Market Review: March 30, 2023

Closing Recap

Thursday, March 30, 2023





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     U.S. stock markets continue to climb the wall of worry, finishing higher ahead of the Fed’s favored inflation indicator tomorrow morning, the core PCE, in addition to Personal Income, Spending, Chicago manufacturing and University of Michigan Sentiment. U.S. markets pared gains late morning amid renewed concerns of banking fears. Meanwhile the White House called for tougher rules for midsize banks after the collapse of two lenders earlier this month, calling for new rules from the Federal Reserve and other banking regulators that would apply to banks with $100 billion to $250 billion in assets. There were approximately 20 firms in that asset range as of the end of 2022, according to the Federal Financial Institutions Examination Council.

·     The Nasdaq 100 coming off its highest close since August, and up 18% this quarter, adds to gains on pace for its best quarterly performance since the second quarter of 2020. The S&P 500 and Nasdaq rising for a 5th time in 6-days and both on track for 3rd straight week of gains and tracking for best week since end of Jan for the S&P. Bespoke Invest noted after an 8.5% pullback from 2/2-3/15, the Euro Stoxx 50 ETF (FEZ) is back to new 52-week highs this morning. Buying the dip has been the M.O. this quarter globally and has worked throughout for stocks.

·     Comments from a handful of Fed speakers echo what they have been saying for weeks on end (but markets have ignored): Fed’s Collins said the Fed will have to raise rates again to help lower too high inflation; forecast of one additional hike in 2023 looks reasonable; and said after hiking again, will likely hold steady for rest of the year; said financial sector stress has taken some pressure off Fed to hike. Minneapolis Federal Reserve Bank President Neel Kashkari said on Thursday he is prepared that the banking sector stress touched off by the failures of Silicon Valley Bank and Signature Bank two weeks ago could last longer than many expect.

·     One of the biggest positives that the bulls have going for them is that the bears are still extremely confident of the difficulties that lie ahead, so stocks climb the “wall of worry”. Stocks have also bounced based on view the bank crisis is "temporarily over," along with seasonal tailwinds (end of quarter buying), bearish sentiment, and an expected Fed pause on rate hikes due to the looming financial issue. Basically, it has taken roughly 2-weeks to reverse 6 months of QT from the Fed as three ill-regulated banks forced the system to make whole some crypto and venture capitalists on their deposits and change the view from more hikes to cuts.

·     Interesting stats today: 1) Wednesday was the third day in a row that SPY’s intraday range was less than 1%. That’s the longest streak since the SPX peaked on 1/3/22. 2) the Net Worth of US households fell $4.1 trillion in 2022, the second largest decline on record after 2008. 3) the second quarter of the third year of a president’s term has historically been bullish for US stocks; 4) Manufacturing PMI has been in contraction territory as the economy continues to weaken. New Orders is at a level seen only 3 other times since 1997; each time was met with a recession.


Economic Data:

·     U.S. 4Q Final GDP +2.6% vs prelim GDP +2.7% and vs. +3.2% in Q3; inflation readings showed: 4Q Final PCE Price Index +3.7% vs Prelim +3.7%; Q4 Core PCE Prices +4.4% vs. est. +4.3% and previous +4.7%; 4Q Consumer Spending +1.0% vs prelim +1.4% (and prior +2.1%)

·     Weekly Jobless Claims rose to 198,000 in latest week vs. est. 196,000 and vs. 191,000 the prior week; the 4-week moving average rose to 198,250 from 196,250 prior week; continued claims rose to 1.689 mln from 1.685 mln prior week.


