Market Review: September 23, 2021

Closing Recap

Thursday, September 23, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     What goes down…must go up? U.S. stocks finish the day strong, “melting” higher throughout the trading day as fears that dragged markets lower Monday (China’s real estate developer Evergrande’s debt crisis) are all but non-existent, with major averages now on track for weekly advances. Stocks overcame a mostly “hawkish” FOMC meeting yesterday where they again said they would continue to watch the economy but upped their timeline for interest rate hikes and indicated the start of asset tapering would begin “soon”. Treasury yields hit their highest levels since early July (above 1.4% for the 10-yr), while oil prices extended gains and precious metals declined as investors abandoned safe-haven currencies in favor of risky assets. Fear has all but disappeared in just a matter of days as the CBOE Volatility index (VIX) plunges below 19 after hitting highs around 29 on Monday. Today’s market advance was broad based, led by energy, financials, industrials, and materials, while interest rate sensitive sectors such as REITs and utilities lagged. Reopen sectors also outperformed today led by casinos (WYNN), cruise lines (CCL), movie theatres (CNK), restaurants, theme parks (SIX) to name a few. Sentiment improves as the American Association of Individual Investors (AAII) weekly survey showed Bulls rise to 29.9% from 22.4%, Neutrals fall to 30.9% from 38.3% and Bears fall to 39.2% from 39.3%. Smallcaps outperformed behind energy and financials as the Russell 2000 up nearly 2%.

·     Central Bank news: the FOMC kept rates steady yesterday but said that moderation in the pace of asset purchases may soon be warranted if progress continues broadly as expected. Chairman Powell said that gradual tapering could conclude in the middle of next year. Fed officials indicated that they see interest rates seen rising to 1% in 2023, faster than projected by the Fed in its projections in June, and then to 1.8% in 2024. Today, the Bank of England kept its main interest rate unchanged at 0.1% on Thursday and stuck to its 895-billion-pound ($1.22 trillion) asset purchase target. The Bank revised down its expectations for the level of GDP in the third quarter by around 1%. Norway’s central bank raised its benchmark interest rate and said it expects to hike again in December, as it joins a short but growing list of nations moving away from emergency-level borrowing costs.

·     Stocks/Sector news: CRM surges over 7% to record highs to pace the Dow after raising FY22 guidance and setting FY23 guidance above street estimates; RAD plunges after missing on quarterly revenue and cutting FY EPS view; DRI jumps to ATH after a beat and raise earnings report and a new buyback program; FUL soars on its strong revenue and guidance, BB spikes on its beat, KBH rises as strong guidance outweighs its quarterly miss, and SCS slides on its miss; CCL shares top $25 for the 1st time in 2.5 months after saying it is on pace to restart over half of its fleet capacity by the end of October boosting RCL NCLH; reopen names strong in general LYV EXPE LUV; energy DVN, MRO, APA was the best performing sector with oil prices closing at their highest levels since July, JPM, AXP, WFC Financials outperform as the 10-year yield hits 1.4% for the first time since July 13; Vaccine names outperform after PFE, BNTX booster shots received FDA approval for those 65 and older, working in healthcare, and other high-risk individuals, NVAX rises over 10% after submitting its vaccine to the WHO for emergency use listing, and MRNA joins the rally.


Economic Data:

·     Weekly Jobless Claims rose to 351,000 in latest week from upwardly revised 335K (from 332k) and higher than the consensus of 32,000; the 4-week moving average fell to 335,750 in latest week from 336,500 prior week, continued claims rose to 2.845M from 2.714M prior and the U.S. insured unemployment rate rose to 2.1% from 2% prior

·     Aug. U.S. PMI Composite Flash 54.5 vs. 55.5 consensus and 55.4 prior, while the Manufacturing PMI at 60.5 vs. 60.8 consensus and 61.1 prior and Service PMI 54.4 vs. 55.1 est. and 55.1 prior

·     Leading Index Change MoM for Aug, Actual 0.9% (Forecast 0.7%, Previous 0.9%)

·     U.S. household wealth jumped to a new high of $141.7 trillion at the end of June, a report from the Federal Reserve showed, boosted by stock market gains and a pandemic-induced real-estate boom. Rising equity markets fueled the increase in overall wealth, adding $3.5 trillion to household assets in the second quarter. The top 1% of Americans own a record 32.1% share of US net worth, or $45.6 trillion. The bottom 50% own 2% of US net worth, or $2.8 trillion.



