Market Review: February 22, 2021

Closing Recap

Monday, February 22, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Stocks end the day mixed as the Dow Jones Industrial Average turned positive midday, rising for a 5th time in the last 6-days behind financial strength (JPM, AXP), energy (CVX, XOM) and reopen plays such as DIS, while the S&P 500 extended its losing streak to 5-days, but finished well off the morning lows. Smallcaps posted modest declines with the Russell 2000 slipping, but declines came in technology as the Nasdaq Comp fell over 2% led by large cap giants (AAPL, AMZN). The S&P 500 and Nasdaq fell as climbing Treasury yields and prospects of rising inflation triggered valuation concerns, hitting shares of high-flying growth companies. The 10-year Treasury yield was at 1.36%, having risen about 26 bps in February alone.

·     Oil futures rallied with prices up by more than 3% lifting energy names, financials rise as investors pile into rate-sensitive U.S. banks as U.S. Treasury yields ticked higher on expectations of rising inflation. Dow Transports rise as much as 1.5%, setting new intraday record highs led by airlines, while reopen stocks outperform, led by gains in cruise lines (RCL), gaming (WYNN), lodging (HLT), theme park (SIX, DIS) stocks and of course travel. Defensive utilities were among the worst sector performers with technology, falling on concerns that rising Treasury yields will crimp growth.

·     Stocks could gain some traction as the U.S. House of Representatives likely will vote on President Joe Biden’s proposed $1.9 trillion stimulus package by the end of the week. The bill includes $1,400 checks to most Americans, a hike in the minimum wage to $15 an hour, and a boost in supplemental unemployment benefits to $400 a week from $300. Investors also await Fed Chair Jerome Powell’s testimony to the Senate Banking Committee on Tuesday to see if he offers any changes to the central bank’s dovish outlook of recent months.

·     It was a busy day for M&A news with a bank deal (MTB acquired PBCT in $7B deal), some more SPAC deals, FRTA acquired in $2.7B deal and in autos, GT acquired tire maker CTB for $2.8B. Energy stocks among top gainers in the S&P given the spike in oil prices while airlines also leading after Deutsche Bank upgraded eight airlines. Dow component Boeing (BA) slides after an engine failure on a 777 aircraft over the weekend leads to UAL halting all flights by its 777 fleet.

Economic Data

·     January Chicago Fed National Activity Index: +0.66 vs. +0.40 consensus, +0.41 prior (revised from +0.52). The M/M growth was led by improvements in personal consumption-related indicators

·     Leading Indicators for January rose +0.5% to 110.3 vs. +0.3% consensus and +0.4% prior (revised from +0.3%); coincident Economic Index +0.2% to 103.3.



·     Oil prices surge again, as WTI crude rose $2.25 or 3.80% to settle at $61.49 per barrel (13-month highs), getting a boost on expectations it will take longer than previously thought to bring back production capacity back on-line after last week’s Texas deep freeze – could be a while before getting back to pre-storm output. Couple that with the expected stimulus bill this week, rising demand and a weaker dollar boosting capacity. You can also add tough rhetoric out of Iran to rising oil as its supreme leader said that Tehran could enrich uranium to 60% purity.

·     Gold prices rise $31 or 1.7% to settle at $1,808.40 an ounce, trading to near one-week high despite a jump in U.S. Treasury yields, as rising inflation expectations boosted demand, and as Bitcoin prices slumped (though recovered off the lows). The sliding U.S. dollar also helped support the precious metals. A $1.9 trillion U.S. stimulus package is widely expected to pass by the end of the week, raising hopes of a speedy economic recovery but boosting inflation.


Currencies & Treasuries

·     Bitcoin headlines continue to dominate, running into resistance ahead of the $60k level following comments from Elon Musk and Treasury Secretary Yellen. Prices rise to highs above $58,000 yesterday before plunging to lows around $47,000 this morning, only to recover back to $53K. Janet Yellen called bitcoin extremely inefficient, is a highly speculative asset. Tesla’s CEO Elon Musk said on Saturday via tweet the price of bitcoin and Ethereum seemed high, at a time when the cryptocurrencies have hit record highs, with bitcoin crossing the $1 trillion market-capitalization threshold. Treasury yields inched higher as the 10-year hit 1.36% and the 30-yr 2.17% while shorter-term 2-yr stays unchanged at 0.11%. The dollar index (DXY) falls around the psychological 90 level, down -0.39% – about 7-week lows.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; KSS rises after a group of activist investors that includes Macellum Advisors, Ancora Holdings, Legion Partners Asset Management and 4010 Capital confirmed a WSJ report over the weekend that it holds a 9.5% stake in Kohl’s through stock and call options and suggests unlocking real estate value (KSS later rejected the groups’ bid for board control); OSTK tgt raised to $126 from $98 at Wedbush and to $110 from Needham as expect strong Q4:20 results driven by holiday spend and strategic initiatives helping capitalize on the COVID tailwinds; FL was upgraded to outperform at Evercore/ISI as expects robust e-commerce momentum among other things; GME rises early after Reddit user Keith Gill doubled down on investment – showing Friday afternoon he bought an added 50K shares to bring total investment to 100K shares, worth about $4 million; LVMH said it purchased a 50% stake in rapper Jay-Z’s champagne brand Armand de Brignac through its Moet Hennessy division.

