves share buyback program; MOGO reported its Bitcoin transaction volume increased over 300% in January; Cowen’s survey suggested that digital payments ramped significantly and opened a $19B revenue opportunity, and they name PYPL as the stock they see as the biggest beneficiary, followed by Visa and MA

·     Services UBS upgraded MSCI to Buy with a $463 pt as they expect strong growth and long-term opportunities in areas including ESG, Climate, Fixed Income, and Private Assets, its updated estimates after the Q4 earnings are now above the street’s consensus, and the stock’s YTD performance (down about 11%) provides an attractive opportunity; Wells believes Friday’s selloff in SCHW on regulatory concerns after some brokers limited trading in certain stocks (IBKR fell about 4% with SCHW on the day) may provide a good long-term entry point and see management’s commentary on its business update call tomorrow as a possible n-t catalyst



·     Pharma movers; big week of earnings with PFE, MRK, ABBV, VRTX, BIIB, REGN, BMY; NVS downgrade from Outperform to Market Perform at Cowen saying the news flow over the past year or so has been challenging and looking ahead don’t see good prospects for improvement; ITRM says it has engaged commercial services provider EVERSANA to immediately initiate pre-launch activities for its oral sulopenem; DVAX and partner Clover Bio said are planning to start a global phase 2/3 study in the first half of the year to test the efficacy of Clover’s S-Trimer COVID-19 vaccine candidate; GRTS and GILD entered into a collaboration, option and license agreement to research and develop a vaccine-based immunotherapy to find a curative treatment for HIV infection; VIE acquired by HZNP for $53.00 per share cash, representing equity value of ~$3.05B

·     Biotech movers; MRNA downgrade from Neutral to Underperform w/$150 pt at Bank America; NVAX said it expects to make 150M vaccine doses per month by May/June; GILD boosted its ownership in RCUS to 19.5% from ~13% after buying 5.65M additional shares at $39 per share; CHRS agrees to pay China-based Junshi Biosciences $150 mln upfront for developing and selling its cancer drug toripalimab in Canada and the United State; SGEN downgraded to Sector Perform at RBC Capital and lowers tgt to $186 ahead of Q4 earnings given rich valuation, risk from Q3’s slowdown in Padcev sales and recent market volatility; CNCE plunged as announced that its Phase 2 trial evaluating CTP-692 as an adjunctive treatment in patients with schizophrenia failed to meet the primary endpoint or other secondary endpoints; BCRX shares jumped as much as 30% earlier after being mentioned on Reddit’s "WallStreetBets" forum

·     Healthcare services and providers; SRNE says positive results from phase 1b study for patients suffering from covid-19-induced acute respiratory distress; ABC tgt $129 to $145 and MCK $186 to $210 at Cowen as expect solid results across the group but see potential for upside for ABC & MCK in particular – prescription sales in C4Q were up 6.6 y/y with specialty sales up 8.1% y/y which is positive for pharma distribution; ALGN earnings this week

·     MedTech and Equipment; TMO posts better-than-expected Q4 profit and revenue, helped by higher sales from products related to COVID-19 and from its life sciences unit as recorded $3.2 billion in COVID-19 response revenue in the quarter; earnings this week for ZBH, PKI


Industrials & Materials

·     Industrial & Machinery; ETN signs agreement to acquire Cobham mission systems, expanding Eaton aerospace’s fuel and environmental systems offerings, paying $2.83B for CMS, inclusive of $130M in tax benefits

·     Transports; Dow Transports look to rebound after falling sharply last week on weakness in airlines and rails; SNDR upgraded, HTLD downgraded at Keybanc saying our proprietary Ship-to-Shore data indicates import volumes at the Port of Los Angeles remained seasonally elevated in January, though y/y and m/m growth moderated slightly – are most constructive on intermodal and reiterate OW ratings on JBHT and HUBG, and upgrade SNDR; AAL downgraded to Neutral at Seaport saying conviction in the recovery story doesn’t change, but sees limited upside as risk reward is balanced

·     Aerospace & Defense; SPCE downgrade from Overweight to Equal weight with $40 tgt at Morgan Stanley saying while struggle to justify the current price on space tourism alone, they acknowledge the potential for the next 3 successful test flights and subsequent re-opening of the reservation book to drive high interest in the name; separately, SPCE announced the date of its new flight window for a rocket-powered test flight of its SpaceShipTwo Unity; NOC announces $2B accelerated share buyback pact; LHX awarded $121 mln U.S. missile defense agency contract to build space flight hardware for HBTSS program

·     Metals & Materials; short squeeze news that has boosted names such as GME, AMC, KOSS has now rolled into the precious metals market as silver commodity markets and silver miners leveraged to prices seeing massive buying interest over the last week with shares of AG, PAAS, CDE, GATO, HL among biggest movers; WOR acquires General Tools & Instruments for $115M

·     Chemicals; DD agreed to sell its DuPont Clean Technologies business for $510 million as it concludes a review of non-core businesses and the combination of its nutrition and biosciences unit with IFF – DuPont said an international private-equity consortium is buying the unit in a deal slated to close in the second quarter; OLN upgraded to Overweight from Neutral at JPMorgan and raise tgt to $30 from $24 calling it an inexpensive company representing good value at the current price, whether the company is turned around or not


Technology, Media & Telecom

·     Semiconductors; ON reported Q4 results that beat with revenue rising to $1.45B and $0.35 EPS, both above views as the global auto recovery drove the co to record automotive revenue of $491M in the quarter; INTC was downgraded from Outperform to Market Perform with $46 tgt at Northland as expect share loss to accelerate over the next couple of years; AMBA tgt raised to $160 from $87 at Berenberg saying its evolution into a pure play computer vision (CV) company is happening faster than we had expected

·     Software movers; video game earnings this week with price tgts raised at Credit Suisse (ATVI to $106 vs. prior $96, EA target $153 vs. prior $150, and TTWO $199 vs. prior $175) saying looking beyond the tougher comparisons this year, lasting changes should be in the form of 1) a step function increase in digital downloads mix vs physical retail and 2) higher conversion rates as users become increasingly more comfortable with in-game/app purchases; big earnings week for software in general as FEYE, FTNT, PFPT, CHKP, NLOK, TENB all on deck in security software, and SaaS where DT, NEWR, APPS, PCTY, U and ZEN have a tough bar following NOW beat last week

·     Media & Telecom movers; VIAC and DISCA downgraded to neutral at Citigroup noting each have seen a material increase in short interest and firm said suspect that the recent rally in both stocks is driven, in part, by short covering. While, in theory, low interest rates suggest that we could see further multiple expansion, they think that it is unlikely unless fundamentals improve; CCO said will offer $1 bln senior notes due 2028; GOGO downgraded to underweight at JPMorgan on valuation, dilution from convert, and eventual LEO competition

·     Hardware & Component news; NOK upgraded to buy from sell at DNB Markets, which also lifted its price target to EUR4.80 ($5.80) from EUR4 saying the read-across from ERIC Q4 suggests there is 5G cycle strength in Northeast Asia excluding China

·     Comm and Networking; AAPL to sell $14 billion of bonds in six parts; CMBM downgraded to Market Perform from Outperform at Raymond James noting the stock performed well in 2020, up over 200% as it transitioned from a value story to a growth play – change reflects valuation concerns and analysis of the prospects from the RDOF program


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