Market Review: April 05, 2021

Closing Recap

Monday, April 05, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     All-time highs for the S&P 500, Dow Jones Industrials, Dow Transports and Semiconductor index (SOX), while mega-caps (AAPL, AMZN, GOOGL, FB) surge after Friday’s job report showed +916k net jobs (vs. expected +675k), the most since August; while services data crushed expectations, boosting the already improved market sentiment. The Nasdaq Composite remains below its record high from February but is now more than 10% off its March lows on 3/5 and outperformed today. Reopen related sectors (casinos, travel, cruise) also among the biggest gainers on the day after the better economic data. Expectations for another hefty federal spending package (the infrastructure bill announced last week), ultra-accommodative Fed policy and solid momentum to vaccine efforts are all supportive of equities as well.

·     Economic data was a boost for equities as non-farm payrolls came in above consensus expectations for the month of March (Friday data), advancing 916K against expectations of a 660K rise. Employment gains for the prior two months were revised up by 156K while the unemployment rate fell to a post-pandemic low of 6%. The Institute for Supply Management’s (ISM) services index jumped to its highest reading on record of 63.7% last month from 55.3% in February as restaurants, hotels are recovering from the pandemic. MKM Partners said today the S&P 500 reached their price objective of 4,000 but believes has further room to 4,100 (as measured by the rising trend line) saying the setup remains constructive as indicators are not stretched or overbought – believe new money inflow into the market will target Technology.

·     Sector movers: mega cap tech helped pace overall broader market gains with AAPL, AMZN, NFLX, FB, GOOGL all surging; travel names outperform as NLCH spikes after submitting its plan to the CDC to resume cruises on July 4, boosting cruise lines CCL, RCL; Airlines also outperform after Friday set a new TSA traveler YTD record (+1118% YoY) and JBLU soars on Ray Jay upgrade to Outperform, DAL jumps after opening middle seats earlier than expected; casinos another reopen sector seeing a lift today after Morgan Stanley upgraded MGM, CZR on a faster-than-expected recovery in Vegas; TSLA bounces after reporting Q1 deliveries that beat expectations on Friday as the latest EV to top consensus deliveries; RBLX rises after Morgan Stanley, Bank of America, Goldman, and Truist each initiate coverage with bullish ratings; OXY, FANG, APA, PXD among the worst performers in the S&P as energy stocks show weakness with WTI crude falling.

Economic Data

·     Markit March final services PMI at 60.4 vs. flash 60.0, final composite PMI at 59.7 (vs. flash 59.1); the services sector final input prices index for March at 72.7, highest since series began in Oct 2009, vs flash 72.7 and final February 70.1; Composite PMI for March at 59.7 vs. flash reading 59.1 and final February 59.5; composite input prices index at 73.0 vs flash reading 73.0, highest since series began in oct 2009, vs final February 70.6.

·     Nonfarm payrolls surged by 916,000 jobs in March (Friday morning – when U.S. markets were closed), the biggest gain since last August and topping estimates of 647,000. Data for February was revised higher to show 468,000 jobs created instead of the previously reported 379,000.

·     ISM Non-manufacturing surged to a record high amid robust growth in new orders, as its overall activity index rebounded to a reading of 63.7 last month – the highest in the survey’s history and followed 55.3 in February. Prices paid index 74.0 in March vs 71.8 in February, new orders index 67.2 in March vs 51.9 in February and the employment index 57.2 in vs. 52.7 in February

·     U.S. Feb factory orders fell -0.8% vs. est. decline -0.5% and compared to +2.7% in January; Feb factory orders ex-defense -0.6% vs. Jan +2.1% and Factory orders ex-transportation fell -0.6% vs. Jan +1.8% and prior +1.7%


Commodities, Currencies & Treasuries

·     Oil prices tumbled on Monday as rising supply from OPEC+ and higher Iranian output countered signs of a strong economic rebound in the United States and expectations of a wider demand recovery in 2021. WTI crude fell -$2.80 or 4.56% to settle at $58.65 per barrel, while Brent fell as well. OPEC+ agreed on Thursday to monthly production hikes from May to July, while OPEC member Iran, exempt from making voluntary cuts, is also boosting supply.

