Market Review: September 26, 2023

Closing Recap

Tuesday, September 26, 2023





DJ Industrials




S&P 500








Russell 2000













After a brief bounce Monday following three weeks of selling pressure, U.S. stocks ended near the lows for the 4th time in the last 5-days as Treasury yields make new highs. Today saw more weakness in likes of Transports (airlines tumbled) as oil prices remain near 10-month highs and the spike in rates raise concerns about the potential impact on discretionary spending (retail, staples, leisure stocks fall). The current stock market pullback has extended to a 4th week as a variety of negative catalysts have converged and are unlikely to dissipate soon, including worries around the lagged impacts of Fed tightening, impact of higher oil prices on inflation as well as consumer spending, the resumption of student loan repayments, high profile labor strikes, and a potential government shutdown (5-days away). With the Fed meeting behind us, and the interest rate “higher for longer” message last week, stock and bond markets remain pressured, squarely focused on the economic outlook (PCE inflation data this week), with treasury yields holding at 16-year highs and pressuring growth and interest rate sensitive stocks/sectors.


Government shutdown looms as Congress has 5 days before funding runs out: Federal funding lapses delayed jobs and inflation reports in 1996 and 2013. Note if Congress doesn’t pass a stopgap funding measure before Sunday, a shutdown of certain agencies could delay the routine release of fresh economic data on wages, employment, inflation, and output. A shutdown that lasts more than two weeks could delay several key economic data points including the monthly jobs data.


All eleven S&P sectors finished lower while one bright spot early was Biotech (XBI), bouncing off 52-week lows the day prior following several positive updates in the SMID biotech space (see below ICPT, IMVT, PLRX, ROIV, SLNO). Lots of negative statistics today with more broad stock weakness: Bespoke tweeted: “The average small-cap stock in the Russell 2,000 is now 33% below its 52-week high. Health Care, Communication Services, and Technology names are down even more”. Also noted “Consumer Staples stocks in the S&P 500 are now the farthest below their 52-week highs of any sector: -20.9%. The average S&P 500 stock is currently in an 18.2% drawdown from its 52-week high."


Economic Data

·     The Consumer Confidence index softened to 103.0 in September from 108.7 in August and below consensus 105.5 as the present situation index 147.1 in Sept vs Aug revised 146.7 and the expectations index 73.7 in Sept vs Aug revised 83.3 (previous 80.2).

·     New Home Sales for Aug fell -8.7% to 675K, worse than the expected 700K view and below July of 739K; home sales in the Northeast +6.7%, Midwest -17.2%, South -7.5%, West -9.4% as new home supply 7.8 months’ worth at current pace vs July 7.0 months; the Aug median sale price $430,300, -2.3% from Aug 2022 ($440,300)

·     Richmond Fed composite manufacturing index +5 in Sept vs -7 in Aug as shipments index +7 in Sept vs -5 in Aug and revenues index +4 in Sept vs +4 in Aug

·     July FHFA House Price Index: +0.8% vs. +0.5% consensus and +0.4% in June (revised from +0.3%). July S&P CoreLogic Case-Shiller Home Price Index composite for 20 cities, seasonally adjusted, climbed 0.9% M/M, surpassing the +0.7% expected and matching 0.9% increase in June. The HPI composite for 20 cities, not seasonally adjusted, rose 0.6% M/M, compared with the -0.3% est.


Commodities, Currencies & Treasuries

·     Oil prices buck weakness in the commodity space, with WTI crude rising $0.71 to settle at $90.39 per barrel despite another rally in the dollar. The euro sinks to $1.0562 against the U.S. dollar, lowest since mid-March 16 while Treasury yields hold at 16-year highs as the 10-year yield tops 4.56% late day. The rise in rates and the buck weigh on precious metals as gold settles -$16.80 an ounce, or -0.86%, to $1,919.80. The Japanese yen bounced from an 11-month low as Japanese officials warned about a possible intervention in the currency (JPY/USD last around 149); while Pound fell to lowest since March at $1.215. The dollar (DXY) working on 11 straight green weeks, up 6.2% in that span. The Fed said that last week it may hike rates further and was likely to keep them elevated for a longer time as it battles to bring inflation closer to its 2% target.






WTI Crude















10-Year Note





Sector News Breakdown



·     TSLA will be investigated by the EU as part of its probe into China’s state subsidies for electric vehicles, Bloomberg reported citing people familiar. Domestic manufacturers including BYD, SAIC Motor and Nio will also be probed.

