Market Review: March 31, 2021

Closing Recap

Wednesday, March 31, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

The S&P 500 neared the $4,000 level as it hit a new record high of $3,994.41, the 5th time it set a new all-time high in March and its 19th new intraday record in 2021 so far. The index capped March off with a rise over 4%, its best monthly return since November. The Nasdaq entered the final day of March threatening to end a month negative for the first time since October, but today’s rally in tech stocks pushed the index to close the month in positive territory and record a quarterly gain over 3%. Tech’s outperformance underscored traders rotating into growth names with value stocks spending much of the day in the red despite markets being green across the board. The Dow underperformed the other indices today with its price barely budging, but it did not lose its status as the top index of 2021 as March’s 7% gain brought its YTD gain to almost 8%, both of which exceed the returns from the S&P and Nasdaq. Markets lost some upward momentum in the afternoon after French president Macron announced a nationwide 4-week lockdown starting Saturday, extending current regional lockdowns and moving schools to remote learning.

Joe Biden is scheduled to unveil his $2.25T infrastructure and jobs plan today at a 4:20 PM press conference in Pittsburgh. The plan faces political obstacles with Senate Minority Leader Mitch McConnell saying that he is unlikely to support it due to the tax increases that are a part of the plan, which includes hiking the corporate tax rate to 28% from the current 21%. Solar, EV, and hydrogen stocks were among sectors that rose in anticipation of the bill’s clean energy initiatives and investments to address climate change.

In retail earnings, LULU slides despite strong Q4 results after its FY21 guidance disappointed, PVH jumps on the open despite its rev miss, WBA and CHWY soar on beat-and-raise quarters; CLF tops $20/share for the first time since April 2014 after guiding Q1, FY21 adj EBITDA above consensus; X STLD also touch 52-week highs in steel, while NUE, STLD approach theirs in the morning before turning red; EV stocks rally after Wedbush forecasts TSLA beating on Q1 deliveries and calls the recent pullback a massive buying opportunity for Chinese names (LI, XPEV, NIO), and CHPT, BLNK also reverse recent declines on reports that the Biden administration will push for a national charging system in infrastructure plan; Cannabis another sector that outperformed after NY Gov Cuomo signed legislation that legalized adult-use, boosting TLRY, CGC, APHA, GTBIF, CURLF, CRLBF, etc; SQ rises on KBW upgrade, other names tied to Bitcoin (PYPL, RIOT, MARA, MSTR) also gain as BTC Bitcoin approaches the $60K level after Goldman is reportedly close to offering digital assets to wealth management clients

Economic Data

ADP Employment Change for March actual 517k, below forecast of 550k and vs. previous 117k; the ADP February payroll change revised to +176,000 from +117,000

Chicago PMI another strong report, reported at 66.3, topping the 61.0 estimate and above prior month of 59.5 – another positive economic data point (recall yesterday massive consumer confidence beat)

U.S. Pending Home Sales MoM fell -10.6%, worse than the forecast decline of -3.0%, and compared to previous decline -2.8%


Commodities, Currencies & Treasuries

The 10-year yield fell as low as 1.71% early in the afternoon before bouncing back above 1.74%. April gold climbed $29.90, or 1.8%, to settle at $1,713.80/oz, though this quarter saw Gold experience its worst performance since 4Q2016. The Dollar Index closed a strong month of March with a small decline off yesterday’s levels. WTI crude oil futures settle at $59.16/bbl, down $1.39, or 2.30%, ahead of tomorrow’s OPEC+ decision that most traders expect to maintain production cuts.






WTI Crude















10-Year Note





Sector News Breakdown


Retailers; CHWY reported Q4 revenue $2.04B vs. est. $1.96B as Q4 gross margin 27.1% rose 300 bps YoY and their customer base increased 43% YoY and FY21 was their first full year of positive adjusted EBITDA, and they see Q1 net sales $2.11B-$2.13B (est. $2.05B), Q2 adj EBITDA $60.8M (+$66.8M YoY), 2022 net sales $8.85B-$8.95B (est. $8.85B); LULU posted Q4 adj EPS $2.58 vs. est. $2.49 on revs $1.73B vs. est. $1.66B, total comp sales +21% and digital comps +92%, and guided Q1 EPS 81c-85c on revs $1.1B-$1.3B vs. est. 82c and $999.5M; PVH Q4 EPS loss (81c) was narrower than est. loss (84c) on revs $2.09B vs. est. $2.12B, and they expect 2021 revenue and earnings to continue to be impacted negatively by pandemic, particularly in Q1, though also expect its international businesses to exceed 2019 pre-pandemic revenue levels in first half of year; ODP rises after Staples said it will evaluate all alternatives in its pursuit of the office supplies company, which may include ODP’s retail and consumer facing business; CONN Q4 non-GAAP EPS 91c vs. est. 23c on revenue $367.79M vs. est. $328.69M; Bank of America said they are buyers of FTCH on the stock’s weakness and maintained their $75 target as they still like the long-term story and growing market share given the company’s position in China, the shift to e-concession, specifically in online luxury beauty

