Mid-Morning Look: March 04, 2022

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Mid-Morning Look

Monday, March 07, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks tumbled overnight tracking Europe and Asian markets lower, rebounded in early market trading, but quickly erased those gains as Russia invasion of Ukraine enters its second week. The concern in Europe continues to pressure commodity prices and weigh on market sentiment as supply constraints boost global inflation fears. The Nasdaq is on track for its 4th decline in the last five days, while crude oil trades to its highest levels since 2008. The 10-yr yield remains more than 30 bps off 2022 highs, while gold topped $2,000 an ounce earlier today. Outside of strength and energy stocks and some other commodity related plays, U.S. sectors are broadly lower, with consumer discretionary (PVH, RL, TPR, cruise names), technology, financials, and healthcare among the top decliners. Defense stocks, consumer staples and utilities are among some of the bright spots as investors look to defensive sectors. Secretary of State Antony Blinken said Sunday the U.S. and its allies are looking at a coordinated embargo following Russia’s invasion of Ukraine, while ensuring appropriate global supply. These comments have spooked global markets – with fears being if EU follows suit, could see another spike in oil related prices.







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10-Year Note





Sector Movers Today

·     Retailers; BBBY among the top stories after GME’s Chairman Ryan Cohen and co-founder of CHWY took a 9.8% in the company is and pushing for changes, saying wants a more simplified turnaround plan and wants to either split up Buybuy Baby or sell the company; PVH, RL downgraded to Neutral, CRI upgraded to Outperform at Wedbush saying the situation in Ukraine is a key sentiment overhang for our group, which may weigh more heavily going forward. Firm lowers estimates and price targets on several names with sizable exposure to Europe. Wells Fargo noted Europe exposure for retailers include, PVH (40%), FTCH (33%), LEVI 30%) RL (18%) generate the largest components of rev from Europe, while the best non-Euro plays include TPR, ASO and BBWI; FTCH disclosed in its 20F annual filing that Russia represented 6% of GMV in 2021; KSS introduces new long-term financial targets of low-single digits percent sales growth and mid-to-high single digits percent EPS growth

·     Materials & Chemicals: potash producers MOS, NTR another move higher, extending gains on supply concerns after Russia’s invasion of Ukraine, and sanctions on Russia and its ally Belarus which are the world’s second- and third-largest potash producers after Canada. RBC Capital today tightens both n-t and l-t outlooks for the sector as the Russian invasion of Ukraine has resulted in significant changes to fertilizer markets (shares of CF, IPI also active); in packaging, BLL was upgraded to Buy at Bank America following constructive comments at their Annual Global Agriculture & Materials Conference as well as other sessions’ takeaways

·     Metals & Mining; another day of huge swings on metals sector with palladium, aluminum, copper falling well off overnight highs in a bit of an unwind in prices; in steel sector, U.S. Steel (X) upgraded to Equal Weight from Underweight at Morgan Stanley and raise tgt to $31 from $21; AA tgt raised to $90 at JPMorgan as update model to reflect the move in commodity prices; precious metals/miners jumped initially/overnight on gold move above $2,000 an ounce, AU was upgraded to Overweight at JPMorgan as recommend increasing exposure to gold; PALL, SPPP shares were active after palladium hit an all-time high of $3,440.76 before erasing its daily gains to drop below $3,000/oz as supply constraints impacting prices

·     Consumer Finance; shares of U.S. payment services providers fall early after they suspend operations in Russia as AXP it was suspending all operations in Russia and Belarus which followed V and MA suspension of their Russian operations the previous day, as well as payments company PYPL. Russia’s Sberbank said the moves by Visa and Mastercard would not affect users of the cards it issues in Russia; ADS was downgraded at Oppenheimer



·     BBBY +85%; after GME’s Chairman Ryan Cohen and co-founder of CHWY took a 9.8% in the company is and pushing for changes, saying wants a more simplified turnaround plan and wants to either split up Buybuy Baby or sell the company

·     CNR +11%; to be acquired by Clayton, Dubilier & Rice for $5.8 Billion as shareholders to receive $24.65 in cash per share

·     LMT +3%; defense price tgts raised at Wells Fargo with LHX tgt to $291, LMT to $486, NOC to $472, GD tgt to $282 as believe valuation is likely to remain high on elevated tensions for some time/the ongoing Russia/Ukraine conflict adds to strength in sector

·     MOS +5%; along with gains in NTR, CF as extending gains on supply concerns after Russia’s invasion of Ukraine, and sanctions on Russia and Belarus which world’s second- and third-largest potash producers

·     OXY +6%; adds to Friday gains of 17.5% on higher oil prices and after Warren Buffet’s Berkshire said in a filing it holds a total of 113.7 million shares, including both the stock and warrants (represents 11.2% of Occidental’s outstanding shares), while activist investor Carl Icahn exited his big bet on the oil company selling the last of what was once a roughly 10% stake

·     SLB +10%; oil service stocks outperform in energy complex with HAL, BKR also leading after the group underperformed the broader energy space last week

·     TS +8%; as Jefferies said with Russian steel exports expected to lose access to the European market, sees a market opportunity for established producers like Tenaris and Vallourec of about $200 million

·     UBER ; boosted its outlook for Q1 core profit, guiding Ebitda $130M-$150M from prior $100M-$130M saying its ride hailing business was recovering faster than expected



·     BLUE -15%; after the company flagged uncertainty about its ability to continue as a going concern after posting Q4 loss of $2.14 per share

·     C -3%; downgraded to Hold at Jefferies from Buy saying while mgmt. articulated a clear vision at the investor day, the new ROTCE targets are loftier (11%-12%) and farther away (’24-’26) than their expectations (banks in general lower to start the day)

·     CIEN -6%; on mixed results as Q1 adj EPS $0.47 vs. est. $0.45 but revs of $844.4M misses the $856.8M estimate; says expect strategic investments to drive significant increase in supply chain capacity in second half

·     CCL -5%; the impact of higher energy oil prices and gas prices nearing their highest national all-time high averages of July 2008 ($4.11), came into the day at $4.06 a gallon, which is putting pressure on leisure, casino, travel, and cruise lines on expectations spending could be impacted

·     CPS -11%; after being replaced by CRNC in the S&P SmallCap 600 effective prior to the opening of trading on Monday, March 14

·     DKNG -5%; downgraded to Hold from Buy at Argus saying it is facing fierce competition from MGM and Wynn, which are expanding their online sports betting operations and firm expects revenue growth to slow in 2022 as fewer states approve online sports betting

·     PM -4%; downgraded to neutral at JPMorgan and cut tgt to $110 from $130 noting Philip Morris International derives 8% of group sales (c6% Russia, c2% Ukraine) and c8% of group EBIT from Russia/Ukraine

·     SQSP -2%; tumbles on weaker guidance as Q4 revs rose 20% y/y to $207.4M vs. est. $205.4M and sees Q1 revs $203M-$205M below est. $216.8M; sees year revs up 10%-12% y/y or $862M-$878M vs. est. $934.6M


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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