Market Review: September 30, 2022

Closing Recap

Friday, September 30, 2022





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     US stocks close out the day, month and quarter lower, finishing one of the roughest stretches in many years as an aggressive policy outlook from the Fed, in an effort to slow inflation, has shown signs of drastically slowing the economy. Just overnight, Nike noted margin compression and inventory build in its quarterly results, Carnival posted a larger quarterly loss and gloomy outlook, and Micron in tech was the latest chip maker to offer a somber outlook. Those are the some of the latest examples of slowing consumer spending which followed last week’s Fed-Ex warning that shook the transport sector. Markets are oversold and showing some of the most bearish sentiment in some time (60% Bearish reading from AAII poll just yesterday), but with the Fed on its aggressive rate hike cycle, will markets get the bounce in October, into mid-term elections and the Christmas holiday that many are hoping for?

·     November WTI oil loses $1.74, or 2.1%, to settle at $79.49/bbl on Nymex

·     Gold futures rose $3.40, or 0.2%, to settle at $1,672 per ounce on Comex, the highest finish since Sept. 22. Prices for the most-active contract ended 1% higher for the week, but they fell 3.1% for the month — down a sixth straight month — and lost 7.5% for the quarter

·     Silver futures advanced 33 cents, or nearly 1.8%, to $19.039 per ounce, with prices scoring gains of 0.7% for the week and 6.5% for the month, but down nearly 6.5% for the quarter

·     The dollar index (DXY) traded below its 20-year high of 114.78, reached on Wednesday, falling to the 112 level in recent days while Treasury yields slipped off more than 10-year highs this week for the 10-year and 2-year

·     The pound claws back the budget-shock loss it saw this week, rebounding to around 1.12/USD and outperforming G-10 FX 9hit all-time lows 1.0327 earlier this week on UK tax news)

·     Asian equities fell for a seventh straight week of losses, longest losing streak since 2015


Economic Data:

·     Inflation data this morning not what Fed wants to see: U.S. Aug. Core PCE Price Index MoM rose a larger +0.6% vs. est. +0.5% and above previous +0.1% while Aug. Core PCE Price Index YoY +4.9%, above est. +4.7% (prior 4.7%). The Aug overall PCE price index +0.3% vs. July (-0.1%) and on a YoY basis, overall PCE prices rose +6.2% vs. July +6.4%

·     Aug. Personal Spending MoM +0.4% topping the +0.2% estimate and vs. prior month -0.2% while Aug personal income rose +0.3%, in-line with consensus; Aug real consumer spending +0.1% vs. July (-0.1%)

·     Sept. Chicago PMI data weak; reported at 45.7, below the consensus est. 51.8, contraction, and lowest level since June 2020 – hadn’t been under 50 since that same time

·     University of Michigan surveys of consumers sentiment final sept 58.6 (consensus 59.5) vs preliminary sept 59.5 and final aug 58.2; current conditions index final sept 59.7 vs prelim sept 58.9 and final aug 58.6 and consumers expectations index final sept 58.0 vs prelim sept 59.9 and final aug 58.0; the 1-year inflation outlook final September 4.7% vs prelim 4.6% and final August 4.8% and 5-year inflation outlook final September 2.7% vs prelim 2.8% and final August 2.9%






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers: NKE reported choppy Q1 results and provided a downbeat outlook, driving shares down ~10% as handily beat sales (constant-FX revenues +10% vs. implied guidance +MSD), and EPS of $0.93 was about in-line with consensus, gross margin of -220bps was about double the YoY decline and guided year gross margin down 200-250bps vs. down 0-50bps prior with bloated inventory (NA inventory was up 65% YoY with in-transit up 85%) – the inventory data weighed on several names (UA, DKS); RCII cuts Q3 EPS view to $0.85-$0.95 below prior view of $1.05-$1.25 (estimate $1.14) and cuts Q3 revenue view to $1B-$1.02B from $1B-$1.055B (est. $1.03B)

·     Auto sector: sector looks to rebound after tumbling Thursday post KMX dreadful and earnings, lower outlook, and somber outlook tanked the auto industry; TSLA is slated to report 3Q22 deliveries and production figures this weekend while Deutsche Bank maintained their 3Q deliveries estimate at 367k units (+52% YoY, +44% QoQ);

·     Consumer Staples & Restaurants: APRN said CFO Randy Greben stepping down for a position at another co, plans to resign effective Oct 17; the WSJ reported MO ends non-compete with Juul, opening the possibility of other deals for both parties

