TheChek News Flow

Gapping down
In reaction to earnings/guidance:

• MU -3.4%, SHW -2% (lowers Q3 and FY21 guidance; also to acquire Specialty Polymers)

Other news:

• LFMD -11.5% (prices ~3.3 mln share offering at $6.00 per share)
• EQT -6.7% (prices offering of 25.93 mln shares of common stock at $20.00 per share)
• VWE -1.9% (announces acquisition of Vinesse)
• MUX -0.9% (provides update on Los Azules Project)

Analyst comments:

• NXPI -2% (downgraded to Mkt Perform from Outperform at Bernstein)
• INNV -1.9% (downgraded to Neutral from Buy at Citigroup)
• HPQ -0.8% (downgraded to Neutral from Overweight at JP Morgan)
• RM -0.8% (downgraded to Mkt Perform from Mkt Outperform at JMP Securities)

Gapping up
In reaction to earnings/guidance:

• WOR +6% CALM +1.9%

Other news:

• FBIO +16.5% (announces receipt of notice of option exercise from AstraZeneca (AZN) to fully acquire Caelum Biosciences a company founded by Fortress Biotech)
• FOLD +12.4% (Amicus Therapeutics and ARYA Sciences Acquisition Corp IV (ARYD) announce formation of a next-generation genetic medicine company: "Caritas Therapeutics")
• DLTR +6.6% (increases share repurchase authorization to $2.5 bln)
• LCID +6.4% (customers expected to begin receiving Lucid Air Dream vehicles in late Oct 2021)
• NRXP +5.3% (announces second favorable safety report for ZYESAMI (aviptadil) in NIH sponsored ACTIV-3b critical care study in patients with life-threatening COVID-19)
• AFRM +3.6% (co says crypto holdings are a "new and coming soon" feature)
• ATRA +3.5% (presents Phase 1 study update of ATA188)
• ABG +3.1% (acquires Larry H. Miller Dealerships and Total Care Auto; adds ~$5.7 bln in annualized revenue)
• TMDX +2.7% (FDA grants premarket approval for OCS Liver System)
• AZN +2.2% (to fully acquire Caelum Biosciences)
• CBIO +2% (FDA grants Orphan Disease Designation for MarzAA)
• WVE +1.7% (announces new data for RNA editing capability and provides update on AATD program)
• IMMP +1.7% (received a €2126617 (~ A$3430952) R&D tax incentive payment in cash from the French Government )
• SLDB +1.6% (reports additional pulmonary function results from the ongoing IGNITE DMD Phase I/II Clinical Trial of SGT-001)
• DNN +1.4% (announces US$50 mln at-the-market offering program)
• OVV +1.4% (receives regulatory approvals for share buy-back program)
• TGTX +1.4% (Presentations from the ULTIMATE I & II Phase 3 Trials of Ublituximab)

Analyst comments:

• SPR +2.8% (upgraded to Outperform from Mkt Perform at Bernstein)
• BA +2.5% (upgraded to Outperform from Mkt Perform at Bernstein)
• LLY +2.2% (upgraded to Buy from Neutral at Citigroup)
• NEXA +2.2% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
• ARCH +1.8% (upgraded to Buy from Neutral at Citigroup)
• CW +1.8% (upgraded to Outperform from Neutral at Robert W. Baird)
• CAG +1% (upgraded to Neutral from Underperform at Credit Suisse)
• UBS +1% (upgraded to Outperform from Sector Perform at RBC Capital Mkts)

Early premarket gappers

• Gapping up:
  • LCID +8.1%, AFRM +4%, ATRA +3.5%, OVV +2.6%, BA +2.4%, AZN +2.1%, CALM +1.9%, WVE +1.7%, ASML +1.7%, LLY +1.4%, AMD +1.1%
• Gapping down:
  • LFMD -9.1%, EQT -5%, MU -3.3%, VWE -1.9%, SHW -1.7%, TBK -1.1%, PPG -0.7%, WDC -0.5%

Closing Stock Market Summary

The S&P 500 fell 2.0% on Tuesday, closing at session lows, as another increase in long-term interest rates disproportionately affected the growth stocks and undercut general risk sentiment. The Nasdaq Composite declined 2.8%, the Russell 2000 declined 2.3%, and the Dow Jones Industrial Average declined 1.6%. 

The 10-yr yield settled higher by five basis points to 1.53% after touching 1.56% in the morning, as selling interest remained influenced by expectations for sustained inflation and an eventual Fed tapering. The 2-yr yield also closed higher, finishing up two basis points to 0.30%. The U.S. Dollar Index rose 0.3% to 93.70. 

The S&P 500 information technology (-3.0%) and communication services (-2.8%) sectors, where several of the mega-cap growth stocks reside, led the retreat with 3% declines. The energy sector (+0.5%) was the only sector that closed higher, even as oil prices coughed up early gains. 

WTI crude futures settled lower by 0.1%, or $0.10, to $75.29/bbl after being up 1.7% intraday. Natural gas futures settled higher by 1.4% to $5.82/MMBtu after being up 10% intraday. The early momentum in energy prices fed into the inflation expectations that drove rates higher. 

Unlike yesterday, the weakness wasn't constrained to the highly-valued growth stocks (the Russell 1000 Value Index fell 1.3%), which seemed to engender some concerns about further downside. Reflecting the latter concerns, the CBOE Volatility Index (23.25, +4.49, +23.9%) spiked above the 23.00 level amid increased hedging interest. 

The extent and scope of the selling might have been exacerbated by other negative-sounding developments:

The Conference Board's Consumer Confidence Index dropped to 109.3 in September ( consensus 114.4) from 115.2 in August, the S&P 500 broke below its 50-day moving average (4444), and Senator Warren (D-MA) told Fed Chair Powell she won't support his renomination because she believes the Fed chair made the banking system less safe.

Both Fed Chair Powell and Treasury Secretary Yellen testified before the Senate Banking Committee today. Mr. Powell reiterated his view that inflation pressures should remain elevated before moderating closer to the Fed's 2% longer-run goal. Ms. Yellen said the Treasury's resources will likely be exhausted by Oct. 18 if the debt ceiling isn't addressed.

Reviewing Tuesday's economic data:

• The Conference Board's Consumer Confidence Index dropped to 109.3 in September (consensus 114.4) from an upwardly revised 115.2 (from 113.8) in August. Concerns about the Delta variant were cited as a factor that continued to dampen consumer optimism.
  • The key takeaway from the report is the expectation that consumer spending is apt to be curtailed given that consumer confidence has fallen in back-to-back months.
• The Advance report for International Trade in Goods for August showed a deficit of $87.6 billion, versus a revised $86.8 billion (from $86.4 billion) in July. The Advance report for Retail Inventories for August increased 0.1%, while the Advance report for Wholesale Inventories for August increased 1.2%.
• The July FHFA Housing Price Index increased 1.4% m/m following a revised 1.7% increase (from 1.6%) in June.
• The July S&P Case-Shiller Home Price Index was up 19.9% yr/yr following a 19.1% increase in June.

Looking ahead, investors will receive Pending Home Sales for August and the weekly MBA Mortgage Applications Index on Wednesday. 

• S&P 500 +15.9% YTD
• Russell 2000 +12.9% YTD
• Nasdaq Composite +12.9% YTD
• Dow Jones Industrial Average +12.1% YTD