Market Review: October 24, 2023

Closing Recap

Tuesday, October 24, 2023





DJ Industrials




S&P 500








Russell 2000













U.S. stocks rallied on Tuesday, snapping the S&P 500 losing streak at 4-days and avoiding its first 5-day losing streak in over a year as better earnings results in large caps helped sentiment. Stocks took out yesterday’s highs as nearly every S&P sector advanced (energy the lone decliner) following strong earnings results from several Dow Jones components (VZ, MMM, KO), but the index continues to “battle” at its key technical 200-day moving average support/resistance of 4,235 (closed above). Investors now await key results after the close in tech with MSFT, GOOGL, Visa, TXN all due to report and another onslaught of mega cap stocks tomorrow morning. Bitcoin prices jumped along with stocks and the dollar, trading at fresh 18-month highs above $35K and boosted shares in the crypto space (COIN, MARA, RIOT, MSTR), though later pared gains. It wasn’t all roses as several stocks sunk on lower results and/or guidance especially in financial related services (AAN, SYF, TBI, TRU). Treasury yields were steady with the 10-yr at 4.85%, the dollar jumped +0.7% while oil prices tumbled over 2%. Headlines were relatively quiet overseas, while in Washington DC, a new House speaker is yet to be named.


Commodities, Currencies and Treasuries

·     Oil prices tumbled with WTI crude down -$1.75 or 2.05% to settle at $83.74 per barrel (possible as supply fears are suppressed by the Israel conflict not engulfing major energy exporters) while Brent crude settled at $88.07 per barrel, down $1.76, 1.96%. Natural gas prices gained 4.50 cents per million British thermal units, or 1.54% to $2.9710 per million British thermal units.

·     Gold prices edged lower, slipping -$1.70 to settle at $1,986.10 an ounce after hitting earlier lows of $1,964.60 an ounce. Gold rebounded as Treasury yields slipped, but a strong dollar kept gains limited as the dollar index (DXY) rose +0.7% to 106.35 (off 1-month lows of 105.35 the day prior) behind better US PMI manufacturing data earlier this morning, much improved vs. the Eurozone PMI overnight. Treasury yields were little changed with the 10-yr at 4.85% after briefly piercing the 5% level yesterday to highest since 2007 (yest lows was 4.81%).


Economic Data

·     S&P Global October flash composite PMI at 51.0 (vs 50.2 in September) and U.S. S&P Global October flash services PMI at 50.9 (vs 50.1 in September).

·     Richmond Fed services revenues index -11 in Oct vs +4 in Sept and Richmond Fed manufacturing shipments index +9 in Oct vs +7 in Sept.






WTI Crude















10-Year Note





Sector News Breakdown



·     Auto giant GM posts Q3 adj. EPS of $2.28, topping estimate of $1.88 per share, Q3 revs $44.13B vs. est. $43.68B; withdrew its previous guidance for 2023 profits and near-term electric vehicle production as costs related to the United Auto Workers strikes jumped to $200M a week during October; GM said the UAW walkouts cost the company $200M in Q3 and $600M so far in Q4. Ford (F) earnings expected later tonight. In Auto Retail: ABG reported a miss on both the top and bottom line for Q3 and a total of approximately $1.7 billion in liquidity.


Consumer Staples & Restaurants:

·     In Beverages: Dow component KO Q3 results topped estimates and boosted its annual sales and profit forecasts on strong demand and higher prices/now sees FY organic revenue growth of 10%-11% (vs. prior 8%-9% view) and raises year profit to 7%-8% from prior 5%-6% view) – also said average selling prices rose 9% in Q3, while overall volumes also grew 2%. MNST was downgraded to Neutral at Piper saying current US growth momentum is slower than expected while Bang’s sales declines have accelerated, both driving near-term headwinds.

·     In Consumer Products: KMB posted mixed Q3 results as EPS topped consensus by $0.15 but sales of $5.1B missed expectations, while the co raised FY23 adj. EPS growth view to 15%-17% from 10%-14% and raises FY23 organic sales growth view to 4%-5% from 3%-5%.



