Market Review: November 06, 2023

Closing Recap

Monday, November 06, 2023





DJ Industrials




S&P 500








Russell 2000













U.S. stocks slipped early afternoon before recovering/closing the day mixed/modestly higher as small caps (Russell 2000) underperform larger cap tech a week after major averages posted their best weekly return of 2023 and as investors await a slew of Fed speakers and debt auctions later this week. Major averages held up well early led by gains in mega cap tech (MSFT, AAPL, AMZN, NVDA), but a sharp rebound in Treasury yields (10-yr to highs of 4.65% after lows of 4.5% last week) pressured interest rate sensitive sectors (utilities, REITs, financials) which outperformed last week. NYSE breadth was negative with decliners leading advancers by a 2.5:1 margin as consumer staples and Healthcare rose. Stocks dipped this afternoon with the S&P 500 (SPX) hitting its 50-day MA support (4,346.50) which marked the lows of the day. The question is, can markets maintain their upward momentum? Oil, the dollar, and Treasury yields all end higher as gold slides, a complete reversal of last week. Tomorrow brings a $48bn 3-year Treasury note auction to be followed by a $40bn 10-year note auction on Wednesday and $24bn in 30-year bonds on Thursday which will be closely watched.


Commodities, Currencies & Treasuries

·     U.S. WTI crude oil futures settle at $80.82 per barrel, rising $0.31 or 0.39% (off earlier highs $82.24), while Brent crude settled at $85.18/bbl, up 29 cents, 0.34%. Oil prices rose sharply overnight after Saudi Arabia and Russia confirmed they will stick with oil supply cuts of more than 1 million barrels a day until the end of the year. Prices pared gains all day along with broader risk assets/stocks. Natural gas prices fell -7%, down 25c to $3.264mln btus.

·     Gold prices slip -$10.60 or 0.53% to settle at $1,988.60 an ounce (intraday highs $2,000.10) as U.S. Treasury yields rose, with investors remaining cautious as they gear up for a host of Federal Reserve speakers this week including Jerome Powell. Traders are pricing in a 90% chance the Fed will leave rates unchanged in December, according to the CME FedWatch tool.

·     Treasury yields end near highs, with the 10-year yield rising over 8 bps to 4.65% (off lows of 4.5% last week and after falling 30-bps last week), while 3 and 5-yr yields jumped over 10-bps in a reversal of last week’s action. No Fed speakers or economic data to move markets today. The US dollar edges higher 0.15% to 105.20 after falling last week.






WTI Crude















10-Year Note





Sector News Breakdown



·     LCID cut prices of its Air range of luxury sedans earlier this week for a limited time ahead of the holiday season; slashed the price of its Air Touring model to $87,500 from $95,000 and the more powerful Grand Touring by $10,000 to $115,600 – Reuters.

·     TSLA is increasing pay for workers in Germany as executives disclosed a 4% wage increase for workers at its site near Berlin during CEO Elon Musk’s visit to the factory last week, The Wall Street Journal reported on Sunday.

·     VC was upgraded to Buy from Neutral at Citigroup in auto suppliers as believes recent weakness presents a more compelling entry point; notes shares have pulled back 17% since the end of Aug mostly on EV demand concerns, with the ’24 P/E de-rating to ~12x.


Retailers, Consumer Staples & Restaurants:

·     BLMN was downgraded at Raymond James in restaurants following the company’s Q3 earnings release as continues to see value in the shares from current depressed valuation levels (P/E 9x, EV/EBITDA ~5x), and potential catalysts with activist Starboard stirring.

·     CLX upgraded from Sell to Neutral at UBS in consumer goods and raised tgt to $132 following the company’s F1Q results and guidance update, even after the +9% move post results last week, as views the risk/reward as balanced.

·     KTB was upgraded from Equal Weight to Overweight at Barclay’s and raised tgt to $59 based on: gross margin recovery in the intermediate term, wholesale channel normalization; and tangible market share gains within U.S. total denim driven by wholesale.

·     In Research for Broadlines, Deutsche Bank previews sector as downgrade BJ to Hold from Buy on limited EPS upside in 2024, highlight WMT, FIVE, and ULTA as its top picks into Holiday; and anticipate solid results at WMT, DLTR, FIVE, and ULTA, aided by share gains; and remain more cautious on the top line at TGT but see gross margin upside.

·     SBUX said it will increase pay for U.S. retail workers by at least 3% in January; said Baristas in February will also accumulate vacation time after 90 days of work.


Leisure, Gaming & Lodging:

·     In Lodging: one big M&A deal announced as HGV agreed to purchase BVH for $75 a share in cash, in a deal valued at $1.5B inclusive of net debt . In research, PK upgraded from Equal Weight to Overweight at Barclay’s with $19 tgt saying many of PK’s largest markets should benefit from secular tailwinds (Hawaii, New York) and or renovation ramp up (Orlando, Key West) in future years, which could lead to better RevPAR growth.

·     In Education: LINC shares rally as reported upside to both Q3 revenue and AEBITDA on the strength of its shift to hybrid learning and adoption of Lincoln 10.0; sees Fy23 revenue midpoint to $372.5M vs prior $365.0M.


Homebuilders, Building Products, Home Furnishing:

·     In Home Improvement Retail: Ahead of earnings, Wedbush said they expect largely in line results from HD when it reports earnings on November 14, but it sees potential for a miss for LOW when it reports on November 21. Wedbush expects both companies to issue a more cautious outlook, with LOW narrowing FY23 comp guidance trimmed toward the lower end of its -2% to -4% range. Accordingly, Wedbush is trimming its estimates for both HD and LOW, including Q323 comps of -3% for HD (vs. consensus’ -2.8%) and Q323 comps of -5% for LOW (vs. consensus’ -4.4%).



