Market Review: June 26, 2023

Closing Recap

Monday, June 26, 2023





DJ Industrials




S&P 500








Russell 2000













U.S. stocks start the week mixed, as NYSE breadth was firmly positive most of the trading day (about 2:1 advancers leading decliners), led by big gains in Energy, REITs, Industrials, and Materials but weakness in Consumer Discretionary and Communications sectors, which carry more weight in the Nasdaq and S&P 500, dragged broader averages lower. Large cap names like TSLA, NVDA, GOOGL, META, AMZN, NFLX, MSFT, AMD weighed down the bigger averages while softness in Healthcare AMGM, MRK, and JNJ weighed on the Dow Jones Industrials (offset by strength in CVX, HD, and NKE). The Smallcap Russell 2000 outperformed on the day led by Energy and Regional Bank gains. Bond yields edged lower while energy markets were quiet as investors brushed off this weekend’s events in Russia. Investors are focused on potential market drivers this week related to inflation and growth prospects as global central bankers will meet in Portugal for the European Central Bank’s annual forum, which investors will watch for clues about the path for interest rates around the world. Europe’s Stoxx 600 fell for a sixth straight session, gold edged higher with oil and the dollar eased.


Another possible catalyst this week is the modest revival of the IPO market as a handful of deals are coming this week after what has been a cold market for more than 18-months. Among the deals expected to price this week: 1) Kodiak Gas Services, Inc. (KGS) 16M share IPO, expected price range $19-$22, (trade date est. 6/29), Fidelis Insurance Holdings Limited (FIHL) 17M shares IPO, expected price range $16-$19 (trade date est. 6/29), and Savers Value Village, Inc. (SVV) 18.75M share IPO, expected price range $15-$17 (trade date est. 6/29).


Commodities, Currencies and Treasuries

·     Oil prices finish higher, with WTI crude gaining $0.21 or 0.3% to settle at $69.37 per barrel as oil and broader financial markets were assessing the impact of a mercenary commander’s short-lived mutiny on the position of Russian President Vladimir Putin. Brent Crude futures settled at $74.18/bbl, up 33 cents, 0.45%. Natural gas prices rose 2.27% to $2.791 mln Btus.

·     Gold prices rose $4.20 to settle at $1,933.80 an ounce, slightly above three-month lows last week, as concerns surrounding the political turmoil in Russia drove flows into safe-haven bullion, outweighing risks from the Federal Reserve’s hawkish outlook.

·     Treasury yields down slightly but holding steady throughout the day awaiting key economic data this week. The U.S. Treasury sold $42B in 2-year notes at high yield 4.670% vs. 4.678% when issued prior, with bid-to-cover ratio 2.86 vs. 2.90 prior auction as primary dealers take 13.34% of U.S. 2-year notes sale, direct 18.17% and indirect bidders awarded 68.49%.






WTI Crude















10-Year Note





Sector News Breakdown



·     LCID takes a 3.7% stake in luxury car maker Aston Martin under a deal that will see the electric vehicle start-up supplying the car maker with batteries and other technology. Aston Martin, which will launch its first battery-electric vehicles (BEV) from 2025.

·     TSLA downgraded to Neutral from Buy at Goldman Sachs, but raises its EPS, target multiple (45x to 55x) and price target from $185 to $248. Deutsche Bank notes raised its TSLA 2Q deliveries estimate to 448k units (+76% YoY, +6% QoQ), ahead of results this weekend.

·     GM said earlier today it does not expect to put TSLA-compatible charging ports on its new Chevrolet Silverado EV pickups before model year 2025.

·     XPEV said to Launch G6 Ultra Smart Coupe SUV on June 29.


Retail, Consumer Staples & Restaurants:

·     In beverages: SAM mentioned positively in Barron’s this weekend saying the hard-seltzer boom has fizzled, but don’t count out the company out as the beaten-up stock looks ready to get off the mat this summer. This may be the year of Twisted Tea.

·     In restaurants: BJRI price tgt raised to $40 at Benchmark as the firm said it came away from mgmt meetings with a greater appreciation of the internal strategic steps that are being taken to make the business more efficient; Wells Fargo initiated industry with a negative as EAT with an underweight rating, TXRH EW rated and said look to get more constructive on pullback.

Leisure, Gaming & Lodging:

·     In Cruise lines: CCL Q2 adj EPS loss (-$0.31) vs. est. loss (-$0.34); Q2 revs $4.9B vs. est. $4.77B; Q2 cash from operations and adjusted free cash flow were positive and both are expected to be positive for 2h’23; forecast Q3 adj profit marginally below estimates amid higher marketing and labor costs; said booking volumes for the second quarter scaled a new peak, shattering record volumes seen in the first quarter; said cumulative advanced booked position for FY24 is above high end of historical range at strong prices; guides FY23 adj Ebitda $4.1B-$4.25B.

