Market Review: June 21, 2021

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Closing Recap

Monday, June 21, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Stocks opened higher, rising throughout the entire session, and making back half of last week’s losses as market fear is once again non-existent despite a change in the Fed’s rate outlook last week. The Dow Jones Industrial Average jumped for the first time in six days, while the S&P 500 index posts its biggest one-day return in over a month (snaps 4-day losing streak and off lowest levels in 2-months). The CBOE Volatility index (VIX) jumped 16% on Friday on interest rate hike concerns, but fear was all but erased today as the VIX fell around 13% today. The Dow Jones Transports Average jumped 1.9%, while the domestically focused small-cap Russell 2000 added over 2%. The Dow Industrial Average rose as much as 600 points, led by strength in financials (AXP, TRV, GS), energy (CVX), industrials (CAT, BA), and technology (MSFT new record highs). Overall, shares of banks, energy firms and other companies that tend to be sensitive to the economy’s fluctuations had fallen sharply since the Fed’s meeting on Wednesday, when the central bank caught investors off guard by anticipating two quarter-percentage-point rate increases in 2023 – but again much of it erased today.

·     Focus this week will be on U.S. factory activity surveys, home sales data, 10 FOMC members speaking at some 16 events this week which includes Fed Chairman Powell who testifies to a House panel on Tuesday about the Fed’s support for the economy. Treasury yields plunged to lowest levels since February (10-year hit lows of 1.34% before rebounding to around 1.48%), while the dollar slipped. Oil prices rebound after last week commodity pullback, while Bitcoin, and other crypto asset names (Ethereum, Litecoin, etc.) plunge following reports of a further crackdown in China as authorities in the southwest province of Sichuan on Friday ordered cryptocurrency mining projects to close. Energy was the top gainer on the day behind the jump in oil prices and further upbeat comments after Bank America said, "tighter supply and demand balances in 2022 could push oil briefly to $100 per barrel, with Brent poised to average $75 per barrel next year" (shares of APA, FANG, MRO, HES, EOG top S&P 500 gainers).


Fed Speaker Comments:

·     St. Louis Fed President James Bullard cited the "upside risk" of potential inflation in a speech Monday in which he said the central bank will have to stay "nimble" as the U.S. economy reopens after the COVID pandemic. Speaking on a panel discussion sponsored by the Official Monetary and Financial Institutions Forum, Bullard pointed to a tight labor market, suggesting that the economic conditions coming out of the pandemic recession are much better than the ones faced after the last major economic dislocation. Meanwhile, Federal Reserve Bank of Dallas Robert Kaplan, suggested Monday that the central bank should consider pulling back its accommodative policy "sooner rather than later," arguing that conditions in the labor market and with raw material pricing pointed to the Fed taking its "foot gently off the accelerator."



·     Oil prices rebound as WTI crude gains $2.02 or 2.82% to settle at $73.66 per barrel, surging after some early-morning choppiness, and posting its highest closing price since 2018. The jump in oil prices (and commodities in general) comes amid the recent Iranian election results, which remain an overhang with as a nuclear deal with Iran, and hence Iranian supply growth, remain elusive.

·     August gold rises $13.90 or 0.8% to settle at $1,782.90 an ounce, partially rebounding after a steep decline in prices last week (most-active contract lost 5.9% last week, the biggest decline since the week ended March 13, 2020, after the Fed signaled it would soon start tapering its asset purchase program and could start raising interest rates in 2023). A pause in the dollar’s rally helped restore interest in precious metals which saw steep declines last week (silver, platinum), while investors looked for safe-haven assets as Bitcoin prices plunged. Spot palladium rises about 5% to $2,587.90 an ounce.


Currencies & Treasuries

·     Treasury yields dropped initially, with the benchmark 10-year Treasury yield touching 1.354%, its lowest level since February 24th before recovering back above 1.48%, finishing moderately higher on the day. Despite the hawkish spin last week by the Fed, Treasury yields have been in freefall of late despite the dollar jumping to multi-month highs. The 30-year Treasury yield jumped 10 bps to 2.113%. Bitcoin prices tumbled (along with other crypto assets), touching lows around $32,400 and Ethereum dropped below $2K.

·     The U.S. dollar index (DXY) retreated -0.4% to 91.85, falling from 2-1/2-month highs, prompting investors to turn to gold, which fell for six straight sessions before Monday’s bounce. U.S. 10-year Treasury yields also rose after hitting four-month lows. The U.S. dollar index is coming off its best trading week in fourteen months, rising +1.9% as the Federal Reserve indicated more of a hawkish sentiment towards future rate hikes. Before last week’s FOMC statement, more than half of the Federal Reserve officials estimated that rates would remain near zero into 2024.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; AMZN hosting its 2-day “Prime Day”; FIGS was initiated with Buy/OW ratings at Guggenheim ($45 pt), Cowen ($43), OpCo ($45), Telsey ($43), Barclays ($50), KeyBank ($45), Bank of America ($42), and Piper ($44), and at Neutral by Morgan Stanley ($34) and Goldman ($28); SHOP is rolling out a new service that will allow content publishers to link to merchants in the Shopify network in exchange for a cut of transaction revenue, the Information reported; in gun sector, SWBI climbs again, to a new record high, adding Friday’s 17% gain following stronger-than-expected quarterly results (lifts shares of VSTO, RGR in sympathy)

