Mid-Morning Look: September 30, 2020

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Mid-Morning Look

Wednesday, September 30, 2020






DJ Industrials




S&P 500








Russell 2000






What looked like a bleak start to the day given the chaotic Presidential debate last night (that looked more like a school yard fight with insults and bickering being tossed back and forth), markets take solace in strong economic data as Pending Home Sales rise to record highs, private payroll data came in well above consensus (ADP) and Chicago PMI data surged, touching its highest level since December. Markets also remain hopeful of a stimulus package out of Washington as House Speaker Nancy Pelosi and Treasury Secretary Mnuchin are making a late push to try to reach agreement on a coronavirus-relief deal before the election, despite skepticism on Capitol Hill that a deal is possible at this stage. Risks around the election only intensified after last night’s debate while rising coronavirus infections in recent days in the U.S. and Europe, and the risk it poses to the economic recovery are also weighing on markets. The share of people who tested positive in New York City climbed over 3.25%, highlighting the risk of a second wave of infections. New issues a hot topic today as Palantir Technologies (PLTR), the data-analytics software company, had a “reference price” for its highly anticipated NYSE direct listing set at $7.25 late Tuesday, valuing the company at about $16 billion, while Asana (ASAN) set a “reference price” of $21 for the company’s direct listing Wednesday on the NYSE. With about 154 million shares outstanding, that price would imply a market capitalization of $3.2 billion (these are the first direct listings since WORK and SPOT). The dollar bounces, gold slides and Treasury yields inch higher.


Economic Data

·     ADP showed private payroll adds 749K jobs vs. est. about 650K, while prior revised up from 428k to 481k – pace of U.S. private sector job growth in September was the strongest in three months. By company size, job growth at small firm’s job continued to lag bigger firms. Small businesses added 192,000 jobs in September, while medium firms added 259,000 jobs and large firms adding 297,000 jobs. The service sector added 552,000 jobs, while goods-producing firms added 196,000

·     U.S. Q2 final GDP decline revised to -31.4% from -31.7%; Q2 business investment -27.2%, equipment -35.9% and intellectual property/software -11.4%; US Q2 consumer spending fell -33.2% vs. prior -34.1% and durables -1.7% vs. prior -1.3%; Q2 exports -64.4% and imports fell -54.1%;

·     US final Q2 GDP deflator down -2.1% vs. est. (-2%) and prior (-2.3%); Q2 PCE price index -1.6%, from prior -1.8% and core PCE down -0.8% vs. estimate and prior -1%; Q2 year-on-year PCE price index +0.6% same as prior and core PCE also in-line with prior up 1%

·     Chicago PMI released early, at highest level since December, Chicago PMI surges to 62.4 in September from 51.2 and above the 52 estimate

·     Pending home sales for August rise 8.8% MoM to a record and above the est. 3.1%, while rising 24.2% YoY, helped by record low mortgage rates







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10-Year Note





Sector Movers Today

·     Retailers; GOOS upgraded to outperform from market perform and raise tgt $21/C$31 to $36/C$49 at Cowen saying it has unique financial positives like: positive FCF, DD% EBIT margins, and a profitable retail channel; PVH announces succession plan – Stefan Larsson to become CEO, Manny Chirico to remain Chairman, to be implemented Feb. 2021; SHOO cautious at Wedbush saying they may see a tougher FY21 than the Street currently expects in our view, primarily given the poor outlook for off-price demand and a higher mix of low margin private label sales; HEAR initiated buy and $23.50 tgt at Stifel citing a favorable industry backdrop with the upcoming console cycle serving as a potential near-term catalyst; HAS upgraded from Hold to Buy, and tgt upped from $73 to $100 at Stifel as see an event path to improving fundamentals (and sentiment), and hence higher share prices over the near/intermediate-term; LB added to Focus List at JPMorgan and price target $42 from $35, maintains Overweight rating; Piper raised VFC tgt to $65 from $58 and WWW to $27 from $22 on expectations of more outdoor activity this Fall

·     Leisure and Gaming; U.S. casino operator CZR has agreed to acquire British betting firm William Hill (WIMHY) for 2.9 bln pounds ($3.7B), confirming prior reports last week; in cruise space (CCL, NCLH, RCL), according to multiple media reports, the CDC will further extend its “no sail order” from the current September 30th date to October 31st – Stifel said this should come as no surprise as the cruise industry itself had already imposed a no sail order until October 31st; PENN said it expected Q3 revenue $1.04B-$1.145B vs consensus $1.03B while saying its Barstool Sportsbook app momentum has continued into the second week of operation

