Mid-Morning Look: December 21, 2021

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Mid-Morning Look

Tuesday, December 21, 2021






DJ Industrials




S&P 500








Russell 2000






U.S. stocks look to rally following the worst three-day performance since September for stocks, as the Nasdaq Composite comes into the day at 2-month lows, while the S&P 500 and Dow are bouncing off their lowest levels since December 3rd. Investors were back in “buy-the-dip” mode early, with “risk-on” across the board overnight following a surge in Asian, European markets as well as commodity markets with oil jumping and Bitcoin resuming upward momentum into the Christmas holiday. Early on, the S&P 500 failed at its 50-day moving average resistance around 4,612 before rebounding again, led by strength in cyclicals and “reopen” names with travel, leisure, energy, and consumer rebounding. Semiconductors and retail got an additional boost following stronger-than-expected quarterly results from Micron (MU) and Nike (NKE) respectively overnight. Smallcaps also outperform with the Russell 200 rising nearly 2% to start. Defensive consumer staples lagging early, led by General Mills (GIS) after missing earnings results. Treasury yields quietly at highs of the day, with the 10-yr topping 1.47%, more than 12 bps off Monday’s lows around 1.35% while gold dips and oil rips.


Economic Data

·     U.S. current account deficit widens by 8.3% to (-$214.8B) in Q3 vs. (-$198.3B) in Q2







WTI Crude















10-Year Note





Sector Movers Today

·     Consumer Staples; a general pullback in the defensive sector after a few days of gains as investors rotate back into risker/growth names; in food space, GIS reported Q2 EPS ($0.99 vs. est. $1.05) on better sales ($5.02B vs. est. $4.84B) as operating profit fell 13% to $800M due to inflation and supply chain disruption, while did raise year sales view to full-year organic net sales to rise 4% to 5%, up from previous guidance for a decline of 1% to 3%; CVGW posted a slightly smaller Q4 loss and better revs – delivered a Q4’21 result which showed improved pricing dynamics and the beginning of margin improvement derived from its widespread restructuring efforts; Kellogg (K) slips ahead of vote counting on new contract for workers after having reached a tentative deal with the union on Dec. 17

·     Software movers; CTXS rises after Bloomberg reported Elliot Management, which has amassed a stake in the co, has partnered with Vista Equity Partners for a joint bid for the company, https://bit.ly/3yPmppD ; ORCL was downgraded to sector weight from Overweight at KeyBanc saying while we concur the all-cash deal should be accretive to earnings, it would be near-term neutral to top-line growth and dilutive to EBIT margins; BRZE rises after customer engagement platform tops expectations in first qtrly report since going public last month/said Q3 revs increased 63% YoY to $64M, topping the $56M estimate

·     Healthcare Services; CI and HCA were both downgraded to Neutral from Overweight at JPMorgan saying believe HCA is the best positioned hospital operator in the U.S., with a strong and diversified portfolio, however, we believe other companies in our coverage offer greater near-term upside; while for CI, believe U.S. Medical margins will improve in 2022, partially driven by CI’s pricing strategy…but think this could result in slower membership growth next year; RAD boosted its 2022 adjusted EBITDA view to $500M-$520M from prior $460M-$500M and says it has identified 63 stores it plans to shut in order to cut costs after a mixed Q3; Barclay’s said Healthcare Delivery industry view remains Positive on the several catalysts as see the biggest upside opportunities for PGNY (Top Pick), SGRY, AVAH, DCGO, THC and INNV; biggest risks in AMEH and UHS



·     CCL +6%; broad rebound in “reopen” stocks with shares of HST, RCL, CZR and energy names all among top S&P gainers to start the day

·     CTXS +12%; Elliot Management, which has amassed a stake in the co, has partnered with Vista Equity Partners for a joint bid for the company, Bloomberg https://bit.ly/3yPmppD

·     ERJ +15%; after Embraer unit Eve, an urban air mobility business, said it is going public via a merger with special-purpose acquisition Corporation (SPAC) Zanite Acquisition Corp. (ZNTE) in a deal with an implied enterprise value of about $2.4 billion

·     KLAC +5%; was upgraded to Overweight at Wells Fargo and establishing stock as No. 1 top pick for 2022 while raising its price tgt to $500

·     MU +8%; reported in-line to slightly better Q1 revs/GM/EPS of $7.7B/47%/$2.16 while guidance for Q2 was well ahead of views at $7.5B/46%/$1.95 (topping the $7.3B/$1.86/45.5% est.) as analysts note benefiting from the stabilization the PC market

·     NKE +5%; reported a Q2 beat on both the top and bottom-lie just three months after the apparel/footwear giant sounded the alarm on supply chain disruption – Q3 beat primarily driven by gross margin

·     SEDG +7%; a rebound in renewables and EV stocks a day after the sectors tumbled following the apparent failure of Biden’s “Build Back Better” plan that includes significant incentives for the growing sectors – shares of ENPH, NOVA, RUN, RIVN, BLNK rise early

·     SAVA +18%; after the company said it was informed by Neuroscience journal there is no evidence to support claims of data manipulation in a 2005 paper authored by the Company and its scientific collaborators



·     ACAD -20%; downgraded to Neutral from Buy at Guggenheim and maintaining our $28PT as continue to believe that a new trial will be needed to support approval in ADP

·     ALDX -48%; after the biotech company said it did not meet its primary goal for treating ocular redness in the Phase 3 trial of its Tranquility drug

·     AQST -31%; after saying it was informed by the FDA that it is not ready to take a decision on whether to approve co’s anti-seizure medicine, Libervant, by the target date of 12/23

·     CTMX -30%; after reported prelim data from an ongoing Ph 2 evaluating its conditionally activated CD71-targeted CX-2029 in sqNSCLC and HNSCC patients

·     DBVT -40%; after the company said it would withdraw its marketing application for the Vlaskin Peanut patch in Europe and plans a new Phase 3 clinical study for a modified patch in children

·     GIS -4%; reported Q2 EPS ($0.99 vs. est. $1.05) on better sales ($5.02B vs. est. $4.84B) as operating profit fell 13% to $800M due to inflation and supply chain disruption, but did raise its year organic sales view

·     MRNA -6%; broad selling pressure in vaccine names with PFE, BNTX, NVAX all tumbling as Omicron cases figures surge to new highs daily, raising concerns about effectiveness

·     VIR -10%; downgraded to Underperform at Baird with unchanged $36 tgt noting shares have increased about 65% since late November following the first news reports of the omicron variant.


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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