Mid-Morning Look: March 21, 2022

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Mid-Morning Look

Monday, March 21, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks with a decent pullback early following four consecutive sessions of closing at their peak, leading the S&P 500 index to reclaim its 50dma on Friday (4432) and briefly topping its 200dma (4470) earlier this morning before fading. Note the Nasdaq (coming into the day) has climbed over 10% off its Monday lows with 4 daily gains more than 1% – the only other time that has been done on Nasdaq was in 1980. Meanwhile 4 straight SPX daily gains more than 1% also into today, with there having only been 3 times the SPX has rallied 1% for 4 straight days while in a 10%+ correction. After last week’s strong 4-day market advance, the S&P cuts 2022 loss of -6.4% and Nasdaq to -11.2% (last week they rose 6.2% and 8.2% respectively). Still no apparent near-term fix in Europe as headlines indicate Russia tells U.S. Ambassador that ties on verge of being severed. On the Ukraine/Russia front, Ukraine rejected Russia’s demand to surrender the city of Mariupol, while President Biden will hold a call with Scholz, Macron, Draghi, and Johnson today (& Biden will travel to Europe later this week). Crude is higher on reports that EU officials may be trying to build consensus around an embargo of Russian oil. There is no major data in the US today but there are several Fed speakers including Bostic and Powell. WTI oil extends rally, up 6% at $111.02, set for higher close in nearly 2 weeks. Uncertainty over the course of the conflict in Eastern Europe, which has roiled equity and commodity markets alike as it threatens a wider slowdown, remains in focus with energy, metals, materials among today’s top advancers along with defense stocks. Sanctions on Russia have disrupted energy supply chains and seen oil spike as much as 30%. In stock news, Dow component Boeing Co. (BA) 737-800NG plane operated by China Eastern Airlines Corp. crashed Monday in the southwestern Chinese province of Guangxi. There were 132 people on board.

Treasury yields broadly higher with the benchmark 10-year above 2.24% earlier, while its yield remains inverted against the 5 and 7-yr; the 2-yr yield rebounds above 2% this morning.







WTI Crude















10-Year Note





Sector Movers Today

·     Retailers; Dow component NKE reports tonight after the close with clear concerns on supply chain issues as well as China shutdowns are well known; GES announces new $175 mln accelerated share repurchase plan, says final settlement expected to occur by end of Q3 2022; FIVE added as short-term Buy idea at Deutsche Bank heading into its 3/30 4Q release and Investor Day in light of the stock’s ~20% YTD pullback with a positive 2:1 risk/reward skew over the coming year; JOAN downgraded to Neutral from Buy at Guggenheim saying visibility into the return of year-over-year net sales and adjusted EBITDA growth during 2022 has been hampered; KSS said in a PR that it acknowledges receipt of “multiple preliminary indications of interest”

·     Casinos, Gaming, Lodging & Leisure sector; weakness early in leisure/travel space amid rebound in oil prices as cruise, online travel, etc. slide; RBC Capital said it maintains OP on LYFT on likely rising tide from reopening but modestly lower our LYFT PT to $50 from $53 given potentially rising incentive costs and lower UBER to $50 from $65 on an equalizing market share landscape in the U.S. and less margin upside potential; in leisure, MANU was upgraded to Buy at Deutsche Bank saying valuation of 13.1X sits at the lower end of the sports and live events comparable group, which the firm thinks is not justified; online travel, hotels, leisure active as Hong Kong said it would remove flight bans and reduce quarantine requirements as the gov’t dials back some COVID restrictions

·     Energy stock movers; the big three oil service companies HAL, SLB, and BKR announced this weekend they are pulling operations out of Russia in response to U.S. sanctions over the invasion of Ukraine; oil rises as European Union governments will consider whether to impose an oil embargo on Russia over its invasion of Ukraine as they gather this week with U.S. President Joe Biden for a series of summits designed to harden the West’s response to Moscow – Reuters; commodity risk-on trade back on, as energy stocks among top gainers in the S&P given the rebound in oil prices after falling 4% last week (OXY, MRO, HES, DVN, APA among leaders)

·     Metals & Mining: shares of aluminum producers AA, CENX jumped initially amid rising aluminum prices after Australia said it would ban exports of alumina and aluminum ores to Russia in response to Moscow’s invasion of Ukraine; AA tgt raised to $95 from $68 and maintain Buy at Argus saying they view Alcoa as a well-run company with a strong track record in its industry; in steel sector, Goldman Sachs raising 2022 steel forecasts as global disruptions support domestic prices; in Chemicals; HUN was downgraded at KeyBanc following three consecutive quarterly beats and the stock’s outperformance, and noting elevated exposure to EMEA (27% of sales and 40% of HUN’s MDI capacity), including Russia/Ukraine ($150M / 1.6%); APD was upgraded to Overweight at Keybanc as think that Air Products shares offer a reasonable risk/reward balance at the current price given recent share price movements



·     AA +10%; as Aluminum prices jumped over 5% after Australia said it would ban exports of alumina and aluminum ores to Russia in response to Moscow’s invasion of Ukraine

·     BB +3%; upgraded from Underperform to Sector Perform w/ $7 PT at RBC Capital saying following the normalization in BlackBerry’s share price back to levels which they believe are more aligned with fundamentals

·     OXY +9%; commodity risk-on trade back on, as energy stocks among top gainers in the S&P given the rebound in oil prices after falling 4% last week (MRO, APA, etc.)

·     PDD ; posted a mixed Q4 report as adjusted earnings beat views, though revenue came in below analyst expectations.

·     PLAN +28%; agreed to be acquired by private-equity firm Thoma Bravo for $66 a share, or $10.7 billion, confirming a report overnight by the WSJ https://on.wsj.com/3KZiiMD

·     Y +24%; as Berkshire Hathaway Inc. (BRK) agreed to buy insurer Alleghany Corp. (Y) for about $11.6 billion in cash; Berkshire said it will pay $848.02 a share for Alleghany, a 25.3% premium to Friday’s closing price of $676.75 https://bit.ly/3tt3RLa



·     BA 6%; tumbled after a Boeing 737 passenger plane (not the 737 Max which had been subject of scrutiny prior for crashes) operated by China Eastern Airlines Corp. carrying more than 130 people has crashed in southern China state media reported

·     COIN %; after named a new short by Jim Chanos of Kynikos Holdings after the bell on CNBC

·     CZR -4%; weakness in consumer discretionary following bounce I oil – EXPE, CCL, PENN

·     EHTH -7%; downgraded to Neutral from Buy at Citigroup and cut tgt to $15 from $37 saying they view the e-Broker space as uninvestable with too many dollars chasing too few MA shoppers,

·     IMGN -26%; downgraded at RBC Capital following the company’s presentation of the results of its SORAYA ovarian cancer trial for mirvetuximab soravtansine (mirvetuximab) monotherapy

·     MRNS -7%; slides after biz update and posts Q4 rev of ~$1.5M vs Street view of $3.4M, and adj loss of 77c

·     NLSN -9%; said Sunday it wouldn’t proceed with a bid that would have valued the company at $25.40 a share without naming members of the consortium behind the bid

·     VLON -69%; after announcing that its lead program for ADAIR did not meet primary endpoint in attention deficit hyperactivity disorder (ADHD).


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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