Market Review: March 14, 2023

Closing Recap

Tuesday, March 14, 2023





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Just 2 days after two of the three biggest bank failures took place, the S&P 500 (SPX) surged back to its 200-day moving average of around 3,939 after inflation data came in roughly in-line with expectations and wages fell, adding to optimism that the FOMC has the chance to pause its interest-rate hiking campaign next week. Today’s CPI data opened the door for no hike after Federal Reserve officials were set for a 50-basis-point interest-rate increase next week, but the banking turmoil has likely changed priorities for many. Stocks stumbled early afternoon, led by a sharp decline in the financials after S&P said First Republic Bank (FRC) “A” rating placed on CreditWatch negative on funding profile risk; that they expect First Republic Bank to increase wholesale borrowings to shore up its on-balance-sheet liquidity, which would likely weigh on profitability. Those comments took all the regional and large cap banks that had seen big bounces this morning well-off their highs. Also, a Russian jet crashed into a U.S. drone above the Black Sea today, forcing the U.S. to bring the drone down. Stocks had already been fading prior to those two headlines after failing to breach its 200-day MA and hold for the S&P. But the pullback proved to be just another late day “buy the dip” moment that lifted stocks back near afternoon highs. Producer Prices (PPI) data next up tomorrow on data. Transports were a notable decliner in an overall stronger market.


Economic Data:

·     Headline February consumer prices (CPI) exactly in-line with estimates rising +0.4% m/m (after +0.5% in Jan) and y/y prices rise +6.0% (vs. last month +6.4%). On a core basis, or excluding food & energy, CPI rose +0.5% m/m (vs. +0.4% in Jan) and rise +5.5% y/y, in-line (vs. +5.6% in Jan). Real avg hourly earnings (Y/Y) for Feb fell -1.3% (vs. prior -1.9%). The index for shelter was the largest contributor to the monthly all items increase, accounting for over 70 percent of the increase.

·     @charliebilello noted Price changes over last year (CPI report): Transportation: +14.6%, Gas Utilities: +14.3%, Electricity: +12.9%, Food at home: +10.2%, Fuel Oil: +9.2%, Food away from home: +8.4%, Shelter: +8.1%, Overall CPI: +6.0%, New Cars: +5.8%, Medical Care: +2.1%, Gasoline: -2.0%, Used Cars: -13.6%



·     Gold prices settle at $1,901.90 an ounce, slipping -$5.60, coming after a massive push higher recently on a tumbling dollar and Treasury yields as investors sought haven assets following banking woe fears. A steady rise in U.S. inflation in February raised uncertainty over the outcome of the Federal Reserve’s policy meeting next week. Gold showed little reaction to U.S. Consumer Price Index (CPI) data, which showed CPI rose 0.4% monthly in February, as expected. Bullion prices rallied more than 2% in the previous two sessions as investors sought cover after the collapse of U.S. lender Silicon Valley Bank (SVB) spooked the market.

·     Oil prices extend losses, Brent crude falls to lowest since December 2022. U.S. crude oil futures settle at $71.33/bbl, down $3.47, 4.64% while Brent futures settle at $77.45/bbl, down $3.32, 4.11%, each falling to 3-month lows.


Currencies & Treasuries

·     The U.S. Dollar Index (DYX) was little changed, pulling back after earlier gains, slightly stronger against the euro and stronger against the yen. Treasury yields are also rebounding from sharp declines yesterday. Treasury yields jumped a day after the two-year note, which moves in step with interest rate expectations, fell the most in a single day since 1987. The 2-year yield jumped 38 basis points to 4.31% and is on its way to its largest one-day gain since June 5, 2009, when it rose by 35.5 basis points (after falling nearly 100-bps from high to low the last 3-days). The aggressive broad-based selloff which pushed Treasury yields higher across the curve on Tuesday comes just one day after contagion risks from the banking sector had pushed the 2-year rate to its biggest decline since October 20, 1987. Bitcoin prices tumbled off highs, ending near $24,500 after earlier hitting 9-month highs above $26K.






WTI Crude















10-Year Note





Sector News Breakdown


Retailers, Consumer Staples & Restaurants:

·     BG to join the S&P 500 index effective March 15, replacing SBNY which New York state regulators on Sunday closed following the collapse of Silicon Valley Bank.

·     CAL slips early after Q4 results and gave guidance for the first quarter and full year that disappointed Wall Street estimates.

·     TSN plans to shut down two of its poultry plants and lay off nearly 1,700 workers as it tries to improve its chicken operations that produce about one-fifth of the U.S. supply – WSJ reports.

