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End of Day Brief - Wed Feb. 24 - Stocks surge as Dow makes new high

Dow closes at new record high in strong session

Stocks reversed their early losses and had a positive session as Federal Reserve Chairman Jerome Powell gave his second day of testimony to lawmakers and reaffirmed his view that the economy needs continued support. Also helping to improve risk sentiment was news that FDA staff have determined ahead of a review meeting later this week that they view J&J's COVID-19 vaccine candidate both safe and effective.

ECONOMIC EVENTS: In the U.S., new home sales rose 4.3% to a 923,000 pace in January, which was much stronger than expected.

Fed Chair Powell reprised his Monetary Policy Report to the House Financial Services Committee today following yesterday's Senate testimony, during which he confirmed the Fed remains committed to its ultra accommodative policy stance.

In other Fed news, the Federal Reserve Bank said earlier that its staff was investigating a possible issue or disruption to "multiple services." In a status update at 2:30 pm ET, the Fed said that access to FedCash Services via the FedLine Web solution had been restored.

TOP NEWS: In COVID-19 news, the FDA released its detailed analysis of Johnson & Johnson's ($JNJ) single-shot vaccine ahead of a meeting of a committee of outside experts on Friday to evaluate the analyses by both the agency and the company. In briefing documents ahead of Friday's panel meeting, FDA staff said that "based on the totality of scientific evidence available, including data from adequate and well-controlled trials, if available, it is reasonable to believe that the product may be effective to prevent, diagnose, or treat such serious or life-threatening disease or condition that can be caused by SARS-CoV-2." In the documents, the staff of the FDA also wrote that safety analysis "supported a favorable safety profile with no specific safety concerns identified that would preclude issuance of an EUA," or Emergency Use Authorization.

Shares of Lowe's ($LOW) were 3.7% lower despite the company beating consensus Q4 adjusted EPS and revenue expectations while reporting comparable sales for the U.S. home improvement business increased 28.6%. Lowe's said that if its positive trends continue, FY21 revenue could approach $86B, which is above the current $85.4B consensus forecast, adding that it is "confident" in taking market share and improving operating income in FY21.

In other earnings news, Square ($SQ) fell 7.4% after the company reported what Piper Sandler analyst Christopher Donat called "an expense-driven earnings beat." While many metrics were "impressive," they were not good enough to justify the 19% year-to-date increase in the shares, said Donat. Of note, Square also announced that it has purchased approximately 3,318 bitcoins at an aggregate purchase price of $170M. Combined with Square's previous purchase of $50M in bitcoin, bitcoin now "represents approximately five percent of Square's total cash, cash equivalents and marketable securities as of December 31, 2020." Meanwhile, Square CFO Amrita Ahuja said on CNBC's "Squawk Alley" that the company's Cash App platform saw 1M first-time bitcoin buyers in January.

Fisker ($FSR) shares surged 38.6% after the electric car hopeful announced it has entered into a memorandum of understanding with Hon Hai Technology Group ($HNHPF), or "Foxconn," supporting a project to develop a "breakthrough electric vehicle." The proposed collaboration, codenamed "Project PEAR," will see Fisker and Foxconn jointly develop a new segment vehicle and Foxconn manufacture the vehicle at projected annual volumes of more than 250,000, the company stated.

Exelon ($EXC) announced its board has approved a plan to separate Exelon Utilities, comprised of the company's six regulated electric and gas utilities, and Exelon Generation, its competitive power generation and customer-facing energy businesses into two publicly traded companies.

MAJOR MOVERS: Among the noteworthy gainers was Poseida Therapeutics ($PSTX), which rose 9.2% after announcing a presentation that will include a case study of a patient with metastatic castration-resistant prostate cancer treated with P-PSMA-101 at a dose of 0.25 x 10e6 cells/kg "who showed a marked decrease in PSA expression levels of more than 50% in the first three weeks post treatment and is continuing on trial." Also higher was Owens & Minor ($OMI), which gained 29% after reporting quarterly results.

Among the notable losers was Workhorse ($WKHS), which dropped 8.1% further after sliding yesterday following news that the U.S. Postal Service awarded a 10-year contract to Oshkosh Defense ($OSK) to manufacture a new generation of U.S.-built postal delivery vehicles. Oshkosh shares gained another 3% this morning after yesterday afternoon's news of the deal. Also lower were Entercom ($ETM) and ($OSTK), which fell 18.5% and 17.3%, respectively, after reporting quarterly results.

Reviewing Wednesday's economic data:

  • New home sales increased 4.3% m/m to a seasonally adjusted annual rate of 923,000 in January ( consensus 855,000) from an upwardly revised 885,000 (from 842,000) in December. On a yr/yr basis, new home sales were up 19.3%.
    • The key takeaway from the report is that new home sales, which are counted when contracts are signed, ramped up again as demand remained strong in the face of higher prices. Separately, the South remains a hot spot for relocation, evidenced by a 40.4% yr/yr increase in new home sales.
  • The weekly MBA Mortgage Applications Index dropped 11.4% following a 5.1% decline in the prior week.

  • Russell 2000 +15.7% YTD
  • Nasdaq Composite +5.5% YTD
  • S&P 500 +4.5% YTD
  • Dow Jones Industrial Average +4.4% YTD

Market Snapshot
SP 5003925.43+44.06(1.14%)
10-yr Note -3/321.385
NYSEAdv 2145 Dec 1067 Vol 1.2 bln
NasdaqAdv 2823 Dec 1136 Vol 5.6 bln

Industry Watch
Strong: Financials, Energy, Industrials, Materials, Information Technology
Weak: Utilities, Consumer Staples

Moving the Market

-- Dow closes at record high amid continued support from reopening optimism, a buy-the-dip mindset, and Fed Chair Powell

-- Treasury yields continued to rise amid expectations for economic growth and inflation

-- Fed Chair Powell said it could take another three years for central bank to meet inflation goal

-- Covid-19 vaccine from Johnson & Johnson (JNJ) will likely receive emergency use authorization soon

Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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