Market Review: March 03, 2021

Closing Recap

Wednesday, March 03, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     It was a tale of two markets on Wednesday as the technology heavy Nasdaq fell sharply (over 2.5%) as investors fled high-flying growth names, tending to rotate into more value, cyclical related sectors which are viewed as more likely to benefit from an economic recovery on the back of fiscal stimulus and vaccination programs. Stay at home names suffered on the day (AMZN, ZM, TDOC), while reopen related sectors outperformed: strength in casinos (WYNN), theme parks higher (SIX), events (LYV), cruise lines (NCLH), airlines (UAL), online travel (BKNG), lodging (MAR), restaurants (RRGB) among leaders. Energy was another standout leader as oil prices resume upward momentum. Industrials jump, led by gains in Dow component Boeing (BA), while transports were higher, not far-off record highs. The Nasdaq and Philly semiconductor index both dropped below key technical levels as markets keep a watchful eye on rising Treasury yields, sparking inflation concerns which tend to hit higher multiple growth companies.

·     Again, the Fed chalking up the latest Treasury yield rally to a stronger economy. Chicago Federal Reserve Bank President Charles Evans on Wednesday said he sees the recent rapid rise in bond yields – which some analysts have suggested could raise alarm bells for the U.S. central bank — as mostly reflecting improvements in the economy. Also weighing on sentiment today, a round of weaker economic data (along with the bounce in yields), as a report showed U.S. services industry activity unexpectedly slowed in February amid winter storms, while a measure of prices paid by companies for inputs surged to the highest level in nearly 12-1/2 years. The U.S. Senate was expected to take up Biden’s $1.9 trillion coronavirus relief package, with Democrats aiming to get it signed into law before March 14, when some current jobless benefits expire.

·     In sector/stock top stories: the Nasdaq briefly falls below the $13k level for the first time since January with big tech underperforming as AMZN dips below $3k for the first time since 11/3, NFLX, NVDA, MSFT touch their lowest prices in more than a month, AAPL remains down over 8% YTD, $FB down over 6% YTD, and TSLA off more than 5% in 2021; The Dow in positive territory most of the day behind strength in industrials, energy and financials as BA, AXP, JPM, CVX outperform; LYFT surges above the $60 level for the first time since July 2019 after reporting last week was its best in terms of rideshare volumes since pre-pandemic, which also boosts shares of UBER; MIK spikes after being acquired by APO for $22/share in a $5B deal; retailers mixed after earnings as DLTR, URBN rise on their EPS beat, JWN slips despite its EPS beat.

Economic Data

·     The ISM non-manufacturing activity index fell to a reading of 55.3 last month from 58.7 in January, which was the highest since February 2019. U.S. services industry activity unexpectedly slowed in February amid winter storms, while a measure of prices paid by companies for inputs surged to the highest level in nearly 12-1/2 years (71.8 from 64.2 in Jan), bolstering expectations for faster inflation in the near term.

·     ADP Feb payrolls reported at 117K below est. 177K while Jan payrolls revised to 195K from 174K – recap (data comes ahead of the nonfarm payroll report this Friday)

·     Markit Feb final composite PMI at 59.5 vs 58.7 prior and Feb. services PMI at 59.8 vs 58.3 last month



·     Oil prices rallied today, with WTI crude rising $1.53, or 2.56% to settle at $61.28 per barrel, while Brent rose $1.37 or 2.19% to settle at $64.07 per barrel. Prices were helped after Reuters reported, citing several OPEC+ sources, suggesting OPEC+ are considering rolling over existing production cuts from March into April, What wasn’t clear was whether this includes the 1 mb/d unilateral Saudi cut or just refers to the expected 500k/d increase from OPEC+. Prices also managed to rally despite a massive weekly inventory build as reported by the EIA (though gasoline and distillates saw large drawdowns). The EIA said weekly crude oil inventories rose +21.6M barrels vs. and expected draw of -0.9M consensus. Gold prices dropped back to 9-month lows, falling -$17.80, or 1% to settle at $1,715.80 an ounce, but bouncing off lows around the $1,700 an ounce level. Investors keeping a close eye on Treasury yields and the dollar.


