Market Review: November 11, 2022

Closing Recap

Friday, November 11, 2022





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     The S&P 500 and Nasdaq added to their weekly rally as a soft inflation reading on Thursday raised hopes the Federal Reserve would get less aggressive with U.S. interest rate hikes, prompting big bets and rotation into growth stocks (technology, discretionary) and interest rate sensitive names and out of more defensive, haven related sectors (healthcare, staples). On Thursday, the S&P 500 and the Nasdaq racked up their biggest daily percentage gains in more than 2-1/2 years as annual inflation slipped below 8% for the first time in eight months. Today stocks pushed further, with S&P futures hitting 4,000 for the first time in about 2-months (SPX did not hit 4K). The Russell 2000 index topped its 200-day moving average resistance of 1,875 today, the Dow Transports gained 2%, extending gains above its 200-day MA reached yesterday of 14,225 – with all 20 names in index are higher as both caught up with the Dow. The Dow Jones Industrial Averages advanced on the week but lagged on the day following weakness in healthcare stocks (UNH, MRK, JNJ). A plunging US dollar this week (down over 4%) also helped propel stocks and commodity prices higher. Nasdaq highest since Sept. 21 – S&P, Nasdaq best week since week ending June 24. Consumer sentiment (as per the UoM data) hits lowest level since June as fear of recession looms. We still don’t have a definitive outcome in several elections from Tuesday’s vote, with the Senate and House still not confirmed. Senate races in Arizona and Nevada have still not declared winners, while Georgia remains expected to be a run-off election in early December. The House meanwhile (as of late Thursday), shows 211 Republicans currently winning their seats compared to 201 Democratic victories (one party needs to cross 218 to win control), with outstanding official results for 23 House seats, as per ABC.


Economic Data:

·     University of Michigan surveys of consumers 1-year inflation outlook prelim November 5.1% vs final October 5.0% and the 5-year inflation outlook prelim November 3.0% vs final October 2.9. The headline University of Michigan surveys of consumers sentiment prelim Nov 54.7 vs. consensus 59.5 and final Oct 59.9; current conditions index prelim Nov 57.8 vs final Oct 65.6 and expectations index prelim Nov 52.7 vs final Oct 56.2.



·     Oil prices jump with other commodity prices, as WTI crude gains $2.49 or 2.9% to settle at $88.96 per barrel but finished the week lows -3.9%. Crude futures and base metals extended the gains seen overnight which were sparked by China’s COVID update, after health authorities eased some of the country’s heavy COVID curbs. Natural gas prices erase earlier gains and end the session 5.8% lower at $5.879/MMBtu – for the week, gas falls by 8.1%.

·     Gold prices rise for the 5th time in last 6-session, gaining $15.70 or 0.9% to settle at $1,769.40 an ounce, a big beneficiary of the lower dollar today/this week (rises around 5.5% on the week and silver over 4%). Prices for the precious metal got a boost as the U.S. dollar fell to a more than two-month low on the back of the October consumer price index data released Thursday, which fed expectations that the Federal Reserve may slow the pace of interest-rate hikes.


Currencies & Treasuries

·     Bitcoin, Ethereum and the crypto space tumbled this morning after FTX Group commenced voluntary chapter 11 proceedings in united states according to press release saying Sam Bankman-Fried has resigned his role as CEO and will remain to assist in orderly transition while John J. Ray iii appointed CEO. Subsidiaries not included in the chapter 11 proceedings: LedgerX LLC, FTX Digital Markets Ltd., FTX Australia Pty Ltd. and FTX Express Pay., West Realm Shires Services, Alameda Research and about 130 additional affiliated cos commenced proceedings under Chapter 11 Bankruptcy. An incredible week in the crypto space with this ongoing FTX saga, with many funds, investors and PE hurt. Bitcoin around $16,700 late Friday.