·     Oil prices rise as WTI crude gains $1.07 or 1.48% to settle at $73.30 per barrel, supported by growing fuel demand and a draw in U.S. crude inventories as production remained hampered in the Gulf of Mexico after two hurricanes. Brent crude posts highest close since oct ‘18 as energy stocks outperform early. Investors rotate back into commodity prices and stocks as China fears subside the latter part of the week, with industrial metals also showing strength.

·     Gold prices slide, down -$29.00 or 1.6% to settle at $1,749.80 an ounce (6-week lows) as investors continued to rotate back into riskier assets, with stocks climbing throughout the day. Investors continue to position themselves for a sooner-than-expected interest rate hike from the U.S. Federal Reserve, which pressured precious metals, but had no impact on U.S. stocks. The U.S. central bank said on Wednesday it will likely begin reducing its bond purchases as soon as November and signaled interest rate increases may follow more quickly than expected. Fading concerns over China’s Evergrande also led to the pullback in safe-haven assets.


Currencies & Treasuries

·     Treasury yields power higher across the curve, as the U.S 10-year yield rises to 1.41% (off intraday lows of 1.307%), highest since mid-July, and the biggest daily move since February. An unexpected rise in weekly unemployment claims muted by the confirmation that tapering could start in November. Markets are digesting the Fed news, which includes the dots plot showing increasing expectations of a rate increase next year. The U.S. dollar fell across the board as improved risk sentiment in global financial markets erased all the gains it notched in the previous session after the U.S. Federal Reserve flagged plans to reel in stimulus this year. While positive for the dollar, the boost from the Fed’s announcement was undercut by hawkish messages from several central banks in Europe (Norway and UK).






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; GIII said it agreed to buy European luxury fashion brand Sonia Rykiel for an undisclosed amount; SCS posted a Q2 EPS and sales miss as 2Q EPS $0.21 vs est. $0.23 on revs $724.8Mm vs est. $761.3Mm; guides 3Q revs $755-785Mm vs est. $713Mm, while guides Q3 above views; TGT said it will hire 100,000 seasonal team members at stores across us to supplement current team during holiday season; ATER said it has reached an agreement with its lender, High Trail, to pay down its outstanding secured term debt in an aggregate principal amount of $66.3 million plus accrued and unpaid interest; BRLT 8.3M-share IPO priced at $12.00 (expected range $14-$16)

·     Consumer Staples & Restaurants; DRI reported Q1 EPS that beat expectations, announced a new buyback program of $750M and boosted its year outlook for EPS, sales and comp sales (EPS $7.25-$7.60 from $7.00-$7.50, revs to $9.4B-$9.6B from $9.2B-$9.5B and comp sales to 27%-30% from 25%-29%); YUMC CEO said the co is focusing its store expansion efforts in China on smaller cities, as demand there has recovered from the pandemic much quicker than that in the country’s major centers; ACI tgt price raised by a few analysts following KR’s significant 2Q "beat and raise", to reflect BOTH greater EBITDA and a sustainably-higher multiple; SOVO 23.3M share IPO priced at $12.00 per share (expected pricing range was $14-$16)

·     Casinos, Gaming, Lodging & Leisure sector; DKNG was named a best idea short at Hedgeye saying they see 20%-25% downside; Hyatt (H) 7M share Secondary priced at $74.50; cruise line CCL said it is on pace to restart over 50% of fleet capacity By October which boosted shares of RCL and NCLH on improved sentiment for the sector; CHDN submits proposal to develop Queen of Terre Haute Casino Resort, a destination gaming facility in Vigo County, Indiana



·     E&P and Majors; energy stocks among early leaders in the S&P 500 as oil prices touch their best levels since early July; Seaport initiated OVV with a Buy rating and $42 target as it is trading at a discount to E&P peers and has a strong FCF profile and NAV coverage; Wells initiated coverage at OW on GTLS ($230 PT) and SLB ($37), EW on BKR ($25 PT), HAL ($21), LBRT ($11), and UW on NOV ($12); I pipelines, OKE upgraded to Outperform at Bernstein and lift target price to $66/share, representing 20% upside (plus what we see as a safe 7% dividend) saying they have been on the sidelines for OKE in recent years, fearing that Bakken crude inventory would not last

·     Alternative Energy, Utilities & Solar; PLUG upgraded to Overweight at Piper saying the pullback in the shares offers an attractive entry point as has tremendous forward momentum on green hydrogen plans as well as electrolyzer sales, and cites the upcoming analyst day should be a positive catalyst; for BLDP, piper said they are concerned that ’22 Street revenue estimates are too high after speaking with the company mgmt; Raymond James noted that as the German election looms, green hydrogen stands to ‘Win’ – and BE is a direct play on this

·     Refiners and Biofuels; shares of DAR and REGI were strong early after Piper said having lagged materially for months on RVO concerns, and even trading down yesterday on the news, they see both DAR and REGI as strong buys. For the refiners, it appears an absolute win, but particularly PBF, HFC, VLO.