Currencies & Treasuries

·     The U.S. dollar was little changed following weaker economic data as the ISM services index missed, as the buck edged higher against the yen, and was down slightly vs. the euro. Stocks were mostly lower with soft tech stocks weighing on the NASDAQ. The yield on the benchmark 10-year Treasury yield hit highs just below the 1.50% level (up over 8 bps to 1.496%) before pulling back slightly as market participants keep a watchful eye on the move in yields, raising inflation concerns. This morning’s focus was on the surge in the price components the ISM services and Markit PMIs, rather than the weakness in the headline activity indexes and the ADP job numbers. Note it was 1-year ago today (3/3/20) that the yield on the 10-year Treasury fell below 1% for the first time ever – before falling below 0.5%. Bitcoin leveraged stocks mixed despite bitcoin prices rising over 7% to around $51,000.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; JWN Q4 EPS 21c vs. est. 14c on revenue $3.65B vs. est. $3.6B, digital sales approximately $2B, and expect FY21 revs to grow more than 25% with digital representing about 50% of sales as they forecast this quarter’s margin pressures to reverse through the next year; ROST posted Q4 EPS $0.67 on sales $4.2B and comps -6%, each missing consensus ($1.00, $4.27B, -4.7%), guides Q1 EPS 74-86c, below expected 89c, and see Q1 comps -1% to -5%; URBN reported Q4 adj EPS 30c vs. est. 29c on in-line sales $1.09B; DLTR Q4 adj EPS $2.13 slightly topped est. $2.11 on net sales $6.77B that slightly missed est. $6.8B; BGFV posted Q4 EPS 95c (2c YoY) on sales $290.6M vs est. $244.1M, same-store sales +10.5%, sees Q1 EPS 47-53c and same-store sales increasing approximately 20%, and increased its dividend by 50% to 15c from 10c; REAL announces $250M convertible senior notes offering; Cowen said their checks across the apparel and footwear space appear to show consensus recovery estimates are conservative across the board, and they raised their target on COLM to $130 from $116 as it stands out for a strong 2H21, and on DECK to $435 from $365 given positive sentiment on Ugg and Hoka; CSFB ups target on KSS to $58 from $30 after its solid Q4 earnings showcased structural changes that can improve margins going forward as the company targets 7-8% EBIT margins by 2023; MIK entered into an agreement with Apollo Global Management, taking the company private in a deal value of $5 billion, with MIK holders getting $22 per share

·     Auto sector; FSR was upgraded from Underperform to Peer Perform with $30 tgt at Wolfe as continue to view Fisker as speculative (launching into competitive sub-segments with unclear product strategies, intellectual properties, advantages, or competitive moats); CHPT was initiated with an Outperform at Oppenheimer and $39 tgt calling the stock a unit play on EV adoption; LYFT said average daily rideshare rides increased in February from the previous month (up 4% MoM) and that rideshare ride volume during the week ending February 28 reached a new record level for 2021 and was the company’s best week since March 2020

·     Housing & Building Products; CASA was upgraded to Neutral at JPMorgan citing better than expected diversification positions for sustained revenue growth and up tgt to $10; in home furnishings, BBBY shares jumped after saying it plans to launch at least 8 new owned brands in fiscal 2021, with 6 of these being launched sequentially in first 6 months of FY; OC was downgraded to Sell at Goldman Sachs saying along with their energy team’s forecast for rising oil and asphalt pricing, they are turning more cautious on our outlook

·     Consumer Staples; CL was reiterated Underweight at Wells Fargo and cut tgt to $74 based on 21.5x CY22e EPS, following release of US Nielsen data which showed the CL’s underperformance gaps relative to category are widening; BGS posted a top and bottom line miss for Q4 (adj EPS 35c vs. est. 44c; Q4 revenue $510.2M below est. $531.12M) and unable to provide 2021 guidance at this time; DAR with Q$ EPS and sales beat; GO shares slide as Q4 results narrowly top estimates but said it anticipates that Q1 comp sales will decline in negative high-single digits

·     Leisure and Gaming; LVS to sell its Las Vegas real property and operations, including The Venetian Resort Las Vegas and the Sands Expo and Convention Center for ~$6.25B (sold to VICI and Apollo Funds); DKNG rises as announce a strategic agreement across DISH’s portfolio of brands to bring sportsbook and daily fantasy experiences directly to DISH customers nationwide; monthly NICS firearm background checks rose 22.8% YoY in February to 3,442,777 on an unadjusted basis, according to data released by the FBI (above same time prior year of 2.802M, but down from January 4.317M) – shares of VSTO, RGR, SWBI active on data



·     Energy stock movers; XOM outlined plans to grow its dividend and cut debt through 2025 as it reins in spending saying it plans capital spending of $16 billion to $19 billion in 2021 and $20 billion to $25 billion a year through 2025 on high return; PTEN reports an average of 69 drilling rigs operating for the month of February, 2021; for the two months ended February 28, 2021, the company had an average of 68 drilling rigs operating

