Daily Markets: Vaccine Rollout, Yellen's 'Big Package' Stimulus Remarks Driving Stocks

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Today’s Big Picture

Equities in Asia finished the week on a mixed note with Japan’s Nikkei shedding 0.7% and India’s Sensex falling 0.9% while China’s Shanghai Composite rose 0.6% and the Hong Kong Hang Seng closed up 0.2%. By mid-day trading, equities in Europe were mostly higher and U.S. futures point to a positive open when those markets open later this morning.

There are several positives spurring equities today. While February Flash Services PMI data for Europe, Japan, and the UK fell MoM, Flash Manufacturing PMIs for those regions were higher across the board MoM. Later this morning we’ll get the Flash February PMI data for the U.S., which help fill in the lines for GDP expectations for the current quarter. Also giving some optimism are reports that the U.S. COVID-19 vaccine supply is poised to double in the coming weeks and months. Bloomberg reports the number of vaccines delivered could rise to almost 20 million a week in March, more than 25 million a week in April and May, over 30 million a week in June, and by summer, potentially enough to give 4.5 million shots a day. On the fiscal stimulus front, Treasury Secretary Janet Yellen once again voiced her view that a “big package” of stimulus is necessary to help the economy stage a full recovery even though 2021 economic data has surprised to the upside as of late.

Data Download

International Economy

Japan’s Inflation rate increased to -0.6% YoY in January from -1.2% in December.

Germany’s PPI increased 1.4% MoM in January from 0.8% in December where it was expected to remain.

The UK saw retail sales slumped 5.9% YoY in January vs. the 3.1% YoY increase in December, widely missing the expected decline of 1.3% for January.

This morning brought a slew of flash PMI data for February:

  • Japan’s Manufacturing rose to 50.6 from 49.8 while Services fell to 45.8 from 46.1.
  • Germany’s Manufacturing PMI rose to 60.6 from 57.1 in January well ahead of the expected drop to 56.5 but the flash Services reading slipped to 45.9 from 46.7 but was modestly better than the expected 46.5.
  • The Eurozone’s Manufacturing climbed to 57.7 from 54.8 vs. the expected drop to 54.3 while Services fell to 44.7 from 45.4 vs. the expected to increase to 45.9.
  • The UK’s Manufacturing rose to 54.9 from 54.1 from which it was expected to decline to 53.2 while Services jumped to 49.7 from 39.5 from which it was expected to rise to 41.0.

Domestic Economy

The headline data for January residential construction released by the U.S. Census today revealed that permits rose 10.4% MoM and are now up 22.5% YoY with single-family sector permits up 29.9% YoY. Multifamily permits were up 28.0% MoM. On the other end of the spectrum, starts declined 6% MoM, but with the bad weather, this isn’t altogether unsurprising.

Yesterday’s jobless claims for both initial and continuing claims came in above expectations and last week’s initial claims were revised upward 55k to 848k. This is the third week in a row without an improvement in jobless claims.

Thursday’s Philly Fed manufacturing report beat expectations with the headline number dropping to 23.1 from 26.5 rather than the anticipated decline to 20. There was some deceleration in the pace of growth, but activity remains at the high end of the readings over the past several months. The expectations component remains positive but took a hit with the index dropping from 52.8 to 39.5.

Later today we will get the February Flash IHS Markit Manufacturing and Services PMI, January Existing Home Sales data, and the usual weekly Baker Hughes Oil Rig report.


U.S. stocks finished lower yesterday, marking the third straight drop for the S&P 500 and the Nasdaq Composite Index. The drop in Walmart (WMT) and Boeing (BA) weighed on blue-chip stocks, leading the Dow Jones Industrial Average to snap a three-session string of record closing highs. Small-cap stocks were the hardest hit on the day as the Russell 2000 shed 1.67%. Consumer Discretionary and Utilities were the only sectors to finish the day higher.

The bear-steepening of the U.S. yield curve has continued, with the 30-year yield closing the day up almost four basis points with steady steepening across the term structure. The U.S. dollar closed the day near its 50-day moving average, dropping 0.25%, while WTI experienced its worst performance since January 15.

Stocks to Watch

Deere & Co. (DE) reported January quarter EPS of $3.87 significantly higher than the $2.17 consensus; revenue for the quarter rose 23.3% YoY to $8.05 billion vs. the $7.12 billion consensus. For 2021, net income is forecasted to be in a range of $4.6-$5.0 billion with Production & Precision Ag sales of $15.5-16.5 billion, Small Ag & Turf sales of $10.5-11.5 billion, and Construction & Forestry of $10.5-11.0 billion.

Applied Materials (AMAT) reported January quarter EPS of $1.39 per share, well ahead of the $1.28 consensus as revenue for the quarter climbed 24% YoY to $5.16 billion, also well ahead of the $4.97 billion consensus. The company shared it continues to experience an acceleration in demand, driven by a combination of major macro and industry trends that are fueling higher consumption of silicon. For the current quarter, Applied sees EPS of $1.44-$1.56 vs. the $1.28 consensus.

Organic light-emitting diode company Universal Display (OLED) reported December quarter EPS of $1.13, significantly higher than the $0.63 consensus, as revenue for the quarter rose 39.1% YoY to $141.5 million vs the $109.3 million consensus. Revenue from royalty and license fees was $75.0 million in the quarter vs. $37.8 million in the year-ago quarter. For 2021, Universal sees revenue of $530-560 million vs. the $546 million consensus.

