Market Review: April 20, 2021

Closing Recap

Tuesday, April 20, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     U.S. stocks suffered their biggest 2-day loss in over a month, with the Dow dropping below the 34,000 level as stocks failed to rally behind another day of positive earnings results. The Dow Jones Industrial Average dropped 1%, while the S&P 500 fell 0.8% and the Nasdaq Composite lost 1.2%, a day after all three indexes declined, breaking a recent winning streak. Dow components JNJ, IBM, TRV and PG posted generally better quarterly results, and each performed well, but further selling pressure in energy, industrials, consumer, and tech fueled the market pullback as investors sought defensive sectors with utilities, staples, and telecom outperforming. Reopen trades saw pain with big declines in energy (MRO, APA, PXD), cruise lines (CCL, NCLH), airlines (UAL, AAL, DAL – which were also dragged down by softer UAL earnings results – gaming, and casinos (WYNN, PENN), theme parks (SIX, DIS, SEAS), hotels and lodging (HLT, MAR) and so on. In vaccine news, JNJ resumes COVID-19 vaccine roll-out in Europe following EMA review. Apple (AAPL) held a product launch today with the focus on iPad refreshes for iPad Pro, iPad mini, and the low-cost iPad. European markets close down sharply as Britain’s FTSE 100 down 2.02%, biggest one-day drop in nearly two months; Europe’s Stoxx 600 down 1.92%, biggest one-day drop this year; Germany’s DAX down 1.57%, biggest one-day drop since late January; France’s Cac 40 down 2.17%; Spain’s ibex down 1.96%; both post biggest one-day drop this year.

·     There were several factors possibly behind the market pullback today (other than profit taking after setting record all-time highs on a near daily basis over the last few weeks): 1) headlines that China linked hackers targeted the US defense industry (certainly not helping an already tense time with them), 2) possible tax related selling, 3) the reopen trade getting hammered with cruise lines, airlines (weak earnings too), theme parks, energy, casinos getting hurt on surging Covid infections in Asia, South America – recall late yesterday the U.S. State Department said will update its “Level 4: Do Not Travel” advisories to include about 80% of countries"; 4) momentum trades have lost their luster, with electric vehicle names, WFH names falling, IPOs, SPACs, cannabis, solar, etc. – all names that jumped tail end of 2020, have been getting crushed; 5) interesting that there were no Fed speakers the last 2-days appeasing markets about rates staying low for a long time and inflation not being a concerns.

·     Sector/stock movers: KSU spikes after CNI proposed a $33B offer ($325/share, 26.7% above yesterday’s close), which represents a 20% premium to the current offer from CP; XLP rises as Consumer Staples ETF traded at its new record high with strong PG and PM earnings and XLU jumps as utilities threatened its ATH amid a rotation into defensive names (DUK, DTE, SO, SJM, HSY) set new 52-week highs in the sectors; IBM soars to 52-week highs after its earnings beat; UAL sinks as the worst S&P decliner after its wider-than-expected loss, dragging other travel names; SPCE plunges, trades below $21 for the first time since November after Cathie Wood’s Ark Invest sells more than 590k shares yesterday, the latest major stakeholder to sell shares following Richard Branson’s $150M sale last week and Chamath selling $213M in early March; Energy underperforms with APA, CVX, PSX, VLO trading at their lowest prices since February amid rising Covid infections globally – raising fear of slowing demand.


Commodities, Currencies & Treasuries

·     Oil prices end lower, as WTI crude slides $0.94 or 1.48% to settle at $62.44 per barrel, as prices were pressured amid rising Covid-19 infections in Asia and South America, as India’s record daily COVID-19 cases raised concerns over the nation’s economy, and demand for oil (prompting renewed fears of tighter travel restrictions). Prices initially rose its highest in a month, lifted by disruption to Libyan exports and expectations of a drop in U.S. crude inventories.

·     Gold prices rise $7.80 or 0.4% to settle at $1,778.40 an ounce as treasury yields slip, though the dollar steadies after touching 7-week lows Monday. U.S. corn futures climbed to their highest in nearly eight years and soybean futures neared a seven-year high on tightening supply fears.

