Market Review: January 31, 2022

Auto PostDaily Market Report

Closing Recap

Monday, January 31, 2022





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Stocks in the U.S. jumped on the final trading day of January, a month marred by hefty losses for major averages, but also trading at levels that were significantly better than where they were just a few days ago. The S&P 500 index reclaimed its 200-day MA resistance of 4,436, proceeding to extend gains throughout the afternoon in slow steady fashion with strong breadth, but lighter volume than what we have seen recently. The Nasdaq managed to avoid its worst January on record by surging late day (was down more than 16% MTD late last week before the back-to-back market surge, finishing month down less than -10%) – the Nasdaq has rallied nearly 8% from its Monday 1/24 lows. Technology stocks have slumped this month as investors consider how rising interest rates could weigh especially hard on the group’s pricey valuations. After the last 2-day rally, the S&P 500 is down about 5% for the month, the Dow -3.5% MTD, the Nasdaq -9.2% and the Russell 2000 down over -10% for the month. As January closes overseas, the Europe’s Stoxx 600 fell -4%, its worst month since Oct 2020, while European technology stocks were down 12.6% in Jan, their worst month since Oct 2008. Huge week of earnings coming up, with large cap tech again a key driver with FB, GOOGL, AMZN in Internet due, a handful of sei-chip names AMD, SWKS, QCOM, QRVO, NXPI and large cap players: XOM, UPS, PYPL, EA, SBUX.

·     Stock & Sector Movers: Upgrades boost TSLA (Credit Suisse), NFLX (Citi), SPOT (Citi) as tech leads today; Nasdaq-100, Nasdaq Composite both rise over 2%; GOOGL, AMD, PYPL rise ahead of tomorrow night’s earnings reports; solar/Alt Energy names ENPH, SEDG, NEE, BE, FCEL, biotech CRSP, NTLA, EDIT, EVs CHPT, RIVN, NIO amongst other sub-sectors also outperforming amidst a rotation back into growth names; BYND also surges after being double-upgraded at Barclays to lead plant-based; ALGN among S&P’s top gainers after being upgraded at UBS and initiated at OW by Morgan Stanley; SDC also rallying despite being initiated at EW by Morgan Stanley.

·     Wall Street economists/strategists weighed in on FOMC, rate hikes: 1) Morgan Stanley said today they remain sellers of rallies and of the belief that the volatility and intra-day swings we are seeing are classic bear market action. Fair value remains closer to 4,000 at the S&P 500 level"; 2) Goldman Sachs raised its Fed forecast to include five 25bp rate hikes in 2022, versus four previously. Now expect the FOMC to hike in March and May, announce the start of balance sheet reduction in June, hike again in July and September, and then return to a quarterly pace in Q4 with one hike in December to end the year at 1.25-1.5%.


Commodities, Currencies & Treasury’s

·     Oil prices jump on last day of January following 6-straight weeks of gains, with WTI crude up $1.33 or 1.53% to settle at $88.15 per barrel, adding to stellar returns for the month on supply shortage fears and political tensions in Eastern Europe and the Middle East. Front month oil futures rose over 17% for the month while natural gas prices rise over 30% to $4/874 mln btus.

·     Gold prices advanced by $9.80 or 0.6% to settle at $1,796.40 an ounce but finishes January with a roughly 1.8% decline as the dollar advanced. Gold prices have slipped from 2-month highs early last week (around $1,850 an ounce) as expectations for interest rate hikes by the U.S. Federal Reserve pressured the precious metal for worst month decline since September. Silver prices also slip on the month, while palladium rallied for its best month in 14 years.

·     The U.S. dollar rose sharply this month against other currencies based on expectations of Fed rate hikes, posting gains of more than 1%, but the buck slid on Monday as investors rotated out of haven instruments and into riskier assets such as stock. The dollar index (DXY) fell over -0.65% today around 96.60, off earlier highs around the 97 level (best levels since July 2020). The reality of five Fed rate hikes possibly this year has boosted the dollar, with expectations for the first hikes to come in March (25 bps – though some models don’t rule out a 50-bps hike). Euro posts best daily gain since Jan. 12, up +0.8% at 1.1233 (but well-off January highs of 1.1482).

