Market Review: September 02, 2021

Closing Recap

Thursday, September 02, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Stock averages finished higher, with the S&P 500 and Nasdaq touching intraday record highs but finished off their best levels as markets were volatile ahead of tomorrows key monthly nonfarm payroll report that could pave the timeline of bonds asset purchase tapering and futures rate hikes from the Fed. Economists are looking for a reading of +750K nonfarm payrolls (vs. +943K in July), +665K private payrolls (vs. +703K in July), and +25K manufacturing payrolls (vs. +27K in July); the unemployment rate expected to drop to 5.2% from 5.4%, while average hourly earnings estimated to rise +0.3% MoM and +4.0% Yoy. In Washington DC, Sen. Joe Manchin is urging his Democratic colleagues to "hit the pause button" on the $3.5 trillion spending bill, citing more urgent priorities like the U.S. withdrawal from Afghanistan and a spike in COVID-19 cases. Oil prices jumped to 1-month highs, pacing energy stocks higher, while the dollar and Treasury yields slipped ahead of the payroll report. Markets have held up remarkably well (Teflon market) as bad new/headlines over the last few weeks including China, Afghanistan, increase in Delta Covid Variant, rising inflation fails to stick, or dent investor optimism.

·     Stock/sector movers: PWR, MTZ, GNRC, AA, CENX industrial/infrastructure/material names outperform following Hurricane Ida impact on Louisiana and damage along the Northeast overnight, including massive flooding; OXY, DVN, MRO, COG, FANG, HES energy names among leaders in the S&P 500 as WTI oil prices post highest close since Aug. 3, supported by a sharp decline in U.S. crude stocks and a weaker dollar (4-week lows); AEO, LE, DLTH, FIVE among retailers falling on earnings/guidance, while BKE, BNED, KIRK, SIG advanced following their results; MA, V, more weakness in card/payment space, following the AMZN/AFRM competition news recently; also an article noting encourages customers to stop using their Visa card; ASAN, NCNO, NTNX, OKTA outperform in tech post earnings overnight, while AI, VEEV, SCWX slide post results; TCBI downgraded by two firms after the bank announced a strategic plan aimed at transforming Texas Capital Bank into a flagship financial services firm in Texas.


Economic Data:

·     Weekly jobless claims fell to 340K vs. est. 345K while the prior week revised to 354K from 353K; the 4-week moving average fell to 355,000 in latest week from 366,750 prior; continued claims fell to 2.748M from 2.908M prior and vs. est. 2.775M; the U.S. insured unemployment rate fell to 2.0% from 2.1% prior

·     U.S. Q2 non-farm productivity revised to +2.1% vs. est. +2.4%; and vs. +2.3% prior; U.S. Q2 non-farm unit labor costs revised to +1.3% vs. est. +0.9% (prior +1.0%)

·     International Trade in Goods and Services for July (-$70.1B) vs. (-$74.1B) consensus and -$73.2B prior (revised from -$75.7B).

·     Factory Orders rose +0.4% in July, slightly above consensus +0.3% while Factory Orders, Excluding Transportation, +0.8% and Factory Orders, Excluding Defense, -0.1%



·     Oil prices rise $1.40 or 2.04% to settle at $69.99 per barrel (highest since Aug 3rd), leading higher throughout the day supported by a sharp decline in U.S. crude stocks and a weaker dollar. OPEC+ and its allies agreed to stick to their existing plan for gradual monthly oil-production increases after a video conference. Brent crude rises $1.44 or 2% to settle at $73.03 per barrel. Front month natural gas futures rose 0.56% to settle at $4,641 mln btus.

·     Gold prices finish lower, dropping -$4.50 or 0.3% to $1,811.50 an ounce, failing to push higher despite another day of lower Treasury yields and a weaker dollar, with all eyes on the nonfarm payroll report tomorrow morning, data considered important to the Fed’s tapering strategy. Federal Reserve Chair Powell said last week the labor market recovery would determine when the central bank would start cutting asset purchases. Aluminium prices rise to a 10-year high by growing concern that restrictions on production of the metal in China are squeezing supply


Currencies & Treasuries

·     The U.S. dollar index (DXY) fell to near 4-week low of 92.22, ending near the lows as the euro and British Pound extended recent advances following more dovish rhetoric from the Fed over the past week weighing on the buck. Bitcoin prices finished well off the highs above $50K, but still managed a more than 2% advance to around $49,300.

