Market Review: March 11, 2021

Closing Recap

Thursday, March 11, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Stock finished with big gains in another record setting performance for major averages on better jobless claims data, stimulus news and upside momentum buying. To think it was just one year ago today that the WHO declared the COVID-19 pandemic. However, a year later to the day, the benchmark S&P 500 index, the Dow Jones Industrial Average (large cap), the Dow Transport index and the Russell 2000 (Smallcap) each trade to record all-time highs, boosted by several monetary policy measures from the Fed and now a third fiscal policy stimulus package, which was signed into law today President Biden after the House and Senate passed the $1.9 trillion bill. No fear again today as the CBOE volatility index (VIX) hits lowest level since Feb. 25, dropping to lows below 21.50 after touching 30 just last Friday. Bespoke noted that the Nasdaq 100 (QQQ) has risen over 7% from its low last Friday (when stood at 13,425 today), and only needs another 5.85% to get back to new intraday highs. Today’s gains were again broad based as Treasury yields were little changed, the buck dropped, and oil climbed. IS it too much positive sentiment too quickly? Bespoke noted that after falling in back-to-back weeks, bullish sentiment has snapped back rising 9.1 percentage points to 49.4%; the biggest one-week increase and the highest reading since the week of November 12th.

·     European Central Bank policymakers agreed on a monthly bond purchase target when they met on Thursday, saying it would accelerate bond purchases "significantly" to keep a lid on euro zone borrowing costs, but President Christine Lagarde said they did not have a volume goal in mind. ECB President Lagarde also said “inflation is set to increase in coming months and be volatile…and increase in market rates poses risks for wider financing conditions” spooked markets slightly, prompting a bounce in yields (10-year back to 1.535%) and the dollar.

·     Economic data was better as weekly jobless claims fall more than expected, showing a continued rebound in employment. Markets also remain excited about additional fiscal stimulus checks shortly as the House and Senate pass the $1.9 trillion bill and now President Biden signed into law today (previously was expected Friday). Positive headlines on vaccine front with the European Union’s drugs regulator recommended conditionally approving JNJ single dose COVID-19 vaccine. Smallcaps also surging as the Russell 2000 trades new record highs.

Economic Data

·     Weekly jobless claims fell to 712K in the latest week, better than the 725K estimate while prior week revised to $754K from 745K; continued claims fell to 4.144M in latest week vs. est. 4.22M and from 4.337M prior; the 4-week moving average fell to 759,000 mar 6 week from 793,000 prior week and the U.S. insured unemployment rate fell to 2.9% from 3.1%

·     U.S. households ended 2020 with a record $130.2 trillion in wealth, the Federal Reserve said as record low interest rates and a massive fiscal rescue helped. Rising equity markets added $4.9 trillion to household assets in the fourth quarter and rising real estate values added around $900 billion. Balances in cash, checking accounts, and savings deposits rose by a combined $642.7 billion in the fourth quarter to a record $14.1 trillion. Household wealth rose $12 trillion from the year-earlier period, and consumers paid off a record $118.3 billion in credit card debt.


Commodities, Currencies & Treasury’s

·     WTI oil prices ends near fresh 22-month highs, rising $1.58 or 2.45% to settle at $66.02 per barrel, with early gains accelerating after OPEC increased its forecasts for the rebound in global oil demand and global economic growth this year. Oil also benefitted from a decline in the dollar and as a fall in U.S. gasoline inventories offered a signal of recovering consumption. Gold prices edged higher by 80c to $1,722.60 an ounce, booking its 3rd straight day of gains (albeit modest) as the dollar slips – rising despite another strong rebound in global stock markets.

·     Bond prices were little changed after the U.S. Treasury sold $24B in 30-year at a yield of 2.295% vs. 2.29% when issued prior, with a bid-to-cover (demand) at 2.28, indirect bidders awarded 60.55% and directs 20.24%. The auction was fairly good, helping ease market concerns and sending Treasury yields lower. The benchmark 10-year bounced off morning lows of 1.475%, ending around 1.53%. The dollar extended its recent pullback off 3 ½ month highs.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; discount retail (WMT, TGT, BIG, DLTR) underperformed broader retail; Coupang (CPNG) 130M share IPO priced at $35.00, above the $32.00-$34.00 range; CROX announces a new collaboration with Justin Bieber; COST upgraded to Overweight from Equal Weight at Wells Fargo as the market’s contempt for COVID beneficiaries has created a compelling buying opportunity; PRTY said it expects to post a narrower Q1 loss and lower revenue than the same period last year, when the Covid-19 pandemic started – which follows a Q4 earnings and revenue miss; FOSL said it expects Q1 sales to be hit by COVID-19 pandemic, sales seen down 12%-17% due to current restrictions, particularly in Americas and EMEA

·     Housing & Building Products; JPMorgan upgraded DHI to Overweight from Neutral in the housing sector as view its valuation, trading in-line with its larger-cap peers against our 2022E EPS despite our outlook for continued above average operating margins and ROE, as attractive, while downgrade NVR to Neutral from Overweight, as view the stock’s risk/reward as more balanced at this time relative to its peers. Firm also reiterate Overweight ratings on larger-cap PHM, smaller-caps MDC and TMHC and higher-growth small caps CCS and GRBK

