Mid-Morning Look: February 01, 2022

Auto PostDaily Market Report

Mid-Morning Look

Tuesday, February 01, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks are mixed to start, getting another boost initially after a massive 2-day surge helped pare January losses, as transports and cyclical names among leaders before a weaker ISM and Markit manufacturing report, as well as a higher inflation reading took some of the steam out of the markets. Transports are among top gainers thanks to big earnings beat from package delivery giant UPS, while tech took a little breather after a huge rebound the last 2-days of January and ahead of a busy earnings week (AMZN, GOOGL, AMD, FB, SWKS among those reporting this week). Treasury yields popped higher (10-yr above 1.8% and 2-yr nearing 1.2%) after the higher ISM inflation reading, while the dollar pared losses. There was a big deal in the media space, with AT&T also announcing a dividend cut to pay for the spinoff of WarnerMedia, sending shares lower. Homebuilders fall amid rising rates and weaker earnings/guidance form the likes of PHM MDC, and NVR. Markets looking for direction early, trying to hold after reclaiming key technical levels the last 2-sessions.


Economic Data

·     The IHS Markit final U.S. manufacturing PMI decreased to 55.5 in January from 57.7 in December but rose from its preliminary reading of 55.0 (est. was 54.8); Data points to a deceleration as it came at the lowest level since October 2020. Market manufacturing sector final input prices index for January 80.0 vs flash 80.1 and final December 83.1

·     The Institute for Supply Management (ISM) said its index of national factory activity dropped to a reading of 57.6 last month, missing the est. of 57.5 and down from Dec reading of 58.8. That was the lowest reading since November 2020 and followed 58.8 in December. The ISM prices paid component of 76.1 for ISM is highest since August (when 79.4) and above Dec at 68.2 – the higher inflation reading weighed on mkt as well as overall ISM miss.

·     Construction spending for Dec rises +0.2% below consensus up +0.6% to $1.640 trln, vs Nov +0.6% from prior view +0.4%; Dec private construction spending +0.7%, public spending -1.6%







WTI Crude















10-Year Note





Sector Movers Today

·     Auto sector; Chinese EV auto makers with monthly January sales numbers; NIO said deliveries rose 34% to 9,652 vehicles, XPEV said deliveries jumped 115% to 12,922 as cumulative deliveries surpassed 150,000 end of Jan and LI January deliveries rise 128% Y/Y to 12,268 vehicles; in research, ALV upgraded from Hold to Buy at Deutsche bank and up tgt to $123 from $117 as now view the supplier as offering one of the best ways to invest in the multi-year auto industry volume recovery ahead; in EV space, Cowen cuts tgts on BEEM $12 (Prior $37) BLNK $25 (Prior $40) CHPT $24 (Prior $37) EVGO $16 (Prior $22) QS $29 (Prior $36) and RMO $2.50 (Prior $4) saying while continued choppiness and limited visibility in 1H could translate to conservatism around ’22 top-line expectations, still think CHPT, EVGO and BLNK will deliver robust growth y/y; EVGO and Meijer Energize First of 5 New Public Fast Charging Stations in the Midwest

·     Housing & Building Products; homebuilders report as MDC misses on most metrics (EPS, revs below views), PHM Q4 EPS $2.51 vs. est. $2.31; Q4 revs $4.36B vs. est. $4.22B; raises share repurchase authorization by $1B and gross margin on home sales rose to 26.8%, up 1.8%; NVR reports Q4 EPS miss and revs that fell -3.8% YoY; tools maker SWK with earnings and big stock buyback ($4B), while saying it sees about 60% of FY22 adj EPS in 2H sees about 13.5% of FY22 adj EPS in 1q sees high single digit FY22 tools & outdoor organic growth sees high-single-low double-digit FY industrial organic growth; LOW said it wants to attract more big-spending contractors, so it’s sweetening its rewards program and rolling out the perks

·     Chemicals: lithium producers ALB and LTHM both upgraded to Neutral from Underperform noting shares have moved considerably off highs, at – 22% and -29% respectively, vs. -7% at the broader Materials index (XLB) and have also significantly underperformed many smaller cap peers, such as Pilbara and Allkem – notes underlying market has improved materially, with lithium prices rallying anywhere between 12% and 110% depending on the benchmark; AXTA reported 4Q adj. EBIT of $121mm, a touch below Mizuho’s estimated $123mm, but in line with the pre-announced range of $120-$125mm; SMG 1Q adj EPS loss ($0.88) wider than est. ($0.73) on sales $566Mm vs est. $561Mm; says to consolidate U.S. lighting manufacturing for Hawthorne into single location and to close another recently acquired assembly facility; GGG Q4 topped consensus (EPS 66c vs est. 63c on revs $539.6M vs est. $519.5M) and it guided Fy22 organic sales growth +HSD vs est. 7.3%; CBT Q1 adj eps $1.29 vs est. $1.11 on revenue $968M bs est. $870.5M, raised its FY adj EPS forecast to $5.50-5.90 from $5.20-5.60 and completely above est. $5.39, and said it remains on track to generate over $1B during the next three years

