Mid-Morning Look: June 06, 2022

Mid-Morning Look

Monday, June 06, 2022

Index

Up/Down

%

Last

 

DJ Industrials

309.41

0.94%

33,209

S&P 500

55.52

1.35%

4,164

Nasdaq

217.90

1.81%

12,230

Russell 2000

13.46

0.71%

1,896

 

 

U.S. stocks open higher after a drop last week, with U.S.-listed shares of Chinese technology companies rallying on optimism around easing regulatory crackdowns and relaxing COVID-19 curbs while market brace for a big week of inflation data and policy meetings abroad. There are no Fed speakers today, as we have entered the blackout period ahead of next policy meeting 14-15 June. Fed Chair Powell will give semi-annual monetary policy report to the Senate, on June 22. Upward pressures on bond yields to remain a focal point for equity markets after Friday’s stronger U.S. nonfarm payroll data and Fed policymakers pushing back against notion of September pause in rate tightening. Solar stocks among early leaders as the White House announces plans for solar manufacturing push to end project slowdown (waives solar import tariffs for 2-years). Nasdaq outperforms behind strength in tech while biotech is mixed amid ongoing cancer conference this weekend (ASCO). 2022 leader energy is seeing modest pullback early despite early oil strength. AAPL’s WWDC keynote will take place today at 1pm. Big banks rise early as Treasury yield curve steepens, 10-year hits 3%, highest in 3-weeks.

 

 

Macro

Up/Down

Last

 

WTI Crude

-0.26

118.61

Brent

-0.17

119.52

Gold

-0.40

1,849.80

EUR/USD

-0.0019

1.0701

JPY/USD

0.33

131.18

10-Year Note

0.046

3.00%

 

 

Sector Movers Today

·     Internet, Media & Telecom: TWTR slips after Tesla CEO Elon Musk says company has materially breached deal agreement; said reserves right to terminate Twitter merger pact if breach; strength in U.S. listed China stocks (BABA, BIDU, PDD, JD, TCEHY) on further reopening of its economy post COVID-lockdown and signs of easing regulatory issues (DIDI news), which overshadowed the Caixin services PMI coming in a lot weaker than forecast at 41.4 vs 46.0 forecast (but above 36.2 prior); AMZN 20-1 stock split went into effect today (closed at $2,447 on Friday); SPOT upgraded to Outperform with $150 tgt at Raymond James noting shares have traded off significantly from all-time highs in early 2021 due to slower than expected scaling of the company’s podcasting business and soft margin guidance but they believe that the bad news is priced in with relatively limited downside.

·     Pharma movers: PRAX said that its experimental depression drug failed in a Phase 2/3 clinical trial as it did not meet the primary or secondary endpoints for the study; ACB upgraded from Sell to Hold at Stifel given the company’s enhanced liquidity position following the recent $173 million bought deal offering; ARQT announces positive topline results from STRATUM pivotal phase 3 trial of Roflumilast Foam 0.3% in seborrheic dermatitis; LLY said its diabetes drug Mounjaro (tirzepatide) spurred as much as 22.5% weight loss in overweight or obese patients compared to 2.4% loss on placebo

·     Utilities & Solar; Solar stocks surge (FSLR, ARRY, FTCI, ENPH, RUN, SHLSafter Bloomberg reported President Joe Biden will take executive action to boost the U.S. solar sector, saying he won’t impose any new tariffs on solar imports for two years. Biden plans to invoke the Defense Production Act to provide support for US-made solar panels. Oppenheimer said this will help the companies exposed to utility scale projects more so SHLS, ARRY, CSIQ, NEP, CWEN

·     Casinos, Gaming, Lodging & Leisure sector; TKAYF rises after The Times on Sunday reported that GrubHub co-founder Matt Maloney had considered buying back the U.S. subsidiary; casinos saw strength on improving China lockdown easing (WYNN ); in lodging: Hyatt Hotels (H) reports May comparable system-wide RevPAR of ~$127, marking it the strongest RevPAR performance in any individual month since November 2019 – system-wide RevPAR in May stood 6% below May 2019 levels or ~3% above May 2019 when excluding Asia Pacific; PK raises Q2 forecast on improving demand across all of its portfolios; expects Q2 RevPAR of $169 mln-$173 mln vs. prior forecast of $160 mln-$164 mln

 

Stock GAINERS

·     AMZN +3%; 20-1 stock split went into effect today (closed at $2,447 on Friday)

·     ARRY +20%; strength in solar stocks (FTCI, ENPH, RUN, SHLS, SPWR) reported President Joe Biden will take executive action to boost the U.S. solar sector, saying he won’t impose any new tariffs on solar imports for two years. Biden plans to invoke the Defense Production Act to provide support for US-made solar panels

·     BABA +8%; strength in U.S. listed China stocks (BABA, BIDU, PDD, JD, TCEHY) on further reopening of its economy post COVID-lockdown and signs of easing regulatory issues (DIDI news), which overshadowed the Caixin services PMI coming in a lot weaker than forecast

·     CRWD +1%; upgraded from Equal weight to Overweight at Morgan Stanley and up tgt to $215 saying the company offers durable growth and FCF at a discount and calls the name defensive amidst an uncertain macro backdrop

·     DIDI +60%; after the WSJ reported Chinese regulators are concluding probes into the ride hailing giant and two other firms and are preparing to allow their apps back on domestic app stores as early as this week https://on.wsj.com/3aJc3Qr

·     KDP +6%; will replace UAA in the S&P 500, while Under Armour (UAA) will replace TRN in the S&P MidCap 400 effective prior to the open of trading on Tuesday, June 21

·     ON +7%; will replace IPGP in the S&P 500, while IPG Photonics will replace YELP in the S&P MidCap 400 and Yelp will replace RRGB in the S&P SmallCap 600 effective prior to the open of trading on Tuesday, June 21

·     SAVE +2%; rises after JBLU said it has sweetened its bid for the airline, as it tries to wrestle the carrier from its planned merger with ULCC

 

Stock LAGGARDS

·     ICPT -4%; announced that the FDA has delayed the pre-submission meeting regarding its marketing application for the liver disease therapy Ocaliva in nonalcoholic steatohepatitis (NASH) to July from June

·     PLAN -3%; after private-equity firm Thoma Bravo had lowered its takeover offer for co to $9.60 bln as shareholders will now receive $63.75/share, compared with previous offer of $66

·     PRAX -61%; said that its experimental depression drug failed in a Phase 2/3 clinical trial as it did not meet the primary or secondary endpoints for the study

·     QTWO -13%; after Barron’s noted this weekend is currently not pursuing a sale after bids came in below expectations, according to multiple people familiar with the matter https://bit.ly/3NnJEhj

·     TWTR -5%; after Tesla CEO Elon Musk says company has materially breached deal agreement; said reserves right to terminate Twitter merger pact if breach

_________________________________________________________________

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.