·     In Footwear and sporting apparel: Puma (PUMSY) maintained its full-year outlook and reported a stronger than expected third-quarter profit margin, helping boost shares of footwear and sporting goods retailers early such as NKE

·     Retailer price tgt changes/preview at TD Cowen: COLM to $71 from $74, DECK $620 from $618, FIGS $7 from $8 and YETI $40 from $46 saying their macro view is one of caution at the low-end consumer and within the U.S. wholesale channel, department store and outlet channel into Spring/Summer ’24. Models remain above Consensus at SKX, DECK, ONON, RL and it is most cautious on the direction of Q3 and into CY24 Consensus estimates for VFC, UAA, MODG, FIGS, YETI, COLM, and ADDYY (FY24).

·     Several ratings changes at JP Morgan: 1) PVH upgraded from Neutral to Overweight with $119 tgt as sees a favorable risk/reward profile with a "multi-year brand ‘unlock’ underway; 2) FL was downgraded from Neutral to Underweight with $17 tgt given headwinds from choppy mall-retail traffic and key brand allocation shifts & liquidation/promotional activity; 3) BBWI downgraded from Neutral to Underweight with $27 tgt citing combo of moderating same-store-sales relative to pre-pandemic, ongoing separation-related SG&A investments, and AUR pressure as the model returns to a normalized cadence of promotions presents potential earnings headwinds.


Leisure, Gaming & Lodging:

·     In Casinos & Gaming: DKNG upgraded from Hold to Buy w/ $37 PT at Moffett noted CEO previously said they will try to accelerate its path to profitability by strategically cutting back on expenses while still investing behind its long-term competitive advantages. Since then, DraftKings has delivered on both fronts, with expenses coming in much better while revenues outperform.

·     In Theme Parks: Truist trimming Theme Park ests & PTs to reflect persistently sluggish demand readings throughout 3Q. Updating estimates and PTs for FUN (to $42 from $46), SEAS (to $55 from $65) and SIX (to $20 from $22) saying unfavorable weather was a headwind to the quarter; however, this will do little to allay concerns around pricing & demand elasticity in the N-T.



·     In the Oil E&P Sector: Raymond James upgraded AR to Strong Buy from MP, upgraded both CTRA and RRC to Outperform from Market Perform, downgraded BSM to MP from OP and lastly downgraded both PXD, HES after recent M&A deal in E&P changes. Said drilling inventory and service costs remain the most topical, along with the recent interest the majors have taken in the E&P sector with the XOMand CVX transactions occurring in back-to-back weeks.

·     In Oil Services: HAL said Q3 revenue came in at $5.8B, slightly below estimates for $5.85B while earnings of $0.79 per share topped $0.77 estimate; said expects Q4 completion and production unit rev to fall by 3%-5% sequentially on lower N.A land activity due to holidays.

·     In Utilities: Group among early S&P leaders, boosted by better results from NEE which beat ($0.94/$7.17B vs. $0.88/$7.09B) and maintained financial guidance for NT and LT with record renewables originations, helping other utilities and shares of PWR which fell last month after NEE had issued a softer warning outlook.



Banks, Brokers, Asset Managers:

·     In Regional banks: BANC reported Q3 adj EPS $0.30 in line with consensus as Q3 loan loss provision rose to $5.0M vs. $1.9M for the previous quarter; tangible book value per share of $15.34, up from $14.56 in the previous quarter. BANC, which agreed to acquire rival PACW in a rescue deal earlier this year, saw deposits unexpectedly drop in the third quarter as total deposits dropped 8.8% to $6.64B in the three months ending September 30.


Bitcoin, FinTech, Payments:

·     Bitcoin prices rocketed higher this morning, up over 10% hitting highs above $35,000 to its highest in nearly a year-and-a-half, on mounting speculation that an exchange-traded bitcoin fund is imminent; boosted crypto stocks MARA, RIOT, MSTR, COIN. Bitcoin then lost ground from yesterday’s high of $35,000, quickly falling by 3% to $33,400 after the BlackRock ETF ticker was removed from @The_DTCC’s website midday.

·     In Consumer Finance: AXP upgraded to Neutral at Piper saying the slowdown in EPS growth is priced-in and shares now trade below the XLF on FY24 P/E, a level rarely seen. Piper believes the stock is adequately discounting slower growth while trading at <12x consensus FY24E P/E. In earnings, SYF posted EPS miss due to higher provisions, but had higher NII. In lending, AAN shares tumble after Q3 adj EPS $0.01 vs. est. $0.07; Q3 revs $525.7M vs. est. $536.1M; narrows FY23 adj EPS view to $1.00-$1.20 from $1.00-$1.40 (est. $1.24).