·     Auto sector; CTB +18%; to be acquired by GT for about $2.8 billion in cash and stock, with holders receiving $41.75 in cash and issue 0.907 shares which values Cooper at $54.36 a share, a roughly 24% premium from Friday ; TSLA has stopped taking orders for the cheapest version of its Model Y electric SUV and removed it from its online configurator just a month into launching the vehicle, according to a report from Electrek; Lucid Motors is close to striking a deal to go public through a merger with blank-check company CCIV, Bloomberg reported this weekend. The new report builds on a Reuters article from February 16, but with a valuation level cited at up to $15B vs. the $12B cited just a few days ago.; Xos Inc, an electric commercial vehicle maker, agreed to go public through a merger with blank-check firm NGAC in a deal valuing the combined entity at $2 billion. The deal will provide Xos with $575 million in gross proceeds, including a $220 million private investment led by Janus Henderson Investors and a consortium of truck dealers led by Thompson Truck Centers.

·     Leisure and Gaming; cruise lines active on earnings after RCL Q4 EPS (non-GAAP) beat ests but revenue fell short of consensus and estimates its cash burn to be, on average, in the range of ~$250 million to $290 million per month (NCLH earnings out later this week); in gaming, PENN secures sports betting and online casino market access in New York through strategic partnership with Rivers Casino; overall casino and gaming names were strong (DKNG, PENN, BYD); big casinos (WYNN) rise as Bernstein notes Macau GGR increased significantly during the third week of February, which captures the last four days of the Lunar New Year and the following few days



·     Energy stock movers; energy stock outperform on rising commodity prices and ahead of several earnings results this week; PBR plunges after Brazil President Jair Bolsonaro moves to fire state-led PBR’s CEO, Roberto Castello Branco; intends to replace him with a retired army general – move follows Branco’s insistence to set PBR’s fuel prices independent of political pressure, as Reuters reported last week; REI said it intends to launch sales process during Q2 to divest all of its Delaware Basin assets and it has downsized its Midland office, closed its Andrews field office and is closing its Tulsa office; GLOG was acquired by BLK’s Global Energy & Power Infrastructure team for $5.80/share, which is a 17% premium to Friday’s closing price and a 22% premium to its volume weighted average share price over the last 30 days; Barclays downgraded FTI to Equal-Weight with a $7 target, saying an 8x multiple on FY22 EBITDA is appropriate; Citi upgraded CVI to Buy with a $31 target from Neutral, saying the broader market is missing the valuation uplift that the company’s move into renewable diesel represents

·     Refiners; JPMorgan raised their crack spread forecasts to incorporate a more optimistic US outlook driven by pent-up demand from Covid and further stimulus effects, short-term supply disruptions resulting from the recent Texas deep freeze, and longer-term impacts of permanent US capacity reductions, particularly for gasoline, and they upgraded MPC to OW and PARR to Neutral, downgraded PSX to N, and kept their ratings on VLO at OW, HFC at N, DK, PBF at UW; Cowen sees near-term trading opportunities following the deep freeze in Texas, saying that PBF might benefit while VLO could face headwinds in refiners, and RDSA, BP could benefit in Integrated Oil while XOM could face headwinds;