·     Sam Bankman-Fried, founder of the embattled crypto exchange FTX, is being investigated by the US Securities and Exchange Commission for potential violations of securities rules. The Bahamas, where his arm is based, froze the assets of a local trading subsidiary and “related. parties.” US and EU regulations could be tightened in the wake of the crisis – Bloomberg reported

·     The U.S. dollar with a rough week, falling over 4% this week alone with all G-10 FX up against it following slowing inflation data Thursday, which carried over to Friday as the dollar index (DXY) hits lows around 106.40 (was just recently at 20-year highs of 114.78 late September). Todays 1.5% drop followed a sharp -2.25% decline on Thursday, hitting its lowest levels since August on easing inflation concerns. The Euro up about 1% above 1.03 and dollar falls 1.6% vs. yen to 138.65; sterling back above 1.18 – down 5.5% in 6-days. Bond markets were closed on Friday in observance of veteran’s Day Holiday.






WTI Crude















10-Year Note


for holiday



Sector News Breakdown


·     Retailers: huge week coming up in large cap retail, with results from WMT (11/15), HD (11/15), TGT (11/16), LOW (11/16) and a handful of others including TJX, KSS, Macy’s, ROST, BJ, FL; FIGS slips after results last night as gross margin was 70.6%, a decrease of 210 basis points year over year, primarily due to an increase in freight-in costs; Operating expenses were $79.6 million, an increase of 24.1% y/y

·     Auto sector: FREY rises after the WSJ reported Koch and Freyr to build batteries for power-grid storage to aid renewables buildout; Reuters reported TSLA is considering exporting made-in-China electric cars to the United States, a reversal that would reflect the automaker’s deepening cost advantage at its Shanghai plant and slower demand from Chinese consumers (Elon musk later tweeted that the Reuters report was false).

·     Consumer Staples & Restaurants: APRN files to sell $30M in common stock; TTCF cut its revenue forecast for the year; FLO shares fell Q3 adj EPS $0.30 vs. est. $0.28; Q3 revs $1.16B vs. est. $1.14B; backs FY22 adjusted EPS view $1.25-$1.30 (est. $1.28) while narrows FY22 revenue view; the defensive staples sector lagged broader markets with HSY, CPB, LW, KHC, CAG falling

·     Casinos, Gaming, Lodging & Leisure sector: casino stocks with exposure to Macau saw an early jump (MGM, WYNN, LVS) after reports overnight that China eased pandemic controls, as the country’s leaders seek to lessen the pain of a stringent zero-Covid policy; SIX was downgraded to market perform at William Blair following earnings; IMAX added to the Best Ideas List at Wedbush as view it the best way to play the upcoming theatrical rebound, and is the best positioned to gain from consumers’ ongoing shift toward premium theatrical amenities


Energy, Industrials and Materials

·     Energy & Industrial stock movers: the big winners of October following into November, with Industrials (XLI) and Energy (XLE) continuing their strong gains oh China bounce hope, as well as rising oil prices on the dollar pullback and signs of slowing interest rates; solar names (RUN, NOVA, ENPH, FSLR) giving back a portion of yesterday gains after the group jumped as CA regulators (CPUC) published a new proposed decision (PD) for establishing a successor tariff under the NEM 3.0 process. Bottom-line, the implications for resi solar in the state of CA are significantly positive, as the new proposal does not include a fixed charge; US gas rig count unchanged at 155 – US oil rig count rises 9 to 622 – US total rig count 779

·     Aerospace & Defense: LHX downgraded to Neutral from Buy at Bank America while cut tgt to $250 from $285, calling it the prime most impacted by the supply chain; SPR downgraded to Underperform from Buy at Bank America and HII downgraded to Underperform saying shipbuilding will grow at 3% annually into the outyears which they find "underwhelming" in light of the enormity of funding funneling into the U.S. Navy and fleet modernization; Cowen said they believe TDG is the best way, in large cap, to express a long aero aftermarket view – as HON, GE, RTX etc. have a lot of non-aero a/m profits, and HEI trades at over 30x EBITDA vs TDG’s 18x

