Market Review: September 16, 2021

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Closing Recap

Thursday, September 16, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Stocks with a strong afternoon, posting a big rebound off morning lows as major averages turned positive in the final hour of trading on light volumes/market activity amid the Yom Kippur holiday (though settled mixed). U.S. stocks opened flat before fading as a round of better-than-expected economic data boosted Treasury yields and raised the chances that the Fed could step up their timeline to begin reducing their monthly bond/asset purchases, which has been a tailwind for stock markets. But as remains the case, investors/traders take any opportunity to buy the dip, with stocks ending near the highs into monthly options expiration tomorrow. Semiconductor stocks end near all-time highs following a bounce late afternoon (briefly turning the Nasdaq positive). Economic data came in strong as retail sales post an upside surprise (rises +0.8% vs. expected -0.7% decline) along with a big Philly Fed beat of 30.7 above est. 18.8 and prior month of 19.4, while weekly jobless claims were mostly in-line. Late day, President Joe Biden took no questions after his speech outlined a big push for voters to support his $3.5 trillion spending package, which focused on the tax hikes on wealthy Americans as well as corporations.

·     Stock/sector movers: Precious metals, gold miners AEM, NEM, AUY, GOLD weak after several strong econ data points pushes Dollar, Treasury yields higher; other metal stocks FCX, AA, CENX also weak; BYND stumbles after Piper downgraded to UW; DASH jumps on Bank of America upgrade as other gig economy names UBER, LYFT, GRUB, ABNB outperform; RIDE, FSR, VC, LEA slide on Bank of America downgrades, while their upgrade of CAR pushes the stock up more than 10% to ATH; retailers GPS, TPR, M, JWN strong after surprising rise in August retail sales; LVS, WYNN, MLCO downgraded at JPMorgan as casino fall a 3rd day following the Macau Government’s announcement to tighten its casino regulatory oversight this week.


Economic Data:

·     Weekly jobless claims reported at 332K vs. est. 330K, while prior month revised to 312K from 310K; continued claims reported at 2.665M from 2.852M last week (est. 2.785M); the 4-week moving average was 335.75K, down 4.25K from the previous week’s average of 340K; the U.S. insured unemployment rate fell to 1.9% from 2.1%prior week 

·     Philly Fed for Sept reported at 30.7 above est. 18.8 and prior month of 19.4; fed new orders index 15.9 in September vs August 22.8; prices paid index 67.3 in September vs August 71.2; employment index 26.3 in September vs August 32.6

·     Retail sales for Aug rises a surprise +0.7% vs. expected decline of (-0.8%); last month revised to (-1.8%) vs. (-1.1%); Retail sales ex autos jump +1.8% vs. est. (-0.1%) and prior (-0.4%)


Commodities, Currencies & Treasuries

·     Oil prices fought back from earlier losses, with WTI crude ending the session flat at $72.61 per barrel, well off morning lows of $71.53, falling from a multi-week high a day earlier, as the threat to U.S. Gulf production from Hurricane Nicholas receded. U.S. Gulf energy companies have been able to restore pipeline service and electricity quickly after Hurricane Nicholas passed through Texas, allowing them to focus on efforts to repair the damage. Oil jumped Wednesday, supported by figures showing U.S. crude inventories fell by a bigger than expected 6.4 million barrels last week, with offshore oil facilities still recovering from the impact of Hurricane Ida.

·     Gold prices tumble -$38.10 or 2.1% to settle at $1,756.70 an ounce (5-week lows), pressured by the rise in the dollar (DXY rises about +0.5%) as the better retail sales and Philly Fed data boosted the expected timeline for the Fed to begin paring back on its $120M bond/asset purchases sooner than markets were anticipating. Treasury yields jumped to morning highs of 1.35% on the data, but failed to push higher, fading throughout the afternoon and settle around 1.32%.







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10-Year Note





Sector News Breakdown


·     Retailers; GPS, TPR, and other retailers outperform in the S&P after August retail sales surprised to the upside, rising +0.7% compared to an expected decline of (-0.8%); GOOS established an automatic share repurchase program in connection with its previously issued normal course issuer bid to buy back over 5.9M of its shares; ELY 4M share Secondary priced at $29.25; FIGS 8.92M share Secondary priced at $40.25; Wells upgraded SIG to OW with a $100 PT from $80 based on about 5x their FY EBITDA estimate given a significantly healthier capital structure, a leaner/healthier store base, meaningful productivity improvements, a rapidly growing e-commerce platform, and the potential to hit/sustain ~10% margins (from 5.2% pre-COVID).

