Mid-Morning Look: July 20, 2021

Auto PostDaily Market Report

Mid-Morning Look

Tuesday, July 20, 2021

Index

Up/Down

%

Last

 

DJ Industrials

464.60

1.37%

34,426

S&P 500

44.25

1.04%

4,302

Nasdaq

96.52

0.68%

14,372

Russell 2000

39.65

1.86%

2,170

 

 

Turnaround Tuesday thus far with major averages bouncing off recent declines on coronavirus variant growth concerns, with the S&P 500 index up about 1% and the Russell 2000 Smallcaps trying to snap its 5-day losing streak. The Nasdaq Composite also moving higher and on track to snap its recent 5-day losing streak as well (note the last time Nasdaq fell 6-straight days was August of 2019). The Treasury yield plunge continues as the 10-year falls as much as 5 bps to below 1.13% before paring losses, while the 30-yr down 3 bps to 1.78% and 5-yr down about 6 bps to 0.63%. Crypto assets pressured again as Bitcoin drops below the $30,000 level, falling over 4% along with weakness in Ethereum (also down 4%) to below $1,750. Oil resumes its recent drop as WT crude hits lows around $65.21 before bouncing, pressured by concern that rising COVID-19 infections could weaken demand again just when OPEC+ is increasing supply. Vaccine stocks outperform with MRNA, PFE, NVAX, BNTX among early gains, while financials pressured amid the drop in Treasury yields. Earnings starting to pick up as IBM moves higher post earnings results overnight while markets await NFLX numbers tonight. Drug distributors (ABC, CAH, MCK) climb after the co’s reach a $1.18B opioid settlement agreement with NY State. In space travel, Jeff Bezos’ Blue Origin’s New Shepard launch vehicle took place this morning and returned safely to Earth. Seeing an early recovery in “reopen” names with airlines and cruise lines trading higher.

 

Economic Data

·     Housing starts for June rose 6.3% MoM to 1.643M unit rate, above consensus of 1.590M and tops May’s 1.546M units; single-family starts +6.3% to 1.160M unit rate and multifamily +6.2%; June Housing Permits fell -5.1% to 1.598M unit rate, below consensus 1.700M. June single-family permits -6.3% to 1.063 mln unit rate; multifamily -2.6% to 535,000-unit rate.

 

 

Macro

Up/Down

Last

 

WTI Crude

0.33

66.75

Brent

-0.19

68.43

Gold

12.30

1,821.50

EUR/USD

-0.0024

1.1775

JPY/USD

0.26

109.70

10-Year Note

-0.01

1.171%

 

 

Sector Movers Today

·     Bank movers; KEY 2Q EPS $0.72 vs est. $0.54, NII $1.0B vs est. $1.0B, said it will evaluate an increase to its dividend in 4Q, and announced new common share repurchase authorization of up to $1.5B; SI Q2 EPS 80c vs. est. 51c, Q2 deposits $11.4B (+62.4% from Q1, +580.6% YoY); SBNY Q2 EPS $3.57 vs. est. $3.14, NII $457.2M (+18.1% YoY), CET1 capital ratio 10.03%, net charge-off 0.12%, and book value per share $106.24; SNV Q2 adj EPS $1.20 vs. est. $1.04, NII $381.9M (+2.1%) core transaction deposits +$702.4M (+2%), provision for credit losses of $24.6M; PACW Q2 EPS $1.52 vs. est. $0.97, NII $270.1M vs. $264.6M in Q1; WTFC Q2 EPS $1.70 vs. est. $1.59, NII $279.6M vs. $263.1M YoY, net interest margin 2.62% vs. 2.73% YoY; ZION 2Q EPS $2.08 vs est. $1.29, CET1 ratio 11.3% vs 10.2% at beginning of pandemic, released more than $120Mm of allowance for credit losses; UBS Q2 EPS 55c and revs $8.98B (+21.25% YoY) both handily beat consensus (36c, $8.33B) as the bank added $25B of new fee-generating assets in wealth management but warned client activity is set to slow; FNB reported Q2 EPS 31c vs est. 29c on revs $308M vs est. $305.7M, NII $227.9M, total avg deposits rose $3.2B (+11.9%);

·     Healthcare Services; ABC, CAH, MCK shares rise after the co’s reach a $1.18B opioid settlement agreement with NY State (expectations are that U.S. state attorneys general and lawyers for local governments are reportedly expected to unveil the final terms of the $26B settlement on Wednesday); in hospitals, HCA raises FY21 EPS view to $16.30-$17.10 from $13.30-$14.30 (est. $14.08) and boosts FY21 revs view to $57B-$58B from $54B-$55.5B (above est. $55.27B) and sees FY21 adjusted EBITDA $12.1B-$12.5B; in the CRO sector, Credit Suisse upped tgts for IQV to $265 (from $242), SYNH to $96 (from $94), MEDP to $205 (from $200), ICLR to $250 (from $245), and CRL to $385 (form $352), as conviction in inherent industry growth prospects rises (says IQV remains our most compelling CRO idea)