·     Oil stocks fell the most given broader market weakness and as oil prices pared gains throughout the day; energy stocks like CVX, XOM, COP, OXY, MRO was lower. The United States is seeking to buy up to three million barrels of oil for delivery in January 2024 to replenish the country’s strategic petroleum reserve, the Department of Energy said on Monday.

·     In Utilities: ETR upgraded to Buy at UBS and raise target price to $118 from $103 as believes the recent settlement with Arkansas around litigation with ETR’s SERI segment removes a substantial amount of the financial risk that has long been an overhang on the stock. NRG upgraded to Neutral from Sell at UBS and tgt to $46 from $33 because of the closing of the STP nuclear plant sale; CEG shares surged after earnings beat estimates.



Banks, Brokers, Asset Managers:

·     BAC upgraded from underperform to market perform at KBW partly due to the recent decline in long-term rates following the better-than-expected productivity report followed by a weaker-than-expected jobs report. As a result, the strong momentum of higher rates broke, driving the 10-year yield down to the 4.50% range and reducing some risk on the mark-to-market HTM book.

·     KEY was upgraded to outperform from MP at KBW saying as the stock is trading at an 18% discount to peers on 2025E and 14% discount on current TBV. Moreover, the stock is trading at 80% of TBV ex-AOCI. That said, the stock has not traded on valuation with a CET1 of 6.1%.



Biotech & Pharma:

·     ACAD was upgraded Buy at Mizuho and raise tgt to $35 as bullish on Daybue, increasing its 2030 sales forecast to ~$1.1B (up from $838M); believe the Phase 3 ADVANCE trial for pimavanserin in negative schizophrenia has a high likelihood of reading out positive data in Q124; and see limited downside to the patent case against generic manufacturer MSN.

·     BNTX reported a surprise profit in Q3 with higher sales (Q3 EPS $0.67/EU$895.3M vs. est. loss (-$0.59)/EU$851M – but down from EU$3.46B y/y); lowers year revs view to EU$4B from EU$5B and cuts FY23 CapEx view to EUR 200M-EUR 300M from EUR 500M-EUR 600M.

·     CABA said it won FDA authorization to launch a Phase 1/2 study of its CABA-201 investigational therapy in patients with the rare autoimmune disease generalized myasthenia gravis.

·     CLDX after saying topline results for its Phase 2 study of its lead product candidate barzolvolimab met its key goal in severe chronic spontaneous urticaria.

·     MLTX reported results from a mid-stage study of a drug that aims to treat people with psoriatic arthritis.

·     Eye-disease battle: ALPMY Astellas (Izervay) vs APLS Apellis (Syfovre) – STAT News noted at this weekend’s meeting of the American Academy of Opthalmology, each company presented new data on their competing treatments for geographic atrophy (vision loss). Stat News noted the Astellas drug, called Izervay, showed an increase treatment effect over 2-years – likely enough to lift restrictions placed on it by the FDA. But Apellis’ Syfovre, still looks more durable and potent.


Industrials & Materials

·     In Defense: OSK announced that the U.S. Army Contracting Command — Detroit Arsenal placed an order for Oshkosh Defense Joint Light Tactical Vehicles (JLTV), trailers (JLTV-T), and associated packaged and installed kits valued at $208M.

·     In Aerospace: AL reported mixed Q3 results as EPS topped consensus on in-line to slight miss in sales, forecasts hitting midpoint of 2023 sales forecast range, forecasts young narrowbody fleet gaining from jet shortage.

·     In Industrials: TGLS shares fall after guides FY23 rev outlook to $835M-$848M vs. Consensus of $854.3M after mostly in-line Q3 results.


Materials, Metals & Mining

·     In Lithium: ALB was downgraded from Buy to Neutral at UBS and slash tgt to $140 from $253 as sees a greater risk to lithium volume growth and more downside earnings risk to 2024. UBS earlier saw lithium prices start to inflect up, but pricing has turned down again (-7% in 2-weeks).

·     In agricultural chemicals: CF was downgraded from Sector Outperform to Sector Perform at Scotia saying thesis for ’23 has largely played out as EU gas prices have doubled since the summer (to $16 from $8), with N prices forced to keep up. NTR was downgraded from Overweight to Neutral at JPMorgan and lower tgt to $58 from $70 saying EBITDA continues to make its way lower, as a base case from the peaks reached during early Russia/Ukraine conflict.



Internet, Media & Telecom

·     In Media: PARA was downgraded to Underperform from Buy at Bank America and slash price tgt to $9 from $32 saying its prior bullish thesis and valuation methodology was predicated on PARA’s inherent asset value in a potential sale.

·     In social media: BMBL shares slumped after founder and CEO Whitney Wolfe Herd will step down early next year, according to a release from the company Monday. Lidiane Jones, the CEO of Salesforce’s cloud-based messaging platform Slack, will succeed her.

·     In telecom: DISH swung to Q3 loss and lost subscribers across both of its businesses; said CEO Erik Carlson will step down on Nov. 12 as part of planned merger with SATS; reported lower revenue, dragged down by subscriber declines across both its Pay-TV and wireless businesses; Dish-TV/Sling-TV subs fell by -64K vs. ests around -40K and lost 22K retail wireless net subs in Q3.


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.