Market Review: September 20, 2021

Closing Recap

Monday, September 20, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Today’s sell-off was extensive with all 11 S&P sectors in the red and unrelenting with new lows throughout the session as markets were unable to find a bottom until the final hour of trading. The four major indices listed above each suffered their worst day in quite some time as the S&P, Nasdaq, and Russell 2000 had their worst pullbacks since May 12 while the Dow avoided its first 2% down day since July 19. There was a major risk-off sentiment as investors fled towards the safety of bonds and cash, sending the dollar higher but financial stocks tumbling with lower Treasury yields. Elsewhere, the energy sector was lower with the higher dollar and other riskier investments, such as volatile stocks that trade more on momentum and the cryptocurrency space, suffered large losses. Additionally, the VIX surged over 36% to clear the 28 level for the first time in more than four months. The weakness started overnight as concerns about the ripple effect of Chinese real estate developer Evergande’s looming debt crisis sent Hong Kong and European markets into a tailspin. Domestically, investors will key in on the Fed’s FOMC September meeting that begins tomorrow for hints on a possible timeline for the central bank to begin tapering its accommodative bond purchases before Wednesday’s official policy statement and Chair Powell’s press conference. A Bloomberg survey of economists set the expectations for the Fed to show hints of tapering this week before making a formal announcement at its November meeting and for rates to stay steady through 2022 before 2 quarter-point increases in 2023, though the anonymous dot plot will offer more insight into the central bankers’ timeline to raise rates.

·     Stock/sector news FXI China ETF plummets to 52-week lows amid real estate developer Evergrande’s debt crisis with BABA making new 2-year lows, PDD, JD, BIDU, TME, DIDI each also fall over 5% at lows, while EV names LI, NIO, XPEV weak as well after LI cuts its delivery forecast; Energy (APA, MRO, FANG, DVN), financials (GS, JPM, LNC, IVZ), and industrials (CAT, CLF, NUE, FCX) stumble; Risk-off sentiment also drags crypto space as Bitcoin hits a 1.5-month low and Ethereum goes below $3k for the 1st time in a month to drag COIN, RIOT, MARA, SI; DHI sinks on guidance cut, sending other homebuilders (TOL, MTH, LEN) lower; Defensive utilities (D, CNP, AWK) outperform; AAL rises after the U.S. lifts its travel ban for vaccinated EU, UK travelers, and other airlines (UAL, DAL, LUV) slightly higher; BRKS spiked after selling its semiconductor solutions business for $3B in cash; AZN jumped after positive data from its breast cancer drug trial


Economic Data:

·     US NAHB Housing Market Index Actual 76 (Forecast 74, Previous 75)


Commodities, Currencies & Treasuries

·     Oil prices slid, with WTI crude -$1.68, or -2.33%, to settle at $70.29. This move lower comes amid increased production resuming in the Gulf after two hurricanes disturbed the region, and market sentiment turning more risk averse that concurrently sent the safe-haven US Dollar higher and made commodities like oil less attractive.

·     Gold prices rose $12.40, or 0.7%, to settle at $1,763.80/oz as another beneficiary of the move into defensive safe havens. Treasury yields fell as well due to the risk-off sentiment during today’s equity selloff as investors rotated into the safer bonds.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; Guggenheim upped their PT on NKE to $180 from $170 as they see geopolitical and Covid-related headwinds as transitory and expect the company to maintain its leading position with its earnings this Thursday driving a continued premium multiple; Wells maintained VSCO at OW as their customer survey shows the brand’s repositioning is on track; SCVL cut its quarterly dividend in half to 7c/share

·     Auto sector; LI said it now expects to deliver 24,500 vehicles in Q3, down from its previous forecast of 25-26k; Barclays reiterated their OW ratings on GM, F (Ford) as they say the chip shortage and changes in industry behavior should favor OEMs over suppliers; Jefferies downgraded LEA and BWA to Hold from Buy and upgraded VC to Buy as the company who maintains the most direct exposure in their coverage to the ongoing electronics shortage; GM said it has resumed Chevy Bolt EV battery production and has fixed a defect leading to a fire risk, and will replace the batteries starting in October

·     Housing & Building Products; DHI cut its Q4 revenue to $7.7-7.9B from $7.9-8.4B and below est. $8.2B and expects Q4 home sales closed 21,300-21,700 from 23,000-24,500 due to continued supply chain disruptions; MHK board approved a new $500M share buyback program

·     Consumer Staples; Citi started coverage on OTLY at Buy with a $21 target; Deutsche upgraded CL to Buy based on the company’s significant strides to instill a healthier growth mindset and recent stock performance differentials between it and peers appear too severe; DNUT to be added to the Russell 2000

