Market Review: January 26, 2021

Closing Recap

Tuesday, January 26, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     U.S. stocks were down slightly after major indexes hit records Monday as investors readied for a slew of blue-chip earnings this week. The S&P 500 touched a fresh intraday record high of 3,870 before slipping, while major averages overall ended little changed, but momentum stocks with high short interest saw the biggest activity again in what continues to a focus on Wall Street. Earnings lifted industrial stocks as GE beat on Q4 revs and FCF, while MMM and RTX also posted strong results. Dow components VZ, AXP slipped on their earnings and JNJ recorded stronger sales in its latest quarter, as revenue gains from its pharmaceutical division boosted its top-line results. The results come ahead of earnings tonight from MSFT, AMD, SBUX, MXIM, etc. But the biggest story on Wall Street over the last week has been the astronomical surge in highly concentrated “short” positions as the impact of social media has boosted interest in several names that have went parabolic. Treasury yields were little changed most of the day, along with little activity in the dollar or commodities ahead of tomorrow’s FOMC meeting and a busy week of earnings. Consumer confidence increased to 89.3 in January from 87.1 in December.

·     The market debate lately remains around several speculative bubbles with the short index up 30% YTD (as per Opco), Bitcoin mania, record breaking call volume and record low put/call ratio, valuation extremes, SPAC, and IPO frenzy and the latest, the manic price action in names like GME to name a few – all a center of focus. The ongoing “run” on shorts has boosted names (daily) led by shares of GME, IRBT, FIZZ, DDS, SPCE, BBBY, LGND, MAC, SKT, SPWR, AMC, FUBO, GSX among the names surging on Wall Street – all high short interest

·     Stocks in Europe got a boost while shares in Asia declined. Defensive staples outperformed today, with gains in food and grocers. In other news today, Verizon said a fiber cut in Brooklyn, N.Y. caused an outage of its service, with users of several applications reporting problems accessing services. The lapse affected customers around New York, Philadelphia and Washington, D.C. In Washington, Democratic lawmakers introduced legislation to raise the federal minimum wage to $15 per hour by 2025.

Economic Data

·     Consumer Confidence index rose to 89.3 (consensus 89.0) vs December revised 87.1 (previous 88.6); the present situation index 84.4 in Jan vs. Dec revised 87.2 (previous 90.3) and the expectations index 92.5 in Jan vs. Dec revised 87.0 (previous 87.5)

·     Richmond Federal Reserve Manufacturing Survey for January rose +14 vs. +19 prior; shipments +10 vs. +12 prior, capacity utilization +4 vs. +15 prior and new orders +12 vs. +24 prior

·     U.S. home-price growth continued to accelerate toward the end of 2020, data out showed. In the year to November, the S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas, rose 9.5%



·     Oil prices relatively quiet on the day ahead of inventory data tonight and tomorrow, as WTI crude fell -16c to $52.61 and Brent was little changed up 3c to $55.91 per barrel and natural gas prices edged up 1.5% to $2.636 mln btu as weather forecasts get colder. Gold prices slipped -$4.30 or 0.2% to settle at $1,850.90 an ounce, falling for a 4th straight session, its longest strong of declines in 8-months.