·     Consumer Staples & Restaurants; TAP was cautious on 1Q given tough US comps, EU lockdowns and input & freight inflation, in addition to an 11-day shutdown of the company’s Fort Worth, TX brewery according to UBS at conference, but TAP noted that supply shortages are easing on cans and the company sounded confident on its portfolio’s prospects; NDLS was upgraded to Overweight at Piper saying there is an opportunity for the stock to grow 30% and achieve a more relevant market capitalization based on multiple expansion in-line with prior periods; QSR was downgraded at Cowen as view shares as fairly valued, trading in-line with the average of global, highly franchised peers DPZ, MCD and YUM’s FY2 EV/EBITDA

·     Leisure and Gaming; sector strong with reopen trades outperforming on positive vaccine headlines and optimism about the economy strengthening with them parks (DIS, SEAS, SIX), casinos (WYNN, MGM), online gaming (DKNG, PENN), cruise lines (CCL, RCL), lodging (HLT, MAR) all leading; in RV space, CWH upgraded to Outperform at BMO Capital based on an improved outlook for the RV industry, an inexpensive valuation, and a reacceleration of the strategy to acquire independent dealerships, while THO tgt raised to $150 from $125 at Argus saying it remains the best-positioned public company in the RV industry



·     Energy stock movers; OPEC raised its forecast for global oil-demand growth in 2021. In its monthly report, OPEC said it sees demand growth of 5.89 million barrels a day this year, compared with a previous estimate of 5.79 million barrels a day. That brings total world demand to 96.27 million barrels a day from a previous outlook of 96.05 million barrels a day. Non-OPEC liquids supply for 2021 is forecast to grow by 950,000 barrels a day to average 63.8 million barrels a day, OPEC said, adding that "upstream capital spending in 2021 is expected to remain well below 2019 levels, mainly due to the significantly lower projected investment in U.S. shale."

·     Energy stock movers; Wolfe upgraded OXY to Peer perform with a $30 pt from Underperform and downgraded PAA, PAGP to Peer perform from Outperform; After meeting with BKR, HAL, HP, LBRT, NEX, PUMP, PTEN, RES, SOI, Wells said March activity has taken another step higher in its recovery from last month’s deep freeze in Texas, which sets the stocks up for some EBITDA beats on utilization in the second quarter; DZ Bank upgraded CVX to Buy with a $124 target; HESM 6M share Spot Secondary priced at $21.00; Morgan Stanley upgraded APA to OW with a $25 tgt from EW with a $16 tgt, AR to EW with $11 pt from UW and $6 pt, and kept PSX at OW and raised its pt to $105 from $82; KeyBanc lifted its target on FANG to $85 from $80; MKM downgraded CNX to Neutral with a $14 price target; ESTE Q4 EPS (28c) loss on revs $36.7M (-45% YoY) vs est. $42.8M; TALO reported Q4 adj EPS loss (41c) vs est. (31c) loss on revs $175.7M vs rev. $185.3M

·     Utilities & Solar; Bank of America downgraded OGE to Neutral with a $34 tgt; Edward Jones started AEP at a Buy and OGS as a Hold; Elon Musk tweeted “Fuel cells should be called fool sells! Such a silly choice for cars. Not great even for a rocket upper stage imo, but at least not absurd.” early this morning, which initially dragged shares of PLUGbut shares shook off brief decline to move higher with BLDP, FCEL; ALTO posts wider-than-expected Q4 net loss of (30c) vs est. (24c) and revs $168.8M also misses expectations of $234.25M



·     Bank movers; along with broader market strength, banks, insurance, Fintech, and the likes all saw more buying momentum; Consumer Finance; LC originations came ahead of the high-end of guidance, reflecting a ~56% QOQ improvement, and the 1Q21 guide was ~10% higher vs. consensus; no-touch payment names SQ, PYPL outperform all day; in services, FOUR double upgraded from Underperform to Buy at Bank America as see the potential for meaningful upside to near and longer term estimates driven by a sharp recovery in payment volumes



·     Vaccine news; The European Union’s drugs regulator recommended conditionally approving JNJ single dose COVID-19 vaccine, following authorizations in the United States and Canada; PFE and BNTX as real-world data from Israel suggests their COVID-19 vaccine is 94% effective in preventing asymptomatic infections and shows the vaccine was 97% effective in preventing symptomatic disease, severe disease and death; RIGL announces completion of enrollment for NIH/NHLBI-sponsored phase 2 trial of Fostamatinib in hospitalized COVID-19 Patients

·     Pharma movers; ALKS said nemvaleukin alfa was granted orphan drug designation by the U.S. FDA for the treatment of mucosal melanoma; SPPI said the FDA grants "fast track" designation for its therapy, poziotinib, to treat non-small cell lung cancer in previously treated patients with HER2 exon 20 mutations; KDMN falls after saying that belumosudil’s PDUFA action date for the treatment of chronic graft-versus-host disease has been extended by three months to August 30, 2021 (from May 30, 2021; cannabis names got a bump late day higher (TLRY, CGC, ACB) on late day report the Assembly’s chief sponsor of a multiyear effort to legalize marijuana in New York says a deal with the Senate and Gov. Andrew M. Cuomo could be made in the next couple of weeks.

