Closing Stock Market SummaryThe S&P 500 declined 0.3% on Friday in a mixed session in which value stocks outperformed at the expense of growth stocks. The growth/value divide was evident in the disparity between the Nasdaq Composite (-1.3%) and Dow Jones Industrial Average (+0.4%). The Russell 2000 lost 0.8%.
Growth stocks remained pressured by valuation concerns as long-term interest rates continued to creep higher: the 10-yr yield rose five basis points to 2.71% (+34 bps for the week). Shorter-dated rates also pushed higher, with the 2-yr yield increasing five basis points to 2.52% (+10 bps for the week).
The mega-caps within the S&P 500 information technology (-1.4%), consumer discretionary (-1.0%), and communication services (-0.7%) sectors were among the heaviest weights on the market. The Vanguard Mega Cap Growth ETF (MGK 227.74, -2.78) fell 1.2%.
Transportation stocks also struggled amid underlying growth concerns and negative-minded analyst recommendations. BofA Securities downgraded both Union Pacific (UNP 241.98, -2.88, -1.2%) and UPS (UPS 191.02, -1.68, -0.9%) to Neutral from Buy. The Dow Jones Transportation Average fell 0.9%.
Conversely, the financials (+1.0%) and energy (+2.8%) sectors were the strongest performers amid the higher rates and higher oil prices ($98.18/bbl, +1.88, +2.0%). The defensive-oriented health care (+0.6%), consumer staples (+0.4%), utilities (+0.3%), and real estate (+0.3%) sectors added to their weekly gains.
Blue-chips like UnitedHealth (UNH 545.96, +9.01, +1.7%), Walmart (WMT 157.41, +0.87, +0.6%), and Coca-Cola (KO 63.83, +0.39, +0.6%) set all-time highs, contributing to the outperformance of the Dow, on no specific news. Note, UNH will be among the first batch of companies to report Q1 earnings next week.
Separately, the S&P 500 wavered around its 200-day moving average (4493) the entire session, ultimately closing below the key technical level amid some slippage activity into the close.
The U.S. Dollar Index (99.84, +0.09, +0.1%), meanwhile, rose for the seventh straight session and briefly topped the 100.00 level.
Friday's economic data was limited to Wholesale Inventories, which increased 2.5% m/m in February (consensus 2.1%) following a revised 1.1% increase (from 0.8% increase) in January. There is no data of note scheduled for Monday.
- Dow Jones Industrial Average -4.5% YTD
- S&P 500 -5.8% YTD
- Russell 2000 -11.2% YTD
- Nasdaq Composite -12.4% YTD
- Typically, the Fed rolls over the bonds on its balance sheet as they mature. In other words, it takes the money the government pays for the mature bond and buys a new one to replace it. The Fed can shrink its balance sheet simply by letting the old bonds roll off the books without replacing them. This is a relatively slow way to shrink the balance sheet.
- The Fed can decrease its bond holding more quickly by selling them on the open market.
Research Calls
- Upgrades:
- AppFolio (APPF) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $143
- Afya (AFYA) upgraded to Outperform from Neutral at Credit Suisse; tgt raised to $19
- C.H. Robinson (CHRW) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $117
- Coupang (CPNG) upgraded to Conviction Buy from Buy at Goldman; tgt lowered to 37
- Eurofins Scientific (ERFSF) upgraded to Hold from Reduce at HSBC Securities
- Gatos Silver (GATO) upgraded to Sector Perform from Underperform at RBC Capital Mkts; tgt $4
- ITT (ITT) upgraded to Buy from Neutral at UBS; tgt lowered to $95
- Kroger (KR) upgraded to Buy from Neutral at BofA Securities; tgt raised to $75
- Sodexo (SDXAY) upgraded to Outperform from Sector Perform at RBC Capital Mkts
- Target (TGT) upgraded to Buy from Hold at Gordon Haskett; tgt raised to $300
- WD-40 (WDFC) upgraded to Neutral from Underperform at DA Davidson
- Downgrades:
- Alcoa (AA) downgraded to Neutral from Outperform at Credit Suisse; tgt raised to $82
- ArcBest (ARCB) downgraded to Neutral from Buy at BofA Securities; tgt $76
- Astec Industries (ASTE) downgraded to Neutral from Outperform at Robert W. Baird; tgt $40
- AvidXchange (AVDX) downgraded to Neutral from Buy at Goldman; tgt lowered to $10
- Canadian Pacific (CP) downgraded to Neutral from Buy at BofA Securities; tgt $81
- Credit Agricole SA (CRARY) downgraded to Hold from Buy at Jefferies
- Dover (DOV) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $160
- Essential Utilities (WTRG) downgraded to Hold from Buy at HSBC Securities; tgt $53
- FTC Solar (FTCI) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $4
- HP (HPQ) downgraded to Neutral from Buy at UBS; tgt $40
- Intertek Group (IKTSY) downgraded to Hold from Buy at HSBC Securities
- Manitowoc (MTW) downgraded to Neutral from Outperform at Robert W. Baird; tgt $16