·     U.S. Treasury yields drifted a little lower as the market remained on hold ahead of the government’s closely watched employment data Friday morning, which potentially could break yields out of their tight range. The benchmark 10-year yield remained under 1.3%, staying in a tight range over the last few weeks.






WTI Crude















10-Year Note





Sector News Breakdown


·     Apparel & Accessories; AEO Q2 adj EPS 60c vs est. 55c on revs $1.19B that missed est. $1.23B as Aerie revenue rose 34% to $336 million and American Eagle revenue grew 35% to $846 million; LE posted Q2 EPS 48c vs est. 41c on revs $384.1M vs est. $383M, sees Q3 EPS 19-27c (est. 17c) on revs $390-405M (est. $393.5M) and raised FY outlook for EPS to $1.35-1.51 from $1.27-1.47; BKE August net sales rose 43% YoY to $111.6M and comp sales +42.7%; GIII blew past Q2 estimates with EPS 39c beating consensus 10c and sales $483.1M beating est. $467M, and also upped its FY22 forecast for EPS to $3.10-3.20 from $2.60-2.70 and sales to be about $2.7B from prior view of $2.57B; DLTH Q2 EPS 27c on sales $149.1M vs est. $143M and raised FY22 EPS guidance to 71-76c from 66-72c and FY revs guidance to $700-715M from $695-710M

·     Miscellaneous, Specialty retailers; BNED reported a Q1 EPS loss (86c) that was narrower than est. (89c) on sales $240.8M vs est. $225.6M, comp sales +49.8%, and sees positive adj EBITDA in FY22; SIG Q2 adj EPS $3.57 and revenue $1.79B topped estimates of $1.69 on $1.64B with same-store sales +97.4% vs est. +80.9%, and raised FY22 revenue outlook to $6.80-6.95B from $6.5-6.65B and operating income to $618-637M from $490-545M; KIRK reported a Q2 adj loss (1c) that was narrower than expected (2.5c) loss on revs $114.8M vs est. $113M; GCO Q2 adj EPS $1.05 vs est. $0.03 on net sales $555M vs est. $522M; SPWH Q2 adj EPS 44c missed est. 48c on sales $361.8M above est. $145.6M, same-store sales -9.9% for the quarter but +3.4% for 1H; SWBI posted a mixed quarter as EPS beat but revs of $274.6M misses by about $4M, though on record gross margins; FIVE shares slide (latest discount retailer to drop on earnings – DG, DLTR, BIG) after mixed Q2 as EPS beat but sales of $646.6M missed the $648.3M estimate and Q3 guidance was mixed as well; in firearms

·     Auto sector; in EV charging sector, CHPT posted a larger than expected quarterly loss but revs of $56.1M topped the $49.1M estimate and raised its year rev view to $225-235M up from $195M-$205M prior and above est. $206.6M; TSLA temporarily halted some operations at shanghai plant – Bloomberg News reported; NKLA announced agreements with the Germany-based Bosch Group of companies for Nikola Class 7 and Class 8 fuel-cell electric vehicles; Ford (F) reports U.S. sales down 33.1% Y/Y to 124,176 vehicles in August, while truck sales fell 29.4% Y/Y to 73,610 units, Car sales squeezed 86% Y/Y to 2,369 unit

·     Consumer Staples & Restaurants; HRL slips as Q3 adj EPS $0.39, in-line with estimates on better revs $2.86B, but organic volume down 2% and cuts FY21 EPS view to $1.65-$1.69 from $1.70-$1.82, while raises FY21 revenue view to $11B-$11.2B from $10.2B-$10.8B; COST August net sales $15.75B (+16.2% YoY) with total comp sales +144.2% vs est. +12.5% and U.S. comp sales ex-gas +10.1% vs est. +7.1%; UL downgraded to Underweight from Neutral at JPMorgan



·     Energy stock movers; oil stocks (COG, APA, DVN, OXY, MRO, FANG) among top leaders in the S&P 500 as WTI oil prices top $70 on course for highest close since Aug. 3, supported by a sharp decline in U.S. crude stocks and a weaker dollar. OPEC+ and its allies agreed to stick to their existing plan for gradual monthly oil-production increases after a video conference. Ministers ratified the 400,000 barrel-a-day supply hike scheduled for October after one of the quickest meetings in recent memory; CVX and BG announce proposed joint venture to create renewable fuel feedstocks as Bunge to contribute its soybean processing facilities in Destrehan, Louisiana, and Cairo, Illinois and Chevron expected to contribute approximately $600M in cash to JV; U.S. Energy Secretary Jennifer Granholm authorized an exchange of 1.5 million barrels of oil from the Strategic Petroleum Reserve (SPR) to XOM to relieve fuel disruptions in Hurricane Ida’s wake.