Currencies & Treasuries

·     U.S. Treasury yields were little changed most of the day, holding around the 1.04% level for the 10-year, but down from 1-year highs of 1.18% just two weeks ago as investors have rotated back into defensive and safe-haven assets, cautious in the near term about the size of a proposed U.S. stimulus package as well as the slow global roll-out of coronavirus vaccines. The 30-year yield slid to 1.7955%, after earlier dropping to a three-week low of 1.786%. The U.S. Treasury sold a record $61 billion in 5-year notes after a solid 2-year debt sale on Monday at a yield of 0.424% vs. the W/I yield of 0.426% before the auction with a bid-to-cover (demand) at 2.34. The U.S. dollar edged lower, down about -0.5%, falling vs. the euro and Pound.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; EXPR mentioned cautiously by Wedbush after rocketing 150% in the last two trading days on the heels of retails wider squeeze-play with most-shorted stocks up +14% versus least-shorted stocks +4% in the RUA index so far in 2021; BOOT Q3 results were strong, surpassing initial top and bottom line expectations; UAA upgraded to outperform and tgt raised to $23 at Cowen saying estimates are conservative through FY23 given improving top-line trajectory, gross margin expansion on SKU rationalization, DTC mix shift and Asia expansion; DG upgraded to a Buy at Loop Capital and tgt raised to $260 from $220 as believe the co has several strategic initiatives that will drive improved financial performance in F2021 and beyond; BBBY was downgraded at both UBS (to Sell) and Raymond James (to MP) with shares up 73% YTD and move has tilted the risk-reward to the downside; OSTK rises after saying it will convert its wholly owned block chain-focused subsidiary, Medici Ventures Inc., to a limited partnership

·     Auto sector; in auto parts, ALV posted a larger Q4 profit and sees 2021 sales growth or around 25% and organic sales around 20%; VLDR in multi-year sales agreement to provide puck lite sensors to Emesent; LAZR downgrade from Outperform to Market Perform with $38 pt at Northland as continue to believe that Luminar will be a leader in the lidar market, but there are now 5 lidar companies that are public or in the process of going public via a SPAC; PRTS rises after the company announced earlier that it had launched a new dedicated shopping hub for the hybrid, plug-in hybrid, and electric vehicle community this week; electric vehicle names active with strong gains early for NKLA, BLNK, RIDE, WKHS on speculative buying over potential legislation this year under the Biden Administration after he reiterated his plan to replace all federal vehicle fleets with electric vehicles

·     Housing & Building Products; in homebuilders, DHI Q1 results beat and its full-year revenue guidance at least meets the consensus estimate saying with the housing marketing continuing to stay strong expects it fiscal 2021 revenue of $25.2B to $25.8B vs. est. of $25.2B; in roofing, BECN upgrade from Neutral to Buy at Longbow based on the expectation of robust residential roofing fundamentals through at least 1H21

·     Consumer Staples; BYND (shares surge)and PEP said they would form a joint venture to develop and sell snacks and beverages made from plant-based protein; KMB downgraded to Hold from Buy at Argus as the co continues to face challenges from weakness in the K-C Professional segment and unfavorable currency translation; IFF guides Q4 revenues of ~$1.27B vs. a consensus of $1.25B and posted operating profit for the Q4 is expected to be ~$100M, and Adjusted operating profit excluding amortization to be ~$203M; BRBR upgraded to buy and tgt to $35 from $20 at Truist calling it one of the few packaged food companies that has momentum coming out of 2020 AND favorable YoY comparisons for the 1H21; CL upgraded to hold from sell at Berenberg; food related stocks and grocers (KR) saw big gains

·     Leisure and Gaming; DKNG upgraded to Buy with $65 tgt at Goldman Sachs as expect ongoing sales beats versus consensus driven by 1) sustained market leading position in new and existing markets, 2) ability to participate in the economics of single operator states, and 3) presence of national partnerships; CZR announced a strategic investment in the daily fantasy sports platform Superdraft; PII Q4 revs and EPS both beat and FY guide above all estimates on both Revs and EPS in the RV leisure space; in prison names (CXW, GEO) shares fell after U.S. President Joe Biden plans to take executive actions to scale back the government’s use of private prisons, aides say (follows through with commentary during campaign against private prisons)



