Mid-Morning Look

Thursday, December 30, 2021

U.S. stocks open higher and keep climbing, a common them throughout 2021 with a new intraday record for the Dow Jones Industrial Average and as the S&P looks to make it a 71^st record close as major averages remain on track for strong double-digit percentage gains for the year and mark its best 3-year performance since 1999. Transport stocks pulling back/mixed early after names like rails CSX, UNP, NSC touching all-time highs this week. Based on today’s market action (thus far), it seems tax loss selling supply was a massive factor in holding down beaten down names up until yesterday – but seeing big bounces in many of the 2021 top decliners, with several of the Russell 2000 Smallcaps leading on the day (IWM trades above 200 and 100- day moving averages). A surprise dip in weekly jobless claims reinforced confidence in the U.S. economy amid a surge in COVID-19 infections as the Labor Department’s data showed the number of Americans filing for new unemployment claims slipped to 198,000 from 205,000 a week earlier. While stocks are looking to end the year at new highs, attention will shift towards the pace of U.S. interest rate hikes into 2022 amid soaring prices and supply chain logjams. But the Santa Claus rally did not disappoint, with a big jump in stocks this month as the Dow on track for a 6% move in December, the S&P 5.2%, Nasdaq 2% and Russell 2000 over 3%.

Economic Data

·     Weekly Jobless Claims fell to 198,000 in the latest week, below consensus 208,000 and down from 206,000 prior week; the 4-week moving avg fell to 199,250 in latest week from 206,500 prior; continued claims fell to 1.716M in latest week (back to where it was pre-COVID) from 1.856M prior (below est. 1.868M); the U.S. insured Unemployment rate fell to 1.3% from 1.4%

·     Chicago PMI for December reported at 63.1, topping estimates of 52 and prior month 61.8

Stock GAINERS

·     BABA +5%; seeing strength in several China related stocks after a dismal 2021 amid increased scrutiny and regulation it its country; possible tax loss selling behind the names with a big bounce today in many names (DIDI, BIDU, KWEB, PDD)

·     DISH, DISCA, VIAC up 2-3%; among top gainers in the S&P 500 as media strong/leading (though many of the names are still down big on year)

·     KR +1%; board authorizes $1B in share repurchase authorization

·     RRD +4%; said it received an $11 per share unsolicited non-binding offer from a strategic buyer, a bid that is above its latest accepted deal with Chatham Asset for $10.85 per share

·     TGT +5%; shares rally for a 5^th straight day as consumer discretionary names outperform

Stock LAGGARDS

·     BIIB -6%; Samsung Biologics said a report that it’s in talks to purchase Biogen (BIIB) is not true. The earlier Korea Economic Daily report is not true, according to a Bloomberg report, which cited a regulatory filing https://bit.ly/3195CBE

·     CSX -1%; as rails pullback off record highs earlier this week/transports lag

·     DIDI ; said Q3 revs dropped 11.5% QoQ, after Chinese regulators launched a cybersecurity probe into the ride-hailing firm; reported the equivalent of $6.7B in revenues for Q3 and posted a net loss equivalent to $4.8B

·     MU -2%; after saying late yesterday that the COVID-19 lockdown in the Chinese city of Xian will cause delays in the supply of its DRAM memory chips; said it should meet most of its customer demand, but the restrictions have resulted in thinner staffing levels

·     TSLA -1%; recalls nearly half a million Model 3 and Model S cars to address potential failures in its trunk latching systems, as first reported by Barron’s