Leisure, Gaming & Lodging:

·     UBER, LYFT, DASH shares rise as a three-judge panel of the California state appeals court on Monday ruled that Proposition 22, the ballot measure passed by state voters in 2020 that classified Uber (UBER) and Lyft (LYFT) drivers as independent contractors rather than as employees, should remain state law. The judges overturned the ruling last year by a California Superior Court judge, who said the proposition was "unenforceable."



·     OPEC further raised its forecast for Chinese oil demand growth in 2023 due to the relaxation of the country’s COVID-19 curbs, although it left the global total steady, citing potential downside risks for world growth. World oil demand in 2023 will rise by 2.32 million barrels per day (bpd), or 2.3%, they said in a monthly report. This was unchanged from last month’s forecast.

·     E&P sector: in research, VET upgraded to Overweight from Neutral on valuation and downgrade OVV to Neutral from Overweight and remove it from JPM’s Analyst Focus List as the FCF/ROC yields are no longer differentiated at strip pricing following the recent cash tax surprise. The firms’ top picks are FANG, MRO, and PDCE

·     MLPs: JPMorgan upgraded MPLX to Overweight and downgraded CEQP to Neutral saying they favor downstream integration. For MPLX says favorable products logistics defensiveness & increased estimates, underpinned by a diverse asset footprint and meaningful refined refinery logistics stability. For CEQP weaker execution, less financial flexibility moves them to sidelines.



·     Shares of U.S. regional banks bounce, looking to claw back some losses from the six-day selloff seen in the wake of Silicon Valley Bank’s collapse, as concern eased about wider contagion in the financial system. Some of todays biggest gainers, after being the biggest decliners last few days, include FRC, WAL, FITB, PACW, KEY, CMA, TFC, ZION. Prices fell recently on concern about a potential banking sector crisis after the collapse of SIVB and SBNY. Big banks also early strength with BAC, C, JPM, WFC strong. Banks finish higher, but off best levels of morning.

·     Moody’s put six banks on review for possible downgrade as it also said it will withdraw ratings on collapsed Signature Bank. Warnings were on First Republic (FRC), Intrust Financial, UMB Corp (UMBF), Zions Bancorp (ZION), Western Alliance (WAL) and Comerica (CMA).

·     Bitcoin prices hit a nine-month high of $26,533 on Tuesday, in its fourth consecutive day of gains, as it appeared to benefit from chaos in global markets following last week’s collapse of Silicon Valley Bank. Cryptocurrency-exposed stocks rose (COIN, MARA, RIOT, MSTR) after Bitcoin extends its gains.



Biotech, Pharma & MedTech:

·     CDMO Q3 revenue and adj. EBITDA beat with record backlog following a sequential decline in backlog last quarter, and added $67M of new business wins, an ex-COVID record; Gross margin bounced back this quarter leading to an adj. EBITDA beat said Stephens.

·     NTLA upgraded to Outperform and $57 tgt at BMO Capital saying they believe that the recent NTLA-2002 IND approval removed a significant overhang for NTLA, assuaging investor concerns triggered by Verve’s IND hold and FDA’s restrictive guidance around gene editing therapies.

·     NVO said to slash insulin prices by up to 75%, WSJ reports (recall on March 6th LLY slashed its insulin prices)

·     RAPT Phase 2b trial of RPT193 in atopic dermatitis topline results delayed until mid-2024 due to recent slower than expected patient enrollment.


Industrials & Materials


·     Truckers fall; JBHT leading the decline in truckers, falling for the 6th time in 7-days as Transports overall weak (Dow Transports -0.9%), while CHRW, LSTR, ODFL faded. Cass Transportation Indexes Report February 2023: After 6 years of rising freight costs and 2 full years of steep increases, February Marks a third month of y/y declines. Cass Freight Index – Shipments, rose 3.8% m/m in February after a 3.2% m/m decline in January. Cass Freight Index – Expenditures, which measures the total amount spent on freight, fell 1.9% m/m in February, and on some volatile comparisons fell to a 9.7% y/y decline after a 1.7% y/y increase in January.

·     Airlines providing monthly updates/guidance:

·     ALK said it sees 1q capacity up 11%-14% vs 2022; sees 1q revenue up 29%-32% vs 1q 2022; sees 1q CASM flat to down 2% vs 1q 2022; expectations for economic fuel cost per gallon were raised to $3.35 to $3.45 from $3.15 to $3.35, and the adjusted pre-tax margin guidance range was revised to down 6% to down 3% from down 4% to down 1%.

·     DAL reaffirmed its Q1 adjusted EPS forecast as still sees adjusted EPS 15c to 40c vs est. 33c; sees Q1 revs $11.8B-$12.1B vs. est. $12.1B; said sees one-time pilot pact charges of $0.8B.

