Mid-Morning Look: January 04, 2022

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Mid-Morning Look

Tuesday, January 04, 2022






DJ Industrials




S&P 500








Russell 2000






Record intraday highs for the S&P 500 and Dow, while the Nasdaq underperforms following strength on Monday as surging treasury yields once again impacting high growth/dividend paying/rate sensitive sectors such as software, utilities. Autos are among early leaders behind strength in Ford (F) new 52-week highs on positive EV comments, while energy stocks jump in the S&P 500 as oil futures extend gains, brent crude rise over $80 per barrel, highest since November. Financials seeing additional follow thru as Treasury yields move higher for a second day to highest levels in months/years depending on short or long end of curve level (though yields pulled back following mixed ISM report). Travel stocks advanced again with airlines and cruise operators rising on lower Omicron variant fears. OPEC+ agreed to stick to its planned increase in oil output for February because it expects the Omicron coronavirus variant to have a short-lived impact on global energy demand.


Economic Data

·     Weaker data as ISM U.S. Manufacturing activity index reported at 58.7 in December (lowest since Jan 2021) vs 61.1 in November and below estimates of 60.0; prices paid index 68.2 in December vs 82.4 in November; new orders index 60.4 in December vs 61.5 in November; employment index 54.2 in December vs 53.3 in November

·     U.S. Job openings (JOLTs) fell to 10.56 mln in Nov. From 11.09 mln; a record 4.5 million Americans quit their jobs in November







WTI Crude















10-Year Note





Sector Movers Today

·     MedTech Equipment; ICAD slips after guides year revs $33.6M-$33.8M, below est. $36.15M; in research, Piper upgraded GMED and SYK to Overweight as both have the momentum to continue delivering better than average share performance again here in ’22, while the firm downgraded MDT, TFX and ZBH from Overweight to Neutral saying they understand that all three have seen pressure recently and trade at modest valuations but all three have headwinds that we believe will make it difficult for the stocks to work in the near- to intermediate-term; NVRO said that UNH will provide coverage for the company’s high-frequency 10 kHz Therapy for the treatment of PDN (Painful Diabetic Neuropathy) for dates of service on or after March 1, 2022

·     Utilities & Solar; in research, SPWR, SOL, TPIC upgraded to strong buy from OP at Raymond James, while FSLR, CLNE upgraded to Market Perform while AQUA, NEP downgraded to Market Perform from OP and XYL downgraded to Underweight noting they are taking profits in some of the value-type, better-established names (disproportionately larger-cap ones) that outperformed; and redeploying capital into some of the speculative story stocks (mostly on the smaller end of the spectrum) that were on the losing side of last year’s rotation

·     Bank movers; Wolfe downgraded JPM to Peer-Perform on the threat of tougher regulations and higher capital minimums with consensus not adequately reflecting expense growth, leaving WFC as their only OP among money centers; UBS upgraded HLI to Buy as they expect much stronger FY22-23 earnings driven by accretion from the recently closed GCA deal; Wells downgraded UMBF to EW on valuation with shares now trading at a modest premium from a steep discount and they do not expect further valuation expansion and UMPQ to EW as shares are unlikely to see much valuation expansion until the COLB merger is integrated, which is currently planned for 1Q23, and its earnings growth is likely to underperform as rates rise because of its higher dependence on mortgage banking than peers; OZK increased its dividend for the 46th consecutive quarter, now paying 30c from prior 29c; Asset Managers; Goldman downgraded APAM to Neutral and NDAQ, TROW to Sell while upgrading NTRS to Neutral; TPG plans to sell about 28.3M shares at $28-31 in its IPO as it aims for a valuation as high as $9.3B

·     Media & Telecom movers; WMG 8.563M share Spot Secondary priced at $41.00, while separately, Jefferies upgraded shares from Hold to Buy and upped tgt to $50 from $41 on a higher level of confidence: 1) digital streaming is still early and will provide steady predictable growth; 2) emerging platforms are underappreciated in Street models; 3) capital structure provides flexibility in new investments/initiatives; Wells Fargo with several changes in its media sector, lowering ests in cable for CMCSA, CHTR, while downgraded SIRI to Equal weight saying they are fans of the model and mgmt team, but think the stock ebbs and flows w self-pay net adds which will be weaker in 2022 as the trial funnel compresses; Wells also said like the scaled streaming players w various risk rewards (NFLX, DIS, DISCA) also think studios like LGF (which they upgraded) and VIAC can unlock value during this gold rush, like DIS for lg cap growth, DISCA for lg cap value and IMAX for SMID-cap growth and GTN for SMID-cap value



·     F +9%; said it will nearly double annual production capacity for its F-150 Lightning electric pickup to 150,000 vehicles as the model has already attracted nearly 200,000 reservations ahead of its arrival this spring

·     FSLR +2%; as Raymond James makes several changes in solar sector, upgraded SPWR, SOL, TPIC, FSLR and cut AQUA, NEP, XYL in clean energy

·     GE +3%; was upgraded to Outperform from Neutral with $122 tgt at Credit Suisse while HON downgraded to Neutral from Outperform saying they see more upside potential in GE

·     HAL +6%; upgraded to Overweight from Equal Weight at Morgan Stanley with a price target of $30, up from $28 noting the stock underperformed peer SLB in 2021

·     NVRO +5%; said that UNH will provide coverage for the company’s high-frequency 10 kHz Therapy for the treatment of PDN (Painful Diabetic Neuropathy) for dates of service on or after March 1, 2022

·     OXY +5%; Energy stocks among the top performers in the S&P 500 early as oil futures extend gains, brent crude rise over $80 per barrel, highest since November



·     AVRO -36%; after saying it is deprioritizing its Fabry disease program due to several factors

·     ICAD -27%; as guides year revs $33.6M-$33.8M, below est. $36.15M

·     ITCI -10%; as files to sell $400M in common stock

·     PINS -7%; downgraded to Neutral from Buy at Guggenheim and cut tgt to $39 from $46 saying Ads Manager data indicates user declines for the second consecutive month, while download data also points to further declines

·     NTR -4%; named Ken Seitz, the head of its potash unit, as its interim CEO after top boss Mayo Schmidt stepped down in just eight months

·     SE -10%; 14.5M share Block Trade priced at $208

·     SNOW -6%; weakness in software stocks amid concern the rising Treasury yields could crimp growth outlooks – shares of AYX, ESTC, MDB, OKTA, PANW, U, TWLO, ZM, ZUO lower


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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