·     Gold prices edge higher by a modest 40c to settle at $1,728.80 an ounce – no rally despite the 0.4% decline in the dollar index today (DXY just above the 92.50 level). Strong economic data failed to rally the U.S. dollar after posting a stellar return in March for the greenback. Bitcoin prices pulled back from the $60K level over the weekend, finishing the day under $59K, but up on the day. Treasury yields were little changed most of the day, with the 10-year around 1.71% level, the 2-year note yield fell 1.6 bps to 0.168%, while the 30-year bond yield edged higher.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; GME filed a prospectus to sell up to a maximum of 3.5M shares of its common stock from time to time through an "at-the-market" equity offering program, sending shares lower while the retailer also said total global sales approx +11% first nine weeks of FY21 (approx +5.3% four weeks ended Feb 27 approx +18% five weeks ended Apr 2); WHR rises after Cleveland Research said increased industry demand in March along with the company’s upcoming broad-based price increase in North America should help support 2021 EPS.

·     Auto sector; TSLA posted record deliveries between January-March quarter with 184,800 deliveries topping estimates of 177,822 vehicles, and exceeding its previous record of 180,570 achieved last quarter. Tesla delivered 182,780 Model 3/Ys in Q1, up 13% QoQ while deliveries of pricier S/Xs slumped from 18,920 to 2,020 during the period; GM and Ford (F) were both initiated at Outperform ratings at Wells Fargo with $67 and $15 tgt respectively; electric vehicle space fails to rally (NIO, LI, XPEV, FSR) despite the White House calling for 500,000 new EV charging stations last week — five times the size of the national network now — as part of a $174 billion plan to boost the EV industry in Mr. Biden’s broad $2.3 trillion infrastructure proposal

·     Consumer Staples & Restaurants; LW upgraded to Buy from Neutral with a $100 PO, at bank America saying the co is poised to approach pre-COVID levels driven by improved demand and margin expansion potential; WW mentioned positively in Barron’s saying they can benefit as Americans ready to shed pandemic pounds after the pandemic; CHEF named as a compelling reopening play at Lakestreet as consumers return to restaurants and chefs restock their kitchens with the high quality ingredients needed

·     Casinos, Gaming, Lodging & Leisure sector; cruise lines (CCL, RCL) rise early after NCLH said today it would require mandatory vaccinations for guests and crew when it restarts trips from U.S. ports starting July; in gaming, CZR and MGM both upgraded at Morgan Stanley saying channel checks suggest the Vegas (~50% of mix) recovery is occurring faster and stronger than expected and expect MGM’s Vegas EBITDA to outperform cons by 21%/8% in 2021/22, and expect CZR to achieve >$900m of targeted synergies and grow top line faster than peers as casino markets recover; movie theatre names rally as IMAX posted its biggest domestic opening weekend in more than a year as "Godzilla vs. Kong" earned $4.5 million on 284 screens; AMC was upgraded to Buy and tgt raised to $13 at FBR Riley as remain impressed with management’s ability to weather the pandemic headwinds



·     Energy stock movers; sector one of the few weak spots for broader markets as oil prices pulling back (OXY, MRO, EOG down); shares of oil companies slip, tracking a fall in crude prices as rising supply from OPEC+ and higher Iranian output countered signs of a strong economic rebound in the U.S. and expectations of a wider demand recovery in 2021.