Commodities, Currencies & Treasuries

·     Oil prices rose along with other commodities amid a further slide in the dollar, With WTI crude up $1.40 or 1.92% to settle at $74.37 per barrel. Oil prices also helped by rising risk appetite as US stock futures once again advance as no news is good news. Market attention now begins to shift to next week’s OPEC-plus meeting, though given oil’s recent rebound there may not be any major policy shifts. Natural Gas for May (new front month) delivery lost 8.00 cents per million British thermal units, or 3.66% to $2.1040 per million British thermal units. June gold settles +$13.20, or +0.66%, to $1,997.70/oz; Treasury yields were flattish after early gains with the 10-yr around 3.55% and 2-yr 4.10% into key PCE core inflation data tomorrow morning. The US dollar index (DXY) fell -0.4%, lagging against the euro which topped 1.09 before paring gains.






WTI Crude















10-Year Note





Sector News Breakdown


Staples & Restaurants:

·     In tobacco: PM upgraded to Overweight at JPMorgan saying IQOS ILUMA has stepped up Heated Tobacco share for PMI in its initial launch markets, yet it’s been impacted by severe supply chain constraints.

·     In food: HRL was downgraded to Hold from Buy at Argus noting the co is struggling to raise margins and earnings, and recently posted 1Q23 EPS that fell 10% from the prior year and missed the consensus estimate. Management has also cut its FY23 EPS guidance.

·     In grocers: Bank America said its Food retail Dallas Pricing Study showed food prices were +22% on avg. Trends varied by retailer, with prices up as much as +36% at DG and as little as +11% at WFM maintained lowest overall prices (except vs. Aldi) and held or improved positioning.



·     FLWS upgraded from Hold to Buy at Craig Hallum citing outlook for improving trends following recent checks.

·     KSS CEO Thomas Kingsbury discloses purchase of 93K shares in filing.

·     WMT upgraded to Outperform from In-Line at Evercore/ISI saying mgmt’s diligent work to pivot the business to omnichannel, divest non-core assets, and invest in productivity has positioned traffic and margins for upside over the next two years.


Autos, Leisure, Gaming & Lodging:

·     In autos: FFIE announced it had started production of the FF 91 at its factory in Hanford, California; added in a news release that a launch event is slated for April 26. Ford (F) positive mention at Morgan Stanley saying while the environment remains uncertain, their OW-rating is an expression of relative confidence in the Co’s ability to execute capital discipline, as evidenced by their recent re-segmenting. CZOO increased its projection for retail gross profit per unit (GPU) for the current quarter.


Homebuilders, Building Products, Home Furnishing:

·     In home furnishings/retail, RH reported a top and bottom line miss for 4Q ($2.88 vs est. $3.34 on revs $772.5Mm vs est. $779.8Mm), while guidance disappoints (1q net revs $720M-$735M, below est. $828.3M and sees FY net revs $2.9B-$3.1B also below consensus of $3.48B). Wayfair (W) estimates reduced at Cleveland Research saying research suggests 1Q-to-date US sales are trending below consensus expectations.



·     In solar: TSLA has missed its solar-roof installation targets by a massive margin due to stiff competition from GAF Energy and other rivals, according to industry analysis firm Wood Mackenzie. In research, Goldman Sachs upgraded SHLS from Sell to Neutral as see a more balanced risk-reward profile and upgraded SPWR from Sell to Neutral with $13 tgt noting that consensus expectations and valuation have come down significantly. Goldman also upgraded FLNC from Neutral to Buy driven by better visibility on an improving gross margin trajectory and upside from IRA battery production tax credits. In earnings, SMA Solar (SMTGY) boosted its EBITDA and sales forecast for 2023.

·     In coal sector (ARCH, BTU, HCC), the WSJ noted Coal prices have come crashing down from last year’s records. Central Appalachian coal has been trading at $88.80 a short ton, down 57% from the record $205.55 at the start of the year. Cash prices for thermal coal mined from northern Appalachia and the Illinois Basin — two places where a lot of exported coal originates — have fallen more than half since September, when Europe was stocking up for winter.



