Mid-Morning Look: December 17, 2020

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Mid-Morning Look

Thursday, December 17, 2020






DJ Industrials




S&P 500








Russell 2000






The S&P 500 index joins the Nasdaq Composite at fresh record highs as the ongoing stimulus relief hope out of Washington, an accommodating Federal Reserve, and the vaccine rollout for coronavirus (driving hopes of normalcy and economic recovery) all remain key market drivers that have been taking stocks higher daily. CNBC noted that U.S. lawmakers will likely finalize a COVID-19 aid deal and government spending bill on Saturday, forcing them to pass a short-term stopgap funding measure to avoid a government shutdown at midnight on Friday, Republican U.S. Senator Rob Portman said. “I think we’ll get it done this weekend, and we should,” he told CNBC in an interview on Thursday (a $900B deal was last on the table which possibly includes some type of stimulus checks, extend unemployment benefits, help pay for vaccine distribution and assist small businesses). Markets dealing with mixed economic data as weekly jobless claims unexpectedly climb above estimates for a second straight week, while housing starts data was well above consensus. The hot asset class of late is Bitcoin, with prices nearly touching $24,000 overnight after topping the $20K level for the first time the day prior as momentum continues to build after several bullish Wall Street calls. The U.S. dollar pummeled as dollar index (DXY) falls over -0.5% to 89.80 level, with euro at more than 2-year highs above 1.2252 as the buck broadly lower.


Economic Data

·     Weekly Jobless Claims rise +23K to 885K vs. 806K consensus while prior week revised to 862K prior from 853K; the 4-week moving average rose to 812,500 dec 12 week from 778,250 prior week (previous 776,000); continued claims fell to 5.508 mln in latest week vs. est. 5.598 mln (prior week revised to 5.781 mln from 5.757 mln)

·     Housing starts rose 1.2% to a seasonally adjusted annual rate of 1.547M units last month, the Commerce Department said, closer to its pace of 1.567M units in February and above the estimate of 1.530 million units in November. Homebuilding surged 12.8% on a YoY basis

·     Building Permits for November jumped 6.2% to a rate of 1.639 million units in November vs 1.553M expected and 1.544M (revised from 1.545M). Single-family homebuilding rose 0.4% to a seasonally adjusted annual rate of 1.186 million units, the highest level since April 2007.

·     Philadelphia Fed business conditions index for December at 11.1 (consensus 20.0) vs 26.3 in November as new orders index 2.3 in December vs 37.9 in November







WTI Crude















10-Year Note





Sector Movers Today

·     Life Sciences, MedTech and Equipment; ILMN upgraded to buy at BTIG with $410 tgt as believe the end market conditions for next-generation sequencing will continue to improve throughout next year and as the value of the GRAIL acquisition becomes clearer; overall, BTIG says 2020 represents the best life science tools and diagnostics sector performance we’ve seen in recent history if not ever with top picks LMNX, FLDM and TMO; MTD and WAT both upgraded to Buy from Neutral at Cleveland Research

·     Metals & Materials; STLD guides Q4 EPS 80c-84c vs. est. 80c in steel sector as expects Q4 earnings from steel operations will be meaningfully higher than Q3 results, driven by flat roll metal spread expansion and steady total steel shipments, while NUE guides Q4 EPS $1.15-$1.20 vs. est. $1.06 as expected Q4 earnings include a net benefit totaling $39.7 mln, or $0.13 per diluted share, related to state tax credits; aluminum prices jump as Bloomberg reports that European officials told the U.S. government that Russian billionaire Oleg Deripaska continues to exert control over Rusal, one of the world’s top producers, in what the officials said was a breach of U.S. sanctions (shares of AA, CENX active on headlines)

·     Auto sector; Morgan Stanley lifted GM price target to $57 from $53 on potential monetization of its autonomous “Super Cruise” technology, targeting 7 models next year and 12 by 2023; CVNA was initiated at OW with a $300 PT and VRM at Sector Weight without a PT at KeyBanc, believing that digital used auto retail has some of the strongest long-term secular tailwinds in our coverage; FSR signed a definitive platform and definitive manufacturing agreement with Magna, which finalizes their framework agreement from October; European car registrations declined 12% in November to 897,692 units, followed by 7.8% decline in October

·     Bank movers; Wells Fargo raises ests and tgt on large cap banks saying bank outperformance since “Pfizer Monday” (Nov. 9) should continue given the 3 “C’s” – Capital markets, Credit, and Costs as reiterate OW ratings and increasing PTs on GS by 20% to $310 (top pick into 4Q20 results) and note recent deal success (Snowflake, DoorDash, mergers, etc.); and on BAC, JPM, and C by avg. 10%; Stephens upgraded CMA to overweight from equal-weight with $62 tgt noting it’s the worst-performing Super Regional Bank year-to-date (down ~26% vs. ~11% at the KRE), while downgraded HBAN as expect it to be more of a peer performer in 1H21.



·     ACN +6%; after Q1 adj EPS $2.17 and revs $11.8B topped consensus and raised its FY revs view to up 4%-6%, from prior 2%-5%

·     JBL +8%; traded at 20-year highs as posts Q1 rev of $7.83B beating the $7.03B estimate and guides Q2 revs $6.2B-$6.8B vs. est. $6.24Bon better year outlook as well

·     LEN +9%; earnings beat (by 20%) on homebuilding margins and financial services, while guidance seems well above Street expectations (FY2021 guidance at 62,000-64,000 deliveries and gross margin of 23.75-24.0% (up from delivery of 52,925 homes and gross margin of 20.6% in FY 2020)

·     MGNX +11%; after the FDA approved its drug Margenza in combination with chemotherapy for the treatment of an advanced type of breast cancer in patients who failed two or more prior therapies

·     RAD +25%; after 3Q adj EPS $0.08 beat the ($0.05) loss on higher sales $6.12B (est. $5.84B) and lifts targets for revenue, profit and same-store sales in 2021 following solid Q3 results

·     ROKU +6%; after saying starting today, company’s users will be able to download HBO MAX (AT&T) from Roku channel store & subscribe directly on Roku device to access all of HBO Max

·     XSPA +24%; after announces partnership with UAL for covid-19 testing with XpresCheck testing facilities



·     HBAN -2%; downgraded at Stephens as expect it to be more of a peer performer in 1H21

·     HZNP -4%; after announcing short-term TEPEZZA supply disruption due to government-mandated COVID-19 vaccine production related to Warp Speed. The orders have dramatically restricted capacity available to produce TEPEZZA at CTLT, their product contract manufacturer

·     LNC -2%; downgraded at KBW Inc. as financials lagging broader market on day

·     RRGB -4%; as Wells Fargo with several changes in restaurant space – downgraded CBRL, PLAY and RRGB to underweight while upgraded BJRI, DRI, QSR and YUM

·     ZYNE -14%; as FDA recommends co to redo late-stage trial of its experimental cannabinoid gel, Zygel, in neurological disorder Fragile X syndrome patients


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.

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