$特斯拉(TSLA)$ PsychoMarket Recap - Monday, August 16, 2021
Stocks finished mixed, with the S&P 500 (SPY) and Dow Jones (DIA) remarkably recovering losses early in the session to narrowly eke out a new intraday record high despite massive geopolitical concerns and disappointing economic data coming out of China. The tech-heavy Nasdaq (QQQ) also recovered to finish roughly even while the Russell 2000 (IWM), which tracks the performance of small-caps, was down 0.75% at the time of writing.
China released economic data for July that showed growth rates slow down dramatically as the world’s second largest economy battles with summer flooding and the resurgence of coronavirus thanks to the highly contagious delta variant. Industrial production, a gauge of activity in the manufacturing, mining and utilities sectors, grew by 6.4% year-over-year in July, a sharp deceleration from the 8.3% rise in June and below the 7.9% growth expected. Retail sales, a key measurement of consumer sentiment in the world’s most populous nation, grew by 8.5% in July, way below the 12.1% increase in June and missing the 11.5% expected by economists.
The National Bureau of Statistics noted “the impact of multiple factors including the growing external uncertainties and the domestic COVID-19 epidemic and flooding situation,” according to a release. The bureau added that the “economic recovery is still unstable and uneven.”
In other, very, very sad news, disorder in Afghanistan further weighed on global markets, with chaos erupting in the capital city of Kabul the last few days as civilians tried to flee the country being swiftly overtaken by the Taliban. Amid the pullback of US forces after more than twenty years of being in the country, the Taliban have regained control of the country with terrifying, ruthless swiftness. As of today, the President of Afghanistan fled the country and the Taliban is in the process of forming a new government. This is devastating news and breaks my heart to see.
In more unfortunate news, the number of children hospitalized in the US with COVID-19 has reached a new record of 1902 across the country as of Saturday. According to Reuters, children now compromise 2.4% of all coronavirus hospitalizations as the surge brought on by the delta variant continues. Moreover, according to Reuters, the number of COVID-19 patients aged 18 to 29, 30 to 39 and 40 to 49 also reached record level highs last week.
The U.S. now has an average of about 129,000 new COVID-19 cases per day, a rate that has doubled in a little over two weeks, the number of hospitalized is at a six month high, and roughly 600 people are dying each day, double the death rate seen in late July.
However, while this is definitely not good, it is important to mention that cases remain highly concentrated in areas of high vaccine hesitancy. According to John Hopkins University, almost ⅓ of all COVID hospitalizations in the US are in Texas or Florida.
According to data analysis by the Associated Press using data through May 2021, shows that 98.9% of those hospitalized with COVID are unvaccinated (only 1,200 of 107,000 hospitalizations as of May 2021). Dr. Rochelle Wolensky, Director of the Center for Disease Control and Prevention (CDC), said “There is a clear message that is coming through: This is becoming a pandemic of the unvaccinated. Our biggest concern is we are going to continue to see preventable cases, hospitalizations and sadly deaths among the unvaccinated.”
A fifth of the nation's COVID-19 hospitalizations are in Florida, where the number of hospitalized COVID-19 patients hit a record 16,100 on Saturday, according to a Reuters tally. More than 90% of the state's intensive care beds are filled, according to data from the Department of Health and Human Services.
As of Friday, 91% of companies in the SPY have reported Q2 earnings, with 87% of these topping consensus estimates on earnings per share, according to data compiled by FactSet. The expected, year-over-year overall growth rate for the SPY currently stands at 89.3%, the fastest increase since the Q4 2009. David Kostin, Chief US Equity Strategist at Goldman Sachs, said “In an earnings season with many surprises – including the highest frequency of EPS [earnings per share] beats in our 22-year data history – one of the most notable was the surge in corporate buyback activity. Strong corporate equity demand is one reason we forecast a 5% return to our SPY year-end target of $470”
Highlights
In the past month or so, financial, material, industrial, and healthcare stocks have been the outperformers in the SPY while the rally in tech stocks has cooled down.
Shares of Tesla (TSLA) fell after regulators from the National Highway Traffic Safety Administration (NHTSA) said it opened a formal safety investigation into Tesla’s autopilot system. NHTSA says it has identified 11 crashes since January 2018 in which Tesla models "have encountered first responder scenes and subsequently struck one or more vehicles involved with those scenes."
Bluesky, an organization funded by Twitter (TWTR) to build technology aimed at fundamentally changing how social media platforms operate, announced Jay Graber, a founder of a social events startup and digital currency developer, to lead the project.
Movie “Free Guy” grossed $28.4 million in the US during its opening weekend, higher than the $15-17 million expected. Unlike other movies, this one was not released on stream simultaneously and is a theater exclusive for the next 6 weeks. AMC stock responded positively to this.
**Please note that current stock price was written during the session and may not reflect closing prices**
American International Group (AIG) target raised by Morgan Stanley from $60 to $62 at overweight. Stock currently around $54
Burlington Stores (BURL) target raised by JP Morgan from $380 to $427 at Overweight. Stock currently around $341
Darling Ingredients (DAR) target raised by Raymond James from $95 to $105 at Strong-Buy. Stock currently around $79
Home Depot (HD) target raised by Raymond James from $350 to $360 at Outperform. Stock currently around $335
Lululemon (LULU) target raised by JP Morgan from $400 to $450 at Overweight. Stock currently around $407
Restoration Hardware (RH) target raised by Cowen from $750 to $850 at Outperform. Stock currently around $717
Sea Limited (SE) target raised by Cowen from $280 to $345 at Outperform. Stock currently around $290
TJX Companies (TJX) target raised by JP Morgan from $80 to $86 at Overweight. Stock currently around $70
Ulta Beauty (ULTA) target raised by Oppenheimer from $385 to $415 at Outperform. Stock currently around $370
“A gem cannot be polished without friction, nor a man perfected without trials.” - Seneca
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