Mid-Morning Look: February 02, 2021

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Mid-Morning Look

Tuesday, February 02, 2021






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S&P 500








Russell 2000






Groundhogs’ day for sure as Wall Street’s main indexes open higher adding to the prior day gains as investors await additional stimulus relief news out of DC, while all eyes on big tech and retail tonight with Amazon (AMZN) and Alphabet (GOOGL) each expected to report earnings after the bell (along with an onslaught of several other names – CMG, FEYE, MTCH, EA, CB) and high expectations for both. Major averages are firmly higher as volatility (fear index) slides again (after the VIX jumped 45% in January) as investors pile into large cap winners on better earnings. Bernstein noted with almost a third of S&P 500 companies having reported their fourth quarter earnings (thru last night), 88% managed to meet or beat analysts’ consensus earnings estimates so far, well above the average of 78% over the last twelve years. Gold prices are sliding, down over 1.5% while Treasury yields rising again along with stocks as the 10-yr rises 3.8bps to 1.115%; 30-yr yield up 4.5bps to 1.89%; 2-yr remains depressed little changed at 0.113%. Oil prices also rise as investors move back out of defensive sectors and into riskier ones after weakness last week for broader stock markets.


An unwind (bigly) in the Reddit/WallStreetBets trades punishing those stocks a second day (GME, AMC, BBBY, EXPR, GSX, NOK, KOSS, SLV), while broader markets are higher adding to massive gains yesterday. Robinhood’s trading app recorded more downloads than any other U.S. trading app last week, despite concerns that its restrictions on transactions involving some heavily shorted stocks. The app saw 2.1 million downloads in the United States on Google Play and App Store last week, according to data from Sensor Tower. Barstool Sports founder Dave Portnoy said in a tweet today he lost about $700K following squeeze trades and lays the blame on Robinhood and CEO Vlad Tenev. Online broker Robinhood, on whose platform much of the buying and selling has taken place, confirmed on Monday it had raised another $2.4 billion from shareholders following a $1 billion boost last week as it strives to meet demands for additional collateral to cover trades.







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10-Year Note





Sector Movers Today

·     Auto sector; UBER said it is buying on-demand alcohol marketplace Drizly for about $1.1B in stock and cash; TSLA is planning to recall 134,951 Model S and Model X cars due to issues with touchscreens; HOG posted an unexpected Q4 EPS loss of (-$0.44) vs. est. profit $0.14 on weaker revs $725M vs. est. $773M as Q4 motorcycle shipments down 48% YoY and Q4 Dealer Retail Motorcycle Unit Sales down 14% YoY; RACE Q4 revs and profit rises buy outlook for 2021 was seen as somewhat disappointing, as guided adjusted EBIT target of between EUR0.97B and EUR1.02B as well as the industrial FCF guidance of around EUR0.35B as underwhelming; VWAGY said presales of additional ID.4 models will start later this month in around 30 European countries including Germany, as well as in the U.S

·     Healthcare services and providers; HCA EPS beats by $0.51, beats on revenue, reinstates dividend and buyback (up to added $6B) while FY 21 rev guidance $53.5B-$55.5B vs. $54.24B est. and EPS of $12.10-$13.10 vs. $11.88 consensus – other hospitals moved early (CYH, UHS); OMCL upgraded to Overweight and $147 tgt at Piper as reported a strong Q4 and FY20 with bookings, revenue and adjusted EPS all handily beating 10/27/20 guidance and modestly ahead of the company’s 1/13/21 preliminary results; ALGN tgt to $610 from $525 at Piper as remain bullish ahead of 4Q results being released tomorrow with orthodontic channel checks and several measures of consumer interest in Invisalign supportive of both upside to 4Q; MCK reported 3Q revenue of $62.6B (vs $61.8B cons) and EPS of $4.60 (vs. $4.15 est. and raised F21 guidance expecting EPS of $16.95 to $17.25 (from $16 to $16.50 prior)

·     Industrial & Machinery; EMR Q1 EPS and revs top views (83c/$4.16B vs. 69c/$3.98B) and raises FY adj eps view to $3.70 to $3.80, from prior $3.40 to $3.50 and remain committed to plan of total company restructuring spend of approximately $200 million; ETN Q4 EPS and sales topped consensus saying qtr was stronger than expected, with organic sales down 5%, at the high end of our guidance range and up 3% QoQ while issued 2021 guidance above estimates; LII Q4 EPS $2.89 adj vs. est. $2.65 and revs $914m vs. est. $884.8Ml reit 2021 rev growth guidance of 4%-8%