·     Internet; NFLX earnings results tonight; ahead of earnings, Jefferies raises tgts on digital ad platforms GOOGL, FB and TWTR saying with their digital ad peer group +27% YTD, they favor selectivity and would own FB and GOOGL was downgraded to Neutral from Buy at BTIG primarily due to valuation as the stock has recently run past our prior $103/share PT (but notes fieldwork on NET within its core WAF, DDoS, and CDN target markets remains positive); in online tutoring (in China), shares of EDU, TAL, GOTU look higher amid reports authorities in China pledged to reduce the cost of childbirth, parenting and education (recall the industry has been pummeled this year amid a crackdown by China on its private education companies)

·     Pharma movers; shares of vaccine makers PFE, MRNA, NVAX, BNTX helping lead the rally in Pharma/Biotech; ARDX plunges after the FDA identified deficiencies on the company’s New Drug Application for Tenapanor for the Control of Serum Phosphorus (prompts several analyst downgrades as they struggle to see a path forward for Tenapanor); MDWD announces positive topline results from phase 3 pediatric study (CIDS) of NexoBrid for Eschar removal of severe thermal burns (said primary endpoints met); ALDX receives orphan drug designation from the U.S. FDA for ADX-2191 to treat primary vitreoretinal lymphoma; RDHL said its bacterial infection treatment, Talicia, will now be covered by UNH’s PBM OptumRx; PLXP said Vazalore, a liquid-filled aspirin capsule, will be available in over 8,000 Walgreens (WBA) stores across U.S. in August

 

Stock GAINERS

·     ABC +4%; rises along with shares of other drug distributors CAH and MCK after the co’s reach a $1.18B opioid settlement agreement with NY State

·     EDU +4%; rises along with TAL, GOTU in the China education sector amid reports authorities in China pledged to reduce the cost of childbirth, parenting and education (recall the industry has been pummeled this year amid a crackdown by China on its private education companies)

·     HAL +5%; reports a 33.5% jump in Q2 profit from the previous three months, with EPS topping consensus views as both North America and international markets continued to improve, and operating income grew 17% with solid margin performance

·     HCA +11%; raises FY21 EPS view to $16.30-$17.10 from $13.30-$14.30 (est. $14.08) and boosts FY21 revs view to $57B-$58B from $54B-$55.5B (above est. $55.27B) – shares of other hospital providers UHS, THC, CYH rally in sympathy

·     IBM +4%; posted Q2/CY21 revenue/EPS beat, as the top-line increase of 3.4%, was IBM’s biggest gain in three years, while Q-Q revenue growth in Cloud slowed, while RHT’s YOY revenue growth improved from the prior quarter

·     IMNM +32%; after saying its antibody cocktail, IMM-BCP-01, to treat COVID-19 neutralizes Delta variant in pre-clinical study; co said it plans to submit application to U.S. FDA to start clinical trials this qtr

·     IPAR +9%; Q2 revs $207.6M tops est. $151.3M (up 22.7% vs 2Q19 on a constant currency basis); guides FY EPS $1.95 vs prior $1.65 and consensus $1.72 and FY revenue $750M Vs prior $700M

·     MRNA +5%; extends gains, setting a new all-time high for a 5th straight day

·     PLXP +17%; after saying Vazalore, a liquid-filled aspirin capsule, will be available in over 8,000 Walgreens (WBA) stores across U.S. in August

·     PTON +3%; UNH said as of Sept. 1, fully insured UnitedHealthcare members can enroll with PTON to obtain access to Peloton’s fitness classes

·     SI +6%; on EPS beat saying its Silvergate Exchange Network handled $239.6 bln of U.S. dollar transfers in Q2 2021, 44% increase from Q1 2021, and up 968% from Q2 2020

 

Stock LAGGARDS

·     ARDX -74%; plunges after the FDA identified deficiencies on the company’s New Drug Application for Tenapanor for the Control of Serum Phosphorus (prompts several analyst downgrades as they struggle to see a path forward for Tenapanor)

·     GKOS -14%; downgraded to Underperform at Wells Fargo and cut tgt to $41 due to the downside risk to sales from the proposed reimbursement cuts to GKOS’ iStent

·     INSP -5%; after CMS issued its proposed rule for CY2022 for the rate of Medicare facility reimbursement in the HOPD/ASC settings. The ASC proposed rate appears to be -28% vs. CY2021

·     INTZ -46%; after saying its CEO left the cybersecurity company, issued prelim 2Q sales that missed expectations and said it’s looking into funding sources needed to achieve profitability

·     PPG -6%; posted disappointing 2Q results as raw material inflation and supply chain disruptions impacted margins and nicked certain segment vols more than expected

·     RKT -2%; downgraded to Underperform at Wedbush with a $12 target as they believe the residential mortgage market is headed towards an environment where the company’s DTC model is not optimized

·     SPCE -6%; falls after rival space venture Blue Origin’s New Shepard launch vehicle took place this morning and returned safely to Earth

_________________________________________________________________

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

Register