Banks, Brokers, Asset Managers:

·     Banking news: the WSJ reported late Wednesday that Massachusetts securities regulators said they are investigating a unit of CFG over its sales of a savings product offered by an insurer controlled by now-indicted financier Greg Lindberg, the WSJ reported. PACW will be moved to the S&P SmallCap 600 from the S&P MidCap 400, effective April 5, to replace NKTR was downgraded to equal-weight at Morgan Stanley, saying that Schwab’s clients are pulling cash out of the firm’s low- interest-rate bank accounts at twice the rate that MS expected. MCB shares tumbled midday following reports the lender shows signs of stress and further pain to come (from Vidar research) which took banks, insurance companies lower late morning.

·     In financial services, lending, and finance: TREE said that it would cut around 13% of its workforce to lower costs; said it expected to record roughly $5.6 million in severance charges. PAYC and PCTY both upgraded to Buy from Neutral at Davidson saying the downside risk to estimates outside of a severe recession is limited.

·     In REITs: sector among top S&P leaders early on rising bets of lower interest rates by the Fed by year-end – but came under pressure on regional bank exposure fears on commercial real estate. Wells Fargo upgraded APLE and downgraded PKin lodging REITs and adj. Ests/PTs Across Coverage saying with operations taking a slight backseat to liquidity/maturities, they make the changes based on our analysis considering the lodging REITs’ historical spread to the 10yr Treasury, liquidity, maturities, and our ’23/24E. In tower REITs, Moffett upgraded AMT, CCI and SBAC to Outperform noting the shares "have come in a fair amount," logging their worst rolling three-year performance vs. the S&P 500 Index in nearly 2-decades.



Biotech & Pharma:

·     AKRO announced a positive End-of-Phase II meeting with the FDA; plans to start a Phase III program for efruxifermin (EFX) in NASH which will ultimately consist of three clinical trials.

·     AVDL 10M share Spot Secondary priced at $8.50.

·     BMEA 5M share Secondary priced at $30.00.

·     BOLT said an early-stage dose-escalation study of its experimental cancer therapy, BDC-1001, in combo with BMY Opdivo, showed anti-tumor activity in the form of multiple partial responses and tumor shrinkage, among others.

·     CNTA said it initiated registration program for SerpinPC to treat hemophilia B; Enrolling subjects in PRESent-5, observational study – cash runway into 2026.

·     NBIX upgraded to Buy with $132 tgt at Canaccord noting the stock has pulled back 19% year-to-date (SPX: +4.9%; XBI: -9.1%) despite the company issuing what they considered a solid 2023 sales outlook for Ingrezza (valbenazine for tardive dyskinesia) when it reported its 4Q results.

·     RNA shares fall after the company said a partial clinical hold on its experimental treatment for adults with myotonic dystrophy type 1 is still in place by the FDA.

·     SCYX shares rise following a deal with GSK to license an antifungal medication being tested to treat the drug-resistant fungus; GSK will pay $90 million up front, plus up to $503 million more in potential milestone payments.

·     VKTX 17.242M share Spot Secondary priced at $14.50.


Healthcare Services & MedTech movers:

·     ANGO declines after Q3 EPS and revs miss estimates and lowers FY23 adj EPS view to loss (6c)-(1c) from 1c-6c and cut FY23 rev view to $338M-$342M from $342M-$348M citing lower than anticipated AngioVac sales.

·     EVH announced an agreement to expand its Technology and Services solution for oncology with its existing partner CNC.

·     GMED upgraded to Buy at Canaccord with $67 tgt noting shares have traded down ~30% since the Feb 9th merger announcement — a selloff they believe more than captures a worst-case scenario and the near/long-term uncertainty related to the integration of NUVA.

·     OSH cancelled its 2023 Annual Meeting of Stockholders scheduled following the previously announced definitive agreement where CVS will acquire the company in an all-cash transaction at $39.00 per share, representing an enterprise value of approximately $10.6 billion.



·     In railroads (CSX ) another train derailment as a train carrying Ethanol has derailed causing it to explode prompting immediate evacuation orders for residents within half-mile radius in Raymond City, Minnesota. Residents residing within a half-mile radius of the derailment site have been directed to vacate their homes promptly.

