Market Review: March 25, 2022

Closing Recap

Friday, March 25, 2022





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Stocks slipped off its best levels Friday, but still managed solid gains on the week in a what has been an absolute rip-roaring rally over the last 2-weeks. The S&P and Nasdaq have overcome key technical resistance levels this week, with momentum flowing higher into quarter end. To say there is zero fear in the stock market would be an understatement as the CBOE Volatility index (VIX) slipped for the 8th time in last 9-days to the 21.50 level (well off March 8th highs of 37.52), back to its lowest levels since Feb 10th as investors plowed further into stocks despite a murky global outlook with rising interest rates (mortgage rates) and uncertainty in Europe given the Ukraine/Russia conflict. Economic data has been generally better regarding jobs, manufacturing, though inflation remains stubbornly highs (40-yr highs for CPI) and confidence showing concern as the University of Michigan’s final March reading of consumer sentiment slipped to 59.4, below the 59.7 estimate and the final February reading of 62.8, while one-year inflation expectations index was highest since November 1981. Will the rally cool off with Treasury yields hitting their highest levels in 9-years and as commodity prices extend gains, making costs more expensive for consumers? Time will tell, but commentary from corporate America has been overly optimistic (airlines, hotels talk about record demand) tell us otherwise – for now at least. Will the spike in rates cool the housing market that has seen the average price of a new home in the U.S. rise to $511K this last month (+25% YoY) from 274K just ten-years ago? The higher the stock market goes, the more inflationary it might get, forcing the Fed to get even more aggressive in their attempt to fight prices from raging out of control. For the week, unofficially, the S&P rose 1.79%, the Dow added 0.31%, the Nasdaq gained 1.98%.

·     Energy stocks CTRA OXY KMI APA PSX yet again leading the S&P; other names leveraged to nat gas AR EQT RRC also outperform with higher prices; yields spike again with the 10-year yield topping 2.5% for the first time in nearly 3 years with regional banks ZION CMA TFC benefitting and housing stocks PHM DHI KBH slumping again; Instacart slashes its valuation by almost 40% to drag peers and other gig economy names like DASH SHOP UBER LYFT APRN; HNST nosedives to record lows after a quarterly miss with guidance of flat sales growth in 2022; NIO quarter tops expectations but shares fall on mixed guidance; Cannabis names ACB CGC TLRY soar after the House of Reps will consider a decriminalization bill next week.


Economic Data:

·     University of Michigan consumer sentiment index at lowest since August 2011, as final March 59.4 below consensus 59.7 and preliminary March 59.7 and final Feb 62.8; the current conditions index final March 67.2 vs prelim March 67.8 and final Feb 68.2 and consumers expectations index final March 54.3 vs prelim March 54.4 and final Feb 59.4

·     Pending Home sales index dropped -4.1% vs. est. +1.0% and Pending Home sales -5.4% y/y



·     Oil prices rebounded, as WTI crude gained $1.56 or 1.39% to settle at $113.90 per barrel, retreating from earlier losses on reports that a missile attack hit Saudi Arabia’s state-run oil company Aramco’s storage facility. Both benchmarks posted their first weekly gains in three weeks as Brent rose 10% and WTI posted an 11% rise. A military spokesman said Yemen’s Houthis launched missiles and drones on Aramco facilities in Jeddah. Natural gas prices jumped 15% this week after adding 3% today to $5.571/MMBtu, the highest closing price since Jan. 27

·     Gold prices slip -$8.00 or 0.4% to settle at $1,854.20 an ounce, but for the week, the precious metal gained 1.3%, despite another weekly surge for Treasury yields and the dollar. Speaking of, the greenback slipped following two straight days of gains, as prices of energy and other commodities retreated from a run higher. The Japanese yen strengthened for the first time in 6-days vs. the buck after hitting a fresh low of 122.43, the weakest in more than 6 years, while the euro and Sterling each bounced. The yen has slipped after the BoJ said it expected to keep its soft monetary policy in place, in contrast to most other central banks around the globe.

·     Treasury yields end the week near the highs as two- and 10-year Treasury yields (2.475% and 2.29% respectively) climbed to their highest levels in almost three years, while the spread between 5- and 30-year yields shrank and teetered on the brink of inversion. The aggressive selloff in Treasuries sent 2- and 10-year yields toward their biggest weekly gains since 2009 and 2019, respectively, all on expectations at an aggressive rate hike cycle by the Fed.

·     In one of the startling comments in a note in a while, JPMorgan noted that “while the world is short on commodities, China is not given they have started stockpiling commodities since 2019 and currently hold 80% of global copper inventories, 70% of corn, 51% of wheat, 46% of soybeans, 70% of crude oil, and over 20% of global aluminum inventories."






