Mid-Morning Look: December 02, 2021

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Mid-Morning Look

Thursday, December 02, 2021






DJ Industrials




S&P 500








Russell 2000






As expected, U.S. stock markets are dealing with extreme volatility early, with major averages trading mixed and the S&P 500 trying to hold above its 50-day moving average support with investors dealing with several macro factors. The Omicron variant outbreak in parts of the world, and first known case in U.S. yesterday remains a concern, but the recent change in sentiment by the Fed appears to be the bigger impact on markets after Fed Chair Powell went notable “hawkish” this week in his testimony as the Fed appears open to the idea of quicker tapering, as momentum in the economy is clear and inflation remains high (look at impact in short term yields). Also a factor, the debt ceiling, as U.S. Senate republican leader McConnell said this morning he does not thinking shutting down U.S. government over vaccine mandate opposition makes sense. Oil futures extend losses, as U.S. WTI and Brent crude tumble after OPEC+ to go ahead with planned January output rise. The Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, decided to rollover their current policy and raise monthly overall production by 400,000 barrels per day in January. Technology shares are weighing on European stocks after Apple warned component suppliers of slowing demand for the iPhone 13 lineup. The Stoxx Europe 600 index dropped more than 1% as traders continue to weigh the impact of the omicron coronavirus variant, with travel stocks among the worst performers. An aggressive interest rate tightening cycle indicated given the action in treasury markets: CNBC noted that the 10-yr yield is roughly 28 bps off recent highs of 1.70%, while the 2-yr is only 4 bps off its recent highs of roughly .64% (around Thanksgiving) – right now its at .6%, up nearly 4 bps this morning; 30-year yields are 42 bps off its recent high-water mark (this morning at 1.77%).


Economic Data

·     U.S. Challenger reported announced layoffs declined -7.9k to 14.9k in November, largely unwinding the 7.1k cumulative increases in layoffs in September and October. This is the lowest monthly level of cuts since the 14.1k in May 1993

·     Weekly jobless claims rose to 222,000 in latest week vs. ests 240,000 and up from 194,000 prior week (revised from 199,000); the 4-week moving average fell to 238,750 in latest week from 251,000 prior week; continued claims fell to 1.956M from 2.063M prior week; the U.S. insured unemployment rate fell to 1.4% from 1.5% prior week







WTI Crude















10-Year Note





Sector Movers Today

·     Apple (AAPL) and iPhone supply chain pressured: Apple told its component suppliers that demand for the iPhone 13 lineup has weakened, people familiar with the matter said according to Bloomberg, signaling that some consumers have decided against trying to get the hard-to-find item. Last month, Apple’s main iPhone assembler, Hon Hai Precision Industry Co., predicted that its business will shrink this quarter from a year earlier — caused by declines in consumer electronics and computing — as it continues to suffer from the chip shortage. On Oct. 24, IQE Plc saw its shares fall 24% after it warned of softening smartphone demand, although the semiconductor company didn’t name any customer

·     Consumer Staples; COST November sales increased 15.7% from last year to $18.13B, total comp sales +14.1% missed est. +15%, U.S. comp sales ex-gas +9.1% vs est. +11.4%; KR Q3 adj EPS 78c topped est. 67c on sales $31.86B vs est. $31.18B, identical-stores sales ex-fuel +3.1% vs est. +1.23%, and now sees FY adj EPS $3.40-3.50 from $3.25-3.35; Kellogg (K) reaches an agreement with the union on a new five-year contract for its employees at a few of its breakfast-cereal plants, potentially bringing an end to a near two-month long strike; PFGC reaffirms its Q2 and FY 22 outlook which includes the impact of 10 months of Core-Mark’s business results; RLX rises as China’s tobacco regulator issues draft rules, further lifting the private e-cigarette industry away from a grey area and into the purview of the state