Consumer Staples; USFD tgt raised to $45 from $39 and PFGC to $66 from $58 at BTIG and overall positive view on food distributors as industry conditions continue to improve and a timeframe for returning to normalcy has solidified; KMB said it is notifying customers in the U.S. and Canada of plans to increase net selling prices across a majority of its north America consumer products business; BYND shares active after Oppenheimer said the company is starting to feel competitive pricing pressure as it notes that Impossible Foods’ burger offering priced at $6.39 vs. $6.99 for Beyond Meat at one store check

Casinos, Gaming, Lodging & Leisure sector; HOG upgraded to Outperform at Baird for the first time since 2016 as like the strategic direction led by a proven leader and expect investors to get behind the change narrative embedded in The Hardwire (2021-2025 plan)



OPEC oil output has risen in March as higher supply from Iran countered reductions by other members under a pact with allies, a Reuters survey found, a headwind for its supply-limiting efforts if Tehran’s boost is sustained. The 13-member Organization of the Petroleum Exporting Countries pumped 25.07 million barrels per day (bpd) in March, the survey found, up 180,000 bpd from February. OPEC+ meets on Thursday and delegates expect most cuts will be kept

Energy stock movers; COP said it expects Q1 output and prices to be higher than the previous quarter, as the oil industry recovers from one of its worst ever downturns last year when the COVID-19 pandemic hampered demand – sees production of 1.47Mm barrels of oil equivalent per day (Boepd) to 1.49Mm, which included an about 50,000 Boepd hit from the cold storm that swept Texas (also reaffirms full-year $5.5B capex); HES upgraded to Buy at Mizuho and raised tgt to $94 as believe sustaining capital requirements, excluding exploration and non-producing project spending, are lower for E&Ps with an offshore presence than capital budgets imply

In research; Morgan Stanley downgraded BP to UW as their transition towards renewables is abandoning oil and gas production more than other majors, creating uncertainty which drives the bearish thesis along with the company’s indication that its dividend will not grow in the near-term, TOT to Equal-Weight from OW, and double-upgraded E (Eni) to OW from UW after recent reports that the company is separating its Retail and Renewables segment as a separate legal entity and is considering an IPO, which should unlock value along with its attractive dividend yield; RBC initiated OAS at Sector Perform with a $75 target

Utilities, Solar, Clean Energy; JPMorgan initiated Neutral ratings on BEP ($43 pt) and BEPC ($49 pt) as they believe the company is offers best-in-class development and ownership of renewable projects, but are Neutral given near-term headwinds from rising interest rates, saying they would wait until rates stabilize or the company proves it can execute in a reflationary environment; Wells sees opportunity in offshore wind given declining costs and the U.S.’s aggressive clean energy goals, highlighted by the Biden administration’s wind action plan released on Monday, and list AGR, BEPC, ES, PEG, D, DUK, BP, RDS.B, NOV, FTI as potential players; Hedgeye added PLUG to its Best Ideas Short List



Bank movers; Piper raised their price target on LOB to $70 from $45, which assumes shares trade at approximately 520% of book value from 340% due to peer multiple expansion and potential upside from its fintech investments; heading into earnings for large cap banks (JPM, WFC on 4/14), UBS says share reactions will be driven by results reinforcing the positive narrative of economic strength and positive earnings revisions on higher rates, and they continue to be selective on the sector and list C (Citigroup), RF as key Buy-rated stocks; Raymond James said Q4’s record BDC market activity pushed BDC debt portfolios to younger loans, which they say could have positive yield implications for BBDC, ORCC; BAM was downgraded to Neutral at Credit Suisse who does not see near-term outperformance, though they see a stronger 2H21 into 2022; Stephens initiated FCF at OW with a $16.50 price target

