Market Review: October 02, 2020

Closing Recap

Friday, October 02, 2020





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

Stocks fall as President Donald Trump tweeted early Friday that he and first lady Melania Trump had tested positive for coronavirus. The news came hours after the White House announced that senior aide Hope Hicks tested positive for the virus after traveling with the president several times over the last week. Additionally, September non-farm payrolls were reported at +661,000, well below the 850,000 expectation. Rising coronavirus cases around the world continues to weigh on sentiment as there is evidence the recovery is slowing. Travel stocks were beaten down early but turn higher after House Speaker Pelosi says that aid is being worked on in Congress and asks the airlines to delay job cuts.

Economic Data

Nonfarm payrolls for September rose 661,000, below the est 850,000 and down from 1.489M reading in August, which was revised up from previous 1.371M reading; September private sector jobs rose 877,000, above the 850k est but a decline from 1.022M in August; Sept factory jobs rose 66,000, beating the 35,000 estimate (Aug was upped to 36k from 29k). The unemployment rate was reported at 7.9%, below the estimated 8.2% and August’s 8.4%; hourly earnings rose +0.1% (est +0.2%); the labor force participation rate was 61.4% in September, compared to 61.7% in August;

August factory orders rose +0.7%, below +1.0% est (+6.5% in July); August nondurables orders +0.8% vs July +1.8%.

University of Michigan sentiment reported at 80.4 vs est 79.



Oil prices declined again today, with WTI crude oil settled at $37.05, a decline of -$1.67 (-4.3%), capping off a weekly decline of about 8%, the second consecutive weekly loss. Investors have been concerned about rising coronavirus cases and what that means for economic slowdown and energy demand, as well as Donald Trump’s coronavirus diagnosis hurting appetite for risk.

December gold declined, settling at $1907.60 an ounce, a decline of -$8.70. Gold shrugged off brief overnight gains after Trump’s positive test as a panic out of equities never materialized.






WTI Crude















10-Year Note





Sector News Breakdown


Retailers; WMT agreed to sell its U.K. grocery-store chain Asda Group Ltd. to a private investment group in a deal that values the company at 6.8 billion pounds, equivalent to $8.8 billion, as the world’s largest retailer reorganizes its international businesses in favor of bets on the growth of online services; AEO upgraded to Neutral from Underperform at Bank America and up tgt to $16 from $10 citing the impressive growth of Aerie, which has positioned the business to have a larger and more positive impact on the company overall; BTIG recommends ETSY, REAL, FTCH, CARS in online retail as Covid-19 plays; BBBY has entered into a partnership with Shipt to provide same-day delivery; KMX price target was raised at Morgan Stanley to $180 from $116 and remains OW; ASO 15.6M share IPO priced at $13.00

POOL to replace ETFC in the S&P 500 index;

Auto sector; TSLA reported 139,300 Q3 deliveries (129,950 est). a 44% increase from Q3 2019 and Q3 production of 145,036 vehicles, a 51% YoY increase; LI delivered 3,504 vehicles in September, bringing its Q3 total to 8,660 (+31.1% Q/Q) and YTD total to 18,160; NIO delivered 4,708 vehicles in September (+133.2% YoY) and 12,206 for Q3 (+154.3% YoY); UBER raised $500M in funding from Greenbriar Equity Group for Uber Freight, bringing the value of Uber’s logistics unit to $3.3B; GM is considering revising its NKLA deal to possibly include a higher stake than its previously agreed to 11% after Nikola’s valuation has recently tumbled on fraud, sexual abuse allegations against founder Trevor Milton;

Housing & Building Products; LEN doubled its quarterly dividend to 25c from 12.5c; Truist raises estimates on BECN, FBHS, MAS and MHK after seeing demand accelerating for residential construction;

Consumer Staples; NUS guided Q3 revenue to $700-$703M, well ahead of its previous guidance of $605-$635M and said digital transactions accounted for ~90% of sales this quarter, prompting an upgrade to Neutral at Bank America;

Restaurants; DPZ was reiterated at Outperform and its estimates were raised at RBC on continued demand on carryout driven by continued dine-in restrictions, the return of sports, and menu innovation; SHAK and PZZA were rated as new Buys at Loop Capital;

Leisure and Gaming;



Energy stock movers; oil prices decline as President Donald Trump tests positive for novel coronavirus and increased election uncertainty and lack of political progress on fiscal stimulus; XOM warned that Q3 earnings could fall to a loss of up to 68c, well below current analyst estimates of a 7c loss, which would be the first time the company posts losses for three consecutive quarters; NBL shareholders approved the merger with CVX; DVN announced a $570M sale of its Barnett Basin assets to Banpu Kalnin Ventures; MRO reinstated its dividend to 3c and took recent debt-reduction measures aiming for a "transparent framework for future capital allocation and uses of free cash flow intended to maximize long-term shareholder value;


Bank movers; MS completed its all-stock acquisition of E*Trade (ETFC); CME reported average daily volume of 16.9M, a 3% monthly increase; GS acquired GM’s credit card business for $2.5B;

