Market Review: September 01, 2021

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Closing Recap

Wednesday, September 01, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     New month, same story as September opens with yet another intraday record for a major index with the Nasdaq opening at a new record high and holding above 15,300. Meanwhile, the S&P came within 0.25 points of joining its record ranks but failed given a late day pullback for stocks. Today’s market upswing accompanied a disappointing read for ADP private payroll data, following Fed Chairman Powell’s comments on Friday that the Fed will be patient as it tries to nurse the economy back to full employment, so weaker data most likely delays the Fed tightening its accommodative policy. Investors now await tomorrow’s weekly jobless claims data where economists expect a new pandemic-low 345k initial claims (vs 353k last week, 348k 2 weeks ago) and Friday’s non-farm payrolls, expected to read +750k jobs in August (+943k in July). Earnings remains concentrated in retail and tech with CHWY, FIVE, SPWH, AEO, LE, SIG, OKTA, and CIEN among the companies reporting tonight-tomorrow morning.

·     Stock/sector news; PLAN soars on its beat-and-raise report, AMBA surges on its strong results and guidance, while CRWD lower despite its beat-and-raise in tech earnings; In retail earnings, PVH jumps over 15% to 3-year highs on its blowout quarter and FY guidance raise and lifts RL LEVI GIII CPRI, though VRA plunges after its quarterly miss and lowered guidance; In staples, CPB and BF/B rise after their earnings reports; NFLX climbs after reports “Seinfeld” will be added to its library next month as FAANG outperforms to lift broader markets – FB ATH despite Rosenblatt d/g, AAPL GOOGL also new ATHs, AMZN higher for 8th time in 9 days to extend rebound to +10% during stretch; ABBV sets 52-week high very early in the session but then slides as much as 12% after the FDA says they must add warnings about increased risk of serious heart-related events, cancer, blood clots, and death for JAK inhibitors that treat certain chronic inflammatory conditions; In the EV space XPEV slips after its monthly deliveries falls from July levels, NIO opens red on a decrease in monthly deliveries and quarterly production guidance but goes green intraday, while LI green early after its August deliveries set a new monthly record but then pares all gains, LCID rolls on its lockup expiry date, and TSLA flat as NHTSA opens another investigation into an autopilot crash; Alt Energy space was strong as JPMorgan adds RUN to its Analyst Focus List and Wolfe initiates at OP along with ENPH, PLUG, SEDG, NOVA.


Economic Data:

·     Weaker monthly private payroll data (ahead of nonfarm report Friday) as the ADP national employment report shows U.S. private-sector jobs in August +374,000 well below the consensus +613,000 while prior month was revised lower from +330K to +326K. The Delta variant of COVID-19 appears to have dented the job market recovery. Job growth remains strong, but well off the pace of recent months.

·     U.S. IHS Markit August final manufacturing PMI at 61.1 vs flash 61.2 and final July 63.4; sector final output index for August at 56.7 vs flash reading 56.3 and final July 59.7; sector final input prices index for August at 87.5 vs flash reading 88.4 and final July 86.7

·     August ISM Manufacturing Index: 59.9 vs 59.0 expected and 59.5 prior; prices paid index 79.4 in August (consensus 83.8) vs 85.7 in July and at lowest since December; new orders index 66.7 in august vs 64.9 in July; the employment index 49.0 in august vs 52.9 in July

·     Construction Spending rose +0.3% in July, above consensus +0.2% vs June unchanged (previous +0.1 pct); July private construction spending +0.3%, public spending +0.7%


