Market Review: February 19, 2021

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Closing Recap

Friday, February 19, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Stocks finished the day mixed though major averages registered modest declines overall in a week highlighted by several market moving catalysts. Smallcaps outperformed on the day as the Russell 2000 climbs about 2%, while the Dow gains were led by industrials and financials. On the week, strong earnings, mixed economic data, U.S. Congressional hearing related to recent GameStop short-squeeze trading, dovish Fed comments and rising inflation/Treasury yield fears that could crimp economic growth all headlined a busy week. President Biden’s push for a $1.9 trillion COVID-19 relief bill took a step forward on Friday as a U.S. House of Representatives committee unveiled the legislation Democrats hope to pass by late next week. The bill would carry out Biden’s proposals to provide additional money for COVID-19 vaccines.

·     Economic sensitive cyclical sectors outperformed such as industrials (DE record highs after blowout earnings) and materials (FCX soars behind 10-year highs for copper), while semiconductors rallied behind another upbeat earnings result in the space (AMAT). Cruise lines (CCL, NCLH) among top gainers in the S&P as "reopen" trades doing well today with SIX rising on theme park comments, online travel (BKNG record highs), airlines (UAL) also surging. Stocks remain well bid given notable tailwinds for markets including earnings strength, prospects for fiscal stimulus, and ongoing vaccine rollout.

·     Treasury yields higher as 10-year yield up over 6 bps to 1.35% (up 12 bps on the week) and the 30-yr up 6 bps to 2.14% (also up about 14 bps on the week) – rising rates providing boost to financials and banks. Manufacturing data was mixed this morning – but in another sign of rising inflation (after spike in PPI this week), IHS Markit data said “"firms raised their selling prices at the fastest pace since July 2008 to partially pass on greater input prices.” The Fed’s Rosengren repeats today Fed policymakers expect to keep interest rates at near zero levels until 2% inflation target has been reached and Fed will continue purchases until there is substantially more progress in lowering unemployment and raising inflation. Treasury yields inching to highs of week, but stocks keeping pushing higher. The dollar lost ground as market participants favored currencies associated with risk-on sentiment over the safe-haven greenback.

·     It wouldn’t be a regular day without another cryptocurrency update, as Bitcoin prices surge as high as 6% topping $55,500 alongside a jump in Ethereum prices – all benefitting from a further drop in the U.S. dollar (note yesterday, Doubleline’s Gundlach tweeted that Bitcoin may be the stimulus asset, not gold). Bitcoin up over 65% in February and 90% YTD, lifting names that invest in Bitcoin, mine, or accept payment/part of blockchain – any relation to it with GBTC, MOGO, NCTY, WBAI, MARA, SI, XENT, RIOT, MSTR, OSTK are among the names that continue to flourish.

Economic Data

·     IHS Markit said U.S. manufacturing sector flash PMI for February at 58.5 (in-line) vs final January 59.2; input prices for February at 73.3, highest since April 2011, vs final January 65.1 and prices index for February at highest since July 2008; services sector flash PMI for February at 58.9 (consensus 57.6) vs final January 58.3 (highest since March 2015); Markit flash composite input prices index and output prices index for February at highest going back to October 2009

·     Jan. existing-home sales rise to 6.69m rate; vs. est. 6.60m; Existing home sales increased 23.7% on Y/Y basis, up from 20.7% in December 2020; Unsold inventory sits at 1.9-month supply, unchanged from December


Commodities, Currencies & Treasury’s

·     Oil prices fell for a second day, down off more than 1-year highs as WTI crude slides $1.28 or 2.12% to settle at $59.24 per barrel and brent dropped $1.02 or 1.6% to settle at $62.91 as production slowly restarted in Texas and the White House said it would be willing to meet with Iran, potentially paving the way for more crude exports. As companies have nearly restored power from grids or generators to resume output that was halted by the frigid weather, prices pulled back on profit taking. The March contract expires at the end of Monday’s session.

·     Gold futures ended modestly higher, rising $2.40 to settle at $1,777.40 an ounce a day after snapping its 4-day losing streak, off 7-month lows, but still ended the week lower by 2% following a sharp rise in Treasury yields on the week, dulling appeal in the precious metal. Gold was buoyed on the day by weakness in the U.S. dollar and expectations for the passage of the latest U.S. COVID-19 relief package. Prices touched a low of $1,759 during Friday’s session, the lowest since June, before recovering. March copper rose 17c, or 4.4%, to settle at $4.074 a pound, up nearly 7.6% this week.

