Monday, Sept. 20, 2021 – DIA 339.40 -1.81%, QQQ 365.70 -2.17%, SPY 434.04 -1.67%, IWM 217.19 -2.38%
No high-impact data was released on the day. Markets gapped lower on the news that China’s largest real estate developer Evergrande was in financial trouble and would struggle to make principal and interests payments coming due on some of the firm’s $300 billion debt load. In the sell-off, the more economically sensitive sectors took the brunt of the selling pressure: Energy (XLE) 47.24 -3.05%, Financials (XLF) 36.55 -2.32%, Consumer Discretionary (XLY) -2.28%. In the case of Energy, the selling pressure was counter to the commodity, as WTI crude was higher on the day $70.85 +1.01%, APA corporation (APA) 18.91 -6.11%, Occidental (OXY) 25.48 -5.42%, Devon (DVN) 28.18 -5.40% all took selling pressure. Steel stocks were weak on the day as base metals continued to sell off, with Nucor (NUE) 96.88 -7.64% at the bottom of the S&P500 performance on the day. Airlines were a bright group as the US government relaxed flying restrictions for passengers with proof of vaccination from the European Union. American (AAL) 20.33 +3.04%, Delta (DAL) 40.78 +1.67%, United Airlines (UAL) 45.27 +1.64% moved higher.
Tuesday, Sept. 21, 2021 – DIA 339.11 -.09%, QQQ 366.15 +.12%, SPY 433.63 -.09%, IWM 217.52 +.15%
Building Permits reported at 1,728K better than the 1,610K expected. Housing Starts were also stronger than expected at 1,615K v. 1,580K. Equity markets were mixed but held firm from the previous day’s heavy selling ahead of Wednesday’s Fed meeting statement release. On the back of stubbornly high natural gas prices in Europe, Energy Services (XLE) 47.35 +.23% stabilized and moved higher to lead the S&P500 sectors. Conoco-Phillips (COP) 59.33 +3.96% lead the S&P500 as the company cut a 9.5 Billion dollar deal to acquire assets in the Permian Basin, while also projecting pre-COVID demand levels to return by the end of the fourth quarter. Gaming and hospitality shares exposed to the continuing regulatory pressure in China/Macau continued to see selling: Las Vegas Sands (LVS) 35.59 -5.57%, Penn National Gaming (PENN) 70.15 -4.39%, and Wynn Resorts (WYNN) 78.77 -4.07% all succumbed to selling and moved lower.
Wednesday, Sept. 22, 2021 – DIA 342.50 +1.00%, QQQ 369.57 +.93%, SPY 437.86 +.98%, IWM 220.90 +1.55%
No high data was released on the day. The FOMC meeting with a statement and an appearance of Chairman Powell to discuss future policy, a tapering of QE likely to begin later in the 4th quarter and likely ending by mid-year 2022. Markets gapped up on a relief rally related to a report in the media that the Chinese property developer, Evergrande was finding the ability to make certain payments on its debt avoiding a default. The markets traded strongly through Powell’s testimony. Once again, Energy services (XLE) 48.81 +3.08% lead the S&P500 sectors with outsized moves being made by APA Corporation (APA) 20.12 +7.19%, Devon (DVN) 30.44 +6.84%, Diamondback (FANG) 84.38 +5.42% and Marathon (MRO) 12.02 +5.35%. Followed by Financial Services (XLF) 37.11 +1.67% with American Express (AXP) 167.49 +2.58%, Goldman Sachs (GS) 385.47 +2.56%, JPMorgan (JPM) 155.91 1.92% all in the top 5 in the DJIA. On the downside FedEx (FDX) 229.41 -9.12% fell on supply chain issues and labor costs. The stock has been in a clear decline since peaking at $319.90 in late May. Also on the downside Incyte Corporation (INCY) 69.76 -8.51% fell on approval of Opzelura for atopic dermatitis which entailed an unexpected “black box” warning for potential significant side effects.
Thursday, Sept. 23, 2021 – DIA 347.56 +1.48%, QQQ 372.98 +.92%, SPY 443.14 +1.21%, IWM 224.81 +1.77%
Initial jobless claims came in higher than expected at 351K v. 320K. The Markit Manufacturing PMI (Sept) was weaker than expected 60.5 v. 61.5, while the Services PMI was also weaker than expected 54.4 v. 55. Interest rates rose through the day in sympathy with European rates moving higher. Reports from China that the government would move to contain any contagion from a potential Evergrande default lifted equity markets before the opening. The 10-Year Note index (TNX) 14.10 +.74 jumped higher. Reopening beneficiaries were top performers on the day. Energy Services (XLE) 50.52 +3.5% was top sector on the day with Devon (DVN) 32.80 +7.75%, APA Corporation (APA) 21.54 +7.06%, Schlumberger (SLB) 28.88 +6.37% and Marathon (MRO) 12.73 +5.91% all outperformed. On the higher interest rates, Financial Services (XLF) 38.02 +2.45% performed 2nd best on the day, with American Express (AXP) 173.36 +3.50%, JPMorgan (JPM) 161.18 +3.38% , SVB Financial 642.15 +5.65% Charles Schwab (SCHW) 74.30 +5.54% outperforming. The day’s disaster was Eargo, Inc. (EAR) 6.86 -68.43% as the company disclosed a Justice Department investigation. The company’s shares were downgraded by JPMorgan and Wells Fargo as a result. In biotech, Cassava Sciences (SAVA) 60.12 +14.93% released interim data on its stage 3 compound, simufilam, for the treatment of mild to moderate Alzheimer’s disease.
Friday, September 24, 2021 – DIA 347.87 +.09%, QQQ 373.33 +.09%, SPY 443.91 +.16%, IWM 223.05 -.48%
New Home Sales came in better than expected 740K v. 700K. Equity markets continued to rally from the plunge on Monday as fears of the Chinese property developer Evergrande's financial position appeared to abate even though the firm missed interest payments on some of its obligations. The company has a 30 day period to cure the problem before it is considered in default. Interest rates continued to rise as reflected by the 10-Year Note index (TNX) 14.60 +.50. Communication Services (XLC) 82.45 +.82%, Energy Services (XLE) 50.90 +.75%, and Financial Services (XLF) 38.22 +.53% were the top 3 leaders in the S&P 500 sector list. Reopening favorites in the cruise line industry showed outsized strength, Carnival (CCL) 25.44 + 3.04% announced better than anticipated earnings and gave a positive outlook, Norwegian (NCLH) 28.10 +2.97% and Royal Caribbean (RCL) 90.69 +2.87% moved higher on that news. China-related shares moved lower Pinduoduo (PDD) 94.55 -3.80%, JD.com (JD) 73.98 -2.82%, and Baidu (BIDU) 156.57 -2.45%. All three hit their respective 52-week highs in February and have been in trading ranges for the last couple of months.
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