·     The U.S. dollar steadied for the first time in several days, recovering off 7-week lows despite another pullback in U.S. Treasury yields. The euro slipped to 1.2025 after rising nearly 0.4% and the British pound dipped after gaining 1% on Monday and touching $1.40. The dollar was little changed against the Japanese yen around 108.40. The buck has fallen in April as U.S. bond yields retreated from the 14-month highs of 1.776% reached last month as the fed has repeated it would be slow about tightening monetary policy. The 10-year Treasury yield dropped to 1.56% at midday after trading in a narrow range around 1.60%






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; NKE was downgraded to Neutral from Buy at Citigroup and cut tgt to $140 from $160 saying while they believe in NKE’s long-term growth and margin expansion story, they see near-term pressure on sales/margin due to a slowdown in demand in China related to the Xinjiang cotton issue; BBBY disclosed purchase of 20K common shares by CFO on April 16th; DG 2021-2022 estimates raised and tgt to $250 from $225 at Guggenheim and reiterate L-T Buy, though believe the shares’ 21% rally over the last month (vs. S&P 500 +6%) may necessitate a pause; Tommy Hilfiger to debut in more than 600 Kohl’s (KSS) stores with an expanded assortment on beginning fall 2021; LULU launching 2 new initiatives including a trade-in and resale program; WHR Authorizes an additional $2BN share repurchase authorization and is on top of $530M unused form the prior program and also increases the dividend by 12%.

·     Auto sector; TSLA tgt raised to $820 from $775 at Mizuho as believe the key to MarQ results are 1) Deliveries as both TSLA and NIO have reported upside to MarQ deliveries, 2) Increases to the 2021 outlook and 3) believe a weaker product mix with 3/Y, the Fremont facility shutdown, and model changeovers could be a GM headwind that may reverse in the JunQ; AAP with $1B stock buyback and raises dividend, says it sees Q1 comp sales up 22%-24%, adjusted operating income margin rate2 expected to range from 8.5% to 8.7%; GAAP Operating income margin rate expected to range from 7.0% to 7.2%; AN Q1 adjusted profit almost triples from last year as the auto retailer benefited from higher earnings per vehicle, amid a global chip shortage that has forced automakers to cut production and raise prices; FSR was initiated at Buy and $31 tgt at Bank America saying Fisker’s key competitive advantages come in the form of an "interesting and attractive" product and its platform sharing

·     Consumer Staples; PG 3Q EPS $1.26 vs. est. $1.19 on sales $18.1B vs. est. $17.9B, beauty organic revs +7%, fabric and home care organic sales +7%, grooming organic sales +4%; says maintained outlook for FY21 organic sales +5-6%; plans to return about $19B cash to shareholders this FY; in the tobacco sector; PM Q1 EPS $1.57 vs consensus $1.40 and revenue $7.59B vs consensus $7.27B; organic growth +2.9%; Volumes – EU (4.7%) vs consensus (3.9%), and guides FY EPS $5.95-$6.05 vs prior $5.90-$6.00 and consensus $5.96 and revenue growth +5%-7% on organic basis vs prior +4%-7%; shares of MO dropped again after dropping 6.1% on Monday after the WSJ reported the Biden Administration is considering cutting almost all nicotine from cigarettes and banning menthol – Citigroup noted this morning that the threat of this regulation is a severe blow to tobacco if the Administration will actually bring such proposals forward; defensive food stocks HSY, CPB, GIS, CAG among market outperformers

·     Restaurants; PLAY raises Q1 revenue view to $252M-$257M from $210M-$220M (est. $217.27M) and said as of April 18, through the first eleven weeks of 1q, overall comparable store sales were down 38% compared to 2019 levels; CHEF tgt raised to $40 and reiterate Buy at BTIG given recent strength in the high-end dining category and its positive implications for the company’s earnings trajectory; YUMC removed from Conviction buy List at Goldman Sachs

·     Casinos, Gaming, Lodging & Leisure sector; SEAS tgt raised to $70 at Stifel saying they are buyers into the print and expect upside to near-term estimates as long-term takeout potential still strongly exists; casinos and online betting names continue to lag (DKNG, PENN, CZR) as well as traditional casinos (MGM, LVS, WYNN); hotels and lodging names also felt pain (MAR, HLT); MANU shares dropped after the soccer team pulled out of Super League (which lasted less than 48 hours – The club was one of six Premier League teams who signed up as founder members of the 12-team Super League.