·     Treasury yields were little changed on day, but big jumps for January. The shorter-term 2-yr yield was last down about -1bps to 1.163% but have increased roughly 45 basis points in January in the largest monthly increase since January 2009. At the same time, the benchmark 10-yr yield is little changed at 1.78%, but well off the 1.5% levels to start the year. The jump in n-t yields comes on expectations for 5-potential rates hikes this year from the Fed, with the first expected in March.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; BSET surges after Q4 results top views – revs $129.9M vs. est. $122.5M, while JBHT announces it is acquiring the assets of Zenith Freight Lines, a subsidiary of BSET, for approx. $87M; VFC price tgt cut by several analysts following earnings results last week; BTIG said they are positive on DECK heading into its FQ3 print this Thursday as believe consumer demand for both the UGG and HOKA brands were robust during the holiday period, even in the face of sub-optimal inventory levels and out-of-stocks on key items.

·     Auto sector; TSLA upgraded to Outperform from Neutral at Credit Suisse with unchanged $1,025 tgt saying with the market disproportionately punishing growth stocks in the past month, they believe an attractive entry point has emerged for Tesla; overall rebound in the EV space today, with big gains for FSR, NIO, BLNK, CHPT, HYLN, NKLA

·     Consumer Staples; BYND upgraded to Overweight from Underweight at Barclays and tgt raised to $80 from $70 as believe BYND’s growth potential in the U.S. foodservice channel and the international segment is not properly reflected in the current stock price; Kellogg (K) downgraded to Market Perform at BMO Capital saying case for aggressively investing in K is less persuasive at current valuations (in line with 5-year averages), the ongoing challenges in US cereal, and industry-wide supply-constraints/inflation; APPH said it expects to achieve the higher end of its guidance range for full-year 2021 net sales, but shares slipped after $59.9M write-down of a $60M acquisition made less than a year ago

·     Casinos, Gaming, Lodging & Leisure sector; Stifel lowered price tgts on SGMS, NGMS in gaming names, while forecasting Q4 earnings beats for EVRI, SGMS, IGT, and inline for AGS (pre-released) as expect game ops and other recurring revenue offerings remained healthy through most of the quarter, though Omicron likely impacted visitation in select markets into year-end; Macau Legend Development’s shares fell almost 20% in Hong Kong after media reports of the arrest of its CEO over the weekend, on suspicion of money laundering and illegal gambling, including operating online casinos; PENN late Friday issued an announcement after the Ontario govt officially opened its market for sports betting/iGaming to private operators April 4th



·     E&P and Majors; broad selling pressure in energy stocks as investors rotate into beaten up tech names and out of 2022 winners such as energy; Truist downgraded CVX to Hold as they see more upside in smaller caps like DVN, OXY, EOG and they also upgraded EOG on their forecast for the company to top consensus expectations in Q4 and 2022-23 driven largely by continued operating efficiencies and contained costs, both driving record margins; Cowen says the escalation in Russia-Ukraine tension is bullish for energy commodities and lists BP, VLO, SLB as equities with the highest Russian exposure and CTRA, EQT, LNG as those with relative upside in the case of a supply disruption; XOM said it is further streamlining its business structure by combining chemical and downstream companies and centralizing technology and engineering, and other support services, to better support customers, enhance performance and grow value.