Commodities, Currencies

·     Gold prices slipped $2.10, or 0.1%, to settle at $1,816/oz after briefly popping in the morning on the weak ADP jobs report. Oil prices rallied with WTI reversing early morning declines to settle higher by $0.09, or 0.13%, at $68.59 per barrel after OPEC+ agreed to maintain their monthly ramp-ups of production by 400,000bpd through this month and upped their 2022 demand forecast. Domestically, the EIA reported the U.S. produced its most oil in a week since May 2020 and gas stocks rose 1.3M barrels vs an expected 1.6M barrel drop. The dollar fell against a basket of major currencies on Wednesday after a report on the U.S. labor market missed expectations by a wide margin, while the euro climbed to a one-month high on inflation worries.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; PVH Q2 EPS $2.72 topped est. $1.20 on better revs $2.31B vs. est. $2.14B and boosted full year outlook, which continues to reflect gross margins above 2019 pre-pandemic levels; CAL posted a healthy top and bottom-line beat (Q2 adj EPS $1.19 vs. est. $0.54; Q2 sales rose 34.7% to $675.5M vs. est. $640.0M); VRA slumps reported weaker sales and adjusted earnings results than analysts expected for the second quarter and guides FY22 EPS and sales below views (revenues $550M-$565M, consensus $579.32M and EPS $0.80-$0.95 vs. est. $0.95); CONN Q2 EPS $1.22 vs est. $0.71 and revenue $418.4M tops consensus $396.7M and same stores stales +16.4% y/y (vs consensus +8.3%) and +3.2% on a two-year basis; in fire arms, FBI reports 2.72M NICS firearm background checks in August vs 3.12M in Aug 2020, follows 2.88M in July 2021 (shares of SWBI, VSTO, RGR active on data)

·     Auto sector; electric vehicle stocks slip led by NIO after the company lowers Q3 production view to 22,500-23,500 vehicles from 23,000-25,000 while also delivered 5,880 vehicles in August 2021, representing growth of 48.3% Y/Y but lower 25.9% from July deliveries of 7,931 units; XPEV delivered 7,214 Smart EVs, representing a 172% increase year-over-year. Deliveries in August consisted of 6,165 P7s, the company’s sports smart sedan, and 1,049 G3s, its smart compact SUV; TSLA falls as U.S. auto safety regulators said they had identified a 12th crash involving Tesla Inc vehicles that were using advanced driver assistance systems in incidents; WKHS shares volatile after the WSJ reported the SEC has opened a probe into the electric vehicle maker an early investor in RIDE; Ford (F) said it will again trim U.S. truck production due to the ongoing semiconductor chip crisis that has hit auto industry wide production; LI delivered 9,433 vehicles in August, up from July’s 8,589 and May’s 4,323; HMC reported selling 114,656 vehicles in August (-15.6%) with sales falling 17.9% YoY

·     Housing & Building Products; UBS noted that recent data from Zillow (ZG) and Apartment List show monthly rent increases that are far, far above their pre-pandemic pace. With housing rents (owners’ equivalent rent and tenants’ rent together) accounting for roughly ⅓ of headline CPI there is a concern that risings rents will lead to US inflation staying high; mortgage applications decreased last week in step with a drop in refinancing as mortgage rates remained unchanged. The Mortgage Bankers Association (MBA) said on Wednesday its seasonally adjusted market composite index tracking mortgage applications fell 2.4% from a week earlier, reflecting a 3.8% decline in applications to refinance existing loans in the week ending Aug. 27; RDFN reports 9% increase in pending home sales is slowest growth since June 2020

·     Consumer Staples & Restaurants; The Mexican arm of Anheuser-Busch InBev has accused STZ in a lawsuit of a second breach of their deal allowing Constellation to sell Mexican beers in the United States; CPB Q4 adj EPS 55c vs est. 48c on revs $1.87B vs est. $1.81B and issued FY22 guidance for net sales -2% to 0% from FY21’s $8.48B, EPS $2.75-2.85 vs est. $2.85, adj EBIT down -8% to -4%, and also announced a $500M buyback program; BF reported Q1 EPS 40c vs est. 39c on revs $906M vs est. $827.7M and still sees mid-single digit growth in FY22 net sales and operating income; FAT purchased Twin Peaks restaurant chain for $300M from Garnett Station Partners; Piper upped their price target on SKIN to $33 from $27 as macro, industry, and company-specific data points keeps them optimistic on Q3 and more excited in the long-term; FARM upgraded to Buy and up tgt to $14 from $7 at Roth Capital predicated on improved operations through closure of Houston, expansion of North Lake and opening of Rialto