·     Energy stock movers; energy sector hammered along with broader market, as reopen trade plays hurt by rising Covid infections in Asia and South America, renewing demand fear concerns. Oil futures had touched highest in a month initially, lifted by disruption to Libyan exports and expectations of a drop in U.S. crude inventories. Libya declared force majeure on exports from the port of Hariga and said it could extend the measure to other facilities, citing a budget dispute.

·     Stock news; Reuters reports Italy’s Eni is considering spinning off oil and gas operations in west Africa and the middle east into joint ventures with other producers and has held talks with BP, total about west African oil and gas joint ventures; overall energy stocks news quiet, with major E&P and oil names among top S&P decliners on the day; in an EPS preview for refiners, RBC said they think weather impacts are largely priced in and do not expect weak 1Q results (even with cracks improving materially sequentially) to be a needle mover for the group (lowering 1Q21 ests for DK, PARR, PSX, and VLO, and increasing our ests for MPC, HFC, and PBF)



·     Bank movers; ZION Q1 EPS $1.90 vs. est. $1.17, NII $545M vs est. $554M, quarterly provision for credit losses was –($132M); SFBS posted in-line Q1 EPS $0.95, NII $94.2M vs. est. $93.6M; CMA reported Q1 EPS $2.43 vs est. $1.37, NII $713M vs est. $718.4M, and said it is planning to resume buybacks in Q2; FITB Q1 EPS 93c and revs $1.93B beat estimates of 69c on $1.9B; SNV Q1 adj EPS $1.21 topped est. 92c on revenue $485.6M that slightly missed est. $486.31M, Q1 net interest margin of 3.04% vs 3.12% sequentially; NTRS posted Q1 EPS $1.70 vs est. $1.49 on revs $1.59B vs est. $1.54B and ended the quarter with AUM more than $1.449T vs $1.405B YoY; FNB Q1 EPS 28c and revs $306M both missed consensus of 26c on $311.3M, NII $222.9M (-4.2% YoY), and total average deposits grew $4.7B (+19.3%); KEY Q1 EPS 61c topped consensus of 48c, NII $1.01B vs est. $1.02B, revs $1.75B vs est. $1.69B; PEBO Q1 EPS 79c vs est. 73c on revs $52.5M, vs. est. $53.3M; MBWM posted Q1 EPS 87c (est. 71c) on revs $42.99M (est. $42.1M); PNFP Q1 adj EPS $1.61 and revs $315.6M came in above estimates of $1.43 on $306.6M; WTFC reported Q1 EPS $2.54, well above est. $1.41, on revs $448.4M vs est. $411M

·     Bank Research; following yesterday’s announced merger with STLRBC reiterated WBS at Outperform and raised their price target to $62, Wedbush was positive and said the deal should be accretive, and Raymond James downgraded the bank to Outperform from Strong Buy but slightly upped its target to $59 from $58; JPMorgan downgraded Peruvian banks BAP, IFE to UW on political risk; Truist reiterated WAL at Buy, raising their estimates and price target to $117 as the bank focuses on returns and business partnerships vs the community banking business model

·     Insurance; TRV Q1 core EPS $2.73 vs est. $2.40, net written premiums $7.505B (+2% YoY), catastrophe losses $835M pre-tax (vs $333M YoY), and authorized an additional $5B in stock repurchases and raised its quarterly dividend 4% to 88c per share; RE provides prelim Q1 catastrophe losses with total pandemic loss provision of $511M, and sees Q1 total pretax net catastrophe losses of $260M; Genworth Mortgage Holdings, wholly owned subsidiary of GNW files initial public offering; PRI agrees to acquire 80% of e-Telequote at an enterprise value of $600M, and Truist set a new street-high $188 price target from $165 after the acquisition; LMND opened early registration for Lemonade Car, adding car insurance to its growing line of products