·     In trucking, TD Cowen said its 1Q23 carrier survey showed pricing expectations decelerated further to reach a survey low in 1Q, with carriers now expecting rate increases of 1.4% in the next 6 months, down 100bps sequentially. Business outlook nears pandemic lows. Survey results are a negative for the TL group, and the widely expected 2H freight rebound may prove too optimistic. TL multiples, however, continue to trade below historical averages (favors KNX and TFII).


Industrials & Materials

·     In waste sector: Cowen initiated coverage of sector saying WM (Outperform) is top pick as believe investors have not yet priced in the future benefit from RNG, April 5th Sustainability Day could serve as a catalyst for the stock. WCN (Outperform) trades at a premium multiple but we believe it is justified by the highest EBITDA and FCF margins. RSG (Market Perform) is solid and well run but greater exposure to hazardous waste could drag down margins. 

·     In metals & mining: SCCO downgraded from Overweight to Equal Weight at Morgan Stanley noting the stock has outperformed its copper peers over the last three, six, and 12 months, and now see a more balanced risk-reward.



Internet, Media & Telecom

·     In advertising: IPG was upgraded to Buy at Bank America and raised tgt to $40 and raise 2023-25E EPS 8-11%, now 4-8% above consensus as think IPG is well placed to weather the tumult thanks to data, healthcare exposure. Risk/reward attractive with shares trading on 12x ’23E P/E.

·     In U.S. listed Chinese tech: BABA adds to weekly gains on Bloomberg report its $20 billion logistics arm said to gear up for HK IPO; JD proposed spin-off and separate listing of JD Property on main board of stock exchange of Hong Kong limited.

·     In media/streaming: Wells Fargo provided a scenario analysis on NFLX’s paid sharing efforts, which appear to be creating significant upside to estimates. Said they see this is a key part of the long-term NFLX bull case with Q1 commentary likely a positive catalyst. The YES Network launching streaming service to give non-cable viewers access to Yankees games. MSGE said its board has approved the planned spinoff of its traditional live entertainment business, and that the move is expected to be completed on April 20.


Hardware & Software movers:

·     In tech job cut announcements: EA announced it plans to slash 6% of its workforce as the videogame publisher looks to cut costs; ROKU announces restructuring to impact approximately 200 employees or about 6% of its staff; estimates that it will incur non-recurring charges of about $30M-$35M in connection with plan.

·     In software earnings: CXM beat on the top and bottom lines and issued upside to Street estimates for FY24 operating profit and subscription revenue growth, sending shares higher.

·     In Business Services: CNXC entered into an agreement to combine with Webhelp in a transaction valued at approximately $4.8 billion, including net debt.

·     In Networking & Comms: JNPR upgraded from In Line to Outperform at Evercore/ISI and raised tgt to $38 saying while macro remains challenging JNPR should see top-line stability driven by healthy backlog ($2.0B+) and Mist/Enterprise ramps.



·     Philly semi-index (SOX) rises over 2% to 3,225, now up 9% MTD and nearly 25% the first 3-months of year after a dismal 2022.

·     AMD tgt raised to $120 from $85, remain Overweight at Wells Fargo saying while they expect near-term demand choppiness, they’re increasing out-year estimates to reflect a greater appreciation for AMD’s broadening datacenter TAM, portfolio positioning.

·     INTC outperformed the day prior after the chip maker provided important roadmap updates across server CPU, AI accelerators and programmable chips. Per INTC, it remains on track for 5 manufacturing nodes across 4 years.

·     SMTC posted a slight Jan Q beat but big Apr Q miss, driven esp. by China & Consumer weakness, w/ $100mn for core-SMTC rev’s coming in below Stifel prior estimate of $150.0mn est.

·     Susquehanna slightly cuts PC ODM notebook builds and sell-through estimates for ‘23 as January and ’22 ended poorly, but February bested expectations, perhaps an early sign of the bottom. AMD model share increases as it renormalizes after Intel’s October “channel stuffing.


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.