Mid-Morning Look: August 23, 2021

Mid-Morning Look

Monday, August 23, 2021

Index

Up/Down

%

Last

 

DJ Industrials

241.96

0.69%

35,362

S&P 500

37.41

0.84%

4,579

Nasdaq

168.16

1.14%

14,882

Russell 2000

26.95

1.24%

2,194

 

 

Stocks surge to start the week as the FDA, as speculated last Friday by the NY Times, announced full approval of the Pfizer (PFE) BioNTech (BNTX) Covid vaccine for individuals 16 years old or older, providing a boost for reopen related stocks such as casinos, travel, and leisure, lodging and restaurants. Investors will not turn their attention to the Jackson Hole symposium starting Thursday, a highlight of the year’s economic and central banking calendar where markets await comments on inflation and clues on when and how the Fed intends to begin tapering asset purchases. Commentary last week from several Fed members weighed on stocks, with indications a “tapering” could come as early as September or October. No concern this morning over a slowing global economy, as well as increasing angst over rising infection rates and vaccine durability that weighed on investors’ minds last week following the FDA new today. The continued regulatory crackdowns in China, most recently on the tech and luxury sector is weighing on some stock names. The Russell 2000 Smallcap index leading early after a 6-day losing streak was snapped on Friday. Bitcoin’s price surged past $50,000 on Monday for the first time since May, continuing its rebound from a months-long slump. The dollar pulls back after gains last week, while Treasury yields little changed. The S&P 500 and Nasdaq each approaching all-time highs.

 

Economic Data

·     U.S. July existing home sales rise 2% to 5.99M unit rate, topping consensus of 5.83M while June upwardly revised to 5.83M from 5.86M; the national median home price for existing homes $359,900, +17.8% from July 2020

·     Markit Aug. U.S. PMI Composite Flash was 55.4, missing the 59.5 consensus and 59.7 prior; Manufacturing PMI 61.2 vs. 63.1 consensus and 63.1 prior and the Markit Service PMI reported at 55.2 vs. 59.7 consensus and 59.8 prior.

 

 

Macro

Up/Down

Last

 

WTI Crude

3.10

65.24

Brent

3.05

68.23

Gold

15.00

1,799.00

EUR/USD

0.0032

1.1726

JPY/USD

0.03

109.83

10-Year Note

0.005

1.265%

 

 

Sector Movers Today

·     Vaccine news: The FDA announced full approval of the Pfizer (PFE) BioNTech (BNTX) Covid vaccine for individuals 16 years old or older; PFE and BNTX prices were initially higher after a report in the NY Times Friday said that the U.S. FDA is poised to fully approve their coronavirus vaccine early this week; separately, BNTX price tgt raised to $450 from $240 at Canaccord saying they remain optimistic for BNTX’s prospects amid its COVID vaccine cash funds clinical pipeline, enabling growth into a fully integrated, global immunotherapy company

·     Casinos, Gaming, Lodging & Leisure sector; strong sector given FDA approving PFE vaccine, helping the reopen trade as casinos, lodging, leisure names move higher; ride haling companies UBER, DASH, LYFT shares slide initially after a California state judge strikes down a ballot measure that declared drivers for the companies were independent contractors (but recovered with FDA approval of FDA Covid vaccine); separately, UBER files to sell 25.4M shares for holders; cruise lines active (CCL, RCL, NCLH), as the CDC said late Friday people in at-risk groups for Covid-19 complications should avoid taking cruises, regardless of their vaccination status

·     Engineering and Construction sector; DY was upgraded to Overweight from Equal Weight at Wells Fargo and raises tgt to $90 from $77 on increasing confidence that DY will be a meaningful participant in the multi-year fiber-to-the-premise (FTTP) investment cycle over the next 5 years, in which we project fiber passing will grow ~15%/year through 2025 and the telcos will spend >$70B in capex in building new fiber premises; KeyBanc meanwhile maintains conviction with Overweight thesis on DY, as their findings are supportive of the strong growth ramp implied in MTZ’s 2H21+ Communications segment outlook – also said view telecom as a growth kicker for PWR and PRIM as well

·     Bitcoin’s price surged past $50,000 on Monday for the first time since May, continuing its rebound from a months-long slump. This is a 70% rally off July lows below $30k, and other cryptocurrency Ethereum traded above $3,300 to also hit its highest price in more than 3 months as it has rebounded 95% off its 7/20 low. Shares of related stocks (MARA, RIOT, COIN) also partake in the rally

 

Stock GAINERS

·     AXSM +12%; said the FDA was unable to complete its review of the company’s drug to treat major depressive disorder by the target action date of Aug. 22, but also said the FDA did not request additional information, adding that the review of the application was ongoing

·     BNTX +8%; rises along with PFE after the FDA announced full approval of the Pfizer (PFE) BioNTech (BNTX) Covid vaccine for individuals 16 years old or older (confirming prior reports from the New York Times on Friday)

·     FANG +6%; strong rebound underway for energy related stocks as WTI crude oil prices recover, on track to snap its 7-day losing streak (APA, DVN, OXY among top gainers in the S&P)

·     MARA +9%; crypto/Bitcoin leveraged names (miners, investors) seeing early strength as Bitcoin tops the $50K level for the first time since May 15th (RIOT, BTBT, MSTR, COIN, NCTY, SI rise)

·     TRIL +191%; PFE agreed to buy Canadian drug developer TRIL in a $2.26 billion deal to strengthen its arsenal of blood cancer therapies, paying $18.50 per share https://on.mktw.net/3kiNUB7

·     VVOS +66%; said the U.S. FDA has granted 510k market clearance to the company’s mmRNA (modified mandibular Repositioning Nighttime Appliance) device for treating mild to moderate obstructive sleep apnea

 

Stock LAGGARDS

·     BABA -1%; no lift in U.S. listed China stocks as ongoing government regulatory crackdown pressures the sector; Beijing recently approved new privacy laws on handling user data (shares of JD fall despite earnings beat)

·     DASH -2%; shares slide early (with UBER, LYFT) after a California state judge strikes down a ballot measure that declared drivers for the companies were independent contractors

·     PTON -1%; tgt cut to $140 from $150 at Oppenheimer and lowering FY22E revenue by 6% and ahead of F4Q release, as third-party data suggests a slowdown in June/July product deliveries and connected-fitness subscriber growth

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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.