·     Utilities & Solar; utility stocks hit the hardest as JE a small utility that offers Texas customers fixed-price electricity and gas contracts, highlighted the uncertainty and potential for financial damage in an update for investors on Monday (NRG, VST are other utilities with Texas exposure); SPWR was downgraded to Underperform on valuation at Credit Suisse who kept their $23 price target given margin improvement could slow down in late 2021/22 due to rising rates which would reduce upside to 2022 EBITDA guidance; Credit Suisse also downgraded ED to Underperform and cut their pt to $65 from $75, due to the continued cost impact of COVID19 being worse than expected as it will last well into 2021; Credit Suisse did upgrade SO to Outperform with a $68 PT from $61 on reduced execution risk as the Vogtle nuclear project nears the Hot Functional Testing (HFT) phase despite recent additional COVID19-related schedule delays; NI files prospectus supplement related to offering of up to $750M shares of common stock; SHLS was initiated at OW by JPMorgan ($44 pt) who called the stock a core holding for Alt Energy investors, Barclays ($49 pt) who said the name looks like the strongest vehicle to play the utility scale market, UBS ($48 pt) who said the name is attractively valued relative to peers and offers unique exposure to increasing utility-scale solar deployments as a best-in-class key component supplier of electrical balance of system (EBOS) products



·     Bank movers; PBCT to be acquired by MTB in all stock transaction in deal valued at about $7.6B, confirming a weekend report by the WSJ; People’s United shareholders will receive 0.118 of a share of M&T common stock for each People’s United share they own ; Wolfe upgraded SCHW with a $67 tgt to reflect growing investor optimism on the reflation trade / rising MBS yields, higher deal-related revenue synergies, stronger account growth, and PFOF risk which is not well understood, but still maintain their preference for LPLA MS, BAC WFC which as better plays on higher rates / stronger engagement; Barclays reiterated OMF as a Top Pick and still sees up to 59% return from shares re-rating to their 9x target multiple and in dividend yield; Wells upped their 1-year price target on BAC to $44 from $42 and their 3-year target to $55, saying the bank’s tech-driven, low-cost earnings model is underappreciated by investors and it should grow EPS about twice as fast as the S&P 500; Barron’s said the rally in big bank stocks still has room to run and pure-play investment banks (MS, GS) can benefit from trading momentum by institutional investors and hedge funds, an increase in M&A activity, and robust IPOs

·     Consumer Finance; Mizuho said SQ is undervalued and raised their price target to a street-high $380 with a bull case over $650 as Cash App and Seller GP provide upside to go along with the rise in Bitcoin, and the stock’s price target was separately lifted to $320 at Barclays on Cash App’s long-term potential; MGI reported Q4 EPS 12c vs est. 7c on revs $323.3M vs est. $326.7M and suspending trading on Ripple’s platform due to its ongoing SEC litigation; Goldman upgraded TW to Buy with a $85 target as the firm’s revenue growth should re-accelerate to double-digit growth with signs of a cyclical recovery in rates volumes; FUTU was downgraded to Hold with a $171 pt at 86Research

·     REITs; KeyBank upgraded AVB to OW with a $200 pt to reflect their view of a continued rebound in coastal apartment fundamentals with Covid cases down significantly and vaccinations accelerating, and also downgraded CPT to Sector Weight as the stock price approaches their prior $108 target and appears more fully valued

·     Insurance movers; PFG announced a strategic review of its business mix, capital management, and capital deployment options; will also add two new independent directors to its board after holding talks with one of its largest investors, Paul Singer’s Elliott Investment Management; ALL boosts quarterly dividend to 81c from 54c

·     FinTech; MOGO selling about 5.35M common shares at $10.10 per share in a registered direct offering, for gross proceeds of approximately $54M; Truist raised their target on LOB to $60 from $48 as it is uniquely positioned to capitalize on the convergence of banking and fintech whose new deposit platform should lower its cost of funds and eventually enable it to be a one-stop shop for small businesses



·     Pharma movers; SNY and GSK to initiate a new Phase 2 study with 720 volunteers aged 18 and over to select the most appropriate antigen dosage for Phase 3 evaluation of their adjuvanted recombinant protein COVID-19 vaccine candidate; CANF rises following new data from the Phase II advanced liver cancer study including overall survival of nearly 4 years in two patients under namodenoson treatment; VTRS provided a downbeat 2021 revenue outlook, while saying it was initiating a dividend; guides FY21 revs $17.2B-$17.8B vs. est. $18.4B and lower FCF outlook; cannabis names active as New Jersey Governor Phil Murphy said he has signed "historic" legislation to legalize adult-use cannabis, decriminalize marijuana possession in small amounts

·     Biotech movers; OTIC shares fell over 50% early as its late-stage study testing Otividex, its drug to treat Meniere’s disease, did not meet the main goal; CLSN said it has received Fast Track designation from the FDA for GEN-1, its DNA-mediated interleukin-12 immunotherapy currently in Phase II development for the treatment of advanced ovarian cancer; NKTR was downgraded at benchmark ahead of earnings; BCLI slides as FDA says company’s current data from a late-stage study to treat amyotrophic lateral sclerosis does not support filing of a marketing application