·     Biotech movers; VIR rises after saying that a monoclonal-antibody drug it has developed to treat Covid-19 showed strong efficacy in a trial (GSK is partner); NUVB said the FDA granted orphan-drug designation to NUV-422 for the treatment of patients with malignant gliomas; FLXN Q4 EPS slight beat of ($0.40) vs. Street’s anticipated ($0.44) estimates mostly due to better than anticipated SG&A spend; IFRX upgraded to Buy at Guggenheim and raise tgt to $16 citing several factors including recent financing that removes the overhang and provides adequate funding for a future hiradenitis suppurativa (HS) pivotal program

·     MedTech and Equipment; DGX said it expects base business, excluding its COVID-19 testing, to fully recover by end of 2021 and expects revenues from COVID-19 testing to step down meaningfully in 2022/raised its long-term outlook to a 4%-5% revenue CAGR for base business and a 7-9% earnings CAGR for total company; Covid-testing companies that saw weakness yesterday on lower revenue outlook from QDEL (which sunk shares), seeing modest rebound today HOLX, QGEN


Industrials & Materials

·     Industrial & Machinery; GE downgraded at Oppenheimer after surpassing price tgt (falls a second day after lowering its year outlook in an investor update after announcing its exit from GE Capital Aviation Services (GECAS), selling it to AER); MTW was upgraded to Outperform from Neutral at Baird saying an infrastructure push couples with commodity inflation to lay the groundwork for improved Crane demand4 MYE slips as Q4 adj EPS 11c vs. est. 16c though Q4 revenue $137.5M vs. est. $128.83M

·     Transports; KNX, WERN, and SNDR downgraded from Buy to Neutral in trucking sector at UBS, saying they believe the truckload spot market is likely at a peak and reward / risk has become balanced following the ~10%-20% YTD move up in the stocks. The truckload market has been tight over the past six months and the recent severe winter weather in late February caused a further tightening, driving dry van spot rates to a cycle high


Technology, Media & Telecom

·     Semiconductors; semi’s outperform again with the Philly semi index (SOX) rising back above the 3,000 level midday up over 4%; WDC tgt raised to $88 at Stifel as our sum-of-parts analysis suggests more upside for the stock on a going forward basis and Wells reit OW and $85 tgt as continue to view WD as a mid/2H2021 fundamental upside story; the South China Morning Post reported this morning that the U.S. and China to set up semiconductor working group to ease export controls and improve supply chain security – group will also work on policy; QRVO was upgraded to Overweight with $200 tgt at Barclay’s saying n-t rends remain strong, with growth in Android yielding June flat to even up slightly verses guidance of below $1B

·     Software movers; ORCL slides – beat consensus expectations on revenue ($10.09B vs cons $10.07B), PF EPS ($1.16 vs cons $1.11), and posted a strong PF operating margin (47.4% vs cons 47.2%). The quarter delivered continued strength in its ERP business with Fusion ERP up 30% YoY Net Suite ERP up 24% YoY, and Fusion HCM up 21% YoY – shares slip as some analysts note Cloud transition could take longer than investors appreciate; CLDR falls as beat consensus revenue expectation Q3 with 19% beat on billings, but forecasts Q1 total revenue between $216M-$218M, below Street est. of $226.8M on weaker EPS outlook; ASAN price tgt raised by several analysts after Q4 sales topped views and guided ahead on revenue for F1Q/FY22; RPD hosted a Virtual Investor Day at which the company provided investors with a detailed overview of the company’s Insight Platform strategy as well as 3-year and 5-year growth and profitability targets that call for Rapid7 to surpass $1bn in ARR by the conclusion of FY25; WAND and SNOW announces partnership with Snowflake to accelerate data lake migration to snowflake data cloud

·     Media & Telecom movers; NFLX shares jump late day after reports the company starts cracking down on password sharing/is telling some viewers that their freeloading days are coming to an end; VZ announced it will spend an additional $10 billion in capex over the next 3 years to deploy C-Band as quickly as possible which will be in addition to the current capex guidance of $17.5B-$18.5B for 2021 – news lifted shares of CIEN, CALX, JNPR, COMM initially in telco equipment sector; VZ also disclosed it had won an average of 161 MHZ of C-Band spectrum; in media, BMBL shares jump as sales climbed in the latest quarter, driven by an increase in paying users for its dating apps – Total paying users across its dating apps increased to 2.7 million, up about 33% from the prior year; in advertising, WPP posted its 2020 results with a beat of 80 bps on Q4 organic growth rate, a beat of 40bps on 2020 adjusted EBIT margins and a 4% beat on adj EPS

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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.