·     Retailers; PVH Q3 adj EPS $2.67 vs est. $2.08 on revs $2.33B vs est. $2.4B, raised FY21 adj EPS view to $9.25 from $8.50; DLTH raises its 2022 profit forecast following its Q3 beat (raises FY21 EPS view to 81c-86c from 71c-76c vs. est. 82c and backs FY21 revenue $700M-$715M); LE lowers its FY21 EPS view to $1.04-$1.13 from $1.35-$1.51 (below est. $1.42) and also lowers FY21 revenue view to $1.64B-$1.66B from $1.67B-$1.71B (est. $1.69B); SIG boosts FY sales view to $7.41B-$7.49B from prior $7.04B-$7.19B after Q3 results; BKE reports November net sales up 35.9% to $117.3M, and comp store sales up 36%; EXPR Q3 sales $472M came in below est. $503M but shares popped on adj EPS 17c that blew past est. 2c and same-store sales +46% vs est. +30.2%; KIRK Q3 adj EPS 51c and sales $143.6M both missed consensus as they were impacted by inconsistent traffic patterns and broader supply chain constraints, and they project Q4 comps falling mid-high single digits due to continued constraints and a meaningful decline in e-commerce sales during Black Friday

·     Energy stock movers; WTI and Brent crude prices fell after OPEC+ agreed to continue the previous policy of hiking output by 400,000 bpd in January; CVX raises share buyback guidance range to $3B-$5B from $2B-$3B per year; announced a 2022 organic capital and exploratory spending program of $15B, at the low end of its $15B-$17B guidance range and up more than 20% from 2021 expected levels; CHK announced a $1B stock and warrant buyback authorization; RDS launched a $1.5B share buyback program; MUSA announced a new stock buyback program up to $1B



·     BA +3%; after China’s aviation authority issued an airworthiness directive on the Boeing Co 737 MAX that will help pave the way for the model’s return to service in China; shares of parts supplier for Boeing SPR also advanced on the reports

·     FIVE +2%; reported Q3 EPS 43c vs est. 29c, revs $608M vs est. $566.3M, comps +14.8% vs est. +5.4%, and guided FY EPS and revs above consensus

·     OMER +4%; agreed to sell its Omidria product to Rayner Surgical Group Limited in a deal that included an upfront payment of $125M with an additional $200M in a commercial milestone payments and w/royalties could exceed $1B

·     OKTA +9%; better than expected FQ3’22 results and guided FY23 slightly above expectations as beat street billings estimates by 3% and guided FY23 revenue 2% above forecasts

·     SNOW +10%; reported better than expected FQ3’22 results, outperforming on all key metrics and increasing its full year outlook as beat product revenue estimate by 10%, gross profit by 13%

·     UBER +4%; UBS said the stock could more than double from current levels as they initiates coverage with a Buy rating and $80 tgt



·     AAPL -2%; told its component suppliers that demand for the iPhone 13 lineup has weakened, people familiar with the matter said according to Bloomberg,

·     AI -11%; mixed results as posted smaller EPS loss on rev beat, up 41% y/y, the fourth quarter in a row of acceleration, billings of $31.2M, missing the consensus of $40.4M, but RPO of $465.5M, up 74% y/y and well above the consensus of $307.0M

·     DCTH -16%; despite saying results were positive in a Phase III Focus study for Hepzato in liver-dominant metastatic ocular melanoma

·     GEO -12%; Board of Directors has unanimously approved a plan to terminate its Real Estate Investment Trust election and become a taxable C corporation and will no longer pay a dividend while lowers FY21 adjusted FFO view

·     KPLT -12%; shares slip after saying its gross originations over a two-month period were lower than 2020 levels

·     LE -10%; lowers its FY21 EPS view to $1.04-$1.13 from $1.35-$1.51 (below est. $1.42) and also lowers FY21 revenue view to $1.64B-$1.66B from $1.67B-$1.71B (est. $1.69B)

·     VEEV -10%; as Q3 results once again exceeded expectations, although the magnitude of recent upside has moderated from recent quarters and the early FY23 revenue outlook is modestly below consensus


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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