Mid-Morning Look: April 10, 2024

Mid-Morning Look

Wednesday, April 10, 2024





DJ Industrials




S&P 500








Russell 2000






U.S. stocks punished early, setting a new April low, while the CBOE Volatility index (VIX) hit highs of 16.43 (but not above the 16.92 on 4/4) after a third straight month of hotter consumer price inflation data. The Consumer Price Index (CPI) rose 0.4% M/M in March, compared with the 0.3% increase expected while annually it increased 3.5% versus a 3.4% estimated growth. Excluding volatile food/energy, the core figure rose 0.4% M/M in March, against expectations of a 0.3% advance and annually, it gained 3.8%, versus the estimated 3.7% increase. These were not welcomed numbers by Wall Street which had been hoping for a deceleration after rising in January and February and help boost hopes for the Fed to maintain their 3-rate cut view for 2024. But given today’s data, the question remains, how can the Fed cut rates (3 times no less) in 2024, when the last three CPI inflation reports showed small, but steadily rising prices! Interest rate sensitive sectors such as REITs (XLRE) -3.1% for worst S&P sector so far with more than 1% declines for Materials (XLB), Financials (XLF), Technology (XLK), Utilities (XLU) and Consumer Discretionary (XLY) amid a spike in Treasury yields (10-yr above 4.5%) and the dollar (DXY) after the hotter CPI data.


The 10-yr yield spiked 13.5 bps to 4.50%, while the 2-yr yield most sensitive to rate moves, jumps over 19-bps to 4.94% and the 1-yr rises to 5.19%. Fed swaps now shift full pricing of rate cut to November from September while changes of June cut lessen. Smallcaps hit the hardest early as the IWM falling below its 50dma of $202.25. The yen weakened, pushing the dollar to its highest against the Japanese currency since 1990. Gold prices slipped initially from recent all-time highs (above $2,385 an ounce) but has since rebounded into positive territory.


Meanwhile the Bank of Canada (BoC) kept its key rate unchanged at a near 23-year high of 5% and ruled out a cut until it sees more signs that a recent drop in inflation will be sustained. In its quarterly Monetary Policy Report, the bank also hiked its growth forecast for 2024 on the back of strong immigration flows and increased household spending. Inflation has been falling in recent months but at 2.8%, it is still above the bank’s 2% target.

Economic Data

  • The Consumer Price Index (CPI) M/M for March rose +0.4% vs. est. +0.3% (vs. +0.4% prior) and Consumer Price Index (CPI) Y/Y for March rises +3.5% vs. est. +3.4% (vs. prior +3.2%). The CPI Core (Ex: Food & Energy) M/M for March also rose +0.4% vs. est. +0.3% (vs. +0.4% prior) and CPI Core Y/Y for March rose +3.8% vs. est. +3.7% (vs. prior +3.8%). This marked the third consecutive month of higher CPI prices.
  • Energy prices shot up 1.1% last month after a 2.3% increase in February. The last two months have seen the biggest back-to-back increases in energy prices since last summer. Rents rose 0.4% in March, as did a proxy for the cost of homeownership known as OER, or owner equivalent rent. Other notable increases included car insurance (2.6%), clothes (0.7%) and medical care (0.5%).
  • Wholesale inventories for February unrevised at +0.5% (vs. consensus +0.5%); U.S. Feb wholesale sales +2.3% (consensus +0.4%) vs Jan -1.4% (prev -1.8%); Feb stock/sales ratio 1.34 months’ worth vs Jan 1.36 months.






