Mid-Morning Look: April 06, 2021

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Mid-Morning Look

Tuesday, April 06, 2021






DJ Industrials




S&P 500








Russell 2000






Stocks erase modest overnight losses as the Nasdaq Composite is trading at 6-week highs (and off more than 10% its lows from a month ago), while the S&P 500 and Dow Jones Industrials are coming off record highs the day prior (the S&P topped its prior day intraday record of 4,083) as momentum remains clearly to the upside for stocks on rising bets on the economy. Given the increasing Covid-19 vaccine rollout (boosting reopen industries such as travel, leisure, gaming, restaurants), the ever dovish Fed (officials keep rates at zero with ongoing monetary policy measures), the boost to Americans bank accounts through a recent third stimulus package (two under Trump, one under Biden), an infrastructure deal coming to the tune of over $2 trillion (boosting materials and industrials) and stronger earnings and economic data – stock markets have continued to make new highs on a near daily basis of late. Treasury yields have backed off after surging for a few weeks (now easing concerns about inflation expectations), while commodity prices remain higher. Fear in the market is non-existent as the CBOE Volatility index (VIX) trades below the 18 level for a third day, with investors avoiding hedging. The U.S. dollar currency index erases gains to trade down 0.05% at 92.515, its lowest since March 24.







WTI Crude















10-Year Note





Sector Movers Today

·     Bank movers; CS announced several high-level staff departures and cut its dividends and bonuses in the wake of a $4.7B hit from the Archegos Capital Management saga and said it now expects Q1 pre-tax loss of around CHF900M ($960.4M). Also, CS sold $2.3B in stocks tied to Archegos (more blocks in FTCH, VIAC, VIPS) according to Bloomberg as they continue to unwind positions tied to the Archegos Capital blowup; DCOM upgraded to Strong Buy from Outperform at Raymond James and raising our target price to $43, following the completion of its merger-of-equals with Legacy Bridge

·     Restaurants; BLMN to raise $300M via private debt offering; Stifel said they estimate PZZA domestic comp sales were exceptionally strong in 1Q, in the low- to mid-20% range and believe the strength was driven by the successful launch of the Epic Stuffed Crust pizza, more effective advertising and promotional management, and stimulus checks, partially offset by severe winter weather in late February; CMG tgt raised to $1,750 (from $1,700) at Truist saying their menu price check revealed a ~4.0% system-wide increase on CMG’s steak/barbacoa offerings last week and est. a 25-30% mix of beef in CMG’s average check, which implies a ~100bps total menu price increase

·     Transports; ALK upgraded to Overweight from Equal-weight, UAL upgraded to Equal-weight from Underweight, and AAL was initiated with an underweight at Morgan Stanley; rail cars active after GBX swung to a loss for the latest quarter as revenue was more than halved amid operating challenges (revenue fell to $295.6 million from $623.8 million) in rails, Citigroup lowered Q1 EPS estimates for the rails (UNP, CSX, NSC) by 4% on average, as extreme winter weather in February temporarily disrupted volumes and has added costs to the quarter

·     Energy stock movers; Goldman cuts CVX to Neutral after multiple years of outperforming other majors has led to the stock trading at a premium compared to peers, though they still maintain a positive view of the company; Citi upgraded NEX to Buy and says oil service stocks could end the year strong, as they were all likely to exceed Q1 expectations before the February storm; BCEI guided total 2021 annual capital expenditures to $150-$170 million, 2Q-4Q production guidance of 40-44k boe/d, 2Q-4Q oil production of 48% to 52% of BOE volumes, and Stifel says any weakness on the guidance (12% below consensus) presents a buying opportunity; BP said it has had a strong start to the year on the back of higher energy prices and strong trading results, putting the company on track to lower its net debt to $35B in Q1, which it had previously anticipated reaching in 4Q21-1Q22, and the debt reduction could lead to share buybacks; JPMorgan downgraded PXD to Neutral



·     DVN +3%; rebound in energy stocks as oil prices recover following 4% drop on Monday

·     ILMN +8%; after guiding Q1 revenue to about $1.085B, topping the $925.7M estimate and said it expects YoY rev growth in the range of 25%-28% for FY21 (prior guidance given on 2/11 earnings was 17%-20%)

·     MUDS +9%; said it is taking sports and entertainment collectibles and confections company Topps Co. public (symbol will be TOPP) as the transaction is expected late in the second or early in the third quarter in deal valued at $1.3B

·     NCLH +4%; said it is scrapping voyages on its Regent Seven Seas Cruises and Oceania Cruises units through the end of July as its flagship line is set to restart from Jamaica, Dominican Republic and Greece in the same month

·     NTR +1%; Potash producers active (MOS, NTR, IPI) as Belarusian Potash Co. said India’s largest potash importer agreed to a surprising new contract price of $280 per metric ton, 13% above a level agreed to in late January, according to Scotiabank

·     SNAP +5%; was upgraded to Overweight from Neutral at Atlantic Equities with $75 tgt

·     WYNN +2%; upgraded to Buy from Hold with $160 tgt at Argus as assumes a recovery in the Las Vegas business and growth in Boston, driven by the rollout of coronavirus vaccines and increased leisure travel



·     CS -1%; announced several high-level staff departures and cut its dividends and bonuses in the wake of a $4.7B hit from the Archegos Capital Management saga and said it now expects Q1 pre-tax loss of around CHF900M ($960.4M

·     EBON -18%; mentioned as negative short call at Hindenburg Research, saying Ebang is yet another cautionary tale for inexperienced retail investors enthused by anything crypto-related

·     INSG -4%; after CFO Foster leaves after being with firm less than 1-year/firm appoints interim CFO

·     PAYX -5%; Q3 EPS topped estimates while revenue fell to $1.11 billion from $1.14 billion, making it in line with the consensus estimate

·     SWKS -1%; seeing a pullback in semiconductors after the index touched record highs the day prior


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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