·     Healthcare services and providers; ATI Physical Therapy has agreed to a SPAC merger deal with Fortress Value Acquisition Corp. II (FAII) that values ATI at $2.5B – deal will give ATI some $645M million in cash – about $300M from the SPAC and $300M through a fully committed private investment in public equity (PIPE)


Industrials & Materials

·     Industrial & Machinery; FRTA to be acquired by Quikrete Holdings, Inc. for $24.00 per share in an all-cash deal valued at about $2.74B, including outstanding debt ; FLR could flourish as a turnaround play, according to Barron’s saying the company is pressing into growth businesses and plays a leading role in a large natural-gas plant and an export terminal project in Canada; GE tgt raised to $15 at Goldman Sachs saying thinks GE will beat consensus FCF expectations for Q1 (-$200 mln), helped by carry over benefits from 2020 cash restructuring

·     Transports; Dow Transports rise as much as 1%, setting new intraday record highs led by airlines as investors continue to but on an economic recovery; airlines AAL, ALK, DAL, HA, UAL, JBLU, LUV, SAVE and SKYW all upgraded to buy from hold at Deutsche Bank saying the sector is back on track and with Covid cases, hospitalizations, and vaccination rates all trending in the right direction, a more positive sector stance is warranted

·     Aerospace & Defense; BA shares fell initially as UAL said it will immediately halt all flights by its fleet of 24 Boeing 777 airplanes with the same type of engine involved in Saturday’s emergency landing in Denver; RTX shares slipped as they own Pratt & Whitney (shares of BA rebounded sharply off lows despite engine failure and more inspections)

·     Metals & Materials; commodity prices continue to surge, with copper, oil, lumber, food all rising; LTHM upgraded to Buy at Argus based on expectations for gradually declining industry supply and meaningful improvement in lithium pricing beginning in 2H21; Bank America upgraded chemical companies DOW to neutral new PE forecast, primarily for US, but also Europe, is resulting in higher estimates and raised LYB to Buy as estimates are moving higher on account of a more bullish PE and PP backdrop


Technology, Media & Telecom

·     Internet; SNAP was upgraded to Overweight from EW and tgt to $80 from $50 at Morgan Stanley as see continued faster than expected engagement, revenue and EBITDA growth; TWTR recently held talks to acquire Indian social media startup ShareChat as the company explored ways to expand its presence in the world’s second largest internet market and build a global rival to TikTok, tech Crunch reported ; SPOT said it would launch in new markets in the next few days which will make the music streaming service available to more than a billion people around the world.

·     Semiconductors; the Philly semiconductor index (SOX) falls over 2% in a day of selling pressure for big cap tech after trading at record highs the week prior; AEHR announced it has received orders for its proprietary WaferPak consumables totaling over $1.3 million from existing customers for their installed base of FOX multi-wafer test systems.

·     Hardware & Software movers; ORCL mentioned positively in Barron’s saying the co is turning into a cloud giant and its stock is a buy; NCTY said it signed a legally binding MOU on the Acquisition of 70% equity of Hangzhou SuanLi Technology Co., Ltd., a cryptocurrency cloud mining blockchain Software-as-a-Service company; CRNT upgraded to outperform at Oppenheimer as believe investor expectations are level-set for a soft 1H21, creating an opportunity to start buying ahead of 2H21–22 positives from wider 5G deployments

·     Media & Telecom movers; DISH posted Q4 revs of $4.56B topping the $4.42B estimate on better EPS as Net Pay-TV subscribers decreased by ~133,000 to 11.29 mln in Q4, including 8.82 mln DISH TV and 2.47 mln Sling TV subscribers; DISCA reported Q4 adj EPS of 76c, beating ests by a nickel as revenue of $2.89B beat the $2.83B est. and said streaming subscribers should reach 12 million by the end of the month; USM, TDS both downgraded to neutral from Overweight at JPMorgan after earnings beat but lower 2021 growth and higher spend than expected; in Telco (VZ, T, TMUS), Opco notes Spectrum Auction Results are supposed to be out this Week but may be postponed until final payments are made; MSGS rises after saying NY Knicks expect to announce general public on-sale for march 4 game vs. Detroit (LYV shares also rise)

@media only screen and (max-width: 500px) {
td p.MsoNormal {
text-indent: 0!important;
margin: 0!important;
div[class*=WordSection]>p {line-height: inherit !important;}div[class*=WordSection] a:not([href]) {color: inherit !important;}


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.