·     Auto sector; RIDE shares pressured early after the WSJ reported several top executives at the co sold off chunks of stock ahead of reporting financial results, according to regulatory filings disclosing the transactions; auto space generally quiet on day; HOG shares outperformed – BMO Capital noted According to data from IHS/Polk, U.S. registrations of HOG motorcycles increased +135% yoy in April (against a -53% comparison last year). On a two-year basis, April U.S. registrations increased +10%.

·     Consumer Staples & Restaurants; SAM raised to “best idea” at Guggenheim after removing TAP saying SAM can continue growing strongly, helped by Truly brand’s growth in retail and faster-than-expected rebound of on-premises channel that includes restaurants and bars; BYND announced expanded distribution in Australia with 800 Woolworths stores now carrying the flagship Beyond Burger; WING announced its launch of Thighstop, a "new thigh concept with more than 1,400 locations nationwide"

·     Casinos, Gaming, Lodging & Leisure sector; SIX receives a positive mention in Barron’s saying shares could keep climbing as it offers outdoor entertainment that’s close to home; BALY announces arrangement with Boot Hill Casino & Resort to launch mobile sportsbook in Kansas; casino names were mostly higher as reopen related sectors also outperform (WYNN, MGM)



·     Energy stock movers; after trading lower last week, energy stocks seeing a strong rebound to start the new week; Bank America upgraded MRO to neutral (up tgt to $16 from $12), amid the firm raising its oil deck for 2021-2023 and acknowledging the prospects that oil price strength may be sustained beyond its current view, while downgraded RRC to Underperform; Bernstein raised their price deck to $75 per barrel for Brent and to $73 per for WTI and logically find all covered names attractive as argue for a new paradigm for oil markets as they upgrade several names including PXD, DVN, KOS to outperform (in contrast to ‘just’ an inflationary cycle or a ‘next super-cycle’); Mizuho raised its tgts on COP to $82 from $73 and on OXY to $37 from $36 saying in a higher oil price environment driven by supply constraint, they believe that large-cap operators with scale are best positioned to succeed

·     Coal, Utilities & Solar; CNX downgraded to Underperform from Neutral at bank America predominantly given a more constructive view on oil than natural gas (notes CNX portfolios is currently 95% natural gas); solar names giving back some of last week profits as ENPH downgraded at Capital One sends shares lower while RUN snaps 3-day win streak; DQ and JKS shares little weakness after headlines U.S. mulls ban on polysilicon from Xinjian, China; shares of REGI, DAR, GEVO move on Reuters report farm state democrats will propose billions in U.S. spending to boost biofuel demand; solar got a bounce late after headlines Sen Ossoff (D-GA) to introduce bill that would give tax break to solar manufacturers.



·     Bank movers; Citi (C) shares rebound, snapping its 12-day losing streak as overall banks (JPM, GS, BAC) trying to rebound after recent pullbacks on plunging Treasury yields; Financials reacted negatively to an unexpectedly hawkish Fed last Wednesday as the FOMC raised rates on the O/N RRP rate and interest on excess reserves by 5bps, implying sooner than expected rate hikes and tapering of asset purchases – pushed banking stocks lower last week

·     Bitcoin news; Bitcoin and other crypto asset names (Ethereum, Litecoin, etc.) plunged following reports of a further crackdown in China as authorities in the southwest province of Sichuan on Friday ordered cryptocurrency mining projects to close. China has ordered payment platform Alipay and domestic banks to not to provide services linked to trading of virtual currencies (shares of stocks that invest, take payment, or mine bitcoin such as MSTR, SI, COIN, MOGO, NCTY, MARA, RIOT, SBNY, OSTK, SQ) were all under pressure early

·     Bitcoin specific news; MSTR announced that it had purchased an additional approximately 13,005 bitcoins for approximately $489 million in cash at an average price of approximately $37,617 per bitcoin, inclusive of fees and expenses (as of June 21, they hold approx 105,085 bitcoins, which were acquired at average purchase price of approximately $26,080 per bitcoin; MARA named new Buy with $40 pt at Compass Point saying MARA is one of a select few Bitcoin miners with established scale, next-generation hardware, and low-cost power purchase agreements in place, RIOT initiated Buy and $43 tgt as believe the recent Whinstone acquisition is transformational for the company and provides additional capacity for miner deployment

·     Financial services: Inc. (LZ) set terms for its initial public offering – the company had previously filed to go public in 2012, with terms implying a valuation of up to about $484 million but filed in January 2014 to withdraw the filing. The company is looking to raise up to $516.3 million by offering 19.12M shares in the IPO, which is expected to price between $24-$27 a share ; JOBS will go private in a $5.7B deal, with shareholders getting $79.05 per share ADS in the consortium purchase



