Market Review: October 18, 2021

Auto PostDaily Market Report

Closing Recap

Monday, October 18, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Markets opened lower on weak China GDP data and another climb in oil prices that spurred inflation fears, but today’s morning weakness gave way to a sustained move to the upside as Treasury yields settled off multi-month highs (1.62%) and oil prices ended the day lower than its early 7-year highs to ease some pressure. The S&P snapped its streak of four consecutive red Mondays, while the Nasdaq opened the week higher for the first time since Labor Day weekend. The Nasdaq also recaptured the 15,000 level for the first time in October as big tech led the way, including a new record high for MSFT and AAPL shares moving higher in response to its company event that unveiled a new MacBook Pro with two new chips and a new generation of AirPods, both of which will be available starting next week in time for the holiday shopping season. Earnings tonight and pre-market tomorrow are concentrated in financials (BK, FITB, FNB, PACW SBNY, SI, SNV, SYF, TRV, ZION among those scheduled), while others include STLD, DOV, HAL, JNJ, KSU, PG, PM, and 72 S&P companies including TSLA and NFLX will report throughout the week as earnings season ramps up.

·     Stock/sector news; OXY among the S&P leaders after Truist upgraded it to Buy as Energy outperformed early with Crude hitting its highest price in 7 years, but the sector eventually slid as Crude prices pared gains; XLE Energy ETF 52-week highs early but pares gains; AAPL pops in the afternoon during its company event that includes a new generation of AirPods, MacBook Pro with the new M1 Pro chip; ZG plummets to 52-week lows after pausing homebuying through year-end as it works through its backlog of properties; Morgan Stanley’s double-downgrade of X to UW from OW sends shares rolling and its d/g of STLD to N sends shares lower early, though shares end higher ahead of earnings tonight; DIS slides after Barclays downgraded it on slowing growth in streaming; ACI spikes after topping quarterly estimates and raising its dividend, while STT soars to its highest levels since June 2018 on its beat; MDT the worst performer in the S&P with shares trading below $120 for the first time in over 6 months after the FDA did not stop its renal denervation trial early, saying it needs to be completed, pushing out the timeline for approval; BIIB weak, hit 4.5-month lows after its ALS study failed to meet its primary endpoint.


Economic Data:

·     Industrial Production for September falls -1.3% M/M vs. +0.2% consensus and -0.1% prior (revised), while Capacity Utilization at 75.2% vs. 76.5% consensus and 76.2% prior and Manufacturing Output falls -0.7% M/M vs. +0.3% consensus and -0.4% prior.

·     The U.S. October NAHB housing market index 80, highest since July and versus 76 in september as the index of current single-family home sales 87 versus 82 in september and index of home sales over next six months 84 versus 81 in september.


Commodities, Currencies & Treasuries

·     Oil prices rose but ended off multi-year highs, rising $0.16, or 0.19%, to settle at $82.44. The morning’s high of $83.18 was the first-time prices topped $83 since October 2014 as recovering demand and high natural gas and coal prices continue to buoy prices by encouraging users to switch to fuel oil and diesel for power generation.

·     Gold prices slipped -$2.60 to settle at $1,765.70 an ounce, trading in a narrow $10-range most of the day. The dollar index (DXY) was little changed around the 93.90 level after having hit multi-year highs recently on rising interest rate and inflation fears amid better economic data. The euro edged back above the 1.16 level. Fed Reserve members have also upped the timeframe to asset tapering, possibly as soon as next month with some saying they hope to end the plan by mid ’22.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; Barron’s says the Consumer is still in good shape and mentions HD, LOW, TSCO, TGT, M, KSS raises its 2021 revenue outlook to $362.5M, above consensus views of $350.55M as Q3 sales are expected to increase 66%-67% Year-Over-Year to $107-$108M; Saks Fifth Avenue is reportedly preparing an IPO for its e-commerce business that could value the unit at $6B, triple its $2B valuation in March; AKA was initiated at OW/Buy at Jefferies ($20 PT), Truist ($16), KeyBank ($13), Piper ($13), Morgan Stanley ($13), Cowen ($11), and EW at Wells ($10); BRLT initiated with OW/Buy ratings at Jefferies ($18), Cowen ($17), JPMorgan ($16), KeyBank ($16)

