Mid-Morning Look: March 30, 2021

Mid-Morning Look

Tuesday, March 30, 2021






DJ Industrials




S&P 500








Russell 2000






U.S. stocks slip off record highs for the Dow Jones Industrials and the S&P pulls back after nearly touching new highs the day prior as markets are seeing another rotation, with yesterday losers such as financials leading today along with Smallcap Russell 2000 – while defensive staples such as food names slide after leading on Monday. Concerns of outsized trading losses for big banks remain related to hedge fund Archegos Capital Management, which was forced to liquidate positions at the end of last week in several technology, China ADR, and media related stocks. A jump in Treasury yields to fresh 14-month highs (10-year topped 1.77% before paring gains), took a bite out of high growth technology shares early as the Nasdaq Composite underperforms. Gold prices fall nearly 2% now or $33 to $1,681 an ounce given further rise in the U.S. dollar (dollar index – DXY – up 0.3% at 93.15 – highest levels since Nov of last year) and pop in yields today (10-yr 1.76%). Industrials, metals and material stocks remain well bid as all eyes on Biden infrastructure plan tomorrow – and how it will be paid for: Axios noted that Biden is preparing to go to the mat for 4 tax increases worth about $1.8 trillion to pay for his infrastructure plan: 1) raise corporate rate from 21% to 28%, 2) impose a global minimum tax on profits from foreign subsidiaries, 3) tax capital gains as regular income for the wealthy and tax unrealized capital gains at death, and 4) return the top individual rate for those making more than $400,000 to the pre-Trump rate of 39.6%. Economic data strong with consumer confidence crushing estimates.


Economic Data

·     March consumer confidence index 109.7 well above the 96.9 estimate and February revised 90.4 (previous 91.3); consumer expectations index 109.6 in March vs. Feb revised 90.9 (previous 90.8) and the present situation index 110.0 in March vs. Feb revised 89.6 (previous 92.0)

·     S&P Case/Shiller home price index rose 0.9% to 243.0 in January 20-City report (a new historic peak) and follows the 0.9% December increase to 240.9 (was 240.8). The 12-month pace accelerated to an 11.1% pace after the 10.2% y/y clip previously/fastest rate since March 2014







WTI Crude















10-Year Note





Sector Movers Today

·     Bank movers; concerns remain for trading losses in big banks related to hedge fund Archegos Capital Management, which was forced to liquidate positions at the end of last week in several technology, China ADR, and media related stocks; DA Davidson upgraded CMA, EWBC, CARE to Buy and downgraded ABCB, TSC to Neutral; KBW upgraded TCBI to Outperform with an $86 price target; Piper reiterated ISTR at OW and lifted its price target to $25 after saying that the bank’s EPS expansion is still not reflected in its share price following their meeting with management last week; Credit Suisse downgraded TROW to Neutral from Outperform as the company’s overall investment performance over the past two years has brought it more in line with its peers and its organic growth rate vs the industry has narrowed

·     Semiconductors; TSM will move 4nm process chips to volume production in the fourth quarter of 2021, ahead of the 2022 timeframe set previously, according to a report in Digitimes; TXN was upgraded to overweight at KeyBanc with $225 tgt and up ests and tgts for ADI (increasing PT to $195), MCHP (increasing PT to $180), NXPI (increasing PT to $225), ON (increasing PT to $47), and QRVO while lower ests and tgt on SWKS (to $210) saying quarterly supply chain findings are positive, as demand continues to be extremely robust in 1Q, albeit supply constrained; VLDR downgraded to hold from buy at Hallum citing a lack of near-term catalysts

·     Internet; GOOGL upgraded to buy from hold at Stifel and raise tgt to $2,350 from $2,025 saying they have increased confidence in Alphabet’s positioning to benefit from category recovery; YELP upgraded to buy from neutral at Citigroup and up tgt to $48 from $33 as expect Yelp to benefit from four trends over the next few years; VIPS authorized to repurchase up to $500M of its Class A ordinary shares; in online travel, BTIG noted EXPE’s ability to maintain share in the US has been a concern given the depth of cost cuts and BKNG talking about making a push – says their site traffic analysis suggests that EXPE may actually be gaining share vs. BKNG on strength at VRBO.

·     Aerospace & Defense; the ARK Space Exploration & Innovation ETF (ARKX), run by ARK Investment Management CEO Cathie Wood, began trading today, with the top 10 holdings comprising roughly half of the fund (top 3 holdings are TRMB with 8.3% weighting, 3D Printing ETF PRNT and KTOS both weighted at ~6%); SpaceX starship fails in test flight during descent; OSIS announced that its security division received an order for approximately $16 million to provide maintenance and support for U.S. aviation checkpoint inspection systems.

·     Consumer Staples; defensive consumer staples (beverages, food) have seen outperformance over the last few sessions with mixed broader markets; MKC reported a beat on the top and bottom line for Q1 (72c/$1.48B vs. 58c/$1.38B) and boosted its FY21 adjusted EPS view to $2.97-$3.02 from $2.91-$2.96 and revenue view to up 8%-10% from up 7%-9%; EL positive comment at Morgan Stanley saying despite its strong run-up in shares (nearly doubling from post COVID lows 12 months ago), firm sees room for additional, albeit more limited, stock upside, and EL remains his top household products pick; ACI and GOOG are partnering to make shopping easier to customers nationwide using Google Maps



·     AAL +2%; airlines broadly higher, with AAL upgraded to hold at Jefferies saying strong network positioning continues to drive considerable potential to outperform peers

·     AMRN +4%; received European Commission approval for VAZKEPA to reduce the risk of cardiovascular events in high-risk, statin-treated adult patients, the first and only such approval by the EC.

·     ASO +7%; EPS of $1.09 topped the 52c estimate on revs $1.6B; guides 2021 EPS $2.70-$2.95 vs. est. $2.43 (shares of DKS, BGFV, SPWH move in reaction)

·     BNTX +5%; raised its 2021 COVID vaccine production target to 2.5B doses (up from 2B previous), commenting there could be additional upside to this target as well as noting a more stable formulation could be ready within months

·     DISCA +8%; rebounds in BIDU, IQ, DISCA, VIAC – names that saw mass selling pressure on Friday on forced hedge fund liquidation from Archegos – seeing big bounces early

·     MBRX +12%; after saying the FDA has granted a fast-track tag for its drug, annamycin, for the treatment of soft tissue sarcoma lung metastases, a type of rare cancer

·     MKC +4%; reported a beat on the top and bottom line for Q1 (72c/$1.48B vs. 58c/$1.38B) and boosted its FY21 adjusted EPS view to $2.97-$3.02 from $2.91-$2.96 and revenue view to up 8%-10% from up 7%-9%

·     X +2%; steel stocks rally again ahead of Biden infrastructure plan details expected tomorrow; also boosting shares of other metals and materials



·     AEM -2%; weakness in gold miners with drop in prices (AEM, AUY, NEM)

·     AVGO -3%; among top decliners in the S&P 500 and semiconductor space with general tech weakness leading the Nasdaq down 1%

·     GOEV -26%; downgraded at Roth to neutral given a hard pivot in the business model after earnings and a reset on operations, which are clearly still ongoing

·     TSLA -1%; CEO Elon Musk said in a tweet the near-term cell supply shortage makes it difficult to scale the production of Tesla Semi commercial truck

·     WVE -26%; shares fell after results from the Ph 1b/2a PRECISION-HD2 core trial showed no statistically significant change in mutant huntingtin protein (mHTT) compared with placebo after single or multiple doses of WVE-120102 up to and including 32 mg monthly

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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.