·     FinTech & Payments; PYPL said that its Venmo peer-to-peer payment platform has launched Crypto on Venmo, in which users can buy, hold and sell cryptocurrency with the app with as little as $1; Barclays sees multiple drivers of upside for AFRM to Q3 GMV guidance from app usage and the recovery in travel; Barclays also raised their pt on MA to $402 from $380 ahead of next week’s earnings to reflect optimism on vaccine rollout and consumer spending, and SQ to $340 as Cash App benefitted from the most recent round of stimulus and app download and usage activity data showed reacceleration in March that likely continued into April

·     Consumer Finance; FUTU announces offering of 9.5M American depositary shares; Piper raised their pt on OW-rated NRZ to $13 from $11.50 following last week’s acquisition of Caliber Home Loans and pre-announced Q1 core EPS 31-37c vs Piper’s 33c estimate

·     Bitcoin news; WeWork announced it will begin accepting payments in cryptocurrency through BitPay and COIN, which will be the first company to use cryptocurrency to pay for its WeWork membership; SI posted Q1 EPS 55c (vs est. 48c) that more than doubled from 23c YoY on revs $31.1M vs est. $30.5M; announced a memorandum of understanding with Voyager Digital (VYGVF) for integration of payments platform; FFWM announced a strategic investment in NYDIG to provide clients with access to Bitcoin-related financial products and services within the traditional banking network, and the company is also working with its core processing provider FISV to integrate Bitcoin into its core platform and digital banking offering, enabling customers to conduct transactions in Bitcoin; SEC filings showed COIN CEO Brian Armstrong sold 749,999 shares for $291.8M in last week’s direct listing, less than 2% of his total holdings, while the company’s CFO sold 15% of her total stake and the COO sold 24% of her holdings; ARK bought shares of COIN again yesterday, now reporting purchasing the stock every day since its direct listing last Wednesday and bringing its total stake to more than 1.43M shares across its Innovation (ARKK), Fintech (ARKF), and Internet (ARKW) ETFs

·     REITs; ACC Q1 adj FFO/share 57c vs. est. 55c on revs $232.7M vs. est. $219.3M and expects Q2 FFO/share $0.33-0.37 vs. est. $0.38; ELS Q1 FFO 64c on revs $296M and sees Q2 FFO 51-57c, FY FFO $2.33-2.43 (est. $1.99)



·     Pharma movers; JNJ reported 1Q results with revenue of $22.32B (vs. $21.98B), with slightly better results from Med Devices ($6.58B vs. $6.24B) citing benefit of market recovery from COVID-19) and Pharma ($12.2B vs. $12.13B) while Consumer was a bit light ($3.54B vs. $3.56B) – reported $100M of COVID-19 vaccine sales in 1Q, though no guidance was provided; OVID downgraded to Neutral from Buy at Cantor and cut tgt to $4 from $8 driven by a lack of visibility on early-stage programs entering the clinic that would result in value creating events

·     Cannabis sector: cannabis stocks rallied (TLRY, ACB, CRON, CGC, CURLF, GTBIF, CRLBF) after the House voted 321 to 101 in favor of a bill that would protect banks that do business with companies in states that have legalized the plant for medicinal or recreational purposes from federal enforcement action. The so-called SAFE Banking Act aims to open up the federally insured banking system to cannabis companies, as the bill would exempt cannabis business transactions from being considered proceeds from illegal activity and subject to anti-money-laundering laws

·     Biotech movers; CRSP and VRTX amended their collaboration agreement for CTX001 in sickle cell disease and beta thalassemia – VRTX will be responsible for 60% of program costs and will receive 60% of profits from future sales of CTX001 worldwide, representing a 10% increase in program economics (CRSP to receive $900M upfront and potential for $200M in milestones); BLUE decided to withdraw Zynteglo for transfusion-dependent β-thalassemia from the German market due to unsuccessful reimbursement negotiations; SNDX said it had positive interim data from the Phase 1 dose escalation part of the Phase 1/2 trial of SNDX-5613 in patients with genetically defined acute leukemias (shares sunk)

·     Healthcare Services; in the CRO industry, Credit Suisse raised tgt prices for IQV to $231 (from $209), SYNH to $92 (from $84), MEDP to $200 (from $181), ICLR to $240 (from $235), and CRL to $328 (from $301). Saying the stepped-up general interest in the CRO space only underscores their positive bias on the longer term growth prospects for the CRO industry; Omnicom health group, the largest healthcare marketing and communications group in the world, and part of Omnicom group (OMC) announced today the launch of omni health.