Insurance; Piper downgraded CNO to Neutral as they see challenging EPS growth given claims utilization from the pandemic should recede and fewer shares should be included in buybacks given the higher share price, both of which drove the stock’s outperformance in 2020; Citi upgraded BHF to Neutral from Sell on a more balanced risk/reward profile given their revised price target of $46 vs. $35

Payments and FinTech; SQ was upgraded to Outperform at KBW as there is now about 17% upside to their $250 price target and they believe the company is a long-term winner within the underserved market with its Seller and Cash App and incremental investments/initiatives such as Tidal, Credit Karma Tax division, and Square Financial Services that can help increase engagement and drive incremental growth; Bernstein said they see a compelling bull case for Visa (V) as disruption, regulation/litigation/DOJ and sustained COVID-19 impact (e.g., on cross-border) fears are overblown; Argus raised their target on Buy-rated ADS to $130 from $95 as they see the company benefitting from improving travel and retail conditions as the pandemic diminishes, as well as their recent acquisition of Lon to provide consumers with a BNPL option

Bitcoin news; MARA said it will be launching the first Bitcoin mining pool based in North America that is fully compliant with U.S. regulations, including anti-money laundering and the Office of Foreign Asset Control’s standards; CNBC reported that GS is close to offering bitcoin and other digital assets to its wealth management clients

REITs; SKT raises $130.6M through the sale of 6.9M shares of its common stock at $19.02 apiece through its at-the-market equity offering program and uses the proceeds to pay off some debt; RBC initiated residential REITs AMH, INVH, CPT, ESS at Outperform and EQR, AVB, ELS, MAA, UDR at Sector Perform, viewing single-family homes (AMH, INVH) as the most attractive sub-sector of the group, then prefer manufactured homes (preferring SUI over ELS within the group), then apartments; Truist raised their price targets for REG to $57 from $50, SITC to $13 from $11 and EPR to $43 from $28; Wells raised their pt on NSA to $45 from $39; UDR announced a public offering of 7M shares to generate proceeds of approximately $306M



Cannabis stocks active (ACB, CGC, CRON, APHA, TLRY, CURLF, CRLBF) after Gov Cuomo signed a bill that the New York State Senate and Assembly approved Tuesday evening that would legalize marijuana for recreational use; the Senate vote was 40-23 and the Assembly vote was 100-49; GTBIF said it is demanding an immediate retraction by the Chicago Tribune of an article alleging the marijuana cultivator and dispenser is under federal investigation for possible pay-to-play violations in its efforts to secure state licenses.

Pharma movers; PFE and BNTX said a Phase 3 trial of its COVID-19 vaccine in adolescents aged 12 to 15 years old showed 100% efficacy and robust antibody responses, an even better result that seen in an earlier study of participants aged 16 to 25 years old; DCTH announces positive Hepzato data in metastatic ocular melanoma; AFMD and NKMax America announce that the FDA has cleared an investigational new drug application for Phase 1/2a dose escalation and expansion study investigating the combination of AFM24 and SNK-01 in patients suffering from tumors known to express EGFR; CRL buys Retrogenix for $48M in cash; ACHL 9.75M share IPO priced at $18.00; PRQR 13.85M share Spot Secondary priced at $6.50; BHC said it would sell all its stake in Egypt’s Amoun Pharmaceutical Co SAE to ADQ for about $740 million

Biotech movers; SURF said the U.S. FDA has granted Orphan Drug Designation for one of the company’s lead therapeutic candidates, SRF617, for the treatment of patients with pancreatic cancer; HGEN 5M share Secondary priced at $18.50; AMGN to Buy Privately Held Rodeo Therapeutics which includes $55M upfront payment as well as future contingent milestone payments potentially worth up to an additional $666 million in cash

Healthcare services and providers; Dow component and pharmacy retailing giant WBA reported F2Q results with revenues of $32.8B (now excluding $4.8B in sales associated with the Alliance Healthcare sale) and EPS of $1.40 including disc ops as adjusted operating income was in-line with consensus and the co raised its guidance to mid-to-high single digit adjusted EPS growth (vs. LSD growth prior) – much improved report from peer RAD last week

MedTech and Equipment; ILMN was upgraded to Buy with $445 tgt at Canaccord saying trades at a 35% discount to our precision medicine technology enabler peer group (including diagnostics leader TMO), which we believe is fair, given that its+17-20% FY’21 revenue growth guidance is likely below the average revenue growth of the higher growth companies in the peer group (QTRX, NSTG, TXG, PACB) – follows pullback in shares Tuesday after the FTC filed to block the GRAIL acquisition; Bernstein positive on ISRG saying they believe its new pricing strategy could drive growth meaningfully above consensus over the next 2-5 years.