·     In stock news; PXD will acquire privately held DoublePoint Energy for approximately $6.4B, including about 27M shares of PXD, $1B cash, and assumption of $900MM debt; SON closed on selling its Display and Packaging business in the U.S. to Hood Container Corporation for $80M in cash; Tudor Pickering upgraded VLO to Buy; SWS started MGY at a Buy with a $14 target; Seaport reinstated coverage on PDCE with a Buy rating and $45 target; Goldman sees robust supply growth potential from the Permian and Haynesville and prefer TRGP for exposure to these regions, are concerned on Appalachia producers and have a Buy rating on EQT and Neutral on COG for regional producers, and they also see favorable NGL near-term pricing and have Buy ratings on SWN, OVV in upstream and prefer TRGP, EPD in midstream for NGL exposure

·     Utilities & Solar; SRE announces agreement to sell a 20% stake in its Sempra Infrastructure Partners to KKR for $3.37B; Goldman is positive on SRE and LNG to reflect the ramp-up in EBITDA from strong US LNG export growth over the next few years and have Buy ratings on NEP, NOVA, RUN for exposure to the shift to renewables



·     Bank movers; Goldman added SCHW to its Conviction Buy list and raised its price target to $77 from $67; Piper raised its estimates on PACW and its pt to $50 from $48 to reflect its pending acquisition of MUFG’s HOA Services Division; NWBI agreed to sell its insurance business to USI Insurance Services; CATY approved a $75M share buyback program; Raymond James upgraded TBK to Strong Buy with a $111 target from Outperform and $78 target following Friday’s acquisition of Hubtran, which they call game-changing as it enables the company to pursue an open-loop payments network from a closed-loop network, which they say will accelerate sales cycle for the trucking industry as it adds freight brokers to its payment network; Wolfe upgraded SCHW to Outperform with an $87 price target and downgraded C (Citigroup) to Peer-perform with a $76 target

·     Insurance; JPMorgan said their outlook on life insurance stocks is less upbeat after the group’s recent strong performance and expectation that long-term fundamentals will remain lackluster, but they are OW on GL given its superior long-term return profile and upbeat outlook for business trends and LNC as the top pick for investors seeking exposure to rising interest rates given its steady organic growth, strong free cash flow, accelerating share buybacks, and overly depressed valuation, and MET, and they downgraded ATH to Neutral as the discount to APO’s bid price is not attractive enough to remain OW on the stock; Piper initiated FNHC at OW with a $7 target after the company has diversified away from its previous concentration in Florida; Ray Jay reiterated HIG at Outperform and raised its target to $75 from $65 to reflect the improved stock performance of insurance stocks, the better fundamental outlook associated with the hard commercial lines pricing market and the anticipated reopening of the economy

·     Payments, Consumer Finance; Wells still sees room to run for consumer finance stocks from reopening and raised its target on AXP to $165 from $150 as it screens as the most attractive name among the group as travel and entertainment spending metrics are entering the hockey stick phase of the recovery; MSTR said it purchased about 253 bitcoins for $15.0m in cash; MARA Produced 196 new minted bitcoins in the first quarter of 2021, increasing total bitcoin holdings to 5,134.2 with a fair market value of approximately $301.9 million as of March 31, 2021



·     Pharma movers; ACAD shares tumble after it announced this am that it received a Complete Response Letter (CRL) from the FDA for its sNDA of Nuplazid for the treatment of hallucinations and delusions associated with dementia-related psychosis (DRP); VIR said new preclinical research showed its antibody therapy, VIR-7831, maintained neutralizing activity against the California variant of coronavirus; ABBV announced Friday afternoon that the PDUFA for its sNDA for upadacitinib in the treatment of adults and adolescents with moderate to severe atopic dermatitis was extended three months to early 3Q21

·     Biotech movers; NVTA rises after the WSJ reported SoftBank Group Corp plans to lead an investment of nearly $1.2 billion into the genetic-testing provider in the form of convertible debt; PASG announces that the European Commission has granted Orphan designation for PBKR03, an adeno-associated virus (AAV)-delivery gene therapy for the treatment of Krabbe disease; QURE announced the completion of patient enrollment in the first dose cohort of a randomized, double-blinded, Phase I/II clinical trial of AMT-130 for the treatment of early stage Huntington’s disease; XLRN announces clinical trial updates, preclinical presentations on sotatercept in pulmonary arterial hypertension

