Mid-Morning Look: July 12, 2021

Mid-Morning Look

Monday, July 12, 2021






DJ Industrials




S&P 500








Russell 2000






The S&P 500 and Nasdaq both touch new intraday record highs as major U.S. averages come into the start of earnings season with a 3-week winning streak, looking to build on last Friday’s market surge. Treasury yields steady after Friday’s rebound with the 10-year up above 1.36%, while the dollar rebounds, pushing commodity prices lower (gold, oil). Oil selling pressure coming from lingering concerns that some OPEC members may soon increase production sharply, as well as the rising variant Covid cases potential impact on demand. Big banks climb ahead of Dow components GS and JPM earnings tomorrow morning (and more big releases later in week). Second-quarter earnings for S&P 500 companies are expected to rise 65.8%, according to IBES data from Refinitiv. In stock news, Chinese ADR’s (BABA, BIDU, DIDI) extend last week weakness in further government restrictions; Virgin Galactic Holdings (SPCE) shares slide after saying it may sell up to $500 million worth of shares, a day after the company completed its first fully crewed test flight into space; the European Union is delaying a proposed digital levy, an EU spokesman said Monday, after finance chiefs from the Group of 20 leading economies endorsed an overhaul of the rules for taxing international companies. Mega cap tech pulls back (AAPL, AMZN) after posting record highs last week while TSLA rebounds.







WTI Crude















10-Year Note





Sector Movers Today

·     Restaurants; CAKE and EAT both upgraded to Outperform from Market Perform at Raymond James as see strong upside to 2Q expectations and attractive valuation entry points with each down 20%+ from their recent highs – also publishes above-consensus 2Q EPS estimates for many buy-rated companies in universe including BLMN, CMG, CAKE, DIN, EAT and RRGB; CMG ests and tgt raised to $1,800 at RBC Capital as reviews Q2 earnings and reviews the case for ESG-driven upside (says CMG remains favorite name in coverage); PZZA tgt raised to $124 and up 21/22 EPS estimates to $2.85 and $3.12, reflecting increased SSS growth, benign cheese costs, and the repurchase of preferred shares

·     Media & Telecom movers; CHTR downgraded to Market Perform from Outperform at Bernstein; TME slides after Reuters report says China may ask co to give up exclusive rights on labels; in cinema (AMC, CNK), Walt Disney Co.’s (DIS) “Black Widow” grossed $80 million in the U.S. and Canada, according to preliminary studio estimates, highest grossing film since pandemic; IMAX soared to a $12 million debut for Marvel Studios’ “Black Widow,” its highest grossing opening weekend of the pandemic era in 11 markets worldwide; VMEO tgt raised to $60 at Jefferies on April/May rev growth above consensus, strong headcount growth and job listing growth

·     Transports; for airlines (AAL, DAL, JBLU, UAL), TSA checkpoint data hit highest level in pandemic era, was still 18% below 2019; GBX double upgraded from underperform to Buy at Bank America with $52 tgt and lift price tgt to $52 from $45 noting shares have pulled back from the upper-$40 range to the low-$40s in recent weeks, and see this pull-back as an opportunity to buy; UAL was downgraded to in-line at Evercore/ISI saying while they like the long-term focus on premium revenue growth, they believe the rate of planned investment makes it a “tougher story” at this point in the investment cycle

·     Healthcare Services; CLOV downgraded to underweight from neutral at JPMorgan with $9 tgt following 1Q21 results in which the company lowered most guidance metrics, including reducing the number of aligned beneficiaries under the direct contracting program in 2021 by 50%; Guggenheim with several changes in the Animal health sector as they downgraded IDXX to Neutral, and upgraded HSKA and CVET to Buy saying they are not adjusting their positive view on the animal health space overall; but are adjusting our strategy



·     ALB +7%; lithium names outperformed with shares of ALB, LAC, LTHM leading higher – possibly on headlines China’s EV battery sector sees over 30% supply shortfall despite higher output

·     CLDX +30%; after announces updated early-stage trial data for CDX-0159, indicating 95% complete response following a single dose in patients with two most common forms of chronic inducible urticaria, a skin condition

·     GBX +5%; double upgraded from underperform to Buy at Bank America with $52 tgt and lift price tgt to $52 from $45 noting shares have pulled back

·     MS +2%; strength in banks ahead of earnings this week for large caps and big regionals; also helped by a slight uptick in Treasury yields

·     SPI +9%; after announcing the launch of next-generation electric pickup truck, EF1-T by its wholly owned EdisonFuture, Inc. and Phoenix Motor Inc. subsidiary.

·     STFC +189%; to be acquired by Liberty Mutual for $52 per share in cash in auto insurance sector https://bit.ly/3r65YBq



·     BIG -3%; after KeyBanc lowers 2Q comp and EPS estimates saying data points to even greater downside risk for Q2

·     CHTR -2%; downgraded to Market Perform from Outperform at Bernstein

·     CLOV -4%; downgraded to underweight from neutral at JPMorgan with $9 tgt following 1Q21 results in which the company lowered most guidance metrics

·     DIDI -4%; confirmed the country’s cyberspace administration notified app stores to remove the ride hailing company’s 25 apps and said the move could impact its China revenue

·     HPQ -4%; as IDC Q2 PC tracker talks about a modest softening in demand. “Though growth remains quite high, it has begun to taper off as the +13% rate in 2Q21 is far lower than the +55.9% in 1Q21 and +25.8% in 4Q20

·     HUYA -3%; as DOYU said it had terminated its $5.3 billion deal with the co two days after China’s market regulator blocked TCEHY’s plans to merge its top two videogame streaming sites.

·     NCLH -1%; weakness in cruise lines earlier amid uptick in variant UK Covid cases

·     SPCE -11%; shares initially jumped after its VSS Unity successfully completed its flight into space with company founder Richard Branson on board, making him the second-oldest person to fly in space – stocks reversed lower after filing to sell up to $500M in stock

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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.