·     In Lodging: PLYA was double downgraded from Buy to Underperform at Bank America and cut tgt to $8 from $10 noting the Caribbean has been one of the largest COVID beneficiaries but now sees risks from 1) softening demand trends, 2) potential over-earning and shift to other tourism markets and 3) higher operating leverage than asset light peers across Lodging and travel.

·     In leisure, ride hailing; UBER trades to fresh 52-week highs after Bernstein raised tgt to $50, and reit Top Pick earlier as believes this "is a good business" with a scale/market share advantage and can make the jump to being regarded as such.


Homebuilders, Building Products, Home Furnishing:

·     In flooring: LL said it has rejected a hostile cash buyout bid of $5.76 a share from F9 Brands Inc. subsidiary Cabinets to Go LLC. The bid represents a 34.3% premium to Friday’s closing price of $4.29. LL Flooring said it determined the $5.76-per-share bid "significantly undervalues" the worth of the company. .

·     In Building Products: BLDR estimates and tgt raised at Truist (to $148 from $124) as believes momentum in housing starts will limit 2023 volume weakness heading into a volume growth year in 2024/biggest stock questions are for forward gross & EBITDA margins.



·     In Oil Drillers: Shares of NE, RIG, VAL, SDRL and DO mention positively in Barron’s saying they may be the ones to own as investors realize that oil will be needed to make the world go around for decades. Offshore drillers might be best positioned to take advantage of l-t demand for oil.

·     In Utilities: LNT was upgraded from Neutral to Buy at Bank America saying the recent IUB decisions in support of advance ratemaking for solar suggest to US an improvement in perception of the regulatory climate in that state that will drive re-rating in shares. AWK announced proposed private placement of $900 million of exchangeable senior notes.

·     In Solar: RUN tgt to $43 from $34 and NOVA to $40 from $31 at RBC Capital while updated quarterly estimates saying based on current share prices, using a 6% discount rate on existing customers that RUN and NOVA have already financed lower than 6%, RBC believes the market is ascribing little to no value to future growth.



Banks, Brokers, Asset Managers:

·     In Banks: KRE shares outperform early, snapping 5-day losing streak as regional banks rebound; ARES announced that certain funds managed by its Alternative Credit strategy have completed the acquisition of a $3.5 billion specialty finance loan portfolio from PACW

·     In payments: GPN tgt cut to $100 from $110 at Mizuho and lower ests saying their analysis suggests that management’s organic growth guide may be overly ambitious as the deceleration in Visa’s US credit volumes in April & May could weigh on GPN’s ability to achieve guidance.

·     In Financial Services: NCR announced the filing of the Form 10 registration statement with the U.S. Securities and Exchange Commission for the planned spin-off of its ATM business.

·     In REITs: PLD has agreed to pay BX $3.1 billion for a portfolio of U.S. warehouses and distribution properties; the portfolio includes nearly 14 million square feet in about 70 properties in major markets including Atlanta, California, Dallas, South Florida, DC, and NY – WSJ reported.

·     Commercial real estate stocks surged after SLG announced that it has sold a 49.9% interest in 245 Park Avenue to a U.S. affiliate of Mori Trust Co., Ltd. at a gross asset valuation of $2.0 billion. The price came at only a modest discount to recent sales of other properties – shares of DEI, VNO, among REITS surging on day.

·     In crypto/Bitcoin: note Bitcoin prices jumped last week, led by upside optimism after global asset manager, BlackRock filed an S-1 with the SEC for a spot Bitcoin ETF. This action reflects the ongoing endeavors of traditional financial institutions to introduce a spot Bitcoin ETF to mkt. Over the last two weeks, Bitcoin has rallied sharply by ~18%.



Biotech & Pharma:

·     AVTX shares plunged over -80% after saying its experimental therapy AVTX-002 did not meet the main goal measured by reduction in asthma-related events compared to placebo.

·     BMEA reported results from an ongoing study for an experimental type 2 diabetes treatment; shares opened higher but quickly reversed ending sharply lower.

·     FGEN shares tumble after saying its experimental drug, pamrevlumab, to treat a type of lung disease (IPF) failed to meet its main goal in phase III trial study and said it plans to discontinue a second late-stage trial on the drug for treating idiopathic pulmonary fibrosis.

·     FRLN announced that the first patient has been dosed in the Phase 1/2 GALILEO-1 clinical trial evaluating FLT201, its adeno-associated virus gene therapy candidate, in Gaucher disease type 1

·     LLY released data on orforglipron, its first nonpeptide oral glucagon-like peptide-1 receptor agonist being studied for chronic weight management in participants with obesity or overweight, and detailed results from SURMOUNT-2, a Phase 3 clinical trial evaluating the efficacy and safety of LLY’s tirzepatide for chronic weight mgmt in those with obesity and type 2 diabetes.