Asset managers; Trian Fund Management LP has accumulated a 9.9% stake in IVZ and JHG; Wolfe upgrades LAZ to Peer Perform with a $36pt from Underperform;

Consumer Finance; GPN has reportedly been shopping its prepaid debit card unit NetSpend, seeking over $2B for the unit and potential buyers include GDOT; RMG spikes after it is reportedly nearing a deal with battery maker Romeo Systems to take them public through a reverse merger



Pharma movers; PACB upgraded at JPM after conversations with CEO Christian Henry regarding new strategic opportunities; AZN was granted Breakthrough Therapy Designation by the FDA for its Farxiga following its Phase III trial results demonstrated an unprecedented reduction in risk of kidney failure and cardiovascular or renal death in patients with chronic kidney disease; The EMA accepted SNY marketing application seeking approval of its enzyme replacement therapy for treatment of Pompe disease; ARA was acquired by Nautic Partners in an $853M deal where shareholders will receive $11.50 in cash, a 66% premium to yesterday’s closing price;

Biotech movers; MESO shares dropped after the FDA issued a Complete Response Letter (CRL) for remestemcel-L for treatment of pediatric steroid-refractory acute graft versus host disease, recommending that Mesoblast conduct at least one additional study in adults and/or children to provide further evidence of effectiveness; BLUE’s marketing application for its eli-cel gene therapy was accepted by the EMA; IMGN was upgraded to Buy with a $14 pt at Guggenheim; AMAG was downgraded to Neutral with a $13.75 pt at HC Wainwright; IMNM 3.25M share IPO priced at $12.00 ONCR 5.8M share IPO priced at $15.00; ARQT 4M share offering priced at $25/share;

Healthcare services and providers; OMI 8.5M share Secondary priced at $20.50; NEOG is replacing POOL in the S&P MidCap 400 index; HUM was reinstated by Berenstein at Market Perform with a $459 pt;

MedTech and Equipment; BDX was added to Goldman Sachs’s conviction buy list on valuation after recent underperformance and current valuation vs other large-cap MedTech sitting below its 10-year average; DXCM downgraded to Underweight from Equal-Weight at Wells Fargo and cut the tgt to $350 from $420 saying the recent approval of ABT’s Libre 3 in Europe will put downward pressure on DexCom’s pricing at a faster rate than the Street models; WMGI lost challenges to its patents on bone plates;

NNOX shares jumped after hours on news it plans to demonstrate its Nanox-ARC system in late November at RSNA 2020, the largest radiology conference in the world with over 50K attendees (at least before COVID-19); also plans to demonstrate its digital x-ray source, the principal enabler of its low-cost imaging device;

Industrials & Materials

Transports; Airline stocks (AAL, DAL, LUV, UAL, ALK, JBLU) pressured early on worries the effect of President Trump contracting COVID-19 will have on a stimulus package for the industry, but spike in the afternoon and turn positive after House Speaker Pelosi says airline aid is imminent and asked them to delay job cuts; CSFB raised its price target and Q3 estimates on rails (UNP, CSX, NSC) to about 2% above the street average given better than expected volume trends; CP reported it moved 7.72 MMT in Q3 2020 and 2.8 MMT, both records for the company; Susquehanna upgraded JBHT to Positive from Neutral and downgraded LSTR to Neutral from Positive in trucking; Citi issues bull case targets on FDX of $500 and $220-40 on UPS;

Metals & Materials; LYB agreed to acquire half of South Africa-based Sasol’s US ethane and polyethylene plants and infrastructure for about $2B;


Technology, Media & Telecom

Internet; NFLX was reiterated as a Buy with $575 pt after 1H20 downloads sets a record and increased 33% from 1H19, although uncertainty and potential churn remains high; AMZN announced a partnership with WMG to remaster songs and albums to ultra HD;

Semiconductors; NVDA price target was raised to $600 from $525 at Wedbush, but was removed from their Best Ideas List on limited implied upside; MRVL was maintained at Buy at Rosenblatt who lifted their pt to $60 from $50;

Software movers; TWLO said at its investor day that it sees prelim Q3 revenue will be ahead of previously issued guidance of $401M-$406M (est. $407.9M); SNOW was initiated at Market Perform by Berenstein; PAYC was upgraded to Buy with a $365 pt from Hold, $250 pt at Stifel; SPLK was upgraded to Outperform from In-Line at Evercore;

Media & Telecom movers; DIS tgt raised to $155 from $135 at JPMorgan saying the stock has retreated a bit from the rebound in early September, creating a more attractive entry point and is also encouraged by the progress of recovery in co’s businesses; ATVI delayed its release of World of Warcraft: Shadowlands until the end of the year from its scheduled late October release; JP Morgan raised its estimates and reiterated its favorable view on ad agencies IPG, OMC ahead of Q3 results;

Hardware & Component news; SGH reported Q4 adjusted EPS 82c vs. est. 79c and sales rose 6.7% YoY to $297.0M vs. est. $299M; sees 1q net sales $280M to $300M vs. est. $287.4m, 1q adj gross margin 18% to 19%, est. 21%;


Market commentary provided by Catena Media Financials US, LLC, 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.