·     Pharma movers; MNOV shares jump after data from an experimental medicine in alcohol use disorder reduced the odds of heavy drinking by 45% compared to placebo with no effect on negative mood; GSK and VIR announce continuing progress of the comet clinical development program for Sotrovimab as it reduces hospitalization, risk of death in adults with mild-to-moderate covid-19 at high risk of progression to severe disease; AMRN slides as the Supreme Court rejected a bid by the co’s subsidiary to revive patents on its heart drug Vascepa in a legal battle against generic drugmakers Hikma Pharmaceuticals and Dr. Reddy’s Laboratories Ltd; The U.S. Supreme Court declined to hear ABBV’s challenge to a lower court’s decision that it violated federal antitrust law by pursuing a "sham" patent complaint against rival PRGO over AbbVie’s blockbuster testosterone replacement drug AndroGel; TEVA presents new data at 7th European academy of neurology congress suggesting socio-economic factors may contribute to the significant under-diagnosis of migraine

·     Biotech movers; TBPH said its Phase 2 trial of its treatment for acute lung injury and impaired oxygenation didn’t meet its primary endpoint when compared with a placebo; TARS said a pivotal Phase 2b/3 study of its investigational therapeutic TP-03 met all of its primary and secondary endpoints in patients with Demodex blepharitis; GILD announces positive data from three retrospective studies of the real-world treatment of patients hospitalized with COVID-19 treated with Veklury (remdesivir); ENOB rise after acquired an exclusive license for a technology to potentially treat and prevent all variants of coronavirus, including the cause of COVID-19

·     MedTech Equipment; in research, Wells Fargo said the reimbursement environment for spec diagnostics has gotten a lot better, as believe Fridays announced advanced diagnostic lab test stats for NTRA’s Signatera is underappreciated and supports this view, raise tgts for all, NTRA, GH, EXAS and NVTA and maintain overweight in NTRA and GH; MDT receives FDA expanded approval for arctic front™ family of cardiac cryoablation catheters for initial use for recurrent symptomatic paroxysmal atrial fibrillation


Industrials & Materials

·     Industrial & Machinery; CNHI agreed to acquire RAVN for $58.00 per share, in a transaction valued at $2.1B ; IR said it plans to acquire Seepex GmbH, a German company that makes positive-displacement pumps, for about $511.9M; LDL rises after Clearlake capital-backed Unifrax to acquire the co for $62.10 per share in deal valued at approx $1.3B ; CAT shares among leaders in the Dow amid rebound in industrials.

·     Transports; AAL said yesterday it would cancel around 1% of its flights through mid-July due to labor shortages and backed up aircraft maintenance in face of surprise uptick in bookings; UBER said it will acquire the remaining shares of grocery delivery company Cornershop after acquiring a majority stake in Q320 as Cornershop will become a wholly-owned subsidiary of Uber

·     Containerboard & Packaging sector: KeyBanc noted Fastmarkets RISI’s PPI Pulp & Paper Week recognized a substantial $30-$50/ton of additional boxboard price increases in June, a favorable development for producers (IP, WRK, PKG, GEF); Wells said they believe domestic containerboard producers are best positioned heading into H2 2021, saying IP remains their top packaging idea as raise ests and tgt

·     Metals & Mining; group looks to recover after last week’s drubbing after the Federal Reserve said Wednesday it expects to raise interest rates by late 2023, sooner than previously projected. Note shares of NUE fell ~13% in tough week for steel stocks, while FCX fell 14%, and gold miner NEM dropped 11%; RIO was downgraded to Sell from Neutral at UBS saying current free cash flow and dividend returns are not sustainable with near-term risks rising for the commodities rally

Technology, Media & Telecom

·     Semiconductors: INTC ests and tgt lowered at Citigroup (to $60 from $65) citing industry checks showing PC supply chain push-outs and firm remains concerned there has been excess inventory built and/or lower demand forecast; TSM was downgraded to Equal-weight from Overweight at Morgan Stanley; also TSM is expected to kick off equipment move-in at its new advanced 5nm fab in the US state of Arizona as early as mid-2022, Digitimes reported

·     Software movers: ORCL mentioned positively in Barron’s saying the company is in the middle of a major business overhaul, reinventing itself for the cloud, and thought the stock has been among the year’s best performing tech shares, but the rally may not be over; general pullback in tech/software space after leading last week; CRWD competitor SentinelOne (S) priced its IPO at $26-29 per share, with a potential $7.36B valuation; the U.S Commerce Department said it was rescinding a list of prohibited transactions with TikTok and WeChat that were issued in Sept as the Trump administration sought to block new U.S. downloads of both Chinese-owned apps

·     Hardware, Components & Services; NOK and DISH to deploy first 5g standalone core network in the public cloud with AWS; GSAT initiated with a Buy and $3.25 tgt at B Riley saying the company is prioritizing monetizing its spectrum assets through crafting new enterprise spectrum leases,


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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