·     Alt energy, Utilities & Solar; Mizuho upgraded ED to Buy based on higher earnings power following the recent rate filing in NY that contained greater CAPEX and rate base forecasts than what we were originally forecasting; ENPH installers in Massachusetts have seen an increase in deployments as extreme weather and power outages continue to impact the state; BMO is positive on the added optionality of a strategic review by NI after its CEO retired Friday with other changes to its board of directors



·     Bank movers; Piper downgraded FCBC to Neutral and reiterated FITB at Buy with a $56 PT after management meetings emphasized improvements; Jefferies trimmed their PT on WAL to $124 from $143 after a disappointing Q4 due to a significant gain-on-sale miss but keeps its Buy rating; CNOB downgraded from Strong Buy to Outperform at Raymond James and lowering our Target price to $38 from $40 on shares following strong 4Q21 results; BUSE upgraded to Outperform at Raymond James after another solid quarter of core loan growth and strong credit quality (nonaccruals down to 0.22% of loans) in 4Q, which they expect to continue; Citi kept its 30-day positive catalyst watch on RJF open and are even more bullish on the story due to their model refresh after earnings and the Street being yet to layer in the pending TSC acquisition where accretion upside continues to build

·     Rising interest rates will nudge down world bond issuance by around 2% this year, credit rating firm S&P Global has forecast, although for corporates it is likely to be between 5% and 15% lower. Global bond issuance, not including government borrowing, hit $9 trillion last year. But this year has seen a sharp jump in borrowing rates on bets the Federal Reserve will hike U.S. interest rates as many as five times this year.

·     Insurance; PFG board approved $1.6B increase to $1.1B available under existing share repurchase; ahead of earnings, Wells Fargo said they continue to hold a negative view on the auto insurance market owing to issues impacting claims severity including: (1) chip shortages, (2) elevated used and new car prices, and (3) low vehicle production levels, which have all been severely impacted by the pandemic (underweight ratings on ALL, PGR)

·     Bitcoin, FinTech & Payments; EFX upgraded to Outperform at RBC who sees favorable long-term risk/reward with the worst currently baked into investor expectations after relative underperformance vs peers despite increasingly positive consumer lending data from recent bank earnings; Barron’s highlighted Visa (V), which was one of their top 10 picks for 2022, saying its strong earnings on Friday make it look even better; HSBC upgraded DLO to Buy and downgraded STNE, PAGS to Hold; Bank of America initiated CCAP at Buy with a $19.50 price objective as an underappreciated middle market lender who is gaining share; BMO lowered their estimates on SYF with their PT going to $50 from $54 due to higher expected costs



·     Pharma movers; TSHA reports positive clinical efficacy and safety data for high dose cohort and long-term durability data for TSHA-120 in giant axonal neuropathy; LPTX forms partnership with Leica Biosystems, a cancer diagnostics company to develop a companion diagnostic to detect Dickkopf-related protein 1; VERU said FDA Grant Fast Track Designation for Sabizabulin for the treatment of hospitalized COVID-19 patients at high risk for acute respiratory distress syndrome

·     Biotech movers; MDGL rises early after announcing positive topline phase 3 MAESTRO-NAFLD-1 data, as primary and key secondary endpoints from the double-blind placebo-controlled 969-patient MAESTRO-NAFLD-1 safety study were achieved and was well-tolerated; IONS falls after PFE announced the discontinuation of development program for vupanorsen (PF-07285557), an investigational antisense therapy that was being evaluated for potential indications in cardiovascular risk reduction and severe hypertriglyceridemia

·     MedTech Equipment; ISRG upgraded to Overweight (PT to $310) at Piper saying the co has executed well during the pandemic, has a substantial first-mover advantage, and is making good progress with SP/Ion and see as well-positioned for another year as a beat-and-raise story; DGX aid it will sell 50 common laboratory tests to consumers on Walmart Inc.’s (WMT) website; PODD was upgraded to Outperform at Oppenheimer Following Friday’s FDA approval of its Omnipod 5

·     Healthcare Services; ALGN upgrade from Neutral to Buy at UBS while lower tgt to $620 from $800 saying analysis of UBS Evidence Lab data coupled with channel checks suggests the company will beat 4Q consensus estimates by ~4% and also grow by ~22% in 2022, within its long-term growth Target of 20%-30%