·     MedTech Equipment; ABT Q1 adj EPS $1.32 vs. est. $1.27; Q1 sales $10.5B (last year was $7.73b) vs. est. $10.69B; guides year EPS at least $5.00 vs. est. $5.04; Q1 total med device sales $3.32B vs. $2.94B YoY – co said posted stronger revenue and sales in the first quarter as contributions from its Covid-19-testing services drove higher diagnostics revenue.


Industrials & Materials

·     Aerospace & Defense; BA among top decliners in the Dow as CFO announces retirement, said doesn’t plan to reinstate its dividend near-term and is using cash on internal investments, balance sheet; LMT 1Q EPS $6.56 vs. est. $6.31 on net sales $16.26B vs. est. $16.33B (missed) as qtr end backlog about $147B; guides FY EPS $26.40-26.70 vs. est. $26.31; HXL posted modestly better 1Q results owing to aggressive belt tightening as the cuts in Europe flowed through, as sales were in line (down 43%); SPCE shares slide further after Cathie Wood’s Ark Invest offloads more than 590,000 shares in the space tourism company – Ark space exploration ETF (ARKX) sold 275,207 shares in Virgin Galactic on Monday, representing ~0.88% in the ETF’s assets; SPCE had 1.94% weighting in ARKX when it started trading last month (down to 1.03%)

·     Transports; rail sector in focus as CNI offered to acquire KSU in a cash-and-stock bid valued at $33.7B, topping the prior deal agreed upon with by CP at roughly $25B. CNI said its bid is valued at $325 for each KSU share, a 27% premium to Monday’s closing price and above the $275 share deal from CP ; airlines also active after larger Q1 EPS loss from UAL overnight, following weakness in DAL last week

·     Metals & Materials; STLD posted Q1 beat as adj EPS $2.10 vs. est. $1.96; Q1 sales $3.5B vs. est. $3.41B; says Q2 earnings will be even higher than our record Q1 2021 results; NUE was upgraded to Buy at Bank America and raised tgt to $80 from $56 saying the windfall earnings expected from the unprecedented steel squeeze resets the view on mini-mill best-in-class producers; CCK posts Q1 beat with continued volume growth in beverage and food cans driven by ESG tailwinds and at-home consumption trends; VALE reports Q1 2021 production fell from Q4 2020; citing normal seasonal factors, Vale says Q1 iron ore production fell 19.5% Q/Q while rising 14.2% Y/Y to 68M metric tons


Technology, Media & Telecom

·     Internet; NFLX earnings expected after the close; Bespoke noted the company has missed bottom-line EPS estimates for four consecutive quarters. Prior to this streak it had only missed EPS just twice in a row once; online travel stocks (BKNG, EXPE, TRIP) underperformed broader mega cap tech on rising Covid infection rates abroad

·     Software movers; JCOM announced its plan to separate the company into two independent publicly traded companies — J2 Global and Consensus — through a spin-off of at least 80.1% of the outstanding shares of Consensus common stock to J2 shareholders; COUP was upgraded to Overweight at Piper based a favorable risk-reward after the -22% YTD sell-off (vs. S&P500 +10.8% YTD) and raises revenue estimates for F2022 and F2023 by $5M and $10M, respectively; Messaging platform Discord Inc has ended deal talks with MSFT and plans to focus on growing the business as a standalone company, Reuters reported; ATVI rolled to lows late day after Overwatch director Jeff Kaplan is leaving Blizzard after nearly 20 years with the company

·     Hardware, Components & Services; IBM posted Q1 Revenue of $17.73B vs. est. of $17.32B, Non-GAAP gross margin 47.3% vs. est. 46.9%m and EPS of EPS $1.77 beating the $1.69 estimate as revenue upside vs. consensus was posted across business units, particularly on Systems; XRX Q1 profit misses analysts’ estimates as co says its business was still experiencing the impact of the COVID-19 pandemic

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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.