·     Auto sector; Ford (F) to invest $316 Million to make EV parts at its Halewood factory in England after the U.K. government pledged funding support and the plant will produce about 250k power units per year starting in mid-2024; TM said its N.A. unit will invest about $3.4 billion (380 billion yen) on U.S. auto battery development and production in the United States through 2030 and plans to establish a new company and build a new U.S. automotive battery plant together with Toyota Tsusho, the automaker’s metals trading arm; Bank of America said auto aftermarket trends maintained their strong year-to-date trends in the week ending 10/9 and auto parts retail continues to exceed expectations, while auto services maintain the recovery pace and car wash holds strong growth; VLVLY (Volvo Cars) said the final price for Stockholm IPO will be within a price range of SEK53-68 with an offering of 368-472M new class B shares as it plans to raise ~SEK25B (~$2.9B), and its first day of trading is expected to be Oct. 28; STLA said it is building a new battery plant in North America to start output in early 2024 and is also postponing the launch of its Maserati Grecale SUV to Spring 2022 from Nov. 16 due to the current chip shortage; CZOO acquired Vans365 in a move to expand its online retail to include commercial vehicles; Bernstein said pure-play EV vendors, including TSLA, currently account for 1% of all car sales and 28% of BEVs sales, up from 15% in 2014, but ~45% of the auto industry’s market cap, making it difficult to justify their current valuations even if they ultimately account for half of all EVs sold by 2030; Earnings this week include TSLA Wednesday PM, LAD Wednesday AM, and AN, GPC Thursday AM

·     Housing & Building Products; LEN said its board increased share repurchase authorization by up to the lesser of $1 billion in purchase price, or 25 million in shares; ZG tumbles after saying it will stop pursuing new home purchases as it works through a backlog of properties already in its pipeline; in building products, FBHS and BECN upgraded at RBC Capital but downgraded SUM and is lowering estimates and targets as incorporate further supply chain disruptions and persistence/acceleration of significant cost inflation; in building materials, VMC, MLM upgraded to Buy from Neutral at DA Davidson citing more catalysts for the stock with signs of improving business momentum that include better lettings, stabilizing commercial activities, and pricing

·     Consumer Staples; grocer ACI Q2 EPS and revs beat (64c/$16.51B vs. est. 45c/$15.81B), with better comp sales up 1.5% vs. est. down (-1.9%), raises FY21 EPS view to $2.50-$2.60, from prior guidance range of $2.20-$2.30 per share and raised its dividend 20% to $0.12; in beverages, Bank America said Hard Seltzer tracker (SAM, STZ) shows sentiment is waning as per checks, there were there were 9,880 hard seltzer posts in Sept., which is below Aug. (12,542 posts)

·     Casinos, Gaming, Lodging & Leisure sector; in lodging, Wells Fargo with a Q3 preview as they upgraded HT to Overweight and HST to Equal-weight while downgraded PK to EW and both APLE and SVC to underweight as adjusts ratings w greater focus on recovery in mid-week, urban demand, exposure to top 25 markets and those likely to benefit from incremental talk of medium-term M&A



·     E&P and Equipment; Truist upgraded OXY to Buy and up tgt to $50 PT as they see the company’s record FCF continuing combined with asset monetization’s, possibly bringing plans to return its quarterly dividend to ‘19/20 levels along with the possibility of an additional variable dividend and/or stock repurchase; Mizuho increased their long-term nat gas price forecast to $3.30/mcf from $3 on improving supply and demand fundamentals and upgraded AR given a positive setup for propane driven by similar factors to gas and CTRA to Buy after the XECmerger and as the only gas producer under their coverage unhedged for 2022; Bank of America downgraded GTLS to Neutral on valuation and near-term margin concerns and CLB to Underperform based on the company having less operating to U.S. onshore, where they see meaningful 2022 upside, and not seeing a near-term meaningful recovery in its Reservoir Description segment; IO shares spiked after its preliminary Q3 results show revenue $44-45M (vs $19.7M in Q2, $16.23M YoY) with more than half of its quarterly revenue from 3D data sales; AMPY said the U.S. Coast Guard has a high degree of confidence that the size of the company’s oil spill earlier this month was approximately 588 barrels, below the previously reported maximum estimate of 3,134 barrels; Barron’s included CVX among its three stocks to beat inflation

·     Pipelines: Ahead of earnings, Raymond James raised their price targets on LNG (to $132), DCP ($39), ENLC ($9), MMP ($51), OKE ($67), SUN ($44), TRGP ($65), and WMB ($33) and sees a tame quarter with few surprises to the upside or downside

