Market Review: September 30, 2020

Auto PostDaily Market Report

Closing Recap

Wednesday, September 30, 2020





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Major U.S. averages were sailing higher all afternoon, looking to end the final day of the month/quarter on a strong note, with the Dow jumping as much 500 points and the S&P reclaiming its 50-day moving average…but stocks fell well off their best levels late day following a combo of negative stimulus and vaccine headlines sunk markets off their highs: 1) Senate Republican leader McConnell said midday both sides are far apart on coronavirus relief with Mnuchin leaving Pelosi’s office with no deal and, 2) Financial Times reported that MRNA CEO said it wouldn’t be able to seek EUA for its Covid-19 vaccine until before Nov. 25 at the earliest. Stocks ended the month lower (first monthly decline since March for major averages).

·     U.S. stocks were cruising higher previously amid stimulus talk hopes as Mnuchin and Pelosi spoke and sharply better economic data as Pending Home Sales rise to record highs, private payroll data came in well above consensus (ADP) and Chicago PMI data surged, touching its highest level since December. The data and optimism of further stimulus helped overshadow a train-wreck of a Presidential debate last night from President Trump and former VP Joe Biden that focused more on bickering, interrupting, and tossing insults instead of national issues such as healthcare, the economy, the coronavirus and post-election law and order.

·     Sector movers; there were many focus sectors including hospitals and managed care names outperform after Presidential debate; increased gains in the solar space (SPWR, CSIQ); energy stocks closed out the month with hefty declines as XOM, CVX, BP all fall between 12%-16% on the month; cruise lines (NCLH, RCL) were among the day’s top gainers; homebuilders spike as Pending Home Sales for August were up 24.2% YoY and up 8.8% MoM to a record high; retailers rebound on positive analyst comments on LB, GOOS, HAS, while restaurants recover on optimism as NY City dining opens up at 25% indoors today; there were also two direct listing on the NYSE today with data analytics firm PLTR (opened at $10 after reference point $7.25) and software company ASAN (opens at $27 after reference price of $21) both opening for trade.

·     Risks around the election only intensified after last night’s debate while rising coronavirus infections in recent days in the U.S. and Europe, and the risk it poses to the economic recovery are also weighing on markets. In COVID-19 news, the Pittsburgh Steeler/Tennessee Titans game set for Sunday was postponed by the NFL, throwing uncertainty into pro-football.

Economic Data

·     ADP showed private payroll adds 749K jobs vs. est. about 650K, while prior revised up from 428k to 481k – pace of U.S. private sector job growth in September was the strongest in three months. By company size, job growth at small firm’s job continued to lag bigger firms. Small businesses added 192,000 jobs in September, while medium firms added 259,000 jobs and large firms adding 297,000 jobs. The service sector added 552,000 jobs, while goods-producing firms added 196,000

·     U.S. Q2 final GDP decline revised to -31.4% from -31.7%; Q2 business investment -27.2%, equipment -35.9% and intellectual property/software -11.4%; US Q2 consumer spending fell -33.2% vs. prior -34.1% and durables -1.7% vs. prior -1.3%; Q2 exports -64.4% and imports fell -54.1%;

·     US final Q2 GDP deflator down -2.1% vs. est. (-2%) and prior (-2.3%); Q2 PCE price index -1.6%, from prior -1.8% and core PCE down -0.8% vs. estimate and prior -1%; Q2 year-on-year PCE price index +0.6% same as prior and core PCE also in-line with prior up 1%

·     Chicago PMI released early, at highest level since December, Chicago PMI surges to 62.4 in September from 51.2 and above the 52-estimate



·     WTI crude oil rallied from pre-opening lows of $38.69 to settle at $40.22, rising 93c or 2.37% following surprisingly bullish inventory data as well as better economic data boosting sentiment about the strength of the economy and demand. Four positive data points included better ADP jobs report, stronger Chicago PMI, slightly improved Q2 GDP revision, and better than forecast pending home sales print. OPEC oil output has risen for a third month in September, a Reuters survey found, as a restart of some Libyan installations and higher Iranian exports offset strong adherence by other members to an OPEC-led supply cut deal. An increase in OPEC supply since August and concerns of a new demand hit as coronavirus cases rise have weighed on oil prices, which have fallen 10% in September to near $40 a barrel. Gold prices fell -$7.70 or 0.4% to settle at $1,895.50 an ounce, pulling back despite a midday drop in the buck as gold futures end the month lower by over 4% (worst since Sept 2016), but managed a 5.3% advance for the quarter. Silver fell 3% to $23.55 per ounce with its worst month since September 2011, down about 17%.