·     BLNK said it has entered into an agreement with Parkopedia to integrate more than 4,000 of its electric vehicles charging stations onto the Parkopedia platform in North America. The deal will give it platform access to nearly 12,000 Blink chargers, including 129 DC Fast Chargers.

·     Ford (F) said it has halted work on a $3.5 billion battery factory in Michigan, just days after the carmaker made concessions to its striking workers.

·     FSR said it expects to reach its target of deliveries of 300 vehicles a day later this year; said it has manufactured 5,000 Fisker Ocean all-electric SUVs, up from 3,123 as of Sept. 7, the last time it offered an update.

·     Nissan Motor Co (NSANY) said all its new European models will be fully electric and it plans to sell only electric vehicles (EVs) on the continent by 2030.


Retailers, Consumer Staples & Restaurants:

·     Organized crime rings in New York, San Francisco, Los Angeles, and Houston are targeting retail inventories, causing more financial loss, according to a report by the National Retail Federation (NRF). In 2022, inventory "shrink" as a percentage of total retail sales accounted for $112.1 billion in losses, up from $93.9 billion in 2021, according to the NRF report on Tuesday. TGT said today they will close nine stores in major cities, citing violence and theft.

·     In Food: UNFI Q4 sales $7.42B miss est. $7.46B on smaller-than-expected Q4 EPS loss of (-$0.25) but guidance weighs on shares as sees 2024 adj EPS loss (-0.88-$0.38) vs. est. +$2.28 and sees 2024 adj. EBITDA $450M-$550M below est. $617.2M.

·     In Restaurants: WING was upgraded from Hold to Buy at Stifel and raised tgt to $200 as believes the company is poised to successfully lap difficult comp comparisons in the 2H23 as menu innovation and delivery channel growth continue to build top-of-mind awareness. DPZ price tgt raised from $427 to $450 at Oppenheimer and names new Top Pick, viewing in it as an under-appreciated revival story into ’24.


Leisure, Gaming & Lodging:

·     In Casinos/Gaming: DKNG upgraded to Overweight from Neutral at JP Morgan and raise price tgt to $37 from $26, taking advantage of sluggish share price performance since late July (shares are down 13% versus the SPX’s 6% decline) given what it continues to think is an appealing sector.

·     In RV sector: THO reported Q4 beat as EPS $1.68 tops consensus $0.96 and while Q4 revs fell -28.4% y/y to $2.74B, they topped the $2.42B estimate; however, guides FY EPS $6.25-$7.25 as mid-pint below $7.12 estimate and said is still cautious on the global economic outlook.


Energy, Industrials and Materials

·     In Utilities: group among worst performing sectors (DUK, AEE, PPL sliding) as interest rate sensitive sectors fall on further move higher in Treasury yields; Mizuho upgraded PNM to Buy from Neutral saying following the NM Supreme Court appeal hearings on 9/15, they believe the AGR/PNM merger case will be remanded back to the NM Public Regulation Commission (NMPRC) in late December 2023. Ultimately, we believe there is still motivation from AGR, PNM, and most parties in the state to get this merger done.

·     In transports: airline stocks trading at multi-year lows on surging oil prices, and fears of how much of an impact rising interest rates will have on consumer/leisure spending; JBLU down for an 8th straight day (only 2 up days in September) while the JETS ETF is in danger of its fourth-straight weekly loss, and ninth weekly loss over the past 10 weeks (LUV, UAL, AAL, DAL weak).

·     In Industrials: Jefferis with three rating changes: CSL downgraded to Hold from Buy as continues to see LT earnings potential from the re-roofing/insulation exposure but believe there are NT headwinds from a deteriorating end market outlook. FLS was upgraded to Buy as sees margin improvement through ’25, driven by cost initiatives/stronger volumes and believes can capitalize on strong aftermarket demand. NDSN was downgraded to Hold as remain constructive L-T but do not expect good entry points NT citing macro headwinds.

·     In Aerospace & Defense: NOC has been down-selected over LMT and LHX for USAF’s Stand-in Attack Weapon (SiAW) with a 36-month $705MM contract award for Phase 2 development, platform integration, and flight-testing w/ planned IOC in 2026. TXT announces confirmed order for first 20 Cessna Grand Caravan ex aircraft from surf air mobility; deliveries of aircraft are expected to begin in first half of 2024.