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; BBBY reached an agreement with activist investor Ryan Cohen and RC Ventures LLC, which own a roughly 9.8% stake to have three of RC Ventures’ director designees join its board of directors; CHS reaffirms Q1 and FY22 EPS outlooks; PRPL 14M share Spot Secondary priced at $6.10; MCW reports Q4 EPS $0.10 vs consensus $0.08 and revenue $191.5M vs consensus $188.7M while guides FY EPS $0.44-$0.47 vs consensus $0.47, revenue $875M-$895M vs consensus $853.9M

·     Consumer Staples; HNST reported a very disappointing Q4 adjusted EPS loss of -$0.10 which came in worse than consensus estimate of -$0.06 as Q4 revenue grew +3.2% to $80.4M, which missed the Street ($84.5M) and its initial outlook for 2022 calls for flat sales (vs. our +14% estimate and consensus +15.1%), flat gross margin (compared to 34.3% in 2021); PM tgt and ests lowered by a few analysts to incorporate an FX update and less IQOS growth in Russian markets after scaling down operations; ACI dropped after ISI/Evercore noted that March month-to-date web traffic fell 19% y/y for ACI, based on SimilarWeb data; EAT, RRGB, DRI fall in casual dining after Bank America noted aggregate restaurant spend slows to 15.7% y/y for the week ending Mar. 19th. 3-yr spend growth accelerates to 23.9%

·     Casinos, Gaming, Lodging & Leisure sector; CCL downgraded to Hold from Buy at Argus as think that Carnival’s prospects have deteriorated amid the slow recovery from the Omicron surge and rapidly rising fuel costs; CWH, THO, WGO, LCII, PATK active after U.S. shipments of RV’s climbed 11% y/y in February to 53,722, a record for the month, according to the RV Industry Association’s survey of North American manufacturers. Shipments of towable RVs rose 11% to 48,220 vehicles, while those for motorhomes jumped 15% to 5,502; Instacart cuts valuation by roughly 38% to ~$24B given market turbulence, was valued at $39B in its most recent round last year – saw weakness in shares of DASH following headlines


Energy, Industrials and Materials

·     Energy stock movers; oil prices slide initially after the U.S. and the European Union reached a deal to slash dependence on Russian fuel imports by boosting the supply of LNG to Europe, but for the week, end higher but later popped on reports of a massive fire at Aramco; in solar, MAXN shares fell after posting a Q4 rev drop as shipments narrow to 577 from 655 in year ago; shares of natural gas levered stocks outperform AR, CTRA, EQT, RRC, SWN as natural gas prices on track for best week since January with colder temperatures increasing demand; weekly Baker Hughes rig count data showed weekly rig count rose 7 to 670 and oil rigs up 7 to 531. U.S. Drillers add oil and nat gas rigs for record 20th month in a row

·     Housing, Industrial & Machinery; Citi cuts price targets on the homebuilders TOL $52 from $62, PHM to $55 from $62, DHI from $108 to $97 following the beginning of the end of the cycle as forecasted by weak quarter from KBH as homebuilders move into 11th down week in last 12 (XHB) on surging mortgage rates – The 30-year fixed mortgage rate has risen from 3.2% to start the year up to 4.53% in less than 3 months

·     Transports; XPO said that it expects cash proceeds of $710 million from the sale of its North American intermodal business to STG Logistics – said the unit had generated $1.2 billion of revenue in 2021, or 9.3% of total revenue of $12.81 billion; ALK held its first investor day in more than two years and updated guidance for 1Q22 and the year as discussed the long-term outlook, which is focused on growing 4%-8% through 2025 with a focus on existing markets

·     Metals & Materials; HUN dips as Reuters reports that hedge fund Starboard Value LP has not secured enough support from Huntsman shareholders to replace four of the U.S. specialty chemicals maker’s board directors with its own nominees; AXTA downgraded to Sector Perform at RBC Capital and lowers target to $26 (from $33) due to ongoing cost pressure and supply chain headwinds; few analysts raise AA price tgt on rising aluminum prices; RIO upgraded to Neutral from Sell and ANFGF downgraded to Sell from Neutral, both at UBS; several utilities hitting 52-week highs SRE, SO, ATO among them



·     Banks and insurance stocks moving higher on surging yields with the 10-year hitting 2.5% and more than 10-bps advances for the likes of 2,3,5, 7 year yields as well on rising expectations of a more aggressive Fed rate hike cycle; PRU was downgraded at Credit Suisse on valuation; Bitcoin prices hit highest levels of week, but names that tends to rise with prices seeing weakness early as MARA, MSTR, RIOT, COIN lower



·     Pharma movers; Cannabis stocks ACB, CGC, TLRY soar early after report says Congress plans vote on federal legalization of the drug next week; ICVX declined after provided topline interim results from its Phase 1/2 clinical trial of vaccine candidate IVX-411 against SARS-CoV-2 that disappointed; ETNB rises after provided promising updates for pegozafermin, which is being evaluated as a treatment for non-alcoholic steatohepatitis and severe hypertriglyceridemia

·     Biotech movers; MEIP tumbles, downgraded by several analysts following announcement that FDA does not consider the single arm TIDAL trial of MEIP’s PI3K delta inhibitor, zandelisib sufficient to establish safety and efficacy; INCY announces positive CHMP opinion for ruxolitinib (Jakavi®) for the treatment of acute and chronic graft-versus-host disease; NVAX announces participation in two booster studies using its COVID-19 vaccine which will evaluate heterologous booster regimens, including NVX-cov2373, after primary series with current FDA vaccines; in MedTech, DXCM announces 4 for 1 stock split;


Technology, Media & Telecom

·     Software movers; OKTA falling for a 5th straight day following news this week that the cybercrime group LAPSUS$ had breached the company’s network; FTNT downgraded to hold from buy at Bank of America saying strong results are already reflected in stock price; semiconductors falter after ripping on Thursday, led by massive gains in NVDA, AMD; in streaming, CURI shares slide over 20% after guides 1H revs $36-40Mm vs est. $50.3Mm; says plans to increase subscription pricing in 2022; in European software, Morgan Stanley upgraded STWRY, ISMAY, CMPUY to Equal-Weight and downgraded OVHFF to Underweight; AI shares down after Morgan Stanley lowered price target to $20 from $31 while maintained Underweight


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.