WTI Crude















10-Year Note




Sector Movers Today

  • In Restaurants: YUM downgraded to Hold from Buy at Argus saying the company has reached profitability and achieved its store opening targets last year, but the firm is less positive on its prospects this year as it is likely to see customer traffic decelerate and menu prices plateau (reduces ests). CAKE positive mention at Wedbush as remaining OP rated and $40 tgt saying it could be the casual dining sleeper of 2024 as Wedbush continues to believe NT headwinds obfuscate CAKE’s underlying earnings power. CAVA was upgraded to Buy from Hold at Argus saying the co appears poised to take advantage of growth opportunities in its targeted Mediterranean niche as well as in the fast-casual segment of the restaurant industry.
  • In Chemicals: LIN downgraded to Neutral and IFF upgraded to Buy at Citigroup in chemicals sector and said new top picks are SHW, APD and OLN as the firm is adjusting Q124 chemical estimates +1% and decreasing FY24 estimates by 1%. ALB (tgt to $156 from $137) upgraded to Buy at Bank America noting inventory levels in China for lithium carbonate were elevated in February, but started to trend down in March while they downgraded CF (tgt to $88 down from $96), turning "somewhat more cautious" on the agriculture space as sees risk of lower crop prices as U.S. ending stocks to use for corn that fell to a decade low in 2021 have steadily climbed.
  • In Transports: DAL first major airline to report earnings, as Q1 adj EPS $0.45 vs. est. $0.36 and revs $12.56B vs. est. $12.5B; Passenger load factor 83% vs. 81% y/y, vs. est. 81.6% and available seat miles 65.54B, +6.8% y/y, vs. est. 65.10B; Guides Q2 adj EPS $2.20-$2.50, vs. est. $2.23 and still sees FY adj EPS $6-$7 vs. est. $6.46. In rails, Bank America upgraded CNI to Buy as volumes are trending slightly ahead of expectations, the grain crop is not as bad as originally feared, and CN appears on track to achieve its near-term double-digit earnings growth objective.



  • BABA +2%; after a report in the South China Morning Post (SCMP) said founder Jack Ma expressed support for the co’s recent restructuring efforts toward efficiency in a memo to employees.
  • DAL +2%; first major airline to report earnings, as Q1 adj EPS $0.45 vs. est. $0.36 and revs $12.56B vs. est. $12.5B; Passenger load factor 83% vs. 81% y/y, vs. est. 81.6% and available seat miles 65.54B, +6.8% y/y, vs. est. 65.10B.
  • MPC +1%; as energy stocks outperform while other ten S&P sectors are in the red.
  • NVDA +1%; as stock rebounds after leading decline in semi’s Tuesday.
  • TSM +2%; reported a 16.5% rise in Q1 revenue to $18.54B, towards the high end of prior expectations of $18B-$18.8B and up from $16.72B in the year-ago period, as its sales boom on demand for artificial intelligence applications. For March alone, TSMC reported revenue rose 34.3% year-on-year to T$195.21B.



  • DCGO -15%; after Politico reported that New York City does not plan on renewing its migrant services contract with DCGO when it expires. The article states that NYC and Mayor Adams will end their relationship with DCGO, and they plan to issue a competitive bid proposal seeking a new provider to take over the work.
  • DECK -6%; after Truist downgraded and cut tgt to $864 from $983 saying credit card data indicates that Hoka’s direct-to-consumer growth decelerated in mid-February and remained softer through March.
  • HNST -8%; after its founder, actress Jessica Alba, said she would step down from her role as chief creative officer; HNST says Alba plans to pursue new projects and would continue to deliver leadership as a member of its board.
  • HXL -10%; announced that Tom Gentile, former CEO of Spirit AeroSystems, will become CEO and President of HXL effective May 1, 2024. Bank America downgraded HXL to underperform noting the surprising nature of this announcement as they did not communicate that it had been pursuing new leadership.
  • MNDY -5%; downgraded to Neutral from Buy at Citigroup as recent partner convos and web traffic outlined slowing demand with more muted impact from price increases, adding risk to the NT outlook.
  • SGH -18%; reported Q2 EPS upside with IPS (Intelligent Platform Solutions) revenue slightly better, while Memory and LED slightly below, netting in line; guided for incremental revenue/EPS improvement in F3Q, reflecting IPS flat-up and Memory/LED up high-single digits.
  • UBS -3%; as the Swiss Government said that the bank and three other systemically relevant banks must face tougher capital requirements to shield the country’s wider economy, a year after the rescue of Credit Suisse. The Swiss gov’t wants increase in capital backing for foreign units.


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.