·     Casinos, Gaming; casino stocks (WYNN, MLCO, MGM, LVS) with good news as Macau August gambling revenue soared 234% year-on-year to 4.4 bln patacas ($549.3 mln) with ests calling for around 176%. The GGR tally for the month was down 47.4% from the level in July as some tightened travel and border restrictions at the beginning of the month factored in



·     Inventory data: The weekly API report showed a draw of 4.04M barrels of oil for the week ending August 27; gasoline inventories show a build of 2.71M barrels, distillate inventories show a draw of 1.96M barrels and Cushing inventories show a build of 2.13M barrels. The EIA report this morning showed crude stockpiles fell -7.2M barrels vs. -3.1M consensus, and -3.0M last week, while gasoline showed a surprise build of +1.3M barrels vs. -1.6M consensus, -2.2M last week

·     Refiners; E&P and Majors; MPC said that only minor damage from Hurricane Ida has been found at its 578,000 barrel-per-day Garyville, Louisiana, refinery; TELL said it won’t proceed with $50 mln public debt offering which priced last week

·     Utilities & Solar; JPMorgan added RUN to its Analyst Focus List as a growth idea given it is one of their top long-term picks and is also uniquely positioned in the near-term following its -17% performance since Q2 earnings (vs +2% for S&P) as they expect a strong rebound in profitability in Q3 and Q4; Wells upgraded PPL to OW with a $34 PT from $32 as an out-of-consensus relative value play trading at an excessive multiple discount to peers and downgraded DTE to EW on valuation while maintaining their $128 PT; HSBC downgraded AWK to Hold but raised their target to $190 from $181; Wolfe initiated Outperform ratings on ENPH ($222 PT), RUN ($62), PLUG ($34), SEDG ($361), and NOVA ($50), Peer-Perform on BE ($25), FSLR ($100), and UP on BLDP



·     Bank movers; WFC steadies after biggest one-day drop in over two months on Tuesday after Bloomberg News reported regulators have warned of new sanctions due to unhappiness over the pace the bank is paying out to victims of its long-running sales scandal; banks in general continue to track Treasury yields, which slipped today following the weaker ADP private payrolls; HOOD said the SEC was reviewing a filing of share sale by a group of its shareholders

·     Bitcoin, FinTech & Payments; RIOT files for stock shelf of up to $600M, BTCM files $250M mixed securities shelf; UPST launches first digital lending platform in Spanish; TWTR now beta testing a Bitcoin lightning tip svc

·     Services, Consumer Finance; PCTY has acquired Blue Marble Payroll, a leading global payroll provider for companies seeking more control and convenience in international payroll processes for an undisclosed sum; Cowen initiated DLX at Outperform with a $55 price target as they see significant upside potential given the company’s impressive cash flow and strong top-line growth

·     REITs; RLGY upgraded to Outperform at KBW and raise tgt to $28 from $18 saying now trades at an all-time low multiple (just over 5x EV/EBITDA), despite the abatement of several concerns that
have weighed on the stock for years and the continuation of several key tailwinds, both industry-wide in housing and company-specific initiatives; NTST files for mixed shelf of up to $250 mln



·     Pharma movers; ABBV plunges, PFE, LLY slip after the FDA requires warnings about increased risk of serious heart-related events, cancer, blood clots, and death for JAK inhibitors that treat certain chronic inflammatory conditions. We are requiring new and updated warnings for two other arthritis medicines in the same drug class as Xeljanz, called Janus kinase (JAK) inhibitors, Olumiant (baricitinib) and Rinvoq (upadacitinib); the FDA has accepted an NDA from TEVA and MedinCell (MDCLF) for TV-46000/mdc-IRM (risperidone extended-release injectable suspension for subcutaneous use) for schizophrenia (companies submitted two phase 3 studies with the application); CHRS completes rolling BLA submission for toripalimab in nasopharyngeal cancer