·     In Info Services: Shares of TRU plunge after a miss on the top and bottom line for Q3, guided Q4 below views and cut FY23 adjusted EPS view to $3.24-$3.28 from $3.40-$3.62 (below est. $3.57) and dropped its FY23 revs view to $3.794B-$3.809B from $3.825B-$3.885B (EFX falls in reaction).

·     In FinTech: FI raised its FY EPS profit to $7.47-$7.52 from prior $7.40-$7.50 after Q3 topped estimates as CEO said they remain confident in our ability to add new clients, grow with our existing clients, and provide solutions that capture greater share of wallet.


Insurance & Financials Services:

·     AJG agreed to buy CADE’s insurance unit for $749M to broaden its property-and-casualty, employee benefits and personal insurance offerings in eight Southeastern states and Texas.

·     RDFN announced that Apollo Capital Management has committed up to $250mn of financing. Redfin immediately borrowed $125mn with rest available to borrow over 12 months.

·     TBI shares fell after Q3 earnings and Q4 revenue forecast fell short of analysts’ expectations, with the firm noting that the operating environment remains soft.

·     WRB Q3 operating EPS $1.35 vs. est. $1.18; Q3 revs $3.03B vs. est. $3.05B; Q3 premiums written $3.35B; remain well positioned for continued success and optimistic about remainder of 2023.



Biotech & Pharma:

·     EDIT was upgraded to buy from neutral at Citigroup noting since early September, shares have declined more than 30% in the absence of any fundamental changes to Editas’ outlook and sees potential for near-term share upside in two key catalysts through the end of the year.

·     NVS reported Q3 adj earnings of $1.74 per share, or 3% ahead of analyst consensus while total sales were $11.78 billion, also higher than expectations.


Healthcare Services & MedTech movers:

·     In Managed Care: CNC reported 3Q results, with revenue of $38B topping $36.2B estimate with the co noting strong marketplace membership growth and EPS of $2.00 beats $1.55 est. and raised its FY23 guidance to at least $6.60 from at least $6.45.

·     In MedTech: DGX reported 3Q results, with revenue of $2.3B and EPS of $2.22 both beating ests with base business (ex-COVID) growth of +4.6% and raises adj revs FY23 base business growth of 6.7%-7.3% from 5.8%-7.0%) and tightened its adj EPS view. DHR FY23 guidance unchanged as Cepheid offsets weaker Life Sciences instrument demand: 3Q23 revenue and EPS beat expectations and FY23 core guide remains unchanged: SILK upgraded to Peer Perform at Wolfe.

·     In Hospitals: HCA tumbles as posts Q3 adj EPS of $3.91, missing analysts’ estimate of $3.98 saying qtrly profit was hurt by an increase in staffing costs as company was impacted by its physician staffing joint venture Valesco (shares of CYH, UHS, THC declined in sympathy)

·     In Healthcare Services: MEDP reported strong operating results for 3Q, with revenue of $492.5M (vs. $475.8M est.), with net bookings growth of 29.4% and book-to-bill ratio of 1.24x and EBITDA beat of $90.2M (vs. $86.5M est.) and raised FY23 Ebitda to $353M-$361M from $340M-$358M.

·     In Veterinary Services: CNBC reported AMZN considers offering veterinary telehealth as it looks to compete with Walmart Amazon is considering offering veterinary telehealth as it looks to compete with Walmart. Walmart began offering free access to pet telehealth to Walmart+ subscribers earlier this year.


Industrials & Materials

Industrials, Transports

·     In Multi-industry: GE Q3 EPS/sales top consensus handily as Q3 total orders of $17.9B, up 19%, with organic orders up 18% and raises FY23 adj EPS view to $2.55-$2.65 from $2.10-$2.30 and boosts FY23 free cash flow view to $4.7B-$5.1B from $4.1B-$4.6B. MMM said its spinoff of 3M’s Health Care unit is progressing and should be completed during the 1H’24 Q3 adj EPS $2.68 vs. est. $2.34; Q3 revs $8.31B vs. est. $7.98B; raised its full-year adjusted profit forecast $8.95-$9.15 vs. prior forecast of $8.60-$9.10 per share; DOV cut forecasts; PCAR rises on results in machinery; CR reported 3Q23 organic sales growth, adj. OP, and adj. EPS that were above as organic sales growth was a solid 9%, while core backlog rose 7% Y/Y to a record level.


