Mid-Morning Look: March 24, 2022

Mid-Morning Look

Thursday, March 24, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks attempting an early rebound after yesterday’s decline, as major averages remain on track for weekly gains, adding on to last week’s massive advance when stocks posted their biggest 5-day run since November 2020. Strength in industrials, semiconductors and financials pacing the march higher for the S&P 500 again battling at its 200-day moving average (now at 4,475), though most sectors in the “green” early, with only a few mixed sectors such as energy, discretionary and REITs. New sanctions against Russia announced this morning as the Biden with economic sanctions on more than 400 Russian political figures, oligarchs, and defense companies. The White House said the new sanctions will cover more than 300 members of the Russian State Duma, the lower house of Parliament. Treasury yields jumped early but has since pared gains (10-year topped 2.38%), while precious metals gain (silver big move). The market has climbed a “wall of worry” over the last month as the Fed changes course, looking between 6-7 rate hikes this year while the war in Ukraine with Russia is far from over at this point, and provides much market uncertainty. But to this point, investors have looked the other way, focusing on beaten up stock prices to start the year and cutting YTD losses by more than half over the last few days. Economic data very favorable this morning as weekly jobless claims fell to lowest levels since 1969, continuing signs of a stronger jobs market. Several Fed speakers expected today which could impact markets. The U.S. dollar gains, back at fresh 6-year highs against the Japanese yen.


Economic Data

·     U.S. Jobless Claims fell -28K to 187K in latest week (lowest since 1969), well below the consensus 212,000 from 215,000 prior week; the 4-week moving average fell to 211,750 in latest week from 223,250 prior week; continued claims fell to 1.350M from 1.417M prior week (est. 1.410M); the U.S. insured unemployment Rate unchanged at 1.0%

·     Durables Goods Orders for February fell (-2.2%) vs. est. (-0.5%) and vs. Jan +1.6%; Feb Durables ex-transportation orders -0.6% vs. est. +0.6% and vs. Jan +0.8%; Feb Durables ex-defense orders -2.7% vs Jan +1.4% and Machinery orders -2.6%, electrical equipment +0.2%

·     IHS Markit March flash composite PMI at 58.5 (vs 55.9 in February) and U.S. IHS Markit March flash services PMI at 58.9 (vs 56.5 in February)







WTI Crude















10-Year Note





Sector Movers Today

·     Auto sector; JPM lowered estimates almost across the board for autos coverage (GM, F, etc.) given the ongoing conflict in Ukraine saying while the direct impact on production may not be large, the indirect impact on demand has the potential to be much greater; NKLA confirmed it started production of its electric commercial truck, the Tre, last week at its Coolidge, Ariz., factory; previously said full production to start by end of Q2; RIVN tgt trimmed to $95 at Mizuho on lower ramp expectations given 1H supply constraints and startup challenges

·     Housing & Building Products; housing stocks have been in downward spiral amid ramping Treasury yields and mortgage rates, as the XHB is tracking for its 11th down week in last 12; KBH overnight with mixed Q1 earnings as EPS $1.47 vs. est. $1.56 but Q1 revs rose 23% to $1.4B below the consensus est. $1.5B and said deliveries in the period were flat with a year earlier at 2,868, below estimates of 3,168 amid supply chain issues. The 30-year fixed mortgage rate has risen from 3.2% to start the year up to 4.53% in less than 3 months.

·     Aerospace & Defense; LDOS downgraded and BAH top picks in government services at Wells Fargo as see a positive setup for government services from here as COVID disruption and contract delays abate, while funding likely moves higher, particularly for defense; Cowen noted implications for likes of ATI and HWM after the International Aerospace Quality Group (IAQG), which certifies aerospace suppliers, stopped qualifying Russian-made aero parts – firm thinks it’s probable that U.S. aerospace titanium suppliers & forgers will see lasting share gains

·     Metals & Materials; several changes in metal space at Morgan Stanley as AA downgraded to EW from OW and SCCO downgraded to underweight and downgrading iron ore names VALE, CMIN, and CAP to EW (from OW) as we see limited upside to our new PTs and less appealing risk-rewards. Commodity prices remain elevated, yet downside risks are building on potential demand destruction. Tactically downgrading mining industry view to In-Line to reflect risks of a stagflationary shock and secular tailwinds from electrification trends; SCHN upgraded to OW at KeyBank; JPMorgan sees broad upside for steel equities after raising price forecasts in the wake of the Russia-Ukraine invasion with CLF remaining their clear top pick and STZHF upgraded to OW; GOLD sold its 12.9% shareholding in SKE for about C$132.5M



·     FCX +3%; tgt raised to $65 from $58 at Jefferies saying the company can deliver consistently high capital returns, while commodities in general higher following new list of sanctions on Russia from the U.S. today

·     IRBT +9%; upgraded to Buy at Northland citing the move by the U.S.T.R office to reinstate an exclusion for robotic vacuum cleaners from Section 301 tariffs will benefit the company

·     NKLA + 14%; confirmed it started production of its electric commercial truck, the Tre, last week at its Coolidge, Ariz., factory; previously said full production to start by end of Q2

·     NUE +3%; big gains early in metals CLF, STLD

·     SPOT +3%; after GOOGL announced deal that allows Spotify’s app within the Google Play Store to offer a choice between its alternative payment method and Google’s own – other digital content providers moving higher as well BMBL, MTCH, DUOL

·     UBER +4%; agreed to a deal to list all New York City taxis on its app as it looks to overcome a shortage of drivers in one of its biggest markets; deal was announced by Creative Mobile Technologies, and Curb, a ride-hailing app for licensed taxi and for-hire rides in North America.



·     COOK -17%; Q4 beat EPS and revenue consensus but shares opened at record lows after Jefferies and Stifel downgraded to Hold as revenue guidance for Q1 $208-212M vs est. $255.6M and FY22 $800-850M vs est. $955.9M overshadowed the beat

·     DRI ; posted a top and bottom line Q3 miss ($1.93/$2.45B below est. $2.10/$2.51B) and tightens its FY22 sales and profit forecasts saying the Omicron variant hit demand and staffing (sees year EPS $7.30-$7.45, down from $7.35-$7.60

·     KBH -2%; mixed Q1 earnings as EPS $1.47 vs. est. $1.56 but Q1 revs rose 23% to $1.4B below the consensus est. $1.5B and said deliveries in the period were flat with a year earlier at 2,868, below estimates of 3,168 amid supply chain issues

·     NTAP -2%; downgraded to Neutral from Buy at Bank America as upward momentum in PCS & AFA are counter-balanced by risk from investments, and n/t supply chain challenges

·     OLLI -1%; Q4 adj EPS 69c vs est. 66c on revenue $501.1M vs est. $513.1M, comp sales (-10.5%), and sees Q1 sales $417-422M vs est. $444.3M and comps down (-15%) to (-14%) vs est. (-10.8%)

·     PTGX -8%; as CFO submitted his notice of resignation from his position to be effective on April 1, 2022

·     SOL -9%; Q4 adj EPS 4c vs est. 6c on revenue $22.8M vs est. $24.9M, guided Q1 revs $3-4M below est. $22M and FY revs $100-120M vs est. $128.4M

·     TITN -7%; reported mixed Q4 results and softer guidance; JCI was upgraded to Buy at Deutsche Bank given 21% upside to our new $79 PT


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.