·     Coal, Utilities & Solar; Cowen raised their targets on ENPH, FSLR, SEDG and cut SHLS, FTCI as they are much more constructive on residential solar and favor SEDG, ENPH while being below consensus on ARRY, SHLS, FTCI downgraded to Underperform at Bank of America; BTU preliminary Q3 net loss ($55M)-($75M) vs ($64.8M) loss YoY, revs $670-690M vs est. $876.8M, adj EBITDA $280-290M vs est. $231M



·     Bank, Brokers movers; STT Q3 EPS beat ($2.00 vs $1.92 cons) on better revs ($2.99B vs $2.96B) with fees largely inline but NII/NIM better and expenses were largely inline while provision was slightly worse; IBKR introduces cryptocurrency trading for financial advisors in U.S., enabling rias to trade and custody bitcoin, ethereum, Litecoin and bitcoin cash; PNC was downgraded at Bank America after earnings last week; in insurance, GSHD downgraded to Underperform on valuation at Bank America calling the change "heavily valuation-driven" with the shares having more than doubled from a mid-May trough.

·     Bitcoin, FinTech & Payments; Financial markets are readying for the expected launch of the first U.S. Bitcoin futures ETF on Tuesday. The ProShares Bitcoin ETF (BITO) is meeting with no obstructions from regulators in advance of a deadline Monday for them to raise objections. According to The NY Times, the NYSE is therefore preparing to list the fund on Tuesday; HOOD reported it will begin listing the Shiba Inu coin on its platform

·     Consumer Finance & Lending; UPST downgraded to Underperform with $300 tgt at Bank America on significant gain in public markets valuation in recent months that saw Upstart stock appreciate 187% since 2Q earnings. Current market price of $390 per share implies a forward sales multiple of 26X ‘23E sales which is at a very large premium vs. peers.



·     Pharma movers; AVDL tumbles after saying the U.S. FDA notified the co that the agency is still reviewing the marketing application of its sleep disorder drug, FT218, and the decision will likely not be taken this month; OMER said they received a Complete Response Letter (CRL) from the U.S. FDA regarding its Biologics License Application (BLA) for narsoplimab in the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy; ESPR announced it would be cutting its corporate workforce by 40% and is targeting at least $20M reduced operating expenses to better position the company ahead of its CLEAR Outcomes trial; OYST said the FDA has approved TYRVAYA Nasal Spray 0.03 mg for the treatment of the signs and symptoms of dry eye disease; MNKD slides after the company said the FDA would not approve a pulmonary arterial hypertension treatment it is developing with UTHR

·     Biotech movers; BIIB said a late-stage experimental treatment, Tofersen, for an inherited form of amyotrophic lateral sclerosis (ALS) failed to reach its main goal, but secondary measures and biomarkers showed favorable trends; RVNC tumbles after the FDA declined to approve its frown line injection treatment, citing issues with the company’s manufacturing facility; o other concerns were raised by the agency; AXSM expands term loan facility with Hercules capital to $300 million – $100 million now available upon the potential FDA approval of AXS-05; VALN reported positive Phase III results for its inactivated, adjuvanted COVID-19 vaccine candidate VLA2001 (note shares of DVAX rise in reaction as partners with VALN)

·     MedTech Equipment; MDT announced that the SPYRAL ON MED pivotal renal denervation (RDN) trial was not stopped early based on the interim analysis and that the study would continue until completion. Wells Fargo said they believe the base case for the Street and MDT was for the trial to be stopped early based on this interim analysis due to a positive outcome; DXCM downgraded to Neutral from Buy at Guggenheim with $530 tgt saying while remain constructive on its long-term outlook, they no longer see the near-term risk/reward as positive with the stock trading above our prior price target

·     Healthcare Services; LHCG lowers FY21 adjusted EPS view to $5.75-$5.85 from $6.30-$6.50 (est. $6.39) and also lowers FY21 revenue view to $2.20B-$2.205B from $2.215B-$2.265B; Mizuho Securities said it sees five healthcare companies posting positive Q3 results this week – hospital chains THC, HCA, insurers ANTM, and data/tool names DGX and IQV as expects strong underlying industry demand and an increase in COVID hospitalizations, testing rates to reflect in Q3 results


Industrials & Materials

·     Aerospace & Defense; SPCE downgraded to Sell with $15 tgt at UBS citing yet another delay for the company’s next powered flights, which had already been delayed from late September to late October following a supplier part issue

·     Metals & Materials; U.S. Steel (X) downgraded to underweight and lower tgt to $17 from $35 and STLD downgraded to equal-weight and tgt to $61 from $77 as downgrades steel industry view, believing steel prices have peaked, and thinks the prospects of lower steel prices will continue to broadly weigh on the stocks in the group