·     Energy stock movers; XOM Q4 adj EPS $2.05 vs est. $1.95 on revenue $84.97B vs est. $85.01B, its dividend was raised to 34c/shr from 27c, it began a $10B buyback program, and it narrowed its CapEx forecast to $21-24B from $20-25B that compares to est. $17.87B; HP Q1 adj EPS loss (48c) was narrower than est. (51c) on revs $409.8M ahead of est. $392.9M and they said operating results were still negatively impacted by costs associated with reactivating rigs, though they expect a more moderate increase in Q2; Piper upgraded HLX, OII to OW; RBC added CNE to its best ideas list on the potential for stock-specific news-driven gain with ET joining it on the list as it is well positioned to generate meaningful cash flow growth as large-scale growth projects come online and capex is expected to slow, and these replace AZRE who was removed as it can be negatively affected from rising rates and a rotation out of growth and CNQ given its strong market performance on both an absolute and relative basis; IMO posted a quarterly profit that narrowly missed estimates, as extreme cold weather hit the company’s production



·     ARCB +5%; shares jumped after Q4 rev ($1.19B), adj Ebitda ($128.6M) and EPS ($2.79 vs. $2.27 est.) beats

·     GCI +10%; authorizes stock buyback of up to $100M and announces amendment to credit agreement

·     HOG +2%; upgraded from Underweight to Equal weight at Morgan Stanley with $40 tgt as positive on the turnaround from a margin standpoint and see the risk reward as more evenly skewed at today’s share price

·     NTR +2%; said could boost production by up to 29% in coming years, depending on any sanctions facing rival producers in Russia and Belarus, the Canadian company’s interim CEO told Reuters (shares of MOS and CF advanced in reaction as well)

·     UPS +12%; after Q4 results beat estimates and FY22 revenue guidance also came in ahead of expectations, guiding to about $102 billion

·     XOM +5%; Q4 adj EPS $2.05 vs est. $1.95 on revenue $84.97B vs est. $85.01B, its dividend was raised to 34c/shr from 27c, it began a $10B buyback program (highest levels since April 2019)



·     AVXL -17%; on trial data – recall earlier STAT News Adam Feuerstein noted Anavex changed the primary and secondary endpoints of this Rett study on Jan. 18, allowing it to claim success when the drug most likely failed – said this press release is entirely misleading

·     CACC -5%; posted mixed results and all-in, as revs beat consensus by 1%, but 44c of the beat was due to higher profit share on Gap insurance and Stephens noted mgmt commentary points to this profit share being volatile/finance revenues was a 28c miss

·     CRUS -4%; strong Q3 results (revs $548.3M vs. est. $510.4M) and guided Q4 revs $400M-$440M, well above the $355.8M estimate but analysts note cryptic messaging around seasonality for the June quarter expectations weighed on shares

·     HLIT -12%; following a 4Q21 beat and a mixed outlook as one analyst attributed weakness to supply chain induced gross margin pressure while sales trends remain healthy

·     KMPR -12%; reported quarterly operating EPS loss of ($2.05) widely missed consensus of ($0.52) amid worse-than-expected Non-Standard Auto Results

·     LDI -8%; shares tumbles after missing top and bottom line for Q4 as EPS $0.09 vs est. $0.16 on revs $705Mm vs est. $714Mm

·     PBI 16%; after Q4 EPS of $0.06 misses the $0.11 estimate and noted supply chain challenges and shifts in consumer buying behavior led to lower volumes

·     SMG -2%; 1Q adj EPS loss ($0.88) wider than est. ($0.73) on sales $566Mm vs est. $561Mm

·     T -4%; said it will spin off WarnerMedia in a $43 billion transaction to merge its media properties with DISCA AT&T will distribute shares of the new Warner Bros. Discovery as a dividend of $1.11 per share, down from $2.08 per share (cuts dividend which sunk shares); AT&T shareholders will own 71% of the new Warner Bros.


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.

Live Trading

Open an Account

Paper Trading