·     Energy stock movers; Goldman downgraded DK to Sell with a $16 pt from Neutral to on valuation after outperforming peers in the past three months (+89% vs the Refining S&P 1500 +47%), expectations that Brent-WTI and Brent-Midland differentials will remain unfavorable going forward, and a attractive risk/reward to MPC; UBS initiated US independent refiners with a Neutral view on the sector and PSX at Buy and MPC, VLO at Neutral within the group; Raymond James upgraded APA, FANG to Strong Buy from Outperform and AR to Outperform from Market Perform ahead of Q4 earnings; NOG was initiated by RBC at Outperform with a $14 pt; Credit Suisse lifted its estimates on SLB and upped its pt to $25 from $21.50 after the company’s Q4 earnings reports and more bullish 2H21 international outlook, though they remain Neutral on the stock given limited upside to its price target; ET shares active after a U.S. appeals court upholds lower court decision telling U.S. army corps of engineers to prepare new environmental statement on Dakota access pipeline

·     Utilities & Solar; Dominion (D) was upgraded to Overweight from Equal Weight at Wells who sees the current valuation already discounting heightened regulatory risk and the company as well-positioned relative to the secular trend toward clean energy; EIX announced it will pay $2.2 billion to settle insurance claims and cover all claims in pending lawsuits from the 2018 Woolsey fire in Los Angeles and Ventura counties which was sparked by its equipment, though the company acknowledged no wrongdoing; DQ forecasts Q4 production volume to be in range of 20,500 metric tons (MT) to 21,000 metric tons and expects Q4 sales volume between 23,000 MT and 23,200 MT; PLUG raised its FY21 gross billings guidance to $475M from $450M and its FY24 guidance to $1.7B from $1.2B; NEE reported Q4 adj EPS 40c on revs $4.39B vs. estimated 38c and $5.71B, and they see FY21 adj EPS $2.40-$2.54 and expect adj EPS to grow 6-8% in 2022 and 2023; NEP Q4 EPS 85c topped estimated 71c, though revs $212M missed est. $352.5M



·     Bank movers; UBS rises after announcing a new three-year CHF 4B ($4.5B) share repurchase program and said it expects Q1 revenue to be helped by seasonal factors such as higher client activity compared with Q4 2020; Raymond James raised ests on BSRR and raised its price target to $26 after their earnings report; Truist upgraded ACBI to Buy with a $24 pt on their forecast of faster loan and revenue growth versus peers; Piper upgraded FVCB to OW after its earnings report included a lower loan loss provision than expected; JPMorgan downgraded TCBI to UW on valuation and headwinds in ROTE and PTPP income growth; Credit Suisse raised their price target on SBNY to $180 from $120 after its Q4 EPS and revs were well ahead of consensus; HTLF Q4 EPS $0.98 missed est. $1.02 and they announced a dividend increase of 10% to 22c, NII margin 3.51%;

·     Asset managers; APO announced CEO Leon Black will retire by July 31 and be replaced by current Chairman Marc Rowan; IVZ Q4 long-term net inflows of $9.8B, with inflows into fixed income products remaining strong at $8.2B

·     Consumer Finance; AXP 4Q EPS $1.76 vs. est. $1.31, revs net of int exp $9.35B vs. est. $9.34B, says trends continued to steadily improve in 4Q, non-travel & entertainment spend exceeded pre-Covid levels for second consecutive qtr, but profit down from last year; NCR tgt raised to $50 from $45 and CATM downgraded at Wells Fargo as firm says they are constructive on NCR’s $1.8B ($39/share) acquisition of CATM



·     Pharma movers; JNJ 4Q adj EPS $1.86 vs. est. $1.82 on sales $22.5B vs. est. $21.7B; guides FY21 adj sales +8.8% and adj EPS +16.4% vs. est. +8.8% and +12.4%, respectively; JNJ CFO on CNBC noting plans to report vaccine data by early next week, with the 45K participant trial potentially including data on new strains; MYOV and PFE reported positive results from a Phase 3 long-term extension study of the investigational once-daily relugolix combination; AZRX says two additional clinical trial sites in Poland have been activated for the extension arm of its mid-stage study, intended to identify the optimal dose and delivery method of its lead oral drug candidate, MS1819; TLRY to supply medical cannabis products in France for experiment; MGTX said the FDA granted Fast Track designation to its gene therapy product candidate for the treatment of