·     MedTech and Equipment; NNOX rises in reaction to the announcement that its single-source Nanox.ARC digital x-ray technology has received 510(k) clearance from the FDA, on April 2, 2021; EW was upgraded to Outperform at Evercore/ISI


Industrials & Materials

·     Industrials, Metals and Materials; VALE rises after saying it will repurchase up to 270 mln ordinary shares and American Depository Receipts, representing about 5.3% of its total shares; overall metals and industrial stocks extending gains after last week proposed infrastructure bill revealed by the White House; GOLD rises as Papua New Guinea Prime Minister James Marape announced an imminent agreement to reopen the disputed Porgera gold mine a year after it was shut (note Barrick Gold also positive mention in Barron’s this weekend); CENX shares fell after announces private offerings of $250 mln 7-yr notes and $75 mln 7-yr convertible bonds

·     Transports; JBLU upgraded to outperform from market perform at Raymond James citing improving trends in JBLU’s core markets, including the recovery in international travel, as well as the potential for normalized margin expansion; SABR says gross air bookings were down about 70% and net air bookings were down about 68% in March 2021 versus march 2019; for airlines, (LUV, DAL, AAL) the TSA checkpoint data continues to show gradual improvement; ’21/’19 7-day avg now in the -30’s% vs -50’% early March

·     Aerospace & Defense; Japan Airlines Co. has retired its fleet of Boeing (BA) 777s with Pratt & Whitney engines a year ahead of schedule after problems including a Feb. 20 incident in which a United Airlines Boeing 777 strewed engine debris across a Denver neighborhood. The Japanese airline had originally planned to retire its last remaining seven 777s with those engines by the end of March 2022; KTOS wins $86 million, assuming all options exercised, single award U.S. army contract for drone command and control systems; LDOS was upgraded to buy at Goldman Sachs citing the fastest organic growth in its coverage universe over the next two years, helped by strong bookings, while downgraded SAIC to neutral saying growth has improved at a much slower pace than expected


Technology, Media & Telecom

·     Internet; large cap mega tech outperforms (AAPL, AMZN, GOOGL, FB); FB outperforms, surging after Barron’s said the stock is trailing Silicon Valley rivals, and it trades essentially in line with the broad market…but it won’t remain this cheap for long, especially with investors rotating out of expensive tech stocks with questionable business models; the U.S. supreme court rules in favor of GOOGL in major copyright dispute with ORCL over software in android devices; phone numbers and other account details for about 533 million FB users have been posted on the dark web recently, reported a cyber-threat intelligence firm and several news outlets; IZEA jumped after saying bookings reach 130% growth in Q1 to hit all-time record

·     Semiconductors; Philly semiconductor index (SOX) hitting new record highs today (intraday highs above 3,300) topping its prior record high 3,269 as tech outperforms; Worldwide sales of semiconductor rose 14.7% YoY, but declined 1.0% M/M to $39.6B in February, reported by Semiconductor Industry Association (SIA). Regionally, Y/Y sales increased across all markets: China +18.9%, Asia Pacific/All Other +18.2%, the Americas +9.7%, Japan +7.6%, Europe +6.8%

·     Software movers; PLTR selected by the national nuclear security administration for 5-year, $89.9m contract for safer project; Monness, Crespi, Hardt & Co. upgrades SAIL from Neutral to Buy with a $64 price target calling it a well-positioned within a rising priority segment; TRMB shares outperform – Cathie Wood’s ARK Innovation (ARKK) initiated a position with a purchase of 453,214 shares last Thursday – extending gains; SAP spikes after CNBC reported GOOGL to stop using ORCL finance software and adopt SAP instead

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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.