·     MLTX shares jumped following positive Phase II data over the weekend saying Sonelokimab (SLK) phase 2 HS trial met its primary endpoint of HiSCR75 at 12 weeks. SLK 120mg dose showed a statistically significant placebo adjusted HiSCR75 of 29% at 12 weeks.

·     MRNA upgraded to Buy from Neutral at UBS but lowers tgt to $191 from $221 citing valuation, pipeline progress with line of sight to the next generation of mRNA vaccines beyond COVID across RSV (’24 potential launch), flu (Ph3 data YE23) and says CMV Ph3 could be a major oppty.

·     PFE shares slipped after saying it is discontinuing its once-daily oral GLP-1 agonist lotiglipron, in favor of twice-daily danuglipron but is now also developing a once-daily "modified release version" of danuglipron.

·     UBX downgraded to Neutral from Outperform at Wedbush on limited saying sees current cash of $83.4M providing runway into Q4:24 as a meaningful near-term overhang to the stock in addition to a lack of other near-term value-driving catalysts.


Industrials & Materials

·     In Industrials: Barron’s noted the U.S. is on the cusp of an industrial supercycle, partly fueled by $2T in spending coming from new federal plans for infrastructure and EV development, and that shares if URI, DE, ETN, SBGSY and PWR are among the stocks worth a look.

·     In Aerospace: MRCY shares slide after its Board noted following a comprehensive review of strategic alternatives, the company’s strategic plan under a refreshed leadership team represents the best path forward (shares downgraded at JPM); SPR announced constructive and positive progress on negotiations with the international Association of Machinists and Aerospace workers and will continue talks today; SPCE announces that Galactic 01, SPCE’s first commercial spaceflight, has a target flight date of June 29th and announces crew onboard the spaceflight.


Materials, Metals & Mining

·     In chemicals: BMO Capital with a few changes as they downgraded ASH to Market Perform from Outperform (tgt to $90 from $109) as believes continued destocking in a host of ASH’s end-markets has set the stage for continued earnings pressure; downgraded CE to MP from OP (tgt to $119 from $133) as macro appears to have stalled with the China recovery muted, Europe struggling, and the U.S. slowing and upgraded SHW to Outperform as sees reasonable upside to its above consensus estimates with raw materials fading in the near-term.

·     In lithium sector: ALB price tgt raised to $291 from $270 and LTHM to $32 from $30 at Keybanc and raising estimates based on more optimistic view on pricing, reflecting recent improvement in spot/monthly contract prices, and its meeting with IR at the conference. Separately, LTHM said a fire broke out at its largest manufacturing plant in Bessemer City, North Carolina; the fire was currently restricted to one building, where solid lithium metal ingots are produced.



Internet, Media & Telecom

·     GOOGL downgraded from Buy to Neutral at UBS while raise tgt to $132 from $123 given it’s difficult to see upside to its current high-single-digit Sites growth estimates and consensus calls for acceleration to 11% ex-FX in ’24 (vs. UBSe +9%). Separately, Bank America reinstated GOOGL with a Buy and $128 tgt following survey which is biased toward heavy Internet users, indicated that: 59% use ChatGPT, 51% use Bing, and 34% use Bard; 30% use Bing and Bard daily.

·     AMZN announced an estimated investment of $7.8B by 2030 to expand its data center operations in Ohio, saying it will bring hundreds of direct jobs and support thousands of additional jobs at local businesses.


Hardware & Software movers:

·     IBM confirmed weekend reports that it will acquire cloud software company Apptio from Vista Equity Partners for $4.6 bln in cash as expects the transaction to close in 2H’23.

·     SNOW expands partnership with MSFT to bring large-scale generative AI models and increased machine learning capabilities to the data cloud. Snowflake focuses on new product integrations with Microsoft’s Azure OpenAI, Azure ML, and more.

·     SWI said late Friday some current and former executives received notices from the SEC in connection with an investigation of a cyberattack on its Orion platform.

·     CAMP was downgraded from Buy to Hold at Jefferies saying it’s hard to see the stock trading up materially from current levels as feels compelled to value CalAmp more like a hardware business.

·     Databricks is buying generative AI startup MosaicML for $1.3 billion.



·     WOLF shares were strong after announced a $1.25 billion secured note financing from an investment group led by APO, with an accordion feature for up to an additional $750 million; shares of other Silicon Carbide (SiC) semis were active on news (ON, STM).

·     MU earnings later this week for memory/DRAM sector. Several analysts with previews as Mizuho said it expects: 1) a potentially soft MayQ but AugQ trends encouraging with pricing and inventory, 2) n-t challenges in 2H with a softer DC outlook and China CAC restrictions as it has noted, 3) Seasonal Handset/PC better & DC recovery into late-C23E and 1H24E could be tailwind.


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.