·     Bank movers; TCBI downgraded by two firms (Janney and Wedbush) after the bank announced a strategic plan aimed at transforming Texas Capital Bank into a flagship financial services firm in Texas, by expanding offerings and coverage in the co’s dynamic markets (Wedbush called it a “prove me” story and believe it will take longer to achieve)

·     Bitcoin, FinTech & Payments; Bitcoin leveraged stocks/crypto assets outperform as Bitcoin prices top $50K, and Ethereum extends rally ($3,770), lifting names such as MARA, RIOT, MSTR, early; more weakness in card/payment space, MA, V, AXP, COF, DFS, relatively weak following the AMZN news recently – also an article noting encourages customers to stop using their Visa card saying the Australian marketplace will from the start of November add a 0.5% surcharge to purchases made with a Visa card



·     Pharma movers; in vaccine news, (PFE, BNTX), the European Medicines Authority said Thursday that there is no "urgent need" for COVID-19 booster shots for fully vaccinated individuals across the general public. In a statement, it said additional shots, should "already be considered for people with severely weakened immune systems as part of their primary vaccination," citing a technical report issued by the European Center for Disease Control and Prevention; Bernstein noted yesterday’s FDA responses to JAK inhibitor safety on the sharper side as they reduce Rinvoq estimates, ABBV price target

·     Biotech movers; ASMB tumbles after announced its decision to discontinue development of ABI-H2158 (2158) following the observation of elevated ALT levels consistent with drug-induced hepatotoxicity in an ongoing Phase 2 trial; ASND 2.5M share Secondary priced at $160.00; MRNA releases new results from a third shot for its Covid-19 vaccine and announcing plans to seek authorization for boosters in the U.S. and Europe.

·     MedTech Equipment; BAX confirmed recent reports by acquiring HRC for $156 per share for all-cash purchase $10.5B, and a total enterprise value of about $12.4B ; TMO awarded a $192.5M contract from the U.S. Department of Defense ((DoD)) for the domestic production of pipette tips; ABT acquired commercial-stage medical device company Walk Vascular ( no terms disclosed)

·     Healthcare Services; in the dental industry, PDCO reported F1Q results ahead of street, with revenue of $1.61B (vs. $1.46B) and EPS of $0.43 (vs. $0.37 cons), with the company noting continued momentum across Dental and Animal Health businesses and also raised the low end of its F22 guidance


Industrials & Materials

·     Aerospace & Defense; SPCE shares active after the U.S. Federal Aviation Administration (FAA) said on Wednesday it is investigating descent deviation of July 11 flight of SPCE rocket plane that carried British billionaire Richard Branson – shares sunk late day after the FAA said it may not return SpaceShipTwo vehicle to flight, pending report or determines issues do not affect safety; BA is getting an order for five new 737-8 jets from Griffin Global Asset management as the aircraft leasing company anticipates a rebound in the travel market; BLDE initiated Buy and $15 tgt at Deutsche Bank as think the stock represents an attractive means to invest in a high-growth, emerging sector with a tremendous total addressable market (TAM) opportunity

·     Industrial & Machinery; PWR entered an agreement to acquire Blattner Holding Co. for $2.7 billion in stock and cash. Under the terms of the deal, Quanta will pay about $2.36 billion in cash and $340 million in its common shares; TTC raised its full-year guidance for sales and adjusted earnings after posted better-than-expected results in Q3 (sees full-year year-over-year sales growth of about 17%, better than a previously forecast range of 12% to 15%); IR said to initiate dividend; won’t participate in SPX FLOW strategic process

·     Infrastructure theme active today (materials, building materials such as X, FCX, NUE, MTZ, PWR, MAS, SUM, VMC, MLM following a brutal night across the Northeast that saw tornado watches and flash flood warnings for parts of the Tri-State Area as remnants of Hurricane Ida brought in heavy winds and drenching rains and even showed water rushing through Newark Liberty International Airport, canceling all flights there. The tail-end of hurricane Ida dumped a "record breaking" amount of rain over New York and New Jersey putting both areas into states of emergency. Hurricane Ida, which devastated Louisiana this week, could mobilize lawmakers to pass the bipartisan $1T infrastructure bill, which is making its way through Congress.

