Market Review: April 21, 2023

Closing Recap

Friday, April 21, 2023





DJ Industrials




S&P 500








Russell 2000














After months of volatility for U.S. markets, April has been anything but, trading in a narrow, choppy, and listless range for weeks heading into the busiest week of earnings of the quarter. For the week, the S&P was nearly flat, the Nasdaq down -0.4% and the Dow -0.25%. Reminder the Fed goes into its “blackout” period after today, with no speakers into the May FOMC interest rate policy meeting where a 25-bps hike is widely anticipated. Odds likely increased after today’s April flash Composite PMI Index (PMI) came in at 53.5, an increase from March’s 52.3, and the quickest increase since May 2022, according to S&P Global. The Flash Services Business Activity Index rose to 53.7 vs. the 51.5 forecast, and above March’s 52.6, at a 12-month high. Massive week of earnings with AMZN, GOOGL, MSFT, CAT, MRK, BA, AMGN, CMCSA, GE, KO, HAL, TMUS, UPS, V, VZ, XOM, CVX among the biggest names expected to report. There are also inflation data points (PCE), GDP and more housing data.


Financials declined, with TFC, CMA, USB, ZION, KEY among the worst performers in the S&P 500 heading into the weekend, Earnings thus far in regionals have been “better-than-feared”, while NIM, NII have been mixed, and generally seen an outflow of deposits, but nothing to this point that has created a “panic”. Energy stocks were also among the worst on the day, with oil posting its biggest weekly losing week since last month’s banking crisis. Consumer discretionary (+1%) along with defensive Consumer Staples and Healthcare paced the gains in the S&P on Friday. Materials the worst on the day as lithium stocks took a hit (ALB, LTHM, SQM) after Chile’s President Boric announced a plan to nationalize the country’s lithium industry. Chinese stocks slumped after reports President Biden reportedly intends to limit investment in key parts of China’s economy by U.S. companies, Bloomberg reported. Overall, markets trading sideways most of the week into big earnings week.


Economic Data

·     S&P Global April flash composite PMI reported better at 53.5 (vs 52.3 in March) and vs. 49.0 estimates and S&P global April flash services PMI at 53.7 vs. est. 52.0 (vs 52.6 in March).


Commodities, Currencies & Treasuries

·     Oil prices slipped, with WTI crude $0.50, or 0.65% to settle at $77.87 per barrel, posting its first weekly loss since last month’s banking crisis, weighed down by concerns over demand and the US economy. West Texas Intermediate futures are about 6% lower this week, with fuel markets from gasoline to diesel flashing signs of weakness, while the Federal Reserve said the US economy had stalled in recent weeks. Brent crude oil futures settle at $81.66/bbl, up 56c, 0.69%.

·     Gold prices end lower, falling -$28.60 or 1.4% to settle at $1,990.45 an ounce – close back below $2,000 and down over 1% on the week, pressured by a stronger dollar after hawkish commentary from Federal Reserve officials that could foreshadow further interest rate increases. Fed officials backed another hike as they monitor the economic fallout from bank strains, after lenders increased emergency borrowings from the central bank for the first time in five weeks.

·     Bitcoin continued its drop, losing 2.8% to $27,400. The 10-year U.S. Treasury yield added 1 basis point to 3.55%. The CME FedWatch tool shows nearly 90% odds for a quarter-point rate hike at the May Fed policy meeting. The 2-year yield rose 8.5 bps to 4.188% this week (up over 21 bps last 2-weeks); the 10-yr yield rises 4.9 bps to 3.57% this week (and up over 18 bps last 2-weeks). The US dollar faded late day.






WTI Crude















10-Year Note





Sector News Breakdown



·     TSLA increased prices on its variants of the higher-end Model S and Model X vehicles by $2,500 to $87,490 and $97,490, respectively, after the company’s Q1 results saw reduced profitability and margins from prior cost cuts.

·     In auto suppliers, ALV shares slip on miss as Q1 EPS $0.90 vs. est. $0.92; Q1 revs $2.49B vs. est. $2.31B; Net income fell to $74 million, from $83 million a year ago; Operating cash flow swung to negative $46M from $70M, with free cash flow at negative $189M (LEA, AXL, ADNT all active). Barron’s posted an opinion article saying that with reports about AAPL getting into the car business, it should start with a modest purchase of an automotive supplier that does all the things the iPhone maker already understands. It should acquire VC.