·     Metals & Mining; Barclay’s lowered tgt prices slightly for gold/industrial miners KGC, NEM, GOLD, RGLD, SCCO and GMEXICO, while raising targets more materially on TECK and ERO, as marked Q3/21 commodity prices to market and adjusted the near-term outlooks slightly; Uranium stocks soar (CCJ, DNN, UUUU, UEC) after world’s largest producer announces launch, investment in physical uranium fund

·     Chemicals; DOW was downgraded from Peer Perform to Underperform at Wolfe Research with $55 tgt saying they are most cautious on the PetChem complex, now 6% below 2022 Street EBITDA, as view stems from bullish natural gas, ethane, and propane outlook, which combined with PE prices flatlining and ethylene prices retrenching from early year gains; WLK was upgraded to Buy from Neutral at Bank America with a price target of $120, up from $97, as believes that Chinese curtailments should drive strength across a number of chemical supply chains through year-end; Loop Capital upgraded shares of FMC to Buy saying recent checks with contacts within the Agriculture industry, shows it is not a "broken story", which represents an opportunity, while the firm downgraded CTVA to Hold as near-term said they see sentiment possibly becoming influenced by the potential for headwinds related to the "profound" supply chain disruptions and raw material cost inflation

Technology, Media & Telecom

·     Internet; NFLX estimates that its latest megahit, "Squid Game," will create almost $900 million in value for the company, and only cost about $21M to make (note earnings are Tuesday night); AMZN under fire as WSJ reports members of a congressional committee questioned whether co executives misled them during an investigation of the company’s business practices and if they may have lied under oath; BIDU shares rise following a media report stating Chinese officials are considering rules which would make content from various tech platforms accessible in Baidu’s search engine; BABA is set to launch its first custom-designed processor chip to power its cloud computing business, several sources told Caixin, in a move to compete with U.S. rivals; PINS tgt cut to $62 from $82 at Credit Suisse though maintains its 2021/2022 EPS ests ahead of earnings; SNAP tgt raised to $90 from $88 at KeyBanc Capital Markets, which writes that the social media company’s ability to deliver annual revenue growth above 50% seems increasingly likely

·     Software & Semiconductors; ahead of earnings, Stifel said despite the current supply constraint issues, they believe most companies should still deliver solid “beat and raises” when all is said and done and strongly reiterate our secular thesis on the equipment group; QCOM removed from US 1 List at Bank America; KLIC raises quarterly dividend by 21%; MU files for three-part notes offering; size not disclosed; FIVN upgraded to Overweight at Morgan Stanley saying its growth prospects are unhampered by the dissolution of the ZM/FIVN merger agreement. Path to PT likely to take a couple of quarters as fewer unknowns and ramping large accounts but see analyst day as nearest catalyst

·     Hardware, Components & Services; NTAP downgraded to Sell from Neutral at Goldman Sachs as we begin to factor in a moderating IT spending environment in 2022; DELL with a positive mention in Barron’s this weekend saying the company is about to become much more attractive to investors as it prepares to spin off its valuable stake in software maker VMW in early November; CDW to acquire Sirius Computer Solutions for $2.5 billion; FLEX agreed to buy Anord Mardix, a company that provides power equipment and systems for data centers, for $540M

·     Media & Telecom movers; DIS was downgraded to Equal Weight from Overweight at Barclays and cut tgt to $175 from $210 saying Disney+ growth has slowed significantly, despite launching new franchise titles, day and date movie releases and Star+ (ests also lowered for DIS at Moffett as continue to see the stock as rangebound and largely fairly-valued); VIAC and ATUS have a comprehensive new multi-year channel carriage agreement covering the portfolio of broadcast, entertainment, news and sports networks.; Barclay’s lowered its tgt on DISCA to $30 from $35 on the pending WarnerMedia deal holding pattern; that said, they now have an expectation of better cost management path than previously expected, while they readjust their DTC strategy in light of the pending WarnerMedia product merger an up WMG PT to $50 from $48; AAPL shares pop in the afternoon during their company presentation that included deeper integration with SIRI for Apple Music, a new $4.99/mo Siri-only option for Apple Music, the third generation of AirPods starting at $179 available next week with spatial audio, improved battery life of up to 6 hours, and will include MagSafe and wireless charging for the case, new colors for its HomePod mini, and a new MacBook Pro with two new chips, the M1 Pro and M1 Max


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