·     Bank movers/brokerage; the banks (C, JPM, WFC, RF, FITB) were market leaders early following the “hawkish” Fed outlook yesterday as they moved up their timeline for interest rate hikes (good for lending margins) and the tapering of asset purchases could be “soon” they said – the 10-yr yield topped 1.4% today; RJF posted record client assets under administration of $1.21T rose from $945.2B in the year ago period and $1.18T in the prior month.

·     Insurance; AIG tgt raised to $65 at RBC Capital saying repositioned underwriting, reduced cat risk, improved reserving, and a lower expense ratio are among the many changes being achieved at AIG – also notes a $6B buyback authorization and the upcoming L&R exit as next catalysts that they expect to unlock value; LNC enters into an agreement with Talcott Resolution Life Insurance to reinsure up to $1.5B in sales of Lincoln’s flagship variable annuity living benefit rider.

·     Services, Consumer Finance; Wedbush boosted 2021-2023 estimates (and tgt to $14) on RKT to account for higher volumes, better than initially expected gain on sale margins, and a better outlook for the company’s ancillary "other income" business lines; BCO lowered its full-year revenue outlook, citing the impact of the spread of the delta variant of Covid-19 as sees revs $4.1B-$4.2B, below its prior $4.3B midpoint of guide

·     REITs; Raymond James upgraded VTR to Strong Buy ($67 TP, +$2) and reiterated Strong Buy rating on WELL ($98 TP, +$3) and CTRE ($27 TP), Outperform rating on OHI ($38 TP, -$2), and Market Perform rating on SBRA saying revised 2022 earnings estimates for WELL, VTR, OHI, and SBRA are +/-2% while our NAV estimates increase ~1% (no changes to CTRE). In net-lease, RBC said they do not sense that there is broad consensus on positioning in the net lease space, with some investors being very bullish and some being very bearish. However, they think the average level of excitement about the group is lower than theirs. For individual names, investors seem to have a more bullish outlook on SRC than them, and tend to be more bearish on ADC



·     Biotech, Pharma movers; for PFE and BNTX, the FDA has granted Emergency Use Authorization for a booster dose of their COVID-19 vaccine for those 65 and older, those who work in healthcare settings, and adults at high risk of severe COVID-19. The authorization includes people whose "frequent institutional or occupational exposure to SARS-CoV-2 puts them at high risk of serious complications of COVID-19." In cannabis space, CURLF agreed to acquire 100% of the outstanding equity interests in Bay, d/b/a Cure Pennsylvania for a total consideration of $90M in cash/stock; NOVN highlights safety data from late-stage SB206 molluscum contagiosum trial; NVAX and its partner Serum Institute of India have applied to the World Health Organization for an emergency use listing of Novavax’s COVID-19 vaccine, the company said

·     MedTech Equipment; EAR shares tumble after the co issued an 8-K announcing they were informed they are the target of a criminal investigation by the DOJ related to insurance reimbursement claims the company has submitted on behalf of its customers covered by federal employee health plans; BAX announces U.S. FDA approval and launch of ready-to-use cardiovascular medicine norepinephrine in premix formulation

·     Healthcare Services; RAD slips as reported mixed Q2 with smaller-than-expected loss but revs of $6.11B missed the $6.21B estimate and cuts its year EPS loss view to (90c)-(53c) from (79c)-(24c), worse than the est. loss (63c) and backs its revs outlook of $25.1B-$25.5B; CI named Eric Palmer as president and chief executive officer of Evernorth, its health services unit that mainly houses its pharmacy benefit management business; also announced several other leadership changes; GDRX is launching a health-information website that the company hopes will draw more users to its health-savings services and add advertising revenue; EHTH names Fran Soistman as CEO, succeeding Scott Flanders; eHealth appoints Christine Janofsky (Lincoln Financial) as Chief Financial Officer