·     Optical and Networking; FN posted a strong quarter, noted improving conditions across a number of lines, offered strong above Street guidance, and announced due to this strength, they are accelerating new production capacity build-out plans and doubling the size of the planned addition to 50% of global capacity; LITE slides on mixed Q2 results as EPS beat but revs of $478.8Mm missed the $480.7Mm estimate; in comm infrastructure; Cowen upgraded COR & downgraded LLNW saying are most positive on QTS, COR and AKAM and most cautious on EQIX and LLNW (downgraded as believe LLNW is facing pricing pressure resulting from its high customer concentration that will have an outsized impact on revenue growth)

·     Energy stock movers; XOM reported Q4 adj EPS ($4.70) loss, though it was profitable after accounting for a $19.3B write-down which ends 3 consecutive quarterly losses, revs $46.5B missed estimates and fell -30.7% YoY, Q4 production 3.69M boe/day (-8.2% YoY), and the company said it exceeded cost-reduction objectives as FY20 capital spending $21B was $2B below target while cash operating expenses fell more than 15% YoY; COP Q4 adj EPS loss (19c) was narrower than the expected (26c) loss as crude oil prices recovered from their pandemic-driven lows, and its Q4 total average realized price fell 29% YoY to $33.21/boe; BP reported Q4 EPS 3c on sales $44.79B, both missing estimates of 8c on $46.61B, and its FY20 EBIT $1B also missed consensus $1.41B; in refiners, MPC posted Q4 adj EPS loss (94c), narrower than est. (1.41) loss, on revs $18.19B vs est. $17.07B, capex $491M vs est. $536.4M, and cut its 2021 capital spending outlook by $350 million from 2020 to $1.4 billion, excluding the midstream business MPLX LP, as the company works to reduce debt; IMO Q4 EPS loss was larger than expected and a 26% YoY decline in revenues to C$6.03B, also missing analyst estimates while taking a C$1.17B non-cash charge related to Canadian unconventional nat gas assets it believes will never be developed



·     AI +9%; as co along with RDSA, BKR and MSFT launch the Open AI Energy Initiative, an ecosystem of Ai solutions to help transform the energy industry

·     DRRX +20%; said the FDA approved Posimir bupivacaine solution for infiltration use in adults for administration into the subacromial space under direct arthroscopic visualization.

·     HOL +38%; to take rocket startup Astra public in a $2.1 bln blank-check deal, the companies said on Tuesday as deal includes $200M private investment led by funds and accounts managed by BlackRock

·     MBRX +63%; after a preclinical study in animals demonstrated a potentially significant therapeutic benefit of Annamycin against metastatic osteosarcoma

·     PRTA +21%; announces that it will go ahead with a confirmatory Phase 3 AFFIRM-AL study for its AL amyloidosis treatment birtamimab following multiple discussions with the U.S. FDA, with the aim of initiating the trial by mid-2021 (updated to Buy at BTIG after news);

·     TVTX +13%; said its Phase 3 study of sparsentan in focal segmental glomerulosclerosis achieved its interim partial remission of proteinuria objective after 36 weeks of treatment.

·     UBER +6%; after saying it is buying on-demand alcohol marketplace Drizly for about $1.1B in stock and cash

·     UPS +4%; posted a top and bottom line beat in package delivery ($2.66/$24.9B vs. est. $2.14/$22.8B) is not providing revenue Fy21 guidance and said U.S. domestic revenue grew 17.4% to $15.74 billion, and international revenue jumped 26.8% to $4.77 billion

·     WAT +9%; as Q4 EPS and sales come in well above estimates ($3.65/$787M vs. est. $2.89/$713M) and issues upside FY21 guidance along with repurchase program



·     BYND -3%; shares active after Impossible Foods said it is cutting suggested retail prices for its plant-based meat substitute products by 20% in the 17,000 grocery stores they are in across the U.S.

·     CRUS -4%; slides after results as Cowen noted a significant beat and in-line (conservative) guidance likely causes shares to trade off after other Apple suppliers set a high bar this quarter (downgraded at Hallum)

·     GME -53%; as air comes out of the short squeeze Reddit/WSB trades (AMC, AG, EXPR, DDS, M, KOSS, BBBY, BB, SLV, NOK, FUBO among decliners)

·     HOG -18%; Q4 EPS loss of (-$0.44) vs. est. profit $0.14 on weaker revs $725M vs. est. $773M as Q4 motorcycle shipments down 48% YoY/Q4 Dealer Retail Motorcycle Unit Sales down 14% YoY

·     LLNW -7%; downgraded to market perform from outperform at Cowen and reducing tgt to $4.75 from $9 as believe LLNW is facing pricing pressure resulting from its high customer concentration

·     SYY -1%; said quarterly profit plunged 82% while Q2 sales were down 23% to $11.56B from $15B last year) as pandemic weighed on food service demand as EPS and rev both miss estimates

·     VRTX -4%; posted a relatively straightforward quarter with a modest top-line beat and an in-line bottom line while 2021 CF guidance was slightly below expectations


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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