Dropbox (DBX) reported December quarter results that topped top and bottom-line expectations and guided the current quarter above consensus expectations. Total average recurring revenue (ARR) ended 2020 at $2.022 billion, an increase of $41.2 million QOQ and 11% YoY. Paying users ended the year at 15.48 million, vs. 14.31 million exiting 2019. The average revenue per paying user was $130.17, as compared to $125.00 for the same period last year. For the current quarter, Dropbox sees revenue of $504-$506 million vs. the $504 million consensus while for 2021 its sees revenue in the range of $2.095-$2.115 billion vs. the $2.11 billion consensus.

Revenue and EPS for AMN Healthcare’s (AMN) December quarter topped consensus expectations. Revenue for the Nurse and Allied Solutions segment was $448 million, up 6% YoY and 17% QoQ while Travel Nurse revenue increased 23% YoY and 15% QoQ. Allied division revenue decreased 13% YoY but was 23% higher QoQ. AMN guided current-quarter revenue to $800-820 million vs. the $605.2 million consensus.

Planet Fitness (PLNT) missed December quarter expectations for both revenue and EPS and opted not to offer forward guidance. System-wide same-store sales decreased 10.6% during the quarter with franchisee-owned same-store sales down 10.6% and corporate-owned same-store sales fell 11.7%. 130 new Planet Fitness stores were opened system-wide during the year, bringing system-wide total stores to 2,124 exiting 2020.

December quarter results at Rackspace Technologies (RXT) topped top and bottom-line expectations as revenue from Multicloud Services and Apps & Cross-Platform increased 18% YoY. The company sees 2021 EPS of $0.95-1.05 vs. the $1.11 consensus with revenue for the year in the range of $2.9-3.1 billion vs. the $2.94 billion consensus.

Roku (ROKU) reported December quarter EPS of $0.49, well ahead of the expected -$0.03 consensus as revenue rose 58.0% YoY to $649.89 million vs. the $617.4 million consensus. The company sees current-quarter revenue of ~$485 million vs. the $459.7 million consensus. Roku added 14.3 million incremental active accounts in 2020 to reach 51.2 million at year-end and noted streaming hours increased by 20.9 billion hours YoY to a record 58.7 billion.

Lumber prices inched above $1,000 per 1,000 board feet yesterday according to Random Length Lumber Futures for March with the day’s high of $1,004.90 double the price from just three months ago and a record. Investors will want to monitor comments on lumber and other inputs as homebuilders such as Toll Brothers (TOL), DR Horton (DHI), and others report their quarterly results and make the post-earnings conference rounds.

Mark your calendars! The CEOs of Facebook (FB), Alphabet (GOOGL), and Twitter (TWTR) will testify before a U.S. House panel on March 25 on “misinformation and disinformation plaguing online platforms” as Congress considers whether to make changes in legal protections for social media companies.

After today’s market close, no companies are is expected to report their quarterly results. Investors looking to get a jump on those reports to be had in the coming days should visit Nasdaq’s earnings calendar page.

On the Horizon

  • February 22: Chicago Fed National Activity, Dallas Fed Manufacturing
  • February 23: S&P/Case-Shiller Home Prices, CB Consumer Confidence, weekly API Crude Oil Stocks
  • February 24: New Home Sales, weekly EIA Energy Stocks
  • February 25: Durable Goods, Weekly Jobless Claims, Pending Home Sales
  • February 26: Personal Income & Spending, Goods Trade Balance, Chicago PMI, Michigan Consumer Sentiment
  • March 1: Markit Manufacturing PMI, ISM Manufacturing, Construction Spending, Total Vehicle Sales
  • March 2: IBD/TIPP Economic Optimism, API Crude Oil Stocks
  • March 3: ADP Employment Change, Markit Services PMI, ISM Non-Manufacturing, EIA Energy Stocks
  • March 4: Jobless Claims, Nonfarm Productivity, Factory Orders
  • March 5: Nonfarm Payrolls, Balance of Trade

Thought for the Day

“One small crack does not mean you are broken, it means that you were put to the test and you didn’t fall apart.” ~ Anonymous.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Chris Versace

Christopher (Chris) Versace is the Chief Investment Officer and thematic strategist at Tematica Research. The proprietary thematic investing framework that he’s developed over the last decade leverages changing economic, demographic, psychographic and technology landscapes to identify pronounced, multi-year structural changes. This framework sits at the heart of Tematica’s investment themes and indices and builds on his more than 25 years analyzing industries, companies and their business models as well as financial statements. Versace is the co-author of “Cocktail Investing: Distilling Everyday Noise into Clear Investing Signals” and hosts the Thematic Signals podcast. He is also an Assistant Professor at NJCU School of Business, where he developed the NJCU New Jersey 50 Index.

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Lenore Elle Hawkins

Lenore Elle Hawkins serves as the Chief Macro Strategist for Tematica Research. With over 20 years of experience in finance, her focus is on macroeconomic influences that create investing headwinds or tailwinds. Lenore co-authored the book Cocktail Investing and in addition to her Tematica work, provides M&A consulting services for companies in Europe looking to expand globally. She holds a degree in Mathematics and Economics from Claremont McKenna College, an MBA in Finance from the Anderson School at UCLA and is a member of the Mont Pelerin Society.

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Mark Abssy

Mark Abssy is Head of Indexing at Tematica Research focused on index and Exchange Traded Product development. He has product development and management experience with Indexes, ETFs, ETNs, Mutual Funds and listed derivatives. In his 25 year career he has held product development and management positions at NYSE|ICE, ISE ETF Ventures, Morgan Stanley, Fidelity Investments and Loomis Sayles. He received a BSBA from Northeastern University with a focus in Finance and International Business.

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