Currencies & Treasuries

·     The U.S. dollar was mixed; the dollar index (DXY) pulled back to below the 94 level from earlier highs around 94.20 in what was a choppy session as market risk was improved, putting pressure on safe-haven related assets after U.S. government officials expressed hope that another stimulus package could be passed. The greenback slid against the yen and weakened versus perceived higher risk appetite currencies such as the Australian, New Zealand, and Canadian dollars. The euro dropped below the 1.17 level early morning before recovering while the British Pound was little changed around 1.29. U.S. economic data was for the most part dollar-supportive, helping the greenback initially. However, for the quarter, the buck dropped over 3% as hopes for a swift recovery from the COVID-19 economic crash made investors exit safe havens.

·     Treasury yields edged higher while prices dipped as the 10-year yield moved to highs this week up over 4 bps to 0.69%, the 2-year yield at 0.127%, up slightly while the 30-yr yield up over 6 bps to 1.47%. prices were little changed initially as investors shrugged off the previous day’s president debate, with many shifting their attention to economic data which was better.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; GOOS upgraded to outperform from market perform and raise tgt $21/C$31 to $36/C$49 at Cowen saying it has unique financial positives like: positive FCF, DD% EBIT margins, and a profitable retail channel; PVH announces succession plan – Stefan Larsson to become CEO, Manny Chirico to remain Chairman, to be implemented Feb. 2021; SHOO cautious at Wedbush saying they may see a tougher FY21 than the Street currently expects in our view, primarily given the poor outlook for off-price demand and a higher mix of low margin private label sales; HEAR initiated buy and $23.50 tgt at Stifel citing a favorable industry backdrop with the upcoming console cycle serving as a potential near-term catalyst; HAS upgraded from Hold to Buy, and tgt upped from $73 to $100 at Stifel as see an event path to improving fundamentals (and sentiment), and hence higher share prices over the near/intermediate-term; LB added to Focus List at JPMorgan and price target $42 from $35, maintains Overweight rating; Piper raised VFC tgt to $65 from $58 and WWW to $27 from $22 on expectations of more outdoor activity this Fall

·     Auto sector; TSLA Q3 delivery preview forecast at RBC Capital (expected next day or so) based on checks/regionally reported data, as forecast total 3Q20 deliveries of 144.6k units, which would be new quarterly record but slightly below their prior 145k estimate. By model, we forecast 129.5k Model 3/Y and 15.1k Model S/X deliveries; Ford (F) to recall more than 700K vehicles in North America as rearview cameras show distorted images or suddenly go dark due to poor electrical connection; GM tgt trimmed to $36 at JPM (from $37) to reflect a decline in the share price of electric truck startup as GM said the two co’s have not finalized their deal to jointly build electric pickup trucks, one day ahead of the target date; LAD announced preliminary 3Q results above consensus as well as a $1.2-1.3B capital raise ($500 million notes, $700-800 million equity).

·     Consumer Staples & Restaurants; big day tomorrow morning for food and beverages with PEP, CAG and STZ earnings all expected; Bernstein was cautious on CAG as they worry about diminishing returns on CAG’s investments behind products innovation and expect structural headwinds; SBUX upgraded to outperform from market perform at Cowen and up tgt to $99 from $77 saying they see early signs of a durable U.S. recovery, aided by broadening digital access through expanded pay options for loyalty and 23% of U.S. stores adding curbside pick-up; restaurants rebound as NY City dining opens up at 25% indoors today (DNKN, MCD rise)

·     Leisure and Gaming; U.S. casino operator CZR has agreed to acquire British betting firm William Hill (WIMHY) for 2.9 bln pounds ($3.7B), confirming prior reports last week; in cruise space (CCL, NCLH, RCL), according to multiple media reports, the CDC will further extend its "no sail order" from the current September 30th date to October 31st – Stifel said this should come as no surprise as the cruise industry itself had already imposed a no sail order until October 31st; PENN said it expected Q3 revenue $1.04B-$1.145B vs consensus $1.03B while saying its Barstool Sportsbook app momentum has continued into the second week of operation