·     Biotech movers; REGN announced positive initial results from an ongoing Phase 3 clinical trial evaluating REGEN-COV(TM) (casirivimab and imdevimab antibody cocktail) used as a passive vaccine for the prevention of COVID-19 in people at high risk of infection; SELB upgraded to Buy and tgt upped to $8 at Mizuho based on our valuation of Selecta’s ImmTOR platform in gene therapy; ALLO upgraded to Buy from Hold and up tgt to $43 from $33 at Stifel on expectations that pretreatment with high-dose ALLO-647 increases the likelihood that ALLO-501 (will persist long enough to drive clinical outcomes that will be competitive with autologous CAR-T; ASLN announces new data on ASLAN003 from study published in the Toxicology in Vitro Journal

·     Healthcare services and providers; TDOC tgt raised to $330 at BTIG while noting shares traded up ~9% on Monday 1/25/21 and are +40% since early January, but view is that the core fundamentals of the business remain strong

·     MedTech and Equipment; ABT received CE Mark for two new uses of its Panbio COVID-19 Ag Rapid Test Device for the detection of the SARS-CoV-2 virus: asymptomatic testing and self-swabbing; STAA will replace PBH in the S&P MidCap 400, and Prestige Consumer Healthcare will replace FBM in the S&P SmallCap 600 effective Friday, January 29; KRMD downgraded to Neutral at Piper and lowering our PT to $4.50 ($9 previously) following the disclosure of soft Q4 results and the departure of its President and CEO; MYO rises as forms joint venture with Beijing Ryzur medical investment co ltd to sell products in China


Industrials & Materials

·     Industrial & Machinery; GE mixed Q4 as adj EPS 8c on revs $21.93B vs. est. 9c and $21.83B but offered an upbeat outlook for its business this year after reporting a surge in quarterly free cash flow and guides FCF $2.5B-$4.5B this year; Dow component MMM Q4 results beat as adjusted EPS $2.38 vs. est. $2.15 and revenue $8.58B vs. est. $8.4B on mixed guidance; PCAR 4Q EPS $1.17 vs. est. $1.22 on revs $5.57B vs. est. $5.14B; CR Q4 backlog trends, FCF help offset top-line softness; ROK mixed Q4 as adj EPS beat ($2.38 vs. $1.88) but sales miss ($1.57B vs. $1.61B)

·     Transports; ALK 4Q adj EPS ($2.55) vs. est. ($2.87) on operating revs $808Mm vs. est. $824.8Mm, qtrly load factor 45.3%, CASM ex fuel 11.35c – guides 1Q total revs -60-65% vs. est. -45%, sees January cash burn about $125-150Mm; TFII tgt raised by several analysts (JPM, Cowen, Stifel) after co announced its plan to acquire UPS Freight for $800MM in cash

·     Aerospace & Defense; HXL topline results came in just below consensus estimates of $297M, while the company’s Adj. loss per share in-line with consensus, while operating margins were (6%) in the Composites segment and positive 8.6% in engineered products; RTX posted Q4 adj EPS 74c on sales $16.4B, topping estimates (70c on $16.24B), and they see FY21 adj EPS $3.40-3.70 on sales $63.4-65.4B; LMT reported Q4 net sales $17.03B (est. $16.95B), cash flow from operations $1.81B (est. $1.76B), backlog $147.13B, and they see FY21 diluted EPS $26-26.30, cash from operation at least $8.3B and net sales $67.1-68.5B; Cowen raised its price targets on AER, ALand FLY and favor them in that order as they see the worst likely being over for aircraft leasing stocks; CACI was awarded a $96M Task Order by the U.S. Army to support medical communications for combat casualty care program

