Mid-Morning Look: August 18, 2023

Mid-Morning Look

Friday, August 18, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks tumble for a 4th day, with the S&P dropping below 4,400 for the first time since June yesterday, declining ahead of today’s $2.2 trillion option expiration. US major averages remain on track for the biggest weekly loss since the March bank crisis, as worries about China and higher global interest rates weighed on sentiment. Treasuries are slightly higher as their declines in recent days take a pause. With stock and index options expiring today (triple witching) and volatility increasing with the VIX at 18.50, the highest level since May, investors are on edge. The US dollar is poised for its fifth week of gains, the longest streak since May 2022, oil prices on track to end streak of 7 straight weekly gains (down -3.7% heading into today), gold prices trying to snap 9-day losing streak (longest since March 2017). There were widespread losses in Europe and Asia overnight as the China property crisis continued with Evergrande filing for bankruptcy in New York. Default concerns also revolve around Country Garden, which has less than 30 days to make repayment on dollar bonds it missed last week. Outside of China, attention remains on implications of higher rates amid concerns disinflation may start to wane and economic resilience could leave rates higher for longer. Attention turns to Fed Chair Powell’s speech at Jackson Hole Symposium next week and his policy signal. CME‘s FedWatch shows markets continue to price no further rate hikes though are attaching lower probability of rate cuts beginning in early 2024.







WTI Crude















10-Year Note





Sector Movers Today

·     Cryptocurrency-exposed stocks COIN, MARA, RIOT, HUT, CLSK, MSTR declined after the Wall Street Journal reported that SpaceX has sold off its Bitcoin holdings. The price of Bitcoin fell around 8% in just 10 minutes overnight down to levels not seen since late June on reports that SpaceX wrote down the value of BTC it previously acquired by $373M and sold it.

·     In Solar: Bloomberg reported US probe finds Asian solar makers evading tariffs on China; shares of CSIQ, JKS were active after headlines. A US government probe concluded some manufacturers in Asia are illegally bypassing tariffs on Chinese solar equipment, exposing them to duties that threaten to hike the cost of renewable power and slow the development of clean energy. 

·     In Insurance: In research, Morgan Stanley upgraded GL to Equal Weight and downgraded AFL to EW from OW with several price tgt changes in insurance sector. Said the life insurers second quarter results were generally encouraging, leading US on average to increase forward estimates. Said while valuations have moved well off their lows from earlier in the year, stills see solid upside potential in several stocks, with MET and EQH being among its best ideas for the sector.

·     In SaaS/Cloud/payments: BILL posted ~5% revenue upside, ~9% gross profit upside, and ~450 bps of operating margin upside vs. the Street as revenue upside was driven by core transaction revenue growth (TPV upside) and higher float revenue but FY24 growth outlook of 22-23% came in below est. of 25%. SNOW slides after cuts tgt to $190 from $203 as sees challenges to Q2 revs ahead of earnings next week; says Co is overvalued; APPF announced a ~9% workforce reduction.



·     AMAT +1%; reported EPS of $1.90, 9% above consensus on $6.4B in revenue, 4% above consensus and guided Q4 to $2.00 EPS, 24% above consensus on revenue of $6.5B, 11% above consensus, the last of the major semi-equipment names to report.

·     BILL +7%; posted ~5% revenue upside, ~9% gross profit upside, and ~450 bps of operating margin upside vs. the Street as revenue upside was driven by core transaction revenue growth (TPV upside) but guided FY24 growth outlook of 22-23% came in below est. of 25%.

·     BLMN +7%; shares rose after the Wall Street Journal reported that activist investor Starboard Value has built a more than 5% stake in the company. https://tinyurl.com/3z46jyvf  

·     DLB +7%; to replace STAA in S&P MidCap 400 at open on 8/22.

·     GLOB +10%; after modestly better Q2 adj EPS $1.36 and revs +15.9% y/y to $497.5M and guidance just above consensus estimates.

·     HE +6%; shares rebound after a dreadful week saw shares fall more than -68% at one point; rebounds today after saying it is seeking advice from various experts as part of prudent scenario planning; said goal is not to restructure company but to endure as financially strong utility

·     ROST +4%; after reporting a top- and bottom-line beat, with significantly better gross margins benefiting from freight while provided an above-Street guide as raises FY23 EPS view to $5.15-$5.26 from $4.77-$4.99 prior (est. $4.97).

·     WMT +2%; among leader in the Dow and S&P 500 after good earnings earlier in week.



·     BABA -3%; US listed Chinese stocks give back yesterday gains, with Asian markets falling overnight after Evergrande filed for bankruptcy protection in the U.S.

·     DE -4%; beat and raise as Q3 EPS $10.20 beats consensus $8.20; Q3 revenue $14.28B vs. est. $14.25B; raises FY23 net income view to $9.75B-$10B from $9.25B-$9.5B and raised operating margins for several segment sectors, but shares under pressure, falling a 4th straight day as fears grow of rising inventory as the co boosted output capacity to reduce its production backlog.

·     EL -3%; fresh 52-week lows after swung to a Q4 loss and guided for lower-than-expected sales growth in FY24; guided for another loss in Q1 amid a 10%-12% drop in sales and guides year sales to $17.02B vs. est. $17.21B amid sluggish U.S. demand.

·     FTCH -34%; after posting softer 2Q results and lowered guidance; cuts FY23 group GMV view to roughly $4.4B from $4.9B and lowers FY23 adjusted EBITDA margin growth; downgraded at Keybanc and JPM based on decreased confidence in execution and the timeline to profitability.

·     KEYS -11%; fresh 52-week lows after forecast Q4 EPS $1.83-$1.89 below consensus $1.99 and guides Q4 revenue $1.29B-$1.31B, below consensus $1.39B.

·     XPEV -6%; reported a wider-than-expected Q2 loss as revs decreased -32% to 5.06B yuan, in line with estimates while Gross margins were -3.9%, compared with 10.9% y/y due to inventory write-downs; guides Q3 revs 8.5B-9B yuan below estimates of 9.77B yuan.


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.