·     U.S. Treasury yields, specifically on the longer end of the curve rose to new one-year highs with the 30-year rising to 2.15% and the 10-year topping the 1.35% level as improved risk appetite boosted markets. The U.S. 5-, 30-yr spread hits 155.472bp, fresh YTD highs following softer recent bond auctions. The two-year Treasury yield which typically moves in step with interest rate expectations, fell to 0.105% on Thursday, matching a record low reached on Feb. 8. The recent creeping up of Treasury yields has started to spill over to modest weakness in stocks. The U.S. dollar losing ground the last few days with all interest piling into Bitcoin, which continues to surge now up about 90% YTD alone at new highs today above $54,600.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; retailing group tries to recover from weakness yesterday post disappointing eps miss and softer guidance from WMT upgraded to Outperform with $30 tgt at Oppenheimer as they are now increasingly confident that a much more targeted consumer focus and improved operational controls should gradually facilitate a return to outsized top-line expansion; KIRK posts preliminary Q4 results with sales of $195M vs $191M consensus, comparable sales of +1.8% vs. -4.0% consensus and EPS of $1.35 to $1.45 vs. $1.19 consensus; Cowen, Bank of America, and Raymond James reiterated their bullish stances on WMT after yesterday’s earnings and investor day with related weakness; BTIG’s initial branded athletic apparel survey had strong results for NKE as the clear stand out favorite brand across age and gender cohorts vs UAA, LULU; Jefferies upped their price target on Buy-rated LESL to $40 from $37 after their pool owner survey suggests above-average pool usage near-term, placing their FY21 EPS estimates at the high-end of guidance and FY22-24 estimates about 7% above the street

·     Auto sector; MGA rises on strong Q4 beat as Q4 adj EPS $2.83 vs. est. $2.03; Q4 revenue $10.57B vs. est. $10.12B; raised dividend 8% to 43c; sees FY21 revenue $40B-$41.6B vs. est. $38.45B; UBER slips initially as the U.K.’s top court ruled that a group of former drivers for Uber were entitled to a minimum wage and other benefits while working for the company, dealing a setback to Uber and other gig-economy firms in world-wide battles over their employment model

·     Housing & Building Products; homebuilder KBH was double upgraded from Sell to Buy w/$51 tgt at Goldman Sachs saying its build-to-order strategy leaves it well-positioned as we enter the selling season, with a backlog up 54%; FND was upgraded to Overweight at Piper and raise PT to $124 (45x 2022E EPS) ahead of Q4 earnings next week; FTDR reported in-line 4Q revenues driven by D2C channel strength and improved RE channel. Frontdoor guided to a solid 11-12% revenue growth though lower than expected adjusted EBITDA for 2021 due to continued investment; RDFN rises after saying it will buy RentPath, owner of,, and, for $608 million in cash to boost its presence in the rental home market

·     Consumer Staples & Restaurants; food names have had a strong week of returns with rotation into Staples as prices rising; KHC downgraded to Neutral from Overweight at JPMorgan noting with the stock +69.5% since March 2020 upgrade (sector +23.2%) and +16.3% this month alone, the stock is now approaching fair value; much like recent casual diner names, TXRH posted a miss on the top and bottom line (much like recent reports from BLMN, CAKE – but investors continue to give a pass for the industry, looking to reopen)

·     Leisure and Gaming; SIX said it is preparing to open all its theme parks and waterparks for 2021 season; is currently hiring thousands of team members for 2021 season; RCL amended its credit agreement to extend the waiver its fixed charge coverage to net debt ratio. Also pushed out restrictions on dividends and buybacks through Q3’22; PLNT with slight miss on revs and EBITDA (comps -10%) and no guide but said “encouraged with our start to 2021, as we have seen net member growth and improved usage”; DKNG tgt raised to $80 at Oppenheimer into 4Q earnings on recent analysis of state data implying solid upside to ’21 consensus revs ($866M); BKNG rises a 6th time in 7-days (up over 5% during that stretch) in online travel, while SABR jumps after Deutsche Bank upgraded, TRIP up after earnings and EXPE rises as well as online travel names extend gains