·     Inventory data bearish: the API reported U.S. crude supplies rose by nearly 7.4M barrels in the latest week, showed gasoline stockpiles fell by 9.9 million barrels, while distillate inventories also declined by about 9.1 million barrels. Crude stocks at the Cushing, Okla., storage hub, meanwhile, edged up by 732,000 barrels for the week. This morning, the EIA said weekly crude oil inventories rose +21.6M barrels vs. and expected draw of -0.9M consensus; Gasoline stockpiles fell -13.6M vs. -2.3M consensus and distillates with a draw of -9.7M vs. -3.0M consensus

·     Utilities & Solar; BKH was downgraded to Neutral from Buy at Mizuho and cut tgt to $60 from $66 based on additional leverage associated with Winter Storm Uri as believe the company may need to take credit-supportive measures to maintain its bond ratings at Baa2/BBB+; PNM downgraded to Neutral at Citigroup after the company received shareholder approval for its sale to Avangrid; ITRI upgraded to Buy from Hold with $140 tgt at Argus after the company recently reported 4Q EPS results that declined year-over-year but topped the consensus forecast; SPI said its SolarJuice Co unit has entered into a contract with a government department of New South Wales, to supply solar photovoltaic (PV) systems to up to 2,600 properties



·     Bank movers; Banks opened higher to start today with rates as risk appetite returns overnight on positive vaccine supply comments (good for reopening trades) and as concerns over valuations ease; SBNY tgt raised to $275 from $190 at UBS saying SBNY’s strategic shift away from multi-family & CRE lending starting in 2017 and has become arguably the most dynamic growth story in the sector; overall financials remain strong on improving economy and higher yields

·     Insurance; PRU was downgraded to neutral at JPMorgan which reflects a mixed outlook for business trends, risk in PRU’s M&A strategy, and a less attractive valuation; Truist incrementally negative on JRVR based on our analysis of their reserves, particularly in the commercial auto space, where they have had trouble lately, including a big boost to reserves in the fourth quarter; Reuters reported that AON will face a list of objections by the EU’s antitrust watchdog which it must overcome with concessions to proceed with its $30 billion bid for WLTW

·     Consumer Finance; RKT the new “meme” stock, surging the last few days (though follows good earnings beat last week), but massive surge prompts two analyst downgraded today (RBC and Zelman) “following the strong Q late last week and abnormal volatility with shares up ~71% yesterday and 109% since reporting” as per RBC – shares dropped sharply on the day



·     Pharma movers; KMPH rises as the FDA has approved the new drug application for Azstarys, a once-daily product for the treatment of attention deficit hyperactivity disorder in patients age six years and older; TAK signs a deal with OVID to secure global rights from Ovid to develop and commercialize Soticlestat (TAK-935/OV935) for the treatment of developmental and epileptic encephalopathies, including Dravet syndrome and Lennox-Gastaut syndrome; LLY and INCY said top-line results from Phase 3 BRAVE-AA2 study, evaluating the efficacy and safety of once-daily baricitinib 2-mg and 4-mg in adults with severe alopecia areata met the primary efficacy endpoint at Week 36; OCGN rises after saying its co-development partner Bharat Biotech released an interim analysis of its Phase 3 trial of its COVID-19 vaccine candidate, COVAXIN, which demonstrated efficacy of 81%; AZN reaffirms its IP rights on Symbicort after court decision

·     Biotech movers; ADPT downgraded from Buy to Neutral at Goldman Sachs and lower tgt to $63 from $74 following an announcement that Roche/Genentech intends to suspend the development of a T cell receptor (TCR)-based cell therapy being developed in collaboration with ADPT against a shared antigen target; MRVI reported 4Q20 revenue of $98.4M topping $89.6M estimate and EPS beat by 2c as total sales growth was 173.5%; UTHR disclosed it was discontinuing development of Trevyent after it received written comments from the FDA regarding its previously received CRL in April 2020/to take up to a $107.3M write down; VIR falls as DSMB recommends that the VIR-7831 arm of the Phase 3 clinical trial be closed to enrollment while the data mature.

