Mid-Morning Look
Monday, December 13, 2021
Index |
Up/Down |
% |
Last |
|
||
DJ Industrials |
-280.71 |
0.78% |
35,690 |
|||
S&P 500 |
-30.80 |
0.65% |
4,681 |
|||
Nasdaq |
-120.19 |
0.77% |
15,510 |
|||
Russell 2000 |
-22.84 |
1.02% |
2,189 |
|||
U.S. stocks look to build on last Friday’s outperformance when the S&P 500 index closed at its highest level ever, in a week that saw the worst performing S&P sector rise 2.5% in a broad-based surge, though large cap tech again was the leader (AAPL all-time highs as approaches record $3 trillion market cap). However, seeing a general pullback in stocks early on likely profit taking after last week’s big gains and caution ahead of the FOMC meeting (and other key central bank meetings) where asset tapering is expected to pick up steam, along with commentary on inflation, the economy, jobs, and the omicron variant impact. Goldman’s Sachs equity strategist this morning noted AAPL, MSFT, NVDA, TSLA, GOOGL account for 51% of the returns since April – historically periods of sharply declining market breadth are followed by weak returns and deeper than avg drawdowns – they recommend owning high growth, high margin stocks. Busy morning for biotech after the ASH conference this weekend. CBOE Volatility index (VIX) jumping over 10% after falling by 2.89 points to 18.69 on Friday, its lowest close since Nov. 24th (and off the prior week highs of 35.32). The 10-yr yield extends losses, down 5 bps to move below 1.44%
Macro |
Up/Down |
Last |
|
||
WTI Crude |
0.18 |
71.85 |
|||
Brent |
-0.73 |
74.43 |
|||
Gold |
1.70 |
1,786.50 |
|||
EUR/USD |
-0.0025 |
1.1286 |
|||
JPY/USD |
0.12 |
1143.50 |
|||
10-Year Note |
-0.05 |
1.439% |
|||
Sector Movers Today
· American Society of Hematology Annual Meeting (ASH) being held Dec.11-14: some highlights include: 1) BLUE said its study data showed a sustained clinical response to a treatment for sickle-cell anemia; 2) RHHBY announced updated data from their p2 CITYSCAPE NCSLC trial for their anti-TIGIT tiragolumab. This data matters heading into p3 readouts in 2022 for the asset across multiple solid tumor types; 3) IGMS slides after updated NHL Phase I data from IGM-2323 (CD20 x CD3 pentameric IgM) which demonstrated clean safety with very low rates of CRS but modest ORR across all patients and lack of a clear dose-response weigh on stock; 4) SGMO Additional data from the Sanofi-partnered SAR445136 sickle cell disease (SCD) program presented at the American Society of Hematology; 5) ALVR issued update on posoleucel, a multi-virus-specific T-cell product, in the prevention setting for patients undergoing allogeneic stem cell transplant; 6) XFOR updated interim results from mavorixafor’s Phase 1b trial in Waldenström’s macroglobulinemia; 7) IMGO updated P2 single-agent bomedemstat data in R/R myelofibrosis (MF) and 2L+ essential thrombocythemia (ET) at this weekend’s ASH meeting
· Housing & Building Products; Zelman upgraded shares of homebuilders KBH and MTH to Buy from Hold; TMHC approves to repurchase of up to $250M of the company’s common stock; OPEN mentioned favorably in Barron’s saying shares could get a lift if more and more people choose the ease and certainty of a digital home sale – notes Zillow’s (ZG) exit from the iBuying business last month was a wrecking ball for the other companies in this new industry, which make online, all-cash purchases of homes by the thousands; ZEV announces strategic EV Battery Partnership; LEN tgt raised to $134, DHI to $115 at KBW saying affordability is a key risk for the housing market in 2022 as home prices increased by an average of 15% year-over-year in 2021
· Hardware, Components & Services; CMBM downgraded to Neutral at JPMorgan despite the strong top-line growth opportunities, led by broad connectivity investments and deployments by service providers across regions; COMM Downgrade to Neutral at JPMorgan as positive bias on the top-line opportunity is balanced by execution risk, which we have underappreciated over the past year; NATI upgraded to Neutral at JPMorgan on valuation and 2022 rebound; although long-term concerns around transformation remain; NTAP Upgrade to Overweight at JPMorgan as see the company well positioned for a transition towards higher growth opportunities while leveraging its leading position in the Enterprise storage market
· Consumer Staples & Restaurants; KO upgraded to Overweight from Neutral and tgt upped to $63 at JPMorgan as think Coca-Cola will benefit from economies re-opening and is well positioned to reaccelerate organic growth toward the top-end of its long-term 4-6% range; Clearlake Capital Group L.P. agreed to sell Proven Brands Inc. and KTB Foods Inc. to HAIN for about $259 million; SBH to provide 2-hour delivery through DASH partnership; SG initiated with Buy/Outperform ratings at JPM ($36 tgt), RBC ($40 tgt), Morgan ($39 tgt), OPCO ($41 tgt), and Goldman ($48 tgt)
Stock GAINERS
· AAPL ; the massive buying momentum continues early as the tech giant approaches the $3 trillion market cap level – would be first for any company (but shares have since pulled back)
· ARNA +84%; to be acquired by PFE for $100 per share in cash, in a deal valuing Arena at $6.7 billion, the companies said as shares rise around 90% https://on.mktw.net/3GDAn0O
· BLUE +6%; said its study data showed a sustained clinical response to a treatment for sickle-cell anemia
· BMY +3%; announces dividend increase and additional $15 billion share repurchase authorization
· FHTX +50%; as LLY will collaborate to develop new cancer medicines using Foghorn’s proprietary Gene Traffic Control platform as LLY will make an upfront payment of $300M in cash to Foghorn and invest $80 at $20 a share, a nearly 67% premium to Friday’s closing price
· GPRO +7%; upgraded to Overweight at Wedbush as thinks various drivers are firmly in place to drive growth in the coming quarters; tgt raised to $13.50
· HOG +12%; after its electric motorcycle subsidiary, LiveWire, announces a merger with special purpose acquisition co AEA-Bridges Impact Corp (IMPX) that will take the unit public in a deal with an enterprise value of about $1.77B (expected symbol LVW for LiveWire)
· LCID +3%; will be added to the Nasdaq-100 Index, effective market open on Monday, Dec 20
· MRNA +6%; general strength in vaccine names (NVAX, PFE, BNTX)
· NVAX +5%; as applied for emergency use for its COVID-19 vaccine in the United Arab Emirates
Stock LAGGARDS
· APA -2%; early weakness in energy stocks, with E&P among top S&P decliners
· IGMS -35%; after updated NHL Phase I data from IGM-2323 (CD20 x CD3 pentameric IgM) which demonstrated clean safety with very low rates of CRS but modest ORR across all patients and lack of a clear dose-response weigh on stock (downgraded at RBC Capital)
· MRK -1%; downgraded to neutral at UBS and cut tgt to $76 from $98 given two of MRK’s potential key growth drivers (islatravir for HIV, molnupiravir for COVID) have had recent negative updates and we see no positive value-inflecting catalysts in the event path in 2022
· WFC -2%; economic-sensitive bank stocks fall tracking Treasury yields and broader markets in early trading as the benchmark 10-year notes slip 4.8 basis points at 1.44%
· XFOR -21%; after presents new clinical and scientific data at 2021 ASH Annual Meeting supporting broader potential for Mavorixafor in the treatment of primary immunodeficiencies
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.