·     Auto sector; Bank America with several auto industry rating changes as they upgraded CAR and DAN to buy from Neutral while downgraded FSR to Neutral and shares of LEA, RIDE and VC to underperform though noted 80% of coverage universe is rated Buy or Neutral, reflecting our constructive stance broadly, while expect stocks may remain volatile over the next 3- 6+ months as visibility is significantly lacking; Ford (F) said it would boost its F-150 Lightning production capacity to 80,000 per year due to strong demand for the electric pickup truck, adding that the vehicle would go on sale next spring.

·     Housing & Building Products; Wells Fargo said its Proprietary August Real Estate Agents’ Survey indicated a moderation in housing momentum and believe Q3 numbers will need to be trimmed (ahead of LEN and KBH earnings next week). Firm notes BTO builders are better set up than spec sales into CQ3 as favor TOL and KBH and believe set up is better for MDC, TMHC, TPH and NVR; ZG pt cut from $184 to $145 at BTIG but maintain Buy noting it has been among the worst performers in coverage universe YTD, prompting us to revisit our thesis; SPWR and TOL announced a multi-year exclusive agreement in which SunPower will be the only provider of solar technology to company’s homes and communities across California.

·     Consumer Staples; BYND downgraded to Underweight from Neutral with a price target of $95, down from $120 at Piper saying the company’s current all-channel retail momentum will lag consensus expectations and foodservice consensus estimates may be high; COTY announces the relaunch of Kylie Cosmetics with new and improved formulas that are clean and vegan, along with refreshed packaging.

·     Casinos, Gaming, Lodging & Leisure sector; LVS, WYNN, MLCO downgraded to Neutral from Overweight at JPMorgan following the Macau Government’s announcement to tighten its casino regulatory oversight, which could have potential implications on gaming patron spend, as well as reduce the casinos’ ability to repatriate Macau FCF back to the U.S. Firm said they are not overly concerned about licensing renewal terms (impossible to predict but nothing new) and we expect a renewal term that’s less than the current 20 years; DASH rises after Bank America upgraded to Buy from neutral and upped tgt to $255 from $190 as expects strong growth for the next five years (2021-2026), driven by the rapid shift of local commerce to delivery via mobile apps.



·     Energy stock movers; after massive outperformance on Wednesday following a spike in oil prices on bullish inventory data, energy stocks saw profit taking as major averages were mostly lower on the day; in oil equipment, NBR reiterated its financial outlook for Q3 saying; IO announced that its board of directors has initiated a process to evaluate a range of strategic alternatives in an effort to strengthen its financial position and maximize stakeholder value; BW to acquire 60% stake in Illinois-based solar energy contractor Fosler Construction Company Inc for a purchase price of $30M; Morgan Stanley was positive on XOM saying they sees 14% average upside to 2021-2023 consensus.



·     Bank movers; banks stocks, which have underperformed the last few days on lower yields (and cautious trading quarterly updates at conferences this week), saw a bounce today (GS, JPM, C, WFC) as Treasury yields pushed higher on strong economic data; GWB announced an agreement to be acquired by FIBK in an all-stock deal valued at $2.0 billion, where GWB holders will receive 0.8425 First Interstate shares at $35.655 each; in insurance; ALL estimates August catastrophe losses of $876M, with $631M from Ida; Enact Holdings (ACT) 13.31M share IPO priced at $19.00

·     Bitcoin, FinTech & Payments; AMC CEO Aron said yesterday that AMC Theatres will accept Bitcoin for online ticket and concession payments, and similarly accept other cryptocurrencies like Ethereum, Litecoin and Bitcoin Cash; Chinese authorities takes the next step in searching out illegal cryptocurrency mining activities by targeting research institutions, colleges, and data centers, Bloomberg reported.

·     Consumer Finance; AXP upgraded to Neutral from Underperform at Bank America with a $169 price target saying risk-reward has turned more balanced after its recent underperformance that was driven by fear that COVID-19 Delta-wave would slow the economic recovery; Bank America noted that total credit card spending, based on aggregated BAC card data, increased 17% over a 2-year period, an upward surprise as they see evidence of people getting back out and spending outside of their home metro area, a good sign for mobility.



·     Pharma movers; AERI shares fall as a Phase 2b study of the company’s experimental treatment for dry eye disease failed to meet the main goal of the trial; EXEL announces results from Phase 3 CheckMate -9ER trial demonstrating efficacy benefits regardless of prior nephrectomy status with Cabometyx (cabozantinib) in combination with BMY Opdivo vs. sunitinib for patients with previously untreated advanced renal cell carcinoma; LPTX presents additional data, showing the effectiveness of its experimental antibody, DKN-01, when administered with BGNE’s drug tislelizumab and chemotherapy, in patients with gastric or gastroesophageal junction cancer; SBTX with interim clinical results from the ongoing phase 1/1b study of SBT6050 alone or in combination with pembrolizumab in patients with advanced or metastatic her2.