·     Transports, Industrial & Machinery: Dow Transports extending gains above its 200-day MA reached yesterday of 14,225 – all 20 names in index were higher; truckers HTLD, WERN, and SNDR all upgraded to Buy from Neutral at UBS and reiterating Buy on KNX saying they move slightly ahead of spot rates and their analysis indicates we are close to a bottom in rates. As spot rates stabilize, we expect P/E valuation to support upside for the truckload names; in aluminum, shares of AA, CENX rolled, pared gains late day on headlines that the London metal exchange decides against ban on Russian metal



·     Business Services: LZ reported Q3 results above ests and forecasts FY22 revenue in the range of $617M-$619, the midpoint being higher than their prior revenue est. of $614M; FA and HRT both downgraded to equal weight from overweight at Barclay’s, putting them alongside STER, given the unexpected ‘miss & cut’ this Q saying the macro softness globally that is ‘inches deep but miles wide’ has already activated the lower growth playbooks; RYAN 3Q adj EPS came in line driven by a better than expected adjusted EBITDAC margin of 28.4% vs 28% consensus offset by worse than expected organic growth at 13.7%; in lending, SOFI rises along with strength in NAVI after earlier reports a federal judge from Texas ruled against student loan program



·     Biotech & Pharma movers: GSK was downgraded to Sell at UBS saying at face value GSK trades on c9x ’23E PE for near double-digit EPS CAGR to ’26 and compared to the EU peer group that may not seem demanding, but they think it is; also, GSK said it will limit the use of its ovarian cancer drug, Zejula, in the United States as a second treatment option; JNCE downgrade from Strong Buy to Outperform at Raymond James and slash tgt to $3 from $16

·     Healthcare Services: WBA upgraded to Buy at Deutsche bank after they recently met with senior mgmt and got a better understanding around the company’s care delivery strategy around Summit/Village MD; DOCS reported a top- and bottom-line beat, with adj. EBITDA of $46.0M also beating consensus of $40.1M, with lower Q3 guide, but reiterated year; FIGS slides as beat on top and bottom-line but 4Q revenue guide is about 10% below consensus and EBITDA margins 100 bps below


Technology, Media & Telecom

·     Semiconductors: an astounding rally for one of the hardest hit sectors in 2022 as the Philly semi index (SOX), with the SMH going from lows of 180.39 on November 3rd to highs above 219 this morning, with the SOX up 13% on the week, paring YTD losses to -32%, led by big gains in AMD, NVDA, LRCX, KLAC among others; AMD launched its latest data center chip on Thurs and named GOOG, MSFT and ORCL as customers; ASML provided bullish market commentary at its analyst meeting and announced a new buyback

·     Software movers: massive squeeze in several software names in the last few sessions as hopes for lower interest rates boost buying in growth names; TOST delivered another quality print, beating nicely on revenue and EBITDA, with 4Q guidance modestly above prior consensus; MTTR rises as revenue above the high end of its guidance range and above Street estimates, partially driven by better-than-expected subscription and services growth, while 3Q EBITDA along with implied 4Q margins came in better than expected; DUOL reported 3Q22 bookings and revenue 7% and 1% ahead of Street estimates and raised FY by a tad higher than the beat which came across all user metrics, highlighted by record MAU adds sequentially to as well as a 3Q record for sequential sub adds of 40k

·     Hardware, Components & Services: LITE downgraded to Neutral from Buy at Bank America as signs of demand risk (3D sensing share loss, hyperscaler softness) create growth and margin risk; COHR was upgraded to Buy at Bank America on attractive valuation for optical specialist with revenue diversity, share gain opportunities; APP was downgraded to Neutral at Bank America after Q3 results saying mobile app ecosystem weakness prompts more cautious tone


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.