·     Healthcare services and providers; OSCR 31M share IPO priced at $39, above the high end of $36-$38 expected range; PDCO reports Q3 EPS and sales beat as adjusted operating margin increased by 30 bps to 4.6% and dental segment internal sales increased 3.6% (follows recent beat by XRAY in dental sector) – does not issue guidance

·     MedTech and Equipment; BSX to pay $1.07B for the surgical business of privately-held Lumenis LTD – the $200M revenue business consists of premier laser systems, fibers and accessories used for urology and otolaryngology procedures; ABT receives health Canada authorization under interim order to expand use of freestyle® libre system for pregnant women in the hospital and professional health care settings


Industrials & Materials

·     Industrial & Machinery; ETN upgraded to Overweight at Morgan Stanley as believe shares have appropriately rerated in response to the Hydraulics sale and other portfolio improvements; GE tgt raised to $15 from $14 at UBS as firm sees three material drivers potentially reducing GE’s unfunded pension liability; DY announced a $150M stock buyback after better EPS and revenues for the quarter, sending shares higher

·     Transports; Dow Transports outperform broader markets, within a few points of record highs mid-session; FDX said it will invest $2 billion in its commitment to be carbon neutral by 2040. As part of the plan, the package delivery giant said it entire fleet of pickup and delivery fleet will be electric vehicles by 2040; said half of its FedEx Express PUD purchases will be EVs by 2025, rising to 100% by 2030; XL shares tumbled after Muddy Waters out with short call report

·     Aerospace & Defense; BA early strength helped boost the Dow, as the shares rose as much s 5% at one point; SPCE tgt raised to $50 at Bank America from $35 as continue to believe the current nascent stages of the company provide investors with a particularly attractive entry point into the stock; IRDM upgrades from Market Perform to Outperform at Raymond James as feel valuation has fallen back to an attractive level after spending several weeks in the stratosphere

·     Metals & Materials; AA upgraded to buy from sell at Goldman Sachs with an updated 12-month price target of $32 following commodities team’s upgrade of our aluminum price forecasts to $2,300/$2,500/$2,750 per tonne in 2021/2022/2023; gold miners dipped with a drop in process (gold touched lows around $1,700 an ounce) as inflation fears perked up


Technology, Media & Telecom

·     Semiconductors; MU raises Q2 revenue guidance to $6.2b-$6.25B, above prior view $5.6B-$6.0B (est. $5.86B) and EPS view 93c-98c vs. est. 79c; AMBA Q4 revenue and gross margins coming in above guidance while Q1 rev guidance came in far better than expected and said still expects to generate >25% of its FY22 sales from CV products; MU reiterate Buy/Top Pick at Citigroup and raising estimates and price target (to $116) due to stronger than expected DRAM pricing; Chinese chip maker Semiconductor Manufacturing Int’l said it has placed an order with ASML for more than $1.2 billion in chip-making equipment; SSNLF is considering two sites in Arizona and another one in New York in addition to Austin, Texas, for a new $17 billion chip plant, according to documents filed with Texas state officials – Samsung says the expected tax abatements form the city of Austin and Travis County would total $1.48B over 20 years, up from the $805.5M prior; CCMP raises dividend to 46c and increase existing share repurchase program to $150M; AMD unveils AMD Radeon RX 6700 XT graphics card

·     Software movers; VEEV delivered a strong finish to the year in F4Q21 with billings, revenue, and margins all coming in well ahead of Street estimates and elevated investor expectations. Billings were ~$47M above consensus ($688M vs. $641M) driven by strong demand; RPD was upgraded to Overweight at Piper and up tgt to $100 saying the Street doesn’t fully appreciate the security software company’s comprehensive portfolio, which can drive sustainable ARR strength; MSFT disclosed a ‘highly skilled and sophisticated’ China-linked hacker group has targeted Exchange mail; new attacks no way connected to the separate SolarWinds-related attacks

·     Media & Telecom movers; ABNB filed to sell $2B in convertible senior notes due 2026; FUBO 4Q revenue +97% y/y, 7% above high-end of pre-announce on strong attachment adoption. 4Q advertising revenue accelerated +157% y/y, continuing to outpace subscription revenue growth of +91% y/y, driving $5M gross profit on 4.6% margin. Addition of ESPN/ABC driving improvement in subscriber churn – also raises FY21 revenue view to $460M-$470M from $415M-$435M and sees total year-end subscribers of 760,000-770,000, up 39-41% YoY

·     Hardware & Component news; SSYS 6.897M share Spot Secondary priced at $29.00; BOX delivered a solid January quarter with revenue, EPS, and billings exceeding consensus estimates, reflecting the success in selling Suites and other add-on products (Shield, Relay, etc.), while net retention rate ticked down again in the quarter; HPE Q1 revenues modestly beat consensus (1%), but EPS was strong ($0.10 beat, 24%), driven by strength in Hybrid IT and Aruba margins, and better than expected other income and raised its FCF guidance by $250M to $1.1 -$1.4B; PSTG and EQIX collaborating on a bare metal as a service storage offering called Pure Storage on Equinix Metal

@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.