·     Services; ALRM upgraded from Neutral to Buy at Roth Capital with $65 tgt saying 3Q checks suggest ALRM’s growth should be better (~14%) than their 12.6% modeled for "core SaaS", while also suggesting hardware should again grow, perhaps double-digits (%) y/y; in lodging, STAY upgraded to overweight at JPMorgan with $15 tgt



·     Energy stock movers; COP said it is planning to resume share buybacks in Q4 with plans to repurchase $1 billion worth, while expects production volumes of 1,050 thousands barrels of oil equivalent per day, or MBoed, to 1,070 and capex excluding acquisitions of $750M-$820M; RDS said it would cut up to 9,000 jobs in a broad restructuring, as the company warned it would report another set of poor earnings for the third quarter citing a weaker performance in its trading activities

·     Inventory data showed: the API reported that U.S. crude supplies fell by 831,000 barrels for the week ended Sept. 25, showed gasoline stockpiles climbed by 1.6 million barrels, while distillate inventories fell by 3.4 million barrels. Crude stocks at the Cushing, Okla., storage hub, meanwhile, added 1.6 million barrels for the week. This morning, the EIA said crude oil inventories fell 1.98 mln barrels, as weekly refinery utilization up 1.0 pct to 75.8% – weekly gasoline output off 423,000 bpd to 8.89 mln bpd and distillate output off 112,000 bpd to 4.36 mln bpd

·     Utilities & Solar; utilities led by DUK after the WSJ reported NEE recently made a takeover approach to Duke, testing the waters for what would be a $60B+ combination, but reports indicate DUK rebuffed the offer; Dominion (D) guides year EPS profit view to high end of $3.37-$3.60, from prior $3.37-$3.63 view and affirms dividend guidance; SR was upgraded to buy at Stifel as the stock’s recent decline creates an attractive entry point; JPMorgan positive on solar space saying they should benefit from trend of improving end-customer demand in the U.S. and international markets as up SEDG tgt to $252 from $222, SPWR to $13 from $11, RUN to $79 from $61 and ENPH to $92 from $80



·     Bank movers; GS was added to US 1 list at Bank America as view it as attractive given a favorable near term revenue backdrop, strategic initiatives in place to drive additional revenue growth ahead, a management team focused on improving its efficiency ratio and capital needs (removed Citigroup from US 1 list)

·     Consumer Finance; Guggenheim noted in Sept data update for PYPL, SQ, PAGS that 1) Cash App downloads are on track to nearly double for the second month in a row (YoY basis) on a record monthly total. Venmo and PayPal Mobile Cash are also on track for record downloads in a single month; 2) See continued strong demand for international remittance apps – particularly Xoom and Remitly. 3) The digital surge in Brazil continues, as Mercado Pago and PagBank downloads look set to reach quarterly records in 3Q; ALLY increases CVNA loan purchase commitment by $1B, increases floor plan commitment to $1.25B

·     REITs; TWO upgraded to an Outperform rating at Raymond James given the P/BV multiple relative to peers. Shares have declined 11% since August, and we believe the pullback has created an attractive buying opportunity; TH said demand for its Permian basin accommodations continues to improve in Q3, with customer activity steadily rising from Q2 lows



·     Pharma movers; CVAC said it started a mid-stage study testing its experimental coronavirus vaccine; doses first patient; said plans to start a decisive global trial with ~30,000 volunteers in Q4 2020; CTIC rises as said it would seek potential accelerated approval of pacritinib as a treatment for myelofibrosis patients with severe thrombocytopenia, following a pre-NDA meeting with the FDA; IRWD downgraded at Wells Fargo after Ironwood announced the IW-3718 program has been discontinued; ITRM shares surge after the company says preparing to submit NDA for its urinary tract infection treatment; KLDO rises after doses first patient in a clinical study evaluating its therapy candidate for patients with mild-to-moderate ulcerative colitis

·     Biotech movers; MRNA rises after researchers say Phase 1 trial of its mRNA vaccine to prevent COVID-19 has shown to be "well-tolerated and generates a strong immune response in older adults; REGN positive analyst mentions after its antibody cocktail lowers virus in covid-19 patients – drug reduced virus levels in non-hospitalized patients; BIIB said that the FDA will convene a virtual advisory committee meeting of the Peripheral and Central Nervous System Drugs Advisory Committee to review data supporting the Biologics License Application – BLA – for aducanumab; ALNY announces positive results from late stage study of its gene-silencing therapy – lumasiran in children under the age of six