·     Metals & Materials; STLD reported Q4 adj EPS 97c (est. 83c) on rev $2.6B (est. $2.53B) and they expect continued steel price strength in strong customer demand in 2021; FCX Q4 adj EPS 39c on rev $4.5B (estimated 37c, $4.26B); Goldman downgraded TS to Neutral with a $14.50 target as shares now reflect the US onshore recovery and have outperformed its peers (+18% over past 6 months vs +2% for other Euro stocks under coverage

·     Chemicals and Materials; IP named new catalyst call buy at Deutsche Bank on likely containerboard price increase; DD preliminary Q4 adjusted EPS of $0.93-$0.95, above $0.80 analyst consensus estimate, and GAAP EPS from continuing operations of $0.35-$0.37, on $5.25B of net sales and boosted its year PES view (to $3.34-$3.36 from prior $3.17-$3.21); FUL 4Q adj EPS $1.06 vs. est. $0.85 on revs $778Mm vs. est. $734.3Mm, says full year debt paydown of $205Mm surpassed $200Mm target


Technology, Media & Telecom

·     Internet; ETSY shares oddly jumped (as much as 9% pre-market) in reaction to a tweet by @elonmusk stating "I kinda love Etsy"…“bought a hand knit wool Marvin the Martian helm for my dog” (shares slipped throughout the day); FVRR downgraded to Sell at MKM noting shares currently trading at 36x ‘21E Revenue, above historical peak of any other Internet marketplace in recent times. In fact, FVRR’s valuation currently exceeds pandemic winners such as ZM;

·     Semiconductors; AMD earnings expected tonight after the close along with TXN, MXIM in chip space; for WDC, Wedbush expects will report upside to Street est. & believe guidance will exceed prior expectations as CQ4 upside & better CQ1 NAND & PC HDD dynamics filter into the CQ1 outlook; price tgts in chip space raised at Barclay’s (AMAT, ADI, QCOM, NXPI, NVDA, MXIM, MRVL, QRVO, TXN) saying with many names up 15-20% over the last month, many of their estimates and price targets have quickly become outdated; Citing the recent capex increase at foundry giant TSMC and Samsung’s DRAM recovery, D.A. Davidson upgrades semiconductor equipment company AMAT to Buy saying the industry has "never been stronger."

·     Software movers; MSFT earnings after the close will be software catalyst; PLTR shares active ahead of its Demo Day later this afternoon – event will include the first public demos of new developments for the Foundry and Gotham software platforms and the Apollo infrastructure platform; MANH tgt to $136 from $120 at Truist and incrementally more bullish on cloud product traction and believe the cloud WMS product is seeing strong ramp in new business bookings

·     Media & Telecom movers; Dow component VZ reported Q4 results with relatively flat revenue of $34.7B as consumer revs were down 1% to 423.9B, retail postpaid net adds were 357,000 and the churn was 0.96% and Fios net adds totaled 92,000/ends 2020 with strong earnings and cash flow, and increased wireless service revenue growth; IAC disclosed another Vimeo capital raise ($300M in two tranches), which takes valuation for the unit from $2.75B back in early-Nov. to $5.7B ahead of a planned 2Q21 spin-off

·     Hardware & Component news; BB announced an expansion of its strategic partnership with BIDU whose high-definition maps will run on the QNX Neutrino real-time operating system; SSTK agreement to acquire TurboSquid, positioning Shutterstock as the world’s largest 3D marketplace; XRX Q4 EPS 58c (est. 63c), revs touch better; XONE said it has reached a commercial license agreement with the U.S. Department of Energy’s Oak Ridge National Laboratory to 3D print parts in aluminum-infiltrated boron carbide.

@media only screen and (max-width: 500px) {
td p.MsoNormal {
text-indent: 0!important;
margin: 0!important;
div[class*=WordSection]>p {line-height: inherit !important;}div[class*=WordSection] a:not([href]) {color: inherit !important;}


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.