·     Utilities & Solar; utilities higher led by DUK after the WSJ reported NEE recently made a takeover approach to Duke, testing the waters for what would be a $60B+ combination, but reports indicate DUK rebuffed the offer https://on.wsj.com/3jhz8Jd; Dominion (D) guides year EPS profit view to high end of $3.37-$3.60, from prior $3.37-$3.63 view and affirms dividend guidance; SR was upgraded to buy at Stifel as the stock’s recent decline creates an attractive entry point; JPMorgan positive on solar space saying they should benefit from trend of improving end-customer demand in the U.S. and international markets as up SEDG tgt to $252 from $222, SPWR to $13 from $11, RUN to $79 from $61 and ENPH to $92 from $80

·     Transports; UBS raised estimates in rail sector for CSX ($0.88 to $0.95), UNP ($2.06 to $2.14), and NSC ($2.39 to $2.43), which imply 6%-8% upside vs. current consensus saying volumes for the quarter came in 2-3 pp better than expected and commentary/data on resource levels suggest margin performance can surprise to the upside; airlines AAL, UAL, ALK, FRNT, JBLU, HA, SKYW, active as the U.S. Treasury Department says it has closed loans to seven passenger airlines and calls on Congress to extend more aid to prevent massive job cuts while DAL and LUV chose not to accept a federal bailout because they found financing in private markets



·     DUK +8%; after the WSJ reported NEE recently made a takeover approach to Duke, testing the waters for what would be a $60B+ combination, but reports indicate DUK rebuffed the offer https://on.wsj.com/3jhz8Jd

·     LB +6%; added to Focus List at JPMorgan and price target $42 from $35, maintains Overweight

·     LEN +3%; trades to all-time highs amid strength in the homebuilding space – Pending Home Sales were up 24.2% YoY and up 8.8% MoM to a record high

·     MRNA +3%; after researchers say Phase 1 trial of its mRNA vaccine to prevent COVID-19 has shown to be “well-tolerated and generates a strong immune response in older adults

·     PENN +7%; said it expected Q3 revenue $1.04B-$1.145B vs consensus $1.03B while saying its Barstool Sportsbook app momentum has continued into the second week of operation

·     REGN ; announced directionally positive initial data from the first N=275 patients in the ph1/2/3 “2067 SEAMLESS” study evaluating two doses of REGN-COV2 antibody cocktail vs placebo in adult COVID-19- positive non-hospitalized patients already receiving standard of care.

·     SNX +6%; price tgt raised to $180 at Citi and $160 at Raymond James following Q3 results that featured a continuation of significant upside relative to expectations



·     ATRC -6%; mentioned a short call by Kerrisdale Capital saying AtriCure trades at close to the highest valuation in its history, as investors assume widespread adoption of the Convergent procedure and continued growth in surgical devices

·     MU -5%; falls on guidance as 4Q results beat with adj EPS $1.08 vs. est. $0.99 on revs $6.06B vs. est. $5.9B, had strong DRAM sales in cloud, pc and gaming consoles and extraordinary increase in QLC NAND shipments in qtr – but guides 1Q adj EPS $0.47 +/- $0.07 vs. est. $0.69

·     OMI -5%; filed to sell up to $150M shares in stock offering

·     PRGS -7%; posted a beat on Q3 EPS and mostly in-line revs while Q3 software license revenue fell -10% YoY to $27.5M, and sees 4Q adj EPS $0.76-0.79 below the est. $0.80

·     WDC -6%; falls in sympathy with MU guidance and commentary on memory



·     Asana (ASAN) set a “reference price” of $21 for its direct listing Wednesday on the NYSE

·     Boqii (BQ) 7M share IPO priced at $10.00

·     Cardiff Oncology (CRDF) 6.5M share Spot Secondary priced at $13.50

·     FuelCell (FCEL) 43.5M share Spot Secondary priced at $2.10

·     Palantir Technologies (PLTR) had a “reference price” for its highly anticipated direct listing set at $7.25 late Tuesday which would value it at about $16 billion

·     Yalla (YALA) 18.6M share IPO priced at $7.50 per ADS


Market commentary provided by Catena Media Financials US, LLC, 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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