·     Energy stocks; Texas oil refineries shut by cold-weather disruptions may take several weeks to resume normal operations, industry experts said on Friday, helping to push up fuel prices. About a fifth of oil processing was halted by power outages, shortages of natural gas and water this week. Average retail gasoline prices rose 6c on the week and are up 9c in the last month, to $2.33 a gallon, the American Automobile Association said

·     Energy stock movers; SUN was downgraded to Neutral with a $33 tgt at Mizuho who believes near-term upside could be limited given tighter commodity supply; JPMorgan downgraded DNOW to UW and MRC to Neutral after their recent outperformance (MRC +104% since 10/30, DNOW +156%, v. OSX +92%) and less favorable risk-reward at these levels and with WTI crude back above $60/bbl; Reuters reports that PBR CEO Roberto Castello Branco is resisting pressure from Brazil’s President Bolsonaro to resign following tensions over rising fuel prices; Eni (E) reported Q4 adj EPS 0.02 euros ($0.02) vs 0.15 euros YoY on sales 11.63B euros vs 16.22B euros YoY; XEC raised its dividend by 23% to 27c from 22c

·     Utilities & Solar; DTE reported Q4 EPS $1.39 vs est. $1.29, reaffirmed its FY21 EPS guidance range of $6.88-7.26, and remains on track to complete the spin-off of DT Midstream by mid-2021 after commencing the Form 10 registration process with the SEC; POR Q4 EPS 57c vs est. 42c, on in-line revs $2.15B, initiates FY21 EPS guidance $2.55-2.70 (est. $2.60), and reaffirms 4-6% long-term diluted EPS growth using 2019 base year; ED posted Q4 EPS 75c (est. 74c) on revs $2.96B (est. $3.151B) and guides FY21 EPS $4.15-4.35 (est. $4.30) along with projected capital investments $4.02B in FY21 and $8.11B for 2022-2023; AEE Q4 EPS 46c vs est. 43c on revs $1.33B; SJW posted Q4 EPS 46c vs est. 35c and (-19c) loss YoY on revs $135.7M vs est. $130M; LNT Q4 EPS 24c slightly beat est. 23c on revs $817M, missing consensus $1.12B, and they maintained FY21 EPS forecast of $2.50-2.64; JKS signed a strategic partnership with Tongwei to form a JV for a high-purity crystalline silicon project and for industrial chain cooperation



·     Biotech & Pharma movers; PFE, BNTX submitted new data to the FDA demonstrating the stability of their COVID-19 vaccine when stored at -25°C to -15°C (-13°F to 5°F), temperatures more commonly found in pharmaceutical freezers and refrigerators; GEVO rises after H.C. wainwright raises tgt to $18 from $5; ABBV, EOLS and Medytox announce resolution of intellectual property litigation; NVAX signed a memorandum of understanding with the Vaccine Alliance (Gavi) to provide 1.1 billion doses of its COVID-19 vaccine, NVX-CoV2373, globally; VCNX rises after co signed multi-project deals for its drug discovery platform Activmab; DVAX jumps as European Commission approves co’s two-dose vaccine for Hepatitis B

·     Healthcare services and providers; EHTH reported 4Q20 results essentially in line with the company’s pre-announcement but provided its initial 2021 guidance below views ($660M-$700M vs. est. $760.6M and lower profit outlook); NXGN upgraded to Overweight from Neutral at Cantor and raise tgt to $23 noting over the last few quarters, NXGN has seen improving fundamentals and with the recent weakness, believe the shares are attractive; AMN rises following Q4 results / higher 2021 revenue guidance.