- Mercury (MRCY) downgraded to Hold from Buy at Jefferies; tgt raised to $65
- Oshkosh (OSK) downgraded to Neutral from Outperform at Robert W. Baird; tgt $92
- Rackspace Technology (RXT) downgraded to Perform from Outperform at Oppenheimer
- REV Group (REVG) downgraded to Neutral from Outperform at Robert W. Baird; tgt $14
- Robinhood Markets (HOOD) downgraded to Sell from Neutral at Goldman; tgt lowered to $13
- Saia (SAIA) downgraded to Neutral from Buy at BofA Securities; tgt $222
- Schneider National (SNDR) downgraded to Underperform from Buy at BofA Securities; tgt $23
- SGS SA (SGSOY) downgraded to Hold from Buy at HSBC Securities
- Shoals Technologies (SHLS) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $16
- Societe Generale (SCGLY) downgraded to Hold from Buy at Jefferies
- Terex (TEX) downgraded to Neutral from Outperform at Robert W. Baird; tgt $44
- TFI International (TFII) downgraded to Neutral from Buy at BofA Securities; tgt $95
- Triton International (TRTN) downgraded to Underperform from Buy at BofA Securities; tgt $53
- Union Pacific (UNP) downgraded to Neutral from Buy at BofA Securities; tgt $258
- UPS (UPS) downgraded to Neutral from Buy at BofA Securities; tgt $204
- Virtus Investment Partners (VRTS) downgraded to Underweight from Overweight at Morgan Stanley; tgt lowered to $240
- Werner Enterprises (WERN) downgraded to Underperform from Neutral at BofA Securities; tgt $38
- Others:
- 5E Advanced Materials (FEAM) initiated with a Buy at DA Davidson; tgt $30
- Alcon (ALC) initiated with a Buy at Needham; tgt $95
- Alpha Tau (DRTS) initiated with an Overweight at Piper Sandler; tgt $19
- Colgate-Palmolive (CL) initiated with a Mkt Perform at Raymond James
- Compass Diversified (CODI) initiated with a Buy at B. Riley Securities; tgt $33
- Cooper (COO) initiated with a Hold at Needham
- Crescent Energy Company (CRGY) initiated with a Buy at Truist; tgt $25
- PagSeguro Digital (PAGS) initiated with an Overweight at Cantor Fitzgerald; tgt $25
- Procter & Gamble (PG) initiated with an Outperform at Raymond James; tgt $175
- Raytheon Technologies (RTX) initiated with an Outperform at RBC Capital Mkts; tgt $125
- RxSight (RXST) initiated with a Buy at Needham; tgt $18
- STAAR Surgical (STAA) initiated with a Buy at Needham; tgt $87
- StoneCo (STNE) initiated with an Overweight at Cantor Fitzgerald; tgt $15
- Terran Orbital (LLAP) initiated with a Buy at Canaccord Genuity; tgt $22
Gapping down
In reaction to earnings/guidance:
- LXP -8.2%, NRIX -2% (also provides corporate update), IMOS -0.5%
Other news:
- HARP -4.2% (CMO departs)
- ULCC -2.8% (Spirit Airlines to begin discussions with JetBlue Airways)
- CWT -2.2% (to acquire Stroh's Water Company)
- BTAI -2.1% (enters into commercial supply agreement with Arx)
- BIIB -1.7% (Medicare releases national policy that limits coverage for aducanumab)
- ANSS -1.1% (wins NASA contract worth up to $39.1 mln)
Analyst comments:
- HOOD -3.4% (downgraded to Sell from Neutral at Goldman)
- CP -2.4% (downgraded to Neutral from Buy at BofA Securities)
- FTCI -2.4% (downgraded to Neutral from Overweight at Piper Sandler)
- AVDX -1.8% (downgraded to Neutral from Buy at Goldman)
- HPQ -1.7% (downgraded to Neutral from Buy at UBS)
- ARCB -1.6% (downgraded to Neutral from Buy at BofA Securities)
- AA -0.8% (downgraded to Neutral from Outperform at Credit Suisse)
Gapping up
In reaction to earnings/guidance:
- WDFC +9.1%, PSFE +4.7% (reaffirms guidance for Q1 and FY22; also names new CEO), UMC +2.2%, DBI +2.2%, QDEL +1.6%, TSM +0.8%, PSMT +0.7%, .
Other news:
- GATO +5.6% (names new CEO; also announces record quarterly production)
- CRWD +3.8% (secures Provisional Authorization to Operate at Impact Level 4; says it expects to achieve $5 bln in annual recurring revenue)
- WOW +3.7% (co is exploring options including a sale according to Bloomberg)
- IIPR +2.8% (announces quarterly operating activity)
- MNOV +2.4% (announces secondary analysis of Phase 2 Trial of MN-166 (ibudilast) in Alcohol Use Disorder Published in Alcoholism: Clinical and Experimental Research)
- WAL +1.7% (extends contract for CEO)
- TRQ +1.7% (provides update on review of acquisition proposal RIO)
- SAVE +1.6% (to begin discussions with JetBlue Airways)
- GRPN +1.5% (10% owner (Pale Fire's Jan Barta) affirms increased holding and 7.8% active stake)
- JBLU +1.3% (Spirit Airlines to begin discussions with JetBlue Airways)
- BHP +1.1% (provides update on BHP Petroleum and Woodside merger and share distribution information)
Analyst comments:
- CPNG +2.5% (upgraded to Conviction Buy from Buy at Goldman)
- ITT +2.2% (upgraded to Buy from Neutral at UBS)
- APPF +2% (upgraded to Overweight from Sector Weight at KeyBanc Capital Markets)
- CHRW +1.2% (upgraded to Overweight from Neutral at JP Morgan)