Aerospace & Defense

·     Defense stocks get a much-needed boost as RTX said it is buying back $10 billion worth of stock under an accelerated repurchase program while reported a better-than-expected quarterly earnings and raised its FY outlook (stock this month hit a 52-week lows of $68.56); raised its outlook for 2023, forecasting adjusted sales of $74 billion, up from $73 billion.

·     In Aerospace suppliers: HXL reported quarterly results and said its factories are running around 75% of capacity as it prepares for the planned production increases by Airbus and Boeing, which compares with around 95% in 2019.


Materials, Metals & Mining

·     In Steel sector: CLF Q3 EBITDA of $614M tops Street $586M; EPS of $0.52 topped Street’s $0.43 view, largely due to a lower tax rate and revs ~$5.6B vs. $6.0B in 2Q and steel shipments were >4.1M tons; NUE Q3 EPS $4.57 vs. est. $4.22; Q3 sales $8.78B vs. est. $8.37B; Q3 average sales price per ton down 14%, and expects Q4 earnings to decrease compared to Q3 due primarily to lower pricing across all three operating segments; China’s biggest listed steelmaker Baoshan Iron & Steel reported a 127% surge in Q3 net profit on reduced costs and higher steel prices.

·     In Paper & Packaging: CCK Q3 adj EPS $1.73, vs est. $1.71 with revs falling -5.8% y/y to $3.07B below consensus $3.24B; sees Q4 EPS $1.40-$1.50 vs. est. $1.58; said anticipate that cap expenditures will be significantly reduced to approximately $500m in each 2024 and 2025; cuts FY23 adjusted EPS view to $6.00-$6.10 from $6.10-$6.30 (est. $6.20); PKG Q3 adj EPS $2.05 vs. est. $1.93; Q3 revs $1.93M vs. est. $1.99B; said its expects Q4 EPS of $1.76 per share as operating and converting costs increase, driven by higher recycled fiber prices, seasonal energy costs.

·     In Chemicals: DOW posted a top/bottom line Q3 guided Q4 net sales below analyst estimates ($10B-$10.5B vs. est. $10.48B); reported a sequential decline of 7% in prices of their products in Europe, the Middle East, Africa, and India, primarily due to lower feedstock and energy rates. IFF said to mull $3.5 billion sale of Pharma solutions, as per Bloomberg late Monday; SHW boosted its net income forecast to $9.21-$9.41 from prior $8.46-$8.86 for the year as demand for paint remained high despite a slowing housing market.



Internet, Media & Telecom

·     In Media: SPOT Q3 monthly active users and subscribers ahead of expectations as monthly active users rose 26% to 574M in Q3 topping analysts’ forecast of 565.7M; premium subscribers rose 16% to 226M topping ests 223.7M.

·     In Telecom: VZ boosted its annual free cash flow (FCF) forecast to higher than $18B, an increase of least $1B from its prior forecast while added 100,000 net monthly-bill-paying wireless phone subscribers in Q3, compared with expectations for 63,600 additions, and top/bottom Q3 beat.

·     In Internet: GOOGL expected to report earnings tonight after the close as well as SNAP in social media sector.


Hardware & Software movers:

·     MSFT earnings expected after the close tonight for software.

·     GLW missed the top and bottom line for Q3 while guided Q4 EPS $0.37-$0.42, below the consensus $0.50 and sales $3.25B vs. est. $3.56B.

·     LOGI beat F2Q on the top and bottom line, driven by better results across all segments, with continued share gains, declining inventory, cost management and new product releases.

·     Several movers in SMID names as AGYS, ASPN rise on guidance while CALX, CDNS decline on results; ASPN posted positive pre guided FY revs Above the mid-point of prior guidance, EBITDA better 8% short.



·     AMSC announces $37 million of new energy power system orders; said nearly all of revenue from these orders is expected to be recognized in fiscal year 2024.

·     NVDA said new U.S. export restrictions blocking the sales of its high-end artificial intelligence chips to China had gone into effect on Monday after regulators advanced the timeline on the curbs from its 30-day period; said does not expect a near-term impact on its financial results.

·     QCOM gave details about its Snapdragon X chip for MSFT Windows-based laptops that it claims will be faster at some tasks than AAPL’s chips for Mac computers.


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.