·     Transports; Dow Transports rise, moving firmly above its 50-day Moving average of 14,700 with back to back daily gains; in trucking (LTL market), KeyBanc said they have a slight positive bias to estimates; we are OW on ODFL and raise our price target to $310 given share and margin potential, and XPO ($110 price target) on relative valuation with SW ratings on ARCB and SAIA due to valuation

·     Metals & Materials; GEF reported FQ3 2021 adjusted EPS of $1.93, well above estimate of $1.54 as sales of $1.491B increased $408MM (+37.7%) from the prior year; consolidated primary product volumes (excluding divestitures) increased $118MM (up 12.1%); MOS said it flagged production hit to North American phosphate operations due to damage caused by hurricane Ida – expected to reduce Q3 production by ~300,000 tonnes as repairs are completed over the next 8 to 9 weeks; GMS reported record revenues that rose 30% YoY; lithium stocks outperform (LAC, LTHM, ALB), following positive analyst comments this week from Cowen and BMO – BMO said with EV continuing to surprise to the upside, and outperforming lithium stocks representing thematic exposure, our target prices on ALB, SQM, LTHM and ORE rise to $265, $65, $25 and A$7; Petro chemical names also active, as Hurricane Ida hit the Gulf Coast as a Cat 4 storm, set the stage for further supply chain issues and subsequently higher prices.

Technology, Media & Telecom

·     Internet; CHWY shares tumbled as Q2 results disappoint with 2Q adj EBITDA $23.3Mm vs est. 34.4Mm on sales $2.16B vs est. $2.2B and sees FY net sales $8.9B-$9.0B vs. est. $9.0B; Ireland hit FB’s WhatsApp with a record 225 million euro ($266 million) fine following an inquiry into the messaging app’s transparency around sharing personal data with other Facebook companies; FSLY shares got a pop after a report appears to have won back Amazon CDN content delivery business they reportedly lost last quarter

·     Software movers; AI shares tumble after mostly in-line quarterly results (larger EPS loss), and guidance midpoint, also in-line with views (sees FY22 revenue $243M-$247M vs. est. $245.4M); VEEV shares slide reported F2Q22 revenue growth of 25%+ y/y, which was modestly better than consensus, but it might be disappointing in the context of VEEV’s pattern of "beat and-raises" in recent quarters; ASAN rises as delivered another strong quarter, beating revenue by $7.2M vs. $6.6M last q, billings by $15M vs. $21M last q, and free cash flow by $34M, driven by better-than-expected demand from large customers as shares rose; NCNO shares jump on strong 2Q results that beat expectations on both the top and bottom line. RPO, an indicator of future growth, jumped 55% Y/Y on the back of strength in new bookings that included a commercial banking lending deal win with Wells Fargo; OKTA shares slipped initially despite reporting strong FQ2’22 results, beating Street billings estimates by 18%, total revenue by 6%, gross profit by 6%, and delivering much better than expected operating losses (RPO up 57% YoY, and billings up 83% with better-than-expected profitability and cash flow)

·     Hardware, Components & Services; AAPL announced will let media apps avoid 30% fee to potentially fend off antitrust scrutiny; NTNX Q4 results beat as multiple metrics (ACV billings, total billings, emerging product billings, million-dollar deals) all reached record levels (ACV up over 100% YoY and large-customer gains >$10M lifetime bookings +42%); in optical, CIEN Q3 adj non-Gaap eps $0.92 vs. est. $0.79 on better revs $988.1M vs. est. $969.3M; SCWX slides following a mixed fiscal Q2 report that narrowly missed the top line but beat on the bottom

·     Media & Telecom; Locast said on Thursday it had suspended all operations, days after a Manhattan federal court knocked out an important defense for the over-the-air streaming service against copyright infringement claims brought by the four major U.S. television networks (DIS, VIAC, CMCSA, FOX); DIS said Disney Cruise Line requiring all guests 12 and older be vaccinated and tested for covid-19 regardless of destination

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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.