Mid-Morning Look: November 29, 2021

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Mid-Morning Look

Monday, November 29, 2021

Index

Up/Down

%

Last

 

DJ Industrials

47.00

0.13%

34,946

S&P 500

39.08

0.85%

4,633

Nasdaq

187.20

1.20%

15,674

Russell 2000

8.89

0.40%

2,255

 

 

U.S. stocks with a solid rebound, reversing big losses for major averages on Friday as fears about the new coronavirus variant (dubbed Omicron) receded, with governments around the world seeking more information about the most recent mutation and its impact. The Covid variant, first detected in southern Africa, prompted a financial market sell-off on Friday on fears it would further disrupt a growing economic recovery after the two-year pandemic. The new variant could also be seen as a boost to stock markets, as it could push the timeline for the Fed raising rates further out amid uncertainty to the economic/global impact (if any). The U.S. dollar firmed while the haven yen and Swiss franc weakened, reversing some of Friday’s moves, while oil prices with a big bounce. Lone piece of economic data strong as October pending home sales index rises +7.5% to 125.2, easily topping the +0.9% estimate and after falling -2.3% in September. Treasury yields jumped initially after Friday’s decline, with the 10-year hitting 1.565% before paring gains (last around 1.53%). European inflation data came in higher than expected in Germany and Spain (accelerated to a three-decade high of 5.6%). After Bitcoin suffered its worst day in two months on Friday, dropping by more than 8% as investors dumped stocks and other riskier assets in favor of perceived safe havens like the dollar, crypto assets with a sharp recovery today, having since recovered nearly all its losses. The tech-heavy Nasdaq Composite outperforms early while the Smallcap Russell 2000 erases early advances. U.S. President Joe Biden is due to update the public on the variant and the country’s response later in the day, the White House said.

 

 

Macro

Up/Down

Last

 

WTI Crude

2.25

70.40

Brent

2.05

74.77

Gold

-0.70

1,789.20

EUR/USD

-0.0053

1.1264

JPY/USD

0.36

113.65

10-Year Note

0.046

1.531%

 

 

Sector Movers Today

·     Covid-vaccine news: MRNA Chief Medical Officer Burton said this weekend he suspects the new omicron coronavirus variant may elude current vaccines, and if so, a reformulated shot could be available early in the new year, according to Bloomberg; BNTX said it is working to adapt its Covid-19 vaccine to address the omicron variant and expects to have a new version ready within 100 days if necessary; PFE CEO said this morning he now estimates it can manufacture 80M treatment courses of Covid19 antiviral drug Paxlovid, up from 50M projected a few weeks ago; ADGI was upgraded to Overweight with a price target of $49 from $33 at Morgan Stanley, bullish on the prospects for Adagio Therapeutics’ SARS-CoV-2 antibody, ADG20

·     Retailers; U.S. shoppers spent slightly less online during Black Friday this year as Shoppers’ total outlay online during Black Friday was roughly $8.9 billion, less than the $9 billion in 2020, Adobe said. Spending online during Thanksgiving Day was flat at $5.1 billion, Adobe said. Adobe says over Thanksgiving weekend, U.S. consumers spent $4.5B online on Nov. 27 (down 4.3% yoy) & $4.7B online on Nov. 28 (down 0.5% yoy); TJX, BURL upgraded to Buy from Neutral at Citigroup to reflect our overall more optimistic view of the off-price sector; DLTR files prospectus supplement related to a potential two-part denominated senior note offering

·     Transports; in airlines, the U.S. screened 2.45 million air passengers on Sunday, highest since February 2020; in research, Deutsche Bank downgraded shares of UPS, SAIA, and CP to Hold from Buy saying they have been unapologetically bullish on SAIA’s long-term prospects since upgrading shares in early 2019. But after the 400% increase in equity value per share over that period (+330% rel. to S&P 500), we think risk reward is balanced. For UPS they believe the upcoming contract negotiation between UPS and the Teamsters has potential to be the most tumultuous since the 15-day UPS work stoppage in 1997; FRO reported a larger than expected Q3 net loss and revenues that were lower than the prior year, as the quarter remained “a challenging period” for tanker owners

 

Stock GAINERS

·     ADGI +76%; upgraded to Overweight with a price target of $49 from $33 at Morgan Stanley, bullish on the prospects for Adagio Therapeutics’ SARS-CoV-2 antibody, ADG20

·     BERY +6%; after activist investor Ancora Holdings issues an open letter to BERY, urging co to begin a strategic review of its options, including a sale or go-private deal and estimates could fetch valuation of $100 per share or more through sale

·     KRYS +123%; after announcing topline data from its pivotal GEM-3 trial for its experimental therapy, VYJUVEK dystrophic Epidermolysis Bullosa met the primary endpoint with statistical significance

·     MRNA +11%; Chief Medical Officer Burton said this weekend he suspects the new omicron coronavirus variant may elude current vaccines, and if so, a reformulated shot could be available early in the new year, according to Bloomberg

·     NRXP +49%; has completed an analysis to identify clinical evidence that indicates a substantial improvement after treatment with Zyesami (aviptadil) in patients with Critical COVID-19 and Respiratory Failure over existing therapies such as remdesivir.

·     RRD +9%; said its go-shop period has ended with a third buyout offer over the weekend for $10 per share in cash, which is higher than Chatham offer of $9.10/ per share and Atlas offer of $8.52 per share (noted 3rd party offer came through on November 27) https://bit.ly/3D3CSY1

·     TWTR +3%; after CNBC’s David Faber reported that that Jack Dorsey is stepping down as CEO (shares have since been halted pending news)

 

Stock LAGGARDS

·     FENC -46%; after saying it expects the FDA will once again reject the company’s application for Pedmark due to issues at the plant where the drug is made.

·     FRO -2%; reported a larger than expected Q3 net loss and revenues that were lower than the prior year, as the quarter remained “a challenging period” for tanker owners

·     JMIA -8%; downgraded to Underweight at Morgan Stanley saying heavy investment in marketing and technology is dampening EBITDA margins

·     MRK -4%; downgraded to Neutral from Buy at Citigroup with a price target of $85, down from $105 saying they place a high probability that MRK will abandon islatravir development in the next three months given likely high regulatory concerns

·     WYNN -1%; casino stocks in Macau slide initially after Suncity Group Chairman Alvin Chau was accused by Chinese authorities of being a leading member of a cross-border gambling group that set up casinos on the Mainland. It is still unclear if the scope of the allegations will just affect Chau individually, Suncity as a group or even the entire junket industry

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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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