·     JBLU guides Q1 EPS loss (45c)-(35c) vs. est. loss (41c); sees Q1 ASMs up 8%-9% vs. prior 5.5%-8.5% view; sees Q1 revenue up 32%-35% y/y vs. est. $2.27B and up from prior view 28%-32% and sees Q1 CASM ex-fuel up 1%-2% y/y vs. prior 2%-4% view.

·     LUV said expects to report net loss in Q1, sees solid profit for FY23; still sees negative rev impact in the range of $300M-$350M in Q1 and operating revs up 21%-23% y/y from prior 20%-24%; sees 1q CASMS up 10%; now estimates its 2023 capital spending to be approximately $4.0B.

·     SAVE sees Q1 operating expenses $1.45B-$1.47B, about $60M-$70M above prior guidance saying that’s mostly due to higher fuel costs and the implementation of a new pilot contract; sees Q1 capacity to be about a half percentage point lower than previously expected.

·     UAL guided Q1 adj EPS loss (-$0.60.-$1.00) vs. est. profit $0.69; continues to see a strong demand environment and now expects Q1 total operating revs about 51% versus first quarter 2022, higher than the Company’s initial approximately 50% expectation provided in January.


Industrials, Aerospace & Defense

·     In tankers/shipping: Baltic Dry Index Rises 8.33% to 1,587, up for an 18th Day. The Index Has Risen 182% in the Past Month. Other dry cargo indexes, expressed in USD/day: Capesize +15.9% to $17,500; Panamax +4.09% to $14,349; Supramax 58k tons +2.28% to $13,889.

·     For Defense (RTX, LHX, BA, GD, LMT, NOC), Wells Fargo said first look at the FY24 request appears better YoY for missiles (RTX most exposed) and electronics (LHX), with aircraft lower (we think BA). GD/LMT read looks mixed, while we think NOC’s biggest programs (B-21, GBSD) likely grow as planned.


Materials, Metals & Mining

·     In chemicals: UNVR confirmed a prior WSJ report, to be acquired by APO in all cash deal valued at $8.1B, with holders to receive $36.15 per share ( ; in ag chemicals, KPLUY said it would propose an increased 2022 dividend and buy back up to 200 million euros ($214.7 million) worth of shares following its May general meeting. Co pre-released its 2022 EBITDA, which came to EUR2.42 B and said its 2022 adj FCF came to EUR1.16B.



Internet, Media & Telecom

·     GOOGL unveiled its artificial intelligence (AI) tools for its email, collaboration and cloud software saying it will be able to summarize message threads in Gmail, craft slide presentations, personalize customer outreach and take meeting notes as part of its upgrade.

·     AMC shareholders approve 1-for-10 stock split in vote today.

·     META said it plans to lay off around 10,000 employees and close about 5,000 additional open roles in its second major round of job cuts in the past six months.

·     MTCH was upgraded to Overweight at Barclay’s noting shares have been a large underperformer YTD with shares down 15% vs. S&P 500 up 1%, mainly due to concerns that Tinder payer growth has peaked. At 9x FY24E EV/EBITDA, they say they see limited downside vs. number of upside catalysts from app optimizations, higher priced tiers, ad rev, and reduced App Store fees.


Hardware & Software movers:

·     Two M&A deals: 1) CVT to be acquired by BX in $4.6B deal, as Blackstone will pay $8.50 per share of Cvent stock ; 2) MNTV agreed be acquired by a consortium led by Symphony Technology Group in an all-cash deal that values Momentive at approximately $1.5B; with Momentive shareholders to receive $9.46 per share.

·     In AI sector, BBAI reported 4Q revenue and EBITDA in line with consensus but issued guidance below the consensus estimate for 2023.

·     GTLB slides as reported solid 4Q results that came in ahead of expectations, but forward guidance was mixed, with topline below expectations, but EPS nicely ahead (sees Q1 revs $117M-$118M vs. est. $126.7M; and year revs $529M-$533M vs. est. $587M).

·     HEAR underperformed its Q4 expectations, and guided 2023 sales below consensus, implying 10% Y/Y growth as Q4 gross margin suffered an incremental inventory provision of $4.5M and excluding this one-time impact, gross margin of 24% was down from 32% in 4Q21.



·     Group again outperforms broader tech, strength across board but AMD, INTC, NVDA among leaders; INFN shares popped after Reuters reported midday the semi-manufacturer co is exploring options that include a sale of the company, noting the co currently has a market value of $1.6B and is working with Centerview Partners on a sale process.


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.