·     Healthcare services and providers; EVH reaffirmed its near-term guidance at investor day and believes that it can grow revenue in the mid-teens range beginning after 2021; ACHC upgraded to strong buy at Raymond James and up tgt to $48 underscored by the news that management has restarted the U.K. sales process; OMI filed to sell up to $150M shares in stock offering

·     MedTech and Equipment; DGX launches three new test options to aid diagnosis of COVID-19 and differentiate it from other seasonal respiratory infections; LUNG upsized its planned IPO and raised the proposed price range, saying in a regulatory filing it will now offer 10M shares priced at $17 to $18 each (has previously said it would offer 6.7 million shares priced at $14-$16 each); ATRC mentioned a short call by Kerrisdale Capital saying AtriCure trades at close to the highest valuation in its history, as investors assume widespread adoption of the Convergent procedure and continued growth in surgical devices


Industrials & Materials

·     Transports; UBS raised estimates in rail sector for CSX ($0.88 to $0.95), UNP ($2.06 to $2.14), and NSC ($2.39 to $2.43), which imply 6%-8% upside vs. current consensus saying volumes for the quarter came in 2-3 pp better than expected and commentary/data on resource levels suggest margin performance can surprise to the upside; airlines AAL, UAL, ALK, FRNT, JBLU, HA, SKYW, active as the U.S. Treasury Department says it has closed loans to seven passenger airlines and calls on Congress to extend more aid to prevent massive job cuts while DAL and LUV chose not to accept a federal bailout because they found financing in private markets

·     Aerospace & Defense; BA reportedly this week will set plans to consolidate 787 Dreamliner assembly in South Carolina ending production of the jetliner in Washington state, as per WSJ; AAXN said U.S. customs & border protection agency signed $13 mln contract to equip 3,800 border patrol agents

·     Metals & Materials; SHW raises FY20 EPS to $20.96-$21.46 from $19.21-$20.71 and sees FY20 consolidated net sales to be flat to up slightly compared to last year vs. prior guidance for FY20 consolidated net sales to be approximately flat year-over-year; HUN upgraded to OW from EW and raise tgt to $26 from $15 at Morgan Stanley


Technology, Media & Telecom

·     Internet; SHOP upgraded from Neutral to Outperform at Wedbush with $1,300 tgt as continue to see strength in Shopify’s near-term ability to capture share in ecommerce, and continue to see the pull-forward in ecommerce trends as being sustainable over time; BQ 7M share IPO priced at $10.00 (shares opened at same price point); broad strength in FAANG names with mega caps AMZN, AAPL, FB, NFLX, GOOGL rising and leading markets; GOOGL google pixel phone, smart home hardware launch event took place today

·     Semiconductors; MU falls on guidance as 4Q results beat with adj EPS $1.08 vs. est. $0.99 on revs $6.06B vs. est. $5.9B, had strong DRAM sales in cloud, pc and gaming consoles and extraordinary increase in QLC NAND shipments in qtr. – but guides 1Q adj EPS $0.47 +/- $0.07 vs. est. $0.69 (shares of WDC among decliners in sympathy with MU)

·     Hardware & Software movers; Palantir Technologies (PLTR), the data-analytics software company, had a "reference price" for its highly anticipated NYSE direct listing set at $7.25 late Tuesday, valuing the company at about $16 billion; PRGS posted a beat on Q3 EPS and mostly in-line revs while Q3 software license revenue fell -10% YoY to $27.5M, and sees 4Q adj EPS $0.76-0.79 below the est. $0.80; SNX price tgt raised to $180 at Citi and $160 at Raymond James following Q3 results that featured a continuation of significant upside relative to expectations; DDOG jumps as announces strategic partnership with MSFT; CRM rises after CNBC’s Jim Cramer teased that CEO Marc Benioff will appear on tonight’s "Mad Money" show to make a "surprise announcement." ASAN opened at $29 after setting a “reference price” of $21 for the company’s direct listing Wednesday on the NYSE. With about 154 million shares outstanding, that price would imply a market capitalization of $3.2 billion.

·     Media & Telecom movers; DIS announced 28,000 layoffs in its Parks, Experiences and Products segment on Tuesday, victims of theme-park closures caused by the coronavirus pandemic; YALA 18.6M share IPO priced at $7.50 per ADS


Market commentary provided by Catena Media Financials US, LLC, 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