Industrials & Materials

·     Aerospace & Defense; at Goldman Sachs, NOC upgraded to Neutral from Sell ($350 tgt) and raised GD to neutral from sell with $176 tgt; downgraded LHX to sell ($207 tgt), WWD to sell ($102 tgt), MRCY to neutral ($52 tgt) and LMT to neutral ($402 tgt); also upgraded ERJ and BDRBF to Buy – said an air travel recovery is occurring, but it is uneven. Despite that, many airlines are choosing to re-fleet. Business jet fundamentals are very strong. The defense market growth rate is decelerating; JOBY positive mention at Morgan Stanley pointing to the long-term potentially disruptive nature of eVTOL aircraft in supporting the firm’s Bull case valuation range of $45 to $60 per share; POWW awarded U.S. Department of Defense contract for the development and manufacture of signature-on-target rounds

·     Materials, Industrial & Machinery; ACM has increased the authorization under its existing buyback program to $1B; GE entered into an agreement to acquire BK Medical, a leader in advanced surgical visualization, from Altaris Capital Partners for $1.45B in cash; in chemicals, FUL shares rise as Q3 revs rose 19.58% Y/Y to $826.83M for the quarter, while adjusted EPS of $0.79 matched estimates and boosted its year outlook

·     Transports; DAL downgrade from Buy to Hold at Argus saying they think that demand began to slow at the beginning of August, and that the recovery in business travel will take longer than we previously expected. As such, we expect Delta to face continued headwinds until business and international travel show sustainable improvement (said prefers LUV)


Technology, Media & Telecom

·     Semiconductors; latest analysis of the NAND Flash market from TrendForce finds that shipments have been below expectations for consumer electronics such as smartphones, Chromebooks, and TVs during this second half of the year. At the same time, demand remains sluggish for retail storage products. NAND flash market will see falling quotes and 0-5% QoQ declines in contract prices for 4Q21, says TrendForce (impact for MU, STX, WDC pt cut from $150 to $135, maintains Positive at Susquehanna saying although recent checks suggest a flattening in blended DRAM/NAND ASPs into YE21 and early 2022, they have decided to reduce estimates to reflect a worst case scenario of down low single digit in Nov-Q and down mid-single digit in Feb-Q; AMD tgt raised to $110 at Piper saying they are comfortable with the company’s ability to procure additional supply in the back half of 2021 and all of 2022 to support strong growth

·     Software movers; Dow component CRM surges after raising FY22 revenue forecast to a range of $26.25B-$26.35B, up from its previous outlook of $26.2B-$26.3B and expects fiscal year 2023 revenue of $31.65B-$31.80B, above analysts’ expectations of $31.47B and guides FY23 op margins to 20.0% vs FY22 guide 18.5%; BB reported a better-than-expected loss and topped quarterly revenue estimates as Q2 EPS ($0.06) vs est. ($0.07) on revenue $175M vs est. $163.5M; ESMT 14.55M share IPO priced at $26.00

·     Hardware, Components & Services; ACN Q4 EPS $2.20 vs. est. $2.19; Q4 revs $13.4B in-line; forecasts Q1 revenue above estimates as it anticipates stronger demand for its cloud and security services; sees Q1 revs $13.9B-$14.35B vs. est. $13.51B; raises dividend 10%, approves $3B of additional share repurchases; DELL said it expects compounded annual revenue growth of 3%-4% and compounded annual growth in non-Gaap diluted earnings per share of 6+% through fiscal 2026 and announce approval of buyback program of up to $5B; TRMB downgraded to Underweight from Neutral at Morgan Stanley citing a lack of more material upward EPS revisions seen given the supply chain constraints

·     Media & Telecom movers; cable stocks pressured again as ATUS said it sees negative internet additions coming into Q3 between 15K-20K (follows cautious outlook from CMCSA last week; CHTR shares slipped); ROKU upgraded to Buy from Neutral at Guggenheim with $396 tgt as expect the connected television (CTV) ad marketplace will continue to grow at a rapid pace and that Roku will be a primary beneficiary; LBTYA upgrade from Neutral to Buy with $36.40 tgt at Jefferies saying its equity case is complex, still suffers from some strategic uncertainties, and operational trends remain mixed. But even on cautious operational forecasts, EFCF should double over a three-year horizon, underpinned by material but realistic deal synergies.

@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.