·     In Chemicals: OLN downgraded from Overweight to Equal Weight as believes the company lacks a catalyst until a new CEO is found. Wells reduces its 2024 outlook and PT and as it expects earnings will likely remain at trough levels for several more quarters given weak overall demand. Goldman Sachs lowered 2023/24 EBITDA estimates for CC by 9%/7% primarily to reflect weaker than expected demand in Titanium Technologies (TT), Advanced Performance Materials (APM), and even Thermal & Specialized Solutions (TSS).



Biotech & Pharma:

·     ICPT to be acquired by Alfasigma for $19.00 per share in cash, in a deal valued at about $794M as it adds a leader in rare and serious liver diseases.

·     IMVT shares surged after disclosed positive results from a Phase 1 clinical trial of its IMVT-1402 drug candidate for autoimmune disease. The results bolster IMVT-1402 as a potential best-in-class neonatal fragment crystallizable receptor inhibitor, Immunovant said.

·     IONS treatment for familial chylomicronemia syndrome, a rare and serious disease, succeeded in a Phase 3 study.

·     LQDA said the FDA agreed to review the Company’s amendment to the tentatively approved new drug application (NDA) for YUTREPIA (Treprostinil) inhalation powder.

·     MDGL disclosed in an 8-K last night that its Chief Commercial Officer would be departing. This comes two weeks after the company named a new CEO and ahead of its March PDUFA for resmetirom in NASH.

·     PLRX rises following positive safety and exploratory efficacy data from phase 2a INTEGRIS-PSC trial of Bexotegrast; said a mid-stage trial of its drug candidate for chronic liver disease met its primary and secondary endpoints.

·     REGN and SNY announced the FDA accepted for Priority Review the supplemental Biologics License Application (sBLA) for Dupixent (dupilumab) to treat children aged 1 to 11 years with eosinophilic esophagitis (EoE). The target action date for the FDA decision is January 31, 2024.

·     SLNO shares surged after reported positive study results that it said would support a regulatory filing for its proposed treatment for the genetic disorder Prader-Willi syndrome.

·     SRPT shares defended at Mizuho, saying sees buying opportunity after weakness Monday likely due to EMBARK – recall EMBARK data later Oct/Nov the near-term catalyst.


Healthcare Services & MedTech movers:

·     EW shares slipped initially after Reuters reported European Union antitrust regulators raided the medical device maker’s facilities in an EU country last week (note the EC said on 9/19 it raided a cardiovascular medical device company on concerns that it may have abused its market power in breach of the bloc’s antitrust rules but did not name the company). Separately, EW was upgraded to Outperform with $90 tgt at Oppenheimer on attractive risk/reward profile.

·     RGEN agreed to buy privately held fluid-management company Metenova for $170 million in cash and stock in a deal that adds magnetic-mixing technology to the life-sciences company’s portfolio.



Internet, Media & Telecom

·     OpenAI is talking to investors about a possible share sale that would value the artificial-intelligence startup behind ChatGPT at between $80 billion to $90 billion, almost triple its level earlier this year, people familiar with the discussions said, the WSJ reported this afternoon. The startup, which is 49% owned by MSFT, has told investors that it expects to reach $1 billion in revenue this year and generate many billions more in 2024.

·     In Media: Liberty Media (LSXMA) has proposed a deal to split off the shares of Sirius XM into a new, publicly traded subsidiary, which would then merge with SIRI Liberty Media already owns a roughly 83% stake in SIRI. Liberty Media said it has made an offer to Sirius XM’s board to split off its shares into a new subsidiary, called New SiriusXM

·     In online/Internet: The FTC filed a long-awaited antitrust lawsuit against AMZN, charging the online retailer with harming consumers with higher prices. The lawsuit, which was joined by 17 state attorneys general, follows a four-year investigation and federal lawsuits filed against GOOGL’s Google and META’s Facebook. AMZN responded saying “if the FTC antitrust suit is successful the result "would be fewer products to choose from, higher prices, slower deliveries for consumers."



·     TSM reportedly may cut its FY24 Capex to as low as $25B v $32B guided for FY23 as per China Times overnight ; notable that semi equipment stocks ASML, LRCX saw weakness, but no US news services confirmed the TSM report overnight in China.

·     ASMI raised its revenue expectations for 2025 as now expects revenue to reach 3 billion euros to 3.6 billion euros ($3.81 billion) in two years, up from a previous estimate of 2.8B-3.4B euros.

·     TER upgraded from Market Perform to Outperform at Northland saying sees several factors that will drive semiconductor test intensity in the future including the transition to 3nm at TSMC, HBM DRAM, vertically integrated product companies, and systems in package.


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.