·     In EV space, TM CEO said it must step up its speed and efforts to meet customer expectations in China in EV space as Toyota last year sold just 24,466 battery EVs worldwide, including those of its luxury Lexus brand, accounting for 0.25% of its global sales of 9.5 million vehicles.


Retailers, Consumer Staples & Restaurants:

·     In consumer products: Dow component PG reports Q3 EPS $1.37 on sales $20.07B, topping the consensus of $1.32/$19.28B with organic growth +7% vs est. +4.1% on strong Beauty +7% (est. +3.8%), Grooming +7%, Healthcare +9% and Baby/Family +6%; maintains FY EPS growth 0-4% but expects EPS toward the lower-end as previously stated; guides FY revenue growth ~1% vs prior (1%)-0% and consensus +0.8%; guides FY organic growth ~6% vs prior +4%-5%.

·     Dow component MCD continues its winning ways, rising for the 18th time in last 21-trading days ahead of earnings next week (4/25) – CHE among names hitting 52-week highs today in food/products/restaurants,

·     In discount retailers: BIG downgraded to Underweight and OSTK cut to Neutral at Piper and lowering tgt prices to $7 and $19 respectively based on their industry view that demand for both home furnishings and mattresses has deteriorated since March and will likely remain challenged in the months ahead. DG upgraded to Buy from Hold at Argus with $250 tgt saying with shares down 17% from their 52-week high and tight monetary policy hurting retailers that sell big ticket items, shares look relatively attractive over the next 12 months.

·     Apparel & Footwear: Stifel raises CROX estimates and target (to $150 from $133) at Stifel ahead of the 1Q report to reflect confidence in near-term trends and improving sightlines to balance sheet optionality into 2H; GOOS upgraded from Negative to Mixed at OTR Global.

·     In grocers/food: the WSJ reported AMZN’s Whole Foods Market is planning to cut several hundred corporate jobs, the company said, as the grocer reorganizes its structure to simplify operations. AMZN shares also moved above their 200-day MA resistance of roughly $107.

·     In restaurants: Bloomberg reported Carlyle Group Inc. is considering bringing in fresh backers for its investment in MCD Chinese operations, people familiar with the matter said. Wedbush said into earnings they favor BJRI most based on our Q1 checks, and belief that both comp and margin drivers exist throughout 2023; also favor CMG as checks point to at least an in-line comp in Q1 and believe CMG is well positioned to regain its relative value advantage.


Leisure, Gaming & Lodging:

·     In casinos and gaming (CZR, DKNG, BYD, PENN, MGM): Barclays said in Q1 preview they expect revenue-driven beats from both U.S. regionals and Las Vegas after a solid quarter for demand, as compared to relatively more modest expectations/investor sentiment throughout the quarter.

·     In online travel: Barclays noted online travel stocks have been a mixed bag YTD with ABNB up 38%/32% compared to EXPE up 7%/2% and S&P 500 at +8%, attributing most of the outperformance to share gains during the pent-up demand post-Covid. In terms of fundamentals, they expect online travel names to see double digit y/y revenue and bookings growth, much higher than their advertising/e-commerce internet peers.



·     In Majors and Oil services: SLB reported a top and bottom-line quarterly beat but said despite having led an upcycle so far this year, is poised to see activity plateau in 2023 due to lower gas prices and restrained capital from private exploration and production operators. Baker Hughes (BKR) weekly US total rig count 753 – US gas rig count up 2 to 159 – US oil rig count up 3 to 591.

·     Price tgt changes at Goldman Sachs as raised MRO from $24 to $28, maintains Sell, OXY tgt was raised from $68 to $77, maintains Buy, AR tgt raised from $30 to $34, maintains Buy and PXD tgt raised from $217 to $240, maintains Conviction Buy. RBC Capital raised its price tgts on OXY, PXD and lowered tgts on natural gas names RRC and SWN.

·     In Pipelines: WMB downgraded from Strong Buy to Outperform w/ $36 PT, MMP downgraded from Outperform to Market Perform, and PAA upgraded from Outperform to Strong Buy w/ $17 PT and PAGP with $17 tgt at Raymond James.



