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End of Day Brief - Tuesday Mar. 23 - Stocks lower on some concerns

Stocks close lower as oil slides, bonds advance, virus worry, and U.S.-China tension

Wall Street had a down day as the market continues to weigh the fresh restrictions in Europe, progress on the vaccine rollout domestically and internationally and moves in the oil and bond markets. Adding to the mix are inflation worries and another flare-up in U.S.-China tensions, which all amounted to stocks pulling back in Tuesday trading.

ECONOMIC EVENTS: In the U.S., the current account deficit widened sharply to a 13-year high of $188.5B in Q4, up $7.6B from a 12-year high of $180.9B in Q3. New home sales plunged 18.2% in February to a 775,000 home pace, which was weaker than expected. The Richmond Fed manufacturing index rose 3 points to 17 in March.

TOP NEWS: The National Institutes of Health said in a statement: "Late Monday, the Data and Safety Monitoring Board (DSMB) notified NIAID, BARDA, and AstraZeneca that it was concerned by information released by AstraZeneca on initial data from its COVID-19 vaccine clinical trial. The DSMB expressed concern that AstraZeneca may have included outdated information from that trial, which may have provided an incomplete view of the efficacy data." In response, AstraZeneca said the Phase 3 trial numbers published yesterday were based on a pre-specified interim analysis with a data cut-off of February 17. "We have reviewed the preliminary assessment of the primary analysis and the results were consistent with the interim analysis. We are now completing the validation of the statistical analysis. We will immediately engage with the independent data safety monitoring board, or DSMB, to share our primary analysis with the most up to date efficacy data. We intend to issue results of the primary analysis within 48 hours," the company added.

In other COVID-19 news, Pfizer ($PFE) announced that it is progressing to multiple ascending doses after completing the dosing of single ascending doses in a Phase 1 study in healthy adults to evaluate the safety and tolerability of an investigational, novel oral antiviral therapeutic for SARS-CoV-2, the virus that causes COVID-19.

Meanwhile, Bloomberg reported that millions more doses of Johnson & Johnson's ($JNJ) COVID-19 vaccine are expected to be released after U.S. regulators cleared the way for contract manufacturer Catalent ($CTLT) to help produce them. The Food and Drug Administration has approved a Catalent facility in Bloomington, Indiana, to make the single-dose vaccine's active ingredient, people familiar with the matter told Bloomberg.

In M&A news, The Hartford ($HIG) announced that its board of directors, after consultation with its financial and legal advisors, has unanimously rejected Chubb's ($CB) March 11, 2021, unsolicited proposal to acquire The Hartford and "determined that entering into discussions regarding a strategic transaction would not be in the best interests of the company and its shareholders."

Additionally, movie exhibitor stocks - including AMC Entertainment ($AMC), Cinemark ($CNK), Cineworld Group ($CNNWF), Imax ($IMAX), Marcus ($MCS), and National CineMedia ($NCMI) - were all trading lower after Disney ($DIS) said that upcoming summer films "Black Widow" and "Cruella" will receive day-and-date releases in theaters and on Disney+ with Premier Access.

MAJOR MOVERS: Among the noteworthy gainers was Oramed Pharmaceuticals ($ORMP), which rose 5.3% after announcing that it has screened the first patient in its ORA-D-013-2 study, the second of two concurrent Phase 3 studies of its oral insulin capsule, ORMD-0801, for the treatment of type 2 diabetes. Also higher was BioLife Solutions ($BLFS), which gained 8.8% after the company reported Q4 results and announced a deal to buy Stirling Ultracold, which makes ultra-low temperature bio freezers.

Among the notable losers was Frequency Therapeutics ($FREQ), which dropped 78% after announcing that day-90 data from its FX-322 Phase 2a study show that four weekly injections in subjects with mild to moderately severe sensorineural hearing loss, or SNHL, did not demonstrate improvements in hearing measures versus placebo. Also lower was Ionis Pharmaceuticals ($IONS), which fell 21.7% after the company announced that its partner Roche ($RHHBY) has elected to discontinue dosing the Phase 3 GENERATION HD1 study of tominersen in manifest Huntington's disease based on a pre-planned review of data.

Reviewing Tuesday's economic data:

  • New home sales declined 18.2% m/m in February to a seasonally adjusted annual rate of 775,000 ( consensus 867,000) from an upwardly revised 948,000 (from 923,000) in January. On a yr/yr basis, new home sales were up 8.2%.
    • The key takeaway from the report is that new home sales, which are counted when contracts are signed, were curtailed by the deep freeze in the Midwest and South during the month; however, the sizable drop in new home sales m/m in the West (-16.4%), and the higher proportion of new homes sold for $399,999 or less, also speaks to the increased affordability pressures being applied by high prices and rising mortgage rates.
  • The current account deficit for the fourth quarter totaled $188.5 billion ( consensus -$190.0 billion). The third quarter deficit was revised to $196.1 billion from $178.5 billion.

  • Russell 2000 +10.7% YTD
  • Dow Jones Industrial Average +5.9% YTD
  • S&P 500 +4.1% YTD
  • Nasdaq Composite +2.6% YTD

Market Snapshot

SP 5003910.52-30.07(-0.76%)
10-yr Note +28/321.633
NYSEAdv 742 Dec 2464 Vol 1.1 bln
NasdaqAdv 545 Dec 3338 Vol 5.5 bln

Industry Watch

Strong: Utilities, Real Estate, Consumer Staples
Weak: Financials, Materials, Industrials, Energy

Moving the Market

-- Large-cap indices decline about 1% in defensive session

-- Russell 2000 and cyclical stocks underperformed for second straight day

-- Profit-taking/rebalancing efforts

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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