·     Biotech movers; BCRX said the U.S. government exercised an option to buy $7 million worth of an antiviral influenza therapy for the strategic national stockpile; BLCM rises following announcement of the company’s license agreement with The University of Texas MD Anderson Cancer Center; for MRNA, Japan’s health ministry said that contaminants found in suspended Moderna Inc COVID-19 vaccines were particles of stainless steel, and it did not expect they would pose an additional health risk


Industrials & Materials

·     Industrial & Machinery; in the E&C sector, DY Q2 adj EPS $0.60 misses the $0.73 estimate on light revs of $787.57M vs. est. $810.47M and said expects contract revenues to be in-line and non-Gaap adjusted Ebitda to decrease as a percentage of contract revenues for Q3

·     Transports; in airlines (UAL, AAL, DAL), the TSA said U.S. screened 1.345 million airline passengers on Tuesday, lowest number since May 11; the railroad industry very active after news yesterday shaking up M&A in the space. The U.S. rail regulator on Tuesday (STB) rejected a voting trust structure that would have allowed CNI to proceed with its $29 bln proposed acquisition of U.S. peer KSU. In response, KSU confirms receipt of unsolicited proposal from CP with the identical terms to the proposal made on August 10, 2021, whereby holders of KCS common stock would receive 2.884 CP common shares and $90 in cash for each share of KCS common stock held. In addition, CP reiterated that holders of KCS preferred stock would receive $37.50 in cash for each share of KCS preferred stock held.

·     Metals & Materials; in lithium sector, BMO Capital said with EV continuing to surprise to the upside, and outperforming lithium stocks representing thematic exposure, our target prices on ALB, SQM, LTHM and ORE rise to $265, $65, $25 and A$7. With 2021 EV sales outpacing our expectations (on better-than-expected sales in China and Europe), our 2021E EV penetration forecast rises ~150bps to 7% (up ~90% y/y!); industrial metals (X, FCX, AA, CENX, RIO) underperform behind weaker China data overnight, rotations; BMO also commented on chemicals saying as Hurricane Ida hit the Gulf Coast as a Cat 4 storm, it has set the stage for further supply chain issues and subsequently higher prices in the already tight pet-chem markets. The TiO2 industry appears to have come through relatively unscathed (CC, TROX, VNTR)

Technology, Media & Telecom

·     Internet; another day of strength for Big tech with GOOGL, AAPL, AMZN, FB, TWTR rising; FB downgraded to Neutral at Rosenblatt saying the company was already seeing competitive return on advertising spend (ROAS) from CTV platforms while adding they now face meaningful digital ad share competition from AAPL, ROKU and AMZN; AMZN rising for the 8th time in 9-days, recovering nearly all its losses from earnings guidance last month and pushes back above all key technical levels, leading major averages; NFLX climbs after reports “Seinfeld” will be added to its library next month

·     Semiconductors; AMBA shares jump after forecasting Q3 revenue that beat consensus estimates after Q2 results topped expectations (Q2 EPS $0.35 vs. est. $0.25; Q2 revs $79.33M vs. est. $75.68M; said IoT cameras, primarily security, and automotive, representing ~90% of total Q2 revenue; sees Q3 revenue $88M-$92M above est. $78.74M)

·     Software movers; PLAN shares jumped following Q2 beat and a raised full-year revenue forecast to $571.5M-$5735M from $555M-$560M prior (est. $558.9M) as IT spending improves during the economic reopening/said Q2 revs rose 36% YoY while sub revs $130.8M, up 35% on the year; in the security sector, CRWD posted Q2 results that topped estimates and raised its year rev outlook, but shares dipped on a conservative Q3 outlook/also added $151M in net new annual recurring revenue during the quarter, and ending ARR grew 70% year-over-year to $1.34B

·     Hardware, Components & Services; HPE wins a 10-year, $2B contract to supply high-performance computing systems to the U.S. National Security Agency (NSA) as the systems, which will be used for AI computing, will be housed in a data center owned by QTS


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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