·     Casinos, Gaming, Lodging & Leisure sector: cruise lines weak after CCL sees net loss, breakeven to slightly negative adjusted EBITDA in Q4, after posting larger Q3 EP loss (-$0.65) vs. (-$0.13) and revs of $4.31B miss ests. $5.07B; says advance bookings for 2023 slightly above historical avg but Q4 cumulative advance bookings below the historical range; (RCL, NCLH move in sympathy)


Energy, Industrials and Materials

·     Industrials, Aerospace & Defense: for BA, the Federal Aviation Administration (FAA) told Boeing it has not completed key work needed to certify the 737 MAX 7 by December, according to a letter from the FAA seen by Reuters; GNRC was initiated at Outperform and $229 at Cowen as see attractive entry as valuation – the stock currently trades at 13.5x NTM P/E which is in-line with its pre-2H20 historical average

·     Transports: in trucking, JBHT and SNDR downgraded from Overweight to Sector Weight at Keybanc saying are incrementally cautious as checks indicate freight activity was seasonally weak through late-September, with limited indication of holiday demand to-date. Further, with imports decelerating, inventories normalizing and spot below contract rates, now see volume and pricing weakness into 2023 (preference for quality KNX, ODFL and out-of-bounds multiples (HUBG, XPO) while cautious on WERN. Susquehanna said for air cargo (FDX, UPS, XPO) Aug sample of Asia air cargo volume was down 13% Y/Y and down 7% on a three-year stack basis. Europe was also down, though a more moderate -6% Y/Y with a slightly worse -8% vs. Aug ‘19

·     Metals & Materials: gold miner AEM was upgraded to Buy at Citigroup, while cut tgt to $50 from $72 as updated gold models ahead of the Q3 results to reflect updated price forecasts from Citi’s commodity team. Noted Gold stocks have been hit hard by the selloff, creating an opportunity for investors to accumulate; in aluminum, CENX downgraded to Underperform at Wolfe as the earnings outlook has deteriorated with lower aluminum prices and higher power costs (shares hit 52-week lows); the weaker global economic data has weighed on industrial metals of late

·     Utilities & Solar; BLDP announced plans to invest $130 million in a manufacturing facility in China; AEP signed an amended agreement on the sale of its Kentucky operations to Liberty and expects to close on the sale in January 2023; WPRT said CFO is resigning and being replaced by former CFO, Bill Larkin



·     Bank, Broker, Exchanges: CBOE was upgraded to Neutral from Sell at Goldman Sachs, with a $126 12-month price Target as see the expansion of CBOE’s SPX options driving significant growth in its proprietary product suit, benefiting both fee capture and margins.

·     Insurance: for TRV, ALL, WRB, CB, RE, RNR – Hurricane Ian made Florida landfall (and now approaching South Carolina), marking the first major hurricane to make landfall since Hurricane Ida in 2021. Current industry loss estimates range from $10b-$30b+ according to Morgan Stanley and think individual company exposures are manageable. While total insured losses for FY22should be < $100b, we still expect strong reinsurance pricing into 2023; VOYA upgraded to Overweight from Neutral at Piper calling it an inflation net beneficiary and says with over-indexing to government, education & healthcare, we believe insulates VOYA relative to peers



·     Pharma movers: AMLX gets FDA approval of Relyvrio for the treatment of amyotrophic lateral sclerosis. Amylyx did not immediately disclose how much it will charge for the drug, to be sold as Relyvrio; ICPT announces REVERSE Phase 3 study of Obeticholic Acid (OCA) in Compensated Cirrhosis due to Nash did not meet its primary endpoint – remains on track to resubmit new drug application (NDA) for OCA in its lead indication of fibrosis due to Nash by year end based on its positive Phase 3 REGENERATE study; BMRN resubmits Biologics License Application (BLA) for Valoctocogene Roxaparvovec AAV gene therapy for severe hemophilia A to the FDA

·     MedTech Equipment & Healthcare Services: CRL upgraded to Buy from Hold at Jefferies as believe scarce NHP supply for preclinical studies is driving most of CRL’s DSA pricing, revenue, and backlog growth.


Technology, Media & Telecom

·     Semiconductors: MU guided next qtr 1Q adj EPS $0.04 +/- $0.10 vs est. $0.64 and revs $4.25B +/- $250Mm vs est. $5.6B and said taking decisive steps to reduce supply growth including a nearly 50% wafer fab equipment cut vs last year – FQ4 inventory grew ~$1B Q/Q and looks set to grow another ~$1.5B in FQ1 to ~240 days and probably grow another ~$1.2B in FQ2 before starting to come down in F2H said UBS. Wells Fargo noted shares of semi cap stocks are under pressure following Micron’s F4Q22 results, as they think the company’s F2023 (Aug. ’23) CAPEX commentary will likely be viewed as an incremental negative – (AMAT, ASML, KLAC, LRCX slip)


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.