Mid-Morning Look: June 01, 2021

Mid-Morning Look
Tuesday, June 01, 2021
Index |
Up/Down |
% |
Last |
|
||
DJ Industrials |
122.36 |
0.35% |
34,651 |
|||
S&P 500 |
6.62 |
0.16% |
4,210 |
|||
Nasdaq |
-3.75 |
0.03% |
13,744 |
|||
Russell 2000 |
10.67 |
0.47% |
2,279 |
|||
U.S. stocks starting the month of June how they ended May, moving higher as investors riding the upward market momentum while oil prices top more than 2-year highs, lifting the energy complex (energy stocks among the top gainers in the S&P). S&P cash (SPX) nears its all-time highs of around 4,238 (after rising a 4th straight month on Friday), the Nasdaq moves with 400 points of its record highs (14,211) and the Dow also about 400 points from its all-time bests of 35,091 in broad rally to start the month/shortened week. After a strong open, the tech heavy Nasdaq slips in a bout of profit taking ahead of another busy week of earnings in the software sector. Market momentum stocks (Bitcoin leveraged names and Reddit/WSB so called “meme” stocks such as AMC, GME, BB) seeing early action, adding to last weeks gains. Economic data mixed, weighs on the dollar, while Treasury yields rise.
Economic Data
· Markit U.S. manufacturing sector final PMI for May at 62.1 (strongest level in 14-years) vs flash reading 61.5 and final April 60.5; manufacturing sector final output index for May at 59.6 vs flash reading 58.1 and final April 57.2; final input prices index for May at 78.1 vs flash reading 78.8 and April 77.2
· ISM U.S. manufacturing activity index 61.2 in May above the 60.9 estimate and 60.7 in April; prices paid index 88.0 in May vs. 89.6 in April; new orders index 67.0 vs. 64.3 in April; the employment index 50.9 down from 55.1 in April (lowest since November)
· April construction spending +0.2% (vs. est. +0.5%) to $1.524 trln, vs. March +1.0%; private construction spending +0.4% and public spending -0.6%
Macro |
Up/Down |
Last |
|
||
WTI Crude |
2.26 |
68.58 |
|||
Brent |
1.85 |
71.17 |
|||
Gold |
-5.10 |
1,900.20 |
|||
EUR/USD |
0.0023 |
1.2248 |
|||
JPY/USD |
-0.17 |
109.38 |
|||
10-Year Note |
0.046 |
1.639% |
|||
Sector Movers Today
· Energy stocks move higher; U.S. crude futures climbed to the highest in more than 2 1/2 years after the OPEC+ alliance forecast a tightening global market, while international efforts to revive a nuclear deal with Iran were yet to reach a breakthrough. West Texas Intermediate rose, while global benchmark Brent topped $70, a level which helped boost energy stocks across the board. Newswires noted OPEC+ agrees to stick to existing plans to ease oil output cuts in June, July
· Pharma movers; AKBA said the U.S. FDA has accepted the marketing application for its drug candidate, vadadustat, for review and has set March 29, 2022 as the action date by which it will decide on the drug’s approval; ALKS said the U.S. FDA approved LYBALVI for the treatment of adults with schizophrenia and for the treatment of adults with bipolar I disorder; BBIO receives fast track designation for encaleret for the treatment of autosomal dominant hypocalcemia type 1; in cannabis, CGC Q4 fiscal 2021 came below expectations while net revenue for the quarter grew ~38% YoY to reach C$148M; LCI announces FDA acceptance, as a priority original ANDA, of the generic Advair diskus® filing; PRTK announces FDA approval of Nuzyra® oral only dosing regimen for the treatment of community-acquired bacterial pneumonia
· Industrial & Machinery; Barron’s was positive on industrials CAT, DE, HON, ODFL, OSK, ROK, SAIA, SIEGY, WCC, XPO saying if widespread inventory shortages—which are the result of several factors—lead to prolonged inflation, the Federal Reserve could raise interest rates, denting stocks, but if supply bottlenecks ease, pent-up demand is satisfied and economic growth returns to modest pre-pandemic levels, rates are likely to remain at historic lows for longer and stock indexes could continue to shine; ALSN was double downgraded to Sell from Buy at Goldman Sachs saying trucking spot prices are at historical highs (+84% YoY), while utilization levels have deteriorated (April load-to-van -36% from February highs) for a sub-sector that has the shortest cycle in our coverage
· Casinos, Gaming, Lodging & Leisure sector; AMC sold 8.5 million shares of its common stock for $230.5 million to Mudrick Capital Management L.P – share sale deal would represent a price of for AMC’s stock of $27.12 a share, which is 3.8% above Friday’s closing price of $26.12; PLNT shares stock could drop 50% after a stunning recovery according to Barron’s as growth slows and the market becomes saturated; in lodging, Blackstone & Starwood boost offer to buy STAY to $20.50 in cash; cruise lines (CCL, RCL, NCLH) and airline stocks outperform with more money rotating into the economic reopen plays
Stock GAINERS
· ALKS +1%; after the U.S. FDA approved LYBALVI for the treatment of adults with schizophrenia and for the treatment of adults with bipolar I disorder
· AMC +16%; sold 8.5 million shares of its common stock for $230.5 million to Mudrick Capital Management L.P – share sale deal would represent a price of for AMC’s stock of $27.12 a share, which is 3.8% above Friday’s closing price of $26.12
· BA +2%; was upgraded to Outperform and $290 tgt at Cowen saying fast improving air traffic is bolstering aircraft demand; and while lingering FAA oversight and timing of China’s MAX approval limit upside to 2021, 2022-24 look brighter
· CLDR +23%; to be acquired by affiliates of Clayton, Dubilier & Rice and KKR in an all-cash transaction valued at approximately $5.3B (confirming reports overnight by the WSJ) with shareholders to receive $16.00 per share in cash https://bit.ly/3wNeAii
· PXD +4%; strength across the board in energy related stocks (APA, COP, FANG, DVN, BKR, EOG) as oil prices top their best levels in over 2 ½ year highs with Brent above $70 per barrel
· UAL +3%; airlines rise on improved traffic as the TSA reported that it screened almost 1.96 million people at airports, compared with 1.85 million on Thursday. That’s the most since March 7, 2020, when the COVID-19 pandemic was in its early stages
· VTNR +13%; adding to last week’s rally after agreeing to buy an Alabama refinery from Shell for $75 million (shares rose 95% on Friday and 124% on Thursday)
Stock LAGGARDS
· ABT -5%; as sees FY EPS between $4.30-$4.50, below consensus of $5.04 citing significantly lower demand for COVID-19 tests/also sees Q2 EPS of at least $1.00, below estimates of $1.23
· CGC -4%; Q4 fiscal 2021 came below expectations while net revenue for the quarter grew ~38% YoY to reach C$148M
· FFIV -4%; downgraded to Sell at Goldman Sachs saying exiting earnings, have not seen consensus expectations reduced as much as we believe is appropriate for Software growth this year
· JNJ 1%; The U.S. Supreme Court declined to hear JNJ’s bid to overturn a $2.12 billion damages award to women who blamed their ovarian cancer on asbestos in the company’s baby powder and other talc products.
· LMNL -7%; said it has decided to stop its plans to move fezagepras into a Phase II clinical study in Idiopathic Pulmonary Fibrosis and a phase Ia/IIb study in Hypertriglyceridemia
· SPCE -6%; filed a shelf registration for $1 billion of mixed securities, plus 2.7m shares issuable upon the exercise of previously sold warrants
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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.