·     Restaurants; Piper upgraded RUTH to OW factoring in a rapid industry recovery alongside a return to company owned development in terms of a willingness and ability to accelerate unit growth on the heels of increased territory opportunities and related white space and STKS to OW too as their previous view was too conservative with risks that are shorter-term in nature

·     Casinos, Gaming, Lodging & Leisure sector; UBS reiterated PTON as a Sell with a $70 target as they say the stock’s +17% appreciation over 2 days on its private label apparel announcement implies $1.2B in sales, though they only see revenue potential of $700M-$1B; BC acquired SmathTronix, a global supplier of high-complexity electrical wiring harnesses for advanced products in the marine, mobile, and defense industries; EA closed its $1.4B purchase of mobile game creator Playdemic from AT for $1.4B; TRIP revamped its Tripadvisor Plus service months after launching it following pushback from large hotel chains and now plans to offer cash rebate to subscribers after check-in rather than upfront discounted rates on hotel rooms; The SEC announced an investigation into ATVI over its workplace practices and how the company handled employees’ allegations of sexual misconduct and workplace discrimination



·     E&P and Majors; LPI purchased approximately 20,000 net acres in western Glasscock County from PXD for approximately $230M; RDS said it intends to start low-carbon jet fuel production at scale by 2025, aiming to produce 2M tons of sustainable aviation fuel by 2025; EQNR received permission from Noway to raise gas exports from two fields on the Norwegian continental shelf to supply the European gas market

·     Utilities & Solar; Credit Suisse raised their target on FSLR to $96 from $80 primarily due to a higher probability of an import tariff extension from either AD/CVD tariffs on SE Asia competitors, or potentially a Section 201 tariff extension on all solar imports, and still sees a $130 upside in their blue sky scenario from higher import tariffs and a 10-year US manufacturing credit; Bank of America removed NRG from its US 1 List; PLUG to build the largest green hydrogen production facility on the West Coast with a Fresno facility that will produce 30 metric tons of liquid green hydrogen per day



·     Bank movers; Bank stocks (JPM, GS, WFC, BAC, C) were lower, tracking a decline in Treasury yields; Piper upgraded NBHC to OW as they have been impressed by the company’s solid profitability metrics, sound credit quality, good expense management, reinvestments into the franchise, and management’s sharp focus on serving small and midsized commercial customers, and is well positioned to post above peer loan growth as the pandemic subsides with improved economic outlook; FCRD was initiated at Perform with a $5 PT at OpCo

·     Bitcoin news; Bitcoin retreated to a 1.5-month low below $43k, pressuring related stocks (RIOT, MARA, COIN, SI, SBNY; COIN dropped its plan to launch a crypto lending program after the SEC had previously said they intend to sue the company if it went through with the program

·     REITs; GMRE was initiated at OW with a $17 tgt by KeyBank as the Company’s disciplined acquisition strategy, together with an attractive cost of capital and a relatively small existing asset base, should translate into multi-year, double-digit AFFO growth; Evercore upgraded AMH, EQRand UE to Outperform and downgraded PLD and ELS to In-Line



·     Pharma movers; PFE and BNTX said their vaccine is safe for children aged 5-11 and generates a robust immune response for the age cohort, and they will submit their data to the FDA seeking emergency clearance as soon as possible; AZN said its Enhertu reduced risk of disease progression or death by 72% vs. trastuzumab emtansine (T-DM1) in patients with HER2-positive metastatic breast cancer; MRK said irs Keytruda combined with chemotherapy reduced risk of death by 27% vs chemotherapy as first-line treatment for patients with metastatic triple-negative breast cancer whose tumors expressed PD-L1; AMGN said its Adagrasib combined with Erbitux shrinks tumors in 39% of trial patients with advanced colorectal cancer and also announced a partnership with VSTM to evaluate an experimental drug to treat patients with non-small cell lung cancer; BMY announced the FDA accepted priority review for its treatment of unresectable or metastatic melanoma with a target action date of March 19, 2022; Cantor lowered its PT on CGC to C$21 from C$30.50 on reduced estimates and sectoral derating

·     Biotech movers; JPMorgan initiated MIRM at OW with a $30 PT as they expect approval for the company’s lead asset by its September 29 PDUFA and see an attractive commercial opportunity based on efficacy demonstrated in its Phase 2b study, and they also downgraded PTGX to N with a $49 PT from $60 after the stock fell over 60% on Friday due to the FDA placing a clinical hold on its lead asset; RYTM completed its submission of a supplemental new drug application to the FDA for its obesity treatment Imcivree; TCRR was kept at a Buy at Mizuho, HC Wainwright, Truist, and BMO despite falling -36% on Friday on Ph 1/2 trial data; CRXT was initiated with an Outperform rating at OpCo with a $12 target and at OW with a $20 target at Cantor; NOTV was initiated with a Buy and $45 PT at Craig Hallum; Chardan upgraded FBRX to Neutral with a $3.50 PT; Leerink initiated TNGX at Outperform with a $25 PT; HSBC initiated DNA with a Buy rating and $14 target with an opportunity to be the ubiquitous synbio partner for anyone with bio-based product ambitions and is a play on a bioengineered future; Stifel initiated EFTR at Hold with a $20 target and would be more constructive at a lower valuation should a pullback occur; IMGO was added to the Russell 2000 today; EU regulators plan interim measures against ILMN and an order to freeze the company’s acquisition of Grail after they closed the deal before receiving approval