Industrials & Materials

Industrial & Machinery; CARR upgraded to Outperform at RBC Capital and recommends swapping out of high-beta JCI (which was downgraded) into higher quality CARR as believe now is the right time in the cycle to own this HVAC leader given its attractive positioning on the quality curve according to our Investment Framework; RMO rebooted revenue guidance to ~$18M-$40M down from a pre-merger estimate of $140M as BTIG lowers tgt to $30 after company noted global demand for battery cells has sharply outpaced supply which is driving a cell shortage and is the driver of the roughly ~80% (at the mid-point) cut to their 2021 revenue target; ETN tgt raised to $158 at Citi and raise ests to reflect stronger Electrical segment volumes and margins, partially offset by a modest reduction to our near-term Vehicle forecast

Transports; Dow Transports setting new all-time highs yesterday (though some weakness today), led by rebound in airlines, as well as massive surge for rails (many touching all-time highs) and car rental with CAR hitting record highs on rising hopes of further economic recovery; in shipping, INSW will buy DSSI for ~$416 mln, as it aims to expand crude shipping capacity and create one of the largest U.S.-listed tanker companies as DSSI shareholders will receive $10.17/share, or 0.55375 shares, of INSW stock; DAL said it will start selling middle seats May 1; Wedbush said the recent pullback in EV stocks is a short-term bump in the midst of a multi-year rally that provides investors an opportunity to own Chinese EV stocks and TSLA, who they say should report Q1 deliveries above the Street’s 170k consensus, which would restore some positive momentum to the sector

Aerospace & Defense; ALK confirmed it will buy an additional 23 Boeing (BA) 737 MAX 9 jets for delivery in 2023-24, with further options to purchase 15 aircraft with deliveries as late as 2026 in an order worth $2.96B at list prices; CUB board accepts revised acquisition proposal from veritas capital and evergreen coast capital at $75.00 per share in all cash deal valued at $3.0B

Metals & Mining; CLF shares rise after guides Q1, full-year adjusted EBITDA above estimates as sees Q1 adjusted EBITDA of ~$500M, well ahead of analyst consensus estimate $388M, Q2 adjusted EBITDA of $1.2B, above consensus $1.03B; steel stocks remained active (rising the last few days) on high hopes of infrastructure bill from White House

Technology, Media & Telecom

Internet; FB ad prices signal digital ad rebound is far from over according to a report in theinformation, noting with consumers glued to phones and laptops, the year of pandemic shut-ins ended up being great for the biggest digital advertising businesses—particularly for FB, AMZN and even some smaller platforms such as SNAP and PINS – says these internet companies won’t give up that edge this year; JD said it sold it had JD Cloud and its artificial intelligence business to its fintech unit for a combined valuation of 15.7 bln yuan ($2.40 bln)

Semiconductors; Bernstein initiates semi-equipment stocks LRCX ($700 TP) and AMAT ($160 TP) both at Outperform with overall positive long-term structural stance

Software movers; VEEV upgraded to neutral from sell at UBS and up tgt to $250 from $245 saying Vault subscription growth has in fact accelerated, our recent field checks remain constructive and post the sector-wide sell-off, and shares now trade at a more reasonable multiple; ORCL launches free program to help customers migrate to Oracle Cloud; COUR (Coursera) opens trading at $39/share vs its IPO price of $33, and rises above $45 in its debut; MSFT won a 5-year, $21.9B contract with the Pentagon to build custom AR headsets, sending shares of VUZI, IVAC, MVIS spiking in sympathy

Hardware & Component news; AAPL upgraded to Buy from Neutral at UBS with $142 tgt from $115 to reflect a more stable long-term iPhone demand backdrop with better ASPs and to capture the "real" option value of Apple’s likely entry into the auto market that we believe is not reflected in Apple shares; BB Q4 adj revenue of $215M missed the $245.11M estimate while also announces potential sale of part of patent portfolio

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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.