·     Medical devices & Equipment; QDEL reported 4Q results that were consistent with preannounced results on the topline while EPS was ahead – also noted a modest delay in its QuickVue OTC launch given incremental data required by the FDA for EUA


Industrials & Materials

·     Industrial & Machinery; DE shares jump on big Q1 beat as EPS $3.87 topped the $2.16 estimate and Q1 total revenue $9.11B vs. est. $7.21B while raises FY21 revenue outlook to $4.6B-$5B from $3.6B-$4B and-first-quarter net income more than doubles on 23% gain in net sales (giving a boost to machinery names CAT, CNHI, LNN, AGCO); BOOM reported 4Q20 EBITDA of $3.7 million, down sequentially, due to a drop at NobelClad. Revenue of $57.1 million rose 3.3% sequentially, and fell 33.9% year-over-year

·     Transports; Dow Transports setting new intraday records, up 1.9% around $13,300 (prior highs 13,272); CAR leading along with strength in airlines (UAL, AAL, ALK); HUBG was upgraded to Buy at UBS with $67 tgt as believe a combination of HUBG’s strong leverage to intermodal pricing and our expectation of accelerating volume growth point to significant upside EPS (vs Consensus) and also attractive upside for the stock; drone maker UAVS rises after responds to Bonita’s research’s short seller research report saying it contained " false, inaccurate and misleading" information about the company

·     Metals & Materials; copper futures top the $4 per pound level for the first time since 2011 as demand grows, lifting copper producers early (FCX, SCCO); other industrial related names moving higher on jump in commodity prices (MP advanced in rare earth space); steel stocks also rising along with industrial metal strength (X, NUE); gold miners (AEM, NEM) slide


Technology, Media & Telecom

·     Semiconductors; AMAT reported a solid JanQ, with Rev/EPS of $5.2B/$1.39, above consensus of $5.0B/$1.28, and guided to a strong AprQ at $5.4B/$1.50 (ahead of consensus $4.9B/$1.27) noting continued strength in all DRAM/ Foundry & Logic, as AMAT now sees 2021 WFE we believe up 17%+ y/y (prior flat) to $70B+; Philly semiconductor index outperformed broader tech behind the AMAT results, coupled with chip shortage concerns amid rising demand; SLAB jumped late day following Bloomberg report that the company is in talks to sell its analog chip business in a deal worth at least $2-3B.

·     Software movers; PLTR bounces after earnings and lock-up related weakness as Cathie Wood’s ARK Innovation bought 5,274,700 shares yesterday, more than doubling the existing stake to over 9.35 million shares; TWLO slips after 3.75M share Spot Secondary priced at $425 (follows strong bounce post earnings yesterday); EVBG upgraded to OW at JPMorgan following better earnings and guidance overnight as shares jumped on the day; AAPL is in talks with lidar suppliers for its self-driving vehicle project, according to a Bloomberg headline (shares of LAZR and VLDR were active in reaction); DBX with beat but growth slowed for fifth straight

·     Media & Telecom movers; TTD 4Q net revenue was better than expected (up 48% y/y, accelerating 16 points from 3Q), coming in 9% above consensus, driven by continued execution on the core growth drivers and CTV growth over 100% y/y in FY20; DIS positive mention by Wells Fargo after comparing financial performance at the various streaming platforms within and think the biggest opportunity is with DIS (notes in first ~8 years of streaming NFLX got to ~140mm subs and 10% op margins – DIS will get to well over 300mm subscribers in same period)

·     Hardware & Component news; ROKU strong quarter as total revenue came in at $650 million, above consensus of $622 million and adjusted EBITDA came in at $114 million, above consensus of $43 million, capped by 4Q platform margin strength and a stable outlook; WATT shares surged on a Bloomberg report that AAPL is working on a magnetically attached battery packer for the newest iPhones (though report didn’t specify WATT – FWIW); NTAP upgraded to Buy at Longbow as see continued share gains in the core business, and strengthening cloud data services found in our checks, driving upside to estimates

·     IT Services & Consulting, RXT posted a strong quarter with organic revenue growth of 11%, increasing revenues to $716M, a 1% beat as bookings were very strong and remain in the $300M per quarter range; DXC was upgraded to Neutral at Bank America after pulling back from the high $20s to mid-$20s following Atos’s decision to abandon its bid for DXC on 2/1

·     Networking; CASA shares jump on better Q4 results as after much stronger wireless revenue in Q4 offset weaker Fixed Telco revenues; ANET shares rise as posted a beat & raise and improvement in visibility and confidence into CY21 outlook and underlying business trends, as product revenue was the key driver of outperformance in the quarter – Q4 revenue of $648M (+17% Y/Y vs -7% comp), beating expectations by 3% and the high-end of guide ($635M)


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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