Banks, Brokers, Asset Managers, Insurance:

·     The Biden administration is moving to make it easier to more closely regulate nonbank financial institutions such as hedge funds and money-market funds, Treasury Secretary Janet Yellen said, proposing a rollback of Trump-era procedures. A group of top federal regulators is proposing to change the way it designates nonbanks as systemically important. That label currently only applies to the nations’ largest banks and allows extra oversight from the Federal Reserve – WSJ.

·     ASB reported 1Q23 EPS of $0.66 vs. consensus of $0.64 with good credit, well-controlled expenses, and higher EOP deposits, but NIB deposits were down, and NIM came under pressure.

·     CATY posted operating EPS of $1.30 above consensus of $1.25 with weaker NII (EPS: -$0.05) and a higher LLP (-$0.02) partially offset by better NIE (+$0.03).

·     OZK posts record NII and EPS as NIM Expands 8 Bps Q/Q, delivered record net income, record qtrly EPS, and record PPNR.

·     WRB among worst performers in the S&P, hitting 52-week lows after Q1 EPS $1.06 missed the est. $1.31; Q1 revs $2.9B vs. est. $2.86B; Q1 ROSE 17.4% and operating income $275.9M.



·     In hospitals: HCA boosted its revenue forecast for the full year as sees FY EPS $17.25 to $18.55, vs. prior $16.40 to $17.60 and revs $62.5B-$64.5B from prior $61.5B-$63.5B after Q4 top and bottom line both top consensus expectations.

·     In MedTech: SWAV shares spiked after a late morning Bloomberg report that the company is said to draw interest from BSX.


Industrials & Materials


·     In rails: CSX reported an adj EPS beat of 6% and beat on revenue was 3.8% ahead of consensus estimates. But Bernstein notes pricing headwind build to the year and the slow start in international intermodal has led the company to lower volume guidance.

·     In truckers: earnings continue to disappoint as KNX with a miss for Q1 adj EPS $0.73 vs. est. $0.81; Q1 revs $1.64B vs. est. $1.61B and guides 2023 adj EPS $3.35-$3.55 vs. est. $3.85 – two analysts (DB, MSCO) noted negative revisions are being more than offset by multiple expansion. XPO upgraded to Overweight from Neutral at JPMorgan saying its board took a significant step to build credibility that XPO could in fact close the widening efficiency gap with peers.

·     In tankers: Baltic Dry Index Rises 5.03% to 1,504 in London, rising a Third Day while Capesize +10.34% to $16,270, Panamax +0.95% to $13,889, and Supramax 58k tons +1.9% to $13,211.

·     In Industrials: JCI, CARR, TT all downgraded to Mixed from Positive by OTR Global

·     In lithium space: SQM shares slide after Chile’s President said he would nationalize the country’s lithium industry, transferring control of its operations from industry giants to a separate state-owned company (ALB, LAC, LTHM other lithium producers that also declined).

·     In Chemicals: PPG shares rose early after mixed results as 1Q adj EPS $1.82 beat est. $1.54 though revs in-line and guides 2Q aggregate sales volume flat and adj EPS $2.05-2.15; said expects sales volumes to be close to pre-pandemic levels in the second quarter of this year.

·     In metals: copper producer FCX Q1 results top consensus, but down sharply from same period a year ago as profit of $663M down from $1.53B y/y and sales fell to $5.39B from $6.6B (est. $5.21B) saying operations were disrupted by weather.



Hardware & Software movers:

·     In Hardware/telco: AAPL shares came under pressure after Cleveland Research cuts ests for Mar/Jun Q’s and FY23 below consensus on deteriorating sell through & normalized inventory; sees risk to JunQ rev assumptions. DoJ antitrust division said to be considering challenging TMUS proposed acquisition of Mint Mobile.

·     In software: SAP forecast operating profit for the year that was ahead of analysts’ estimates after it announced job cuts and plans to refocus the company on its faster-growing cloud business. Operating profit will be EU8.6 billion to EU8.9 billion ($9.4B-$9.8B) for the year. EVBG shares slumped after co was notified of the termination of its contract with the Florida Division of Emergency Management one year early, effective June 30, 2023. EVCM rose after Reuters reported that the company is exploring a potential sale after garnering takeover interest. 


Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.