·     MedTech Equipment; TMO had its PT raised by several brokers, including Stifel, KeyBank, Bank of America, and Citi, following its Analyst Day last Friday; ITMR was downgraded by Leerink

·     Healthcare Services; Mizuho, BMO, Credit Suisse, Morgan Stanley, and Truist were among brokers who raised their PT on MOH after its Investor Day on Friday; Credit Suisse upgraded ACHC to Outperform as shares have recently pulled back on labor supply concerns, though management remains confident in their ability to find adequate supply and the company is also on track to meet or exceed expectations in 2H


Industrials & Materials

·     Aerospace & Defense; BA was awarded a $1.62B indefinite-delivery/indefinite-quantity contract for missile guidance repair; Colliers raised ATRO to Buy; Dynetics, a wholly owned subsidiary of LDOS, was selected by NASA as one of five firms selected to support the agency’s lunar exploration transportation services and will receive $40.8M over the next 15 months

·     Industrial & Machinery; Barron’s declared that mining companies BHP, RIO, NGLOY, GLNCY, VALE are in the best shape ever and offer a rich opportunity to investors willing to take on some risk with shares trading cheaply due to worries that the good times in industrial commodities are ending; PESI was awarded approximately $50M in three new contracts during Q3

·     Transports; Barclays reinstated FTAI at OW with a $31 PT as they see a more consistent financial outlook as the infrastructure segment continuations should ramp into 2022 after the recent equity offering to fund its Transtar acquisition; BMO resumed coverage of CNI at Market Perform versus its previous OP rating as they say management’s strategic plan falls short of tapping the company’s full potential; Stifel lowered its PT on XPO to $100 from $149 and maintains its Buy rating as they say the company should still be attractive to investors after the GXO spinoff
The AL CEO said he sees travel rebounding in the next 12-18 months and sees 2021 passenger numbers at half of 2019 levels with a 2022 forecast that could reach 4B passengers vs 4.5B in 2019; Airlines (AAL, DAL, UAL) were active after the U.S. revoked its travel ban for vaccinated travelers from the UK and EU

·     Metals & Materials; Barclays reinstated coverage of CCK at OW with a $140 PT, started coverage of AMBP with an EW rating, and raised their PT on BLL to $98 as they say beverage cans remain a unique secular growth story with demand continuing to outpace supply; Citi attended the Battery Dhoe in Michigan last week and came away thinking the Lithium industry is in for strong demand growth over the next decade and prefer ALB followed by SQM and LTHM Wedbush initiated LICY at Outperform with a $14 PT

Technology, Media & Telecom

·     Internet; DASH launched alcohol delivery in the U.S., Canada, and Australia, and Wells raised their GOV estimates for the stock while keeping their $235 PT as they say the floor on the stock has risen again after its 22% rally over the last month

·     Semiconductors; BRKS sold its semiconductor solutions group business to Thomas H. Lee Partners for $3B in cash and will no longer pursue a separation into 2 independent and publicly traded companies; Longbow downgraded TXN to Neutral on less upside compared to peers with its buyback on hold for an unknown period and they believe the company’s Q4 sales outlook will be weaker than peers, which is a risk to the multiple

·     Software movers; Wells initiated Overweight ratings on ADBE ($770 PT) as one of the crown jewels in software and a long-term core hold in any large-cap tech portfolio, CRM ($325) as they see a catch-up in shares given a favorable backdrop for front-office/revenue-generating software, and WDAY ($320) based on favorable trends including a rebound in sales activity, uptick in interest from key verticals, and investments into added sales capacity and product; TDC was upgraded to OW at Morgan Stanley who also lifted their price target to $66 from $55 as they say the recent pullback on weaker 2022 guidance created a buying opportunity to take advantage of the company’s underappreciated cloud business

·     Hardware, Components & Services; Citi resumed coverage of DELL as their top stock in tech hardware and added it back to its US Focus List

·     Media & Telecom movers; SPT had its price target raised at BTIG to $150 from $110 and to $153 from $82 by KeyBank ahead of Wednesday’s Analyst Day; TWTR settled a 2016 class action lawsuit in Northern California for $809.5M

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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.