Mid-Morning Look: October 04, 2021
Mid-Morning Look
Monday, October 04, 2021
Index |
Up/Down |
% |
Last |
|
||
DJ Industrials |
-254.38 |
0.74% |
34,072 |
|||
S&P 500 |
-48.47 |
1.11% |
4,308 |
|||
Nasdaq |
-290.91 |
2.00% |
14,275 |
|||
Russell 2000 |
-15.99 |
0.71% |
2,225 |
|||
A sharp move lower for major U.S. averages, paced by declines in tech amid rising inflation fears, while commodity related sectors such as energy and metals, as well as a bounce in industrials are helping pare the losses in the S&P 500. Oil prices jump with WTI crude topping $78 per barrel this morning, its best levels since 2014 on reports OPEC will keep its output plans unchanged, while Natural gas tops $6, up 7% at $6.015 as energy commodities surge across the board. August Factory Orders rise +1.2% to $515.7B vs. +1% consensus and +0.7% prior (revised from +0.4%). The Fed’s Bullard this morning said, “we are going to have more inflation than we are used to for some time and high inflation may not dissipate back to the Fed’s 2% goal, while concerned that inflation risks are to the upside” (not exactly the “transitory” inflation the Fed has been speaking of the last few months). Markets also bracing for the start of quarterly earnings next week. Markets still focused on the infrastructure proposal out of Washington, which was trimmed to $1 trillion while proposed tax hikes have been whittled down too. This week, Democrats will also parse a separate $3.5 trillion bill that addresses climate, healthcare, and childcare, potentially halving that as well. U.S listed China stocks again tumbling amid its slowing economy as well as contagion concerns related to property company Evergrande. A very ugly start to the week after posting declines last week and in September.
Macro |
Up/Down |
Last |
|
||
WTI Crude |
2.05 |
77.92 |
|||
Brent |
2.02 |
81.30 |
|||
Gold |
3.90 |
1,764.00 |
|||
EUR/USD |
0.0032 |
1.1626 |
|||
JPY/USD |
-0.06 |
110.99 |
|||
10-Year Note |
0.021 |
1.488% |
|||
Sector Movers Today
· Internet; AKAM downgraded from Overweight to Sector Weight at KeyBanc following the Company’s announced acquisition of GuardiCore as believe thesis that AKAM would utilize its significant FCF position to return capital to shareholders is unlikely; WISH downgraded to underperform from perform at Oppenheimer, saying the company is facing a perfect storm of negative challenges heading into the fourth quarter and believe online marketplaces including ETSY, FTCH, and AMZN stand to benefit the most heading into the holiday shopping season, while WISH remains the most vulnerable; FB shares a top story today after a former product manager on the civic misinformation team, Frances Haugen, on Sunday accused the co of repeatedly prioritizing profit over clamping down on hate speech and misinformation. Haugen revealed her identity as the whistleblower who provided the documents that underpinned a Wall Street Journal investigation and a Senate hearing on Instagram’s harm to teen girls; U.S.-listed Chinese stocks slip (BABA, BIDU) after the Hang Seng China Enterprises Index slid to a five-year low on Monday amid concerns about Beijing’s regulatory crackdowns and elevated valuations
· Metals & Materials; a standout sector to the upside given further rotation into commodity linked stocks recently; NUE and X are among stocks to play steel industry revival according to Barron’s saying the steel industry is enjoying unprecedented prosperity, as steel prices have nearly quadrupled in the past year to $1,900 a ton. Yet steel stocks sport some of the market’s lowest valuations; in chemicals, DD upgraded to Overweight at JPMorgan as believe that the stock has overdriven to the downside, now reflecting myriad risks including raw materials, and the deferred cycle in auto/electronics, the opposite of what happened in December
· Energy stock movers: oil prices rise early after reports OPEC+ agrees to stick to existing oil output policy; Credit Suisse raises their 4Q21 US natural gas price forecast to $5.75/MMBtu (from $3.50/MMBtu) as the near-term set-up around winter storage inventories and increasingly tight global demand fundamentals have proven more bullish than we had anticipated. Overall, just further rotation into energy related stocks and out of high beta technology.