Industrials & Materials

·     Aerospace & Defense; BA said they expect negative operating cash flows in future quarters until deliveries begin to return to historical levels and that they may need to obtain additional financing in order to fund our operations and obligations; Qatar Airways said it agreed to purchase as many as 50 of Boeing Co.’s new 777X freighter jet, launching the plane during a boom in air cargo; LHX shares slide after posting Q4 profit that topped expectations but revenue that missed, as supply chain headwinds and budget uncertainty weighed, and provided a downbeat full-year revenue outlook as sees FY22 revenue $17.3B-$17.7B vs. est. $18.05B (Q4 adj EPS $3.30 vs. est. $3.26; Q4 revs $4.4B vs. est. $4.48B); in gov’t IT Services, BAH and CACI both upgraded to Outperform from Market Perform at Raymond James given view that this is the most appealing time to own the group since the Trump administration was in office; separately, Bank of America downgraded shares of BAH to underperform from Buy saying post COVID-19 operational and contracting environments have pressured short term organic growth

·     Materials, Industrial & Machinery; OTIS slides after slightly better than forecast Q4 EPS and in-line revs but rev growth for FY22 of $14.4B-$14.7B, was below Wall Street expectations of $14.71B while year EPS of $3.20-$3.30 was in line with $3.28 analyst consensus; PKG upgraded to Buy from Hold at Truist in packaging saying they have become more constructive on containerboard in the near-term and believe it is the best positioned containerboard producer to benefit from favorable near-term market dynamics. Both IP and WRK should also benefit, but both companies have specific company issues; WCC shares rise after positive Barron’s mention citing the need for a retooled power grid, synergies from a recent acquisition, and valuation

·     Transports; in ride hailing industry, LYFT tgt to $70 from $80 at Jefferies as they expect strong 4Q21 topline driven by significant y/y user growth and ongoing q/q improvement despite weather seasonality; for UBER they cut tgt to $76 from $82 as expect Uber s 4Q21 Gross Bookings just above the high end of guide with growth led by Mobility recovery


Technology, Media & Telecom

·     Internet; SPOT said this weekend to add content advisory when podcasts mention Covid as more musicians yank songs from platform – Joe Rogan, responding to objections to his podcast on SPOT, said his show has grown “out of control” and pledged to be more balanced and informed about controversial topics and guests. He added: “If I pissed you off, I’m sorry.” NFLX upgraded to Buy from Neutral and lower tgt to $450 from $595, SPOT upgraded to Buy from Neutral at Citigroup saying subscriber-based stocks have come under significant pressure. Since January 2020, across our subscription-based universe, equity returns now lag the S&P 500. Our EV per sub analysis suggests prevailing equity values don’t assume material sub growth or improving subscriber economics beyond 2023; ANGI said it is teaming up with Walmart as its pros will soon be available in nearly 4,000 Walmart stores across all 50 states and nationwide online; BIDU, BABA and other U.S. listed Chinese stocks saw buying interest early

·     Semiconductors; nice rebound for the SOX index after falling over 15% MTD on supply concerns (SOX rose over 40% in 2021); MCHP upgraded from Neutral to Buy w/ $92 from $82 at UBS and see risk/reward skewed 2:1 to the upside. The Analog cycle is transitioning to the inventory build phase but, in our view, still has legs at least through 22′ and likely into 1H:23 as lead times are stretched, customer chip inventories are still below normal and Auto/Industrial demand is solid; AMD shares rallying ahead of earnings tomorrow night

·     Hardware, Software movers; CTXS to be acquired by Vista Equity & Evergreen Coast Capital for $104.00 cash per share, 24.3% premium, $16.5 billion (confirming reports over the weekend) ; BB entered an agreement to sell legacy patents relating mostly to mobile devices, messaging, and wireless networking to Catapult IP Innovations Inc. for $600 million; SONY acquires Bungie for $3.6 Billion; Studio to Remain Multiplatform


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