·     Biotech movers; MRNA said a study of breakthrough COVID-19 cases among vaccinated individuals supports the need for a booster shot. Moderna identified 88 breakthrough COVID cases among 11,431 people vaccinated between December 2020 and March 2021, but 162 cases in the group who got their shots between July and October of last year; AXSM initiates SYMPHONY phase III trial of AXS-12 in narcolepsy; BIIB announces positive topline results from phase 2 convey study in small fiber neuropathy for Vixotrigine, a non-opioid investigational pain drug; NTLA said the FDA has accepted its application seeking permission to start clinical trial of NTLA-5001, an experimental therapy for treatment of acute myeloid leukemia.

·     MedTech Equipment & Healthcare Services; DXCM tgt raised to $650 at Piper noting shares are up ~50% this year and says with all this data pointing to strong contributions from T2 over the coming years (likely well more than DXCM’s $700M expectation), DXCM remains a top idea.


Industrials & Materials

·     Aerospace & Defense; SpaceX successfully launched four civilians into space Wednesday evening in the first spaceflight staffed wholly by commercial astronauts , which is not a government-backed crew to orbit Earth; SPCE pt cut from $51 to $30 at Cowen after mgmt meetings saying they remain constructive as continue to view SPCE as an important leader in the commercial space flight industry but acknowledge near-term setbacks; LHX received a $100M order from the U.S. Army to deliver the Enhanced Night Vision Goggle – Binocular (ENVG-B) system.

·     While lumber prices and used car prices have come down (the Fed has made sure to relay), the latest crushing blow to the "transitory" story remains container rates, which hit fresh all-time highs ensuring soaring prices just in time for holiday shopping. Note markets awaiting the FOMC meeting next week, though no change in rates or bond asset buying taper expected at this meeting but could as to when. 

·     Transports; A.P. Moeller-Maersk AS raised its Q3 financial guidance and the full year, as continuing bottlenecks in supply chains have led to higher freight rates; said underlying Ebitda should come close to $7B for Q3 and $22B-$23B for year up from prior view of $18B-$19.5B and that free cash flow for the year should be at least of $14.5B, or $3B above prior view.

·     Metals & Materials; steel producers get second positive earnings outlook in as many days as NUE guides Q3 EPS $7.30-$7.40, above estimate $6.60 saying earnings of steel mills segment and products segments expected to increase significantly in QoQ (follows upbeat guidance from STLD yesterday which boosted shares); SBSW is buying half of Australia’s Ioneer Ltd.’s Nevada lithium mine project for $490M; TKR said it expects lower sales and earnings in second half of 2021; said underlying customer demand and end-market momentum remain strong across most sectors; gold miners (NEM, AEM, GOLD, AU) pressured as gold prices dropped on the U.S. dollar bounce following a round of upbeat economic data – raises expectations of Fed to taper assets sooner.

Technology, Media & Telecom

·     Software movers; EA rebounds after selling pressure Wednesday, despite Battlefield 2042 delayed from October 22 release by least several weeks to November (company noted while reaffirmed its outlook); FORG 11M share IPO priced at $25.00; JMP Securities said they believe trends noted by CSCO yesterday at analyst day bode well for ZS but could represent a risk to ANET and PANW citing the company’s ongoing shift to software-based revenues and subscription sales, as well as the breadth and depth of Cisco’s platform strengths across networking, security, infrastructure, and full-stack observability

·     Semiconductors; afternoon strength in AMD helped boost the Philly semi index (SOX back near all-time highs after a report indicated x86 Champion AMD Is ready to make ARM chips if needed; Goldman Sachs raised its 2021/2022 Wafer Fab Equipment (WFE) demand forecast by 3%/5% and now expect the market to grow 38%/12% yoy (vs. 34%/10% yoy prior), driven by the GS Asia Pacific Technology sector team’s expectation that Buy-rated TSM will raise wafer pricing by 5%/10% for advanced/mature nodes in 1H22, and also spend $108bn over the next 3 years (vs. $100bn prior); on a negative note, Morgan Stanley said project TSM’s 4Q rev growth at only 5% Q/Q (vs. Street bulls at >10% Q/Q), leading to further margin erosion in 4Q; sees Smartphone cuts at TSMC noting believe the logic semi cycle is rolling over and seeing either increasing inventory pressure or order cuts in TV, PC, smartphone, and consumer semis


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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