· Auto sector: TSLA said it produced 237,823 vehicles and delivered 241,300 in Q3 (est. around 233K); model S/X production was 8,941 and deliveries were 9,275. Model 3/Y production was 228,882 and deliveries were 232,025; Electric vehicle maker Rivian Automotive (RIVN) has filed the S-1 for its initial public offering (IPO); Ford (F) said September total U.S. sales 156,614, -17.7% YoY while its electrified vehicle sales hit 9,150 in september, up 91.6% over last year; VNE said QCOM and SSW Partners reached a definite agreement to buy it for $37.00 per share in an all-cash transaction, representing a total equity value for Veoneer of $4.5 billion; Chipmaker Wolfspeed Inc to supply silicon carbide power devices for GMs future electric vehicle programs
· Vaccine news: MRK extends gains after rallied more than 8% on Friday after promising results from its antiviral Covid pill with Ridgeback Biotherapeutics (shares of vaccine makers such as MRNA and NVAX ended the day sharply lower); BNTX CEO said a new formulation is likely to be needed by the middle of next year to protect against the virus as it mutates, the Financial Times reported; said mutations will emerge that can evade the body’s immune defenses; the Public Health Agency of Canada says that the rates of heart inflammation rarely linked to messenger-RNA-based COVID-19 vaccines are higher following the administration of MRNA vaccine compared to that from PFE; DVAX said it executed an agreement with the U.S. Department of Defense (DOD) for ~$22M over two and a half years to develop a recombinant plague vaccine adjuvanted with CpG 1018
Stock GAINERS
· ADVM +13%; reports positive follow-up results from its early-stage trial of ADVM-022, its investigational one-time gene therapy injection, in treating wet age-related macular degeneration
· DVN +4%; more strength in the energy and commodity complex, with all among leaders in the S&P 500 as investors rotate out of technology
· F +3%; along with strength in GM as well this morning as autos outperform; follows monthly updates on auto sales
· MRK +2%; extends gains after rallied more than 8% on Friday after promising results from its antiviral Covid pill with Ridgeback Biotherapeutics
· TSLA +4%; announced 241k deliveries vs. the Street’s 221k and bull case whisper numbers in the 225k/230k range. The strength was driven by robust Model 3/Y sales of 232k vs. the Street of 211k, with Model S/X of 9k vs. the Street’s 10k (as per Wedbush ests)
· VNE +3%; said QCOM and SSW Partners reached a definite agreement to buy it for $37.00 per share in an all-cash transaction, representing a total equity value for Veoneer of $4.5 billion.
· XENE +93%; surges after announcing positive data from mid-stage trial of its therapy, XEN110, to treat focal epilepsy
Stock LAGGARDS
· AMPY -43%; shares plummet after California beaches in northern Orange County were closed and wetlands contaminated by a huge oil spill caused by a broken pipeline off the coast
· BABA -1%; U.S.-listed Chinese stocks slump after the Hang Seng China Enterprises Index slid to a five-year low on Monday amid concerns about Beijing’s regulatory crackdowns and elevated valuations
· BNTX -2%, along with other vaccine makers MRNA, NVAX, PFE slide again after plunging Friday while MRK extends gains after promising results from its antiviral Covid pill with Ridgeback Biotherapeutics boosted shares last week
· FB -3%; shares a top story today after a former product manager on the civic misinformation team, Frances Haugen, on Sunday accused the co of repeatedly prioritizing profit over clamping down on hate speech and misinformation
· JELD -2%; lowers FY21 revenue view to 10%-12% from 12%-14% and sees FY21 adj EBITDA $470M-$490M, down from $510M-$535M prior
· NUS -3%; guides Q3 revs between $637M-$642M, well below the $721M estimate saying the delta variant created unexpected disruptions in many of their markets
· TSCO -3%; downgraded to Neutral from Buy at Bank America as expect 2022 same-store sales growth to decelerate to 3% following 2021E growth of 13.4% and 202E of 23.1%, with EPS growth decelerating accordingly
· WISH -6%; downgraded to underperform from perform at Oppenheimer saying the company is facing a perfect storm of negative challenges heading into the fourth quarter
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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.