Mid-Morning Look: August 30, 2023

Mid-Morning Look

Wednesday, August 30, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks opened higher, initially looking like Tuesday’s action where we “melted” higher all day, but major averages have quickly reversed, moving negative and to the lowest levels of the morning in what is likely to be “choppy” action the remainder of the week into the holiday weekend. Stocks jumped out the gate with the dollar falling further alongside Treasury yields as GDP for Q2 was revised lower and core inflation readings were lighter than expected. August private payroll data also came in below expectations for August (though July revised higher), helping bolster expectations the Fed is done with interest rate hikes this year. Hurricane Idalia strengthened into a Category 4 storm as it heads toward landfall Wednesday on Florida’s west coast, where it unleashed floods and triggered blackouts. Idalia’s maximum sustained winds reached 130 miles (215 kilometers) per hour, with “catastrophic storm surge”, the US National Hurricane Center said. S&P sectors are mixed early, with no real big leader or decliner early and NYSE breadth favoring advancers 1.6:1 edge as the S&P 500 holds above its 50-day moving average by about 30 points after topping it yesterday (SPX 4,463 50-day MA). Stocks have rebounded as the S&P (SPX) moves back above 4,500.


Economic Data

·     U.S. Q2 GDP growth was revised to 2.1%, annualized, from the prior estimate of 2.4% and slower than the +2.4% consensus, the Bureau of Economic Analysis said. The core PCE price index rose +3.7% vs. +3.8% expected and +3.8% prior estimate.

·     August ADP private payrolls data reported at 177K vs. est. 195K while the prior month was upwardly revised to 371K from 324K.

·     July advance trade deficit of goods widened to $91.2b from $88.8b in prior month, the Commerce Department said vs. median est. $90.0b. Imports rose 1.9% in July to $255.964b from $251.257b in June and exports rose 1.5% in July to $164.789b from $162.428b in June.

·     In mortgage data: The Mortgage Banks Assoc reported that weekly US mortgage market index rose +2.3% in latest week as the purchase index rises 2.0% and the refinance index rises 2.5% as the average 30-year mortgage rate unchanged at 7.31% in Aug 25 week.







WTI Crude















10-Year Note





Sector Movers Today

·     In payments: the WSJ reported that MA and Visa (V) are planning to increase fees that many merchants pay when they accept customers’ credit cards starting in October and April. The changes could result in merchants paying an additional $502M annually in fees. U.S. merchants paid an estimated $93B in Visa and Mastercard credit-card fees last year, according to the Nilson Report, up from about $33B in 2012.

·     In beverages: BFB Q1 EPS $0.52 vs. est. $0.53 as sales rose 3.1% to $1.038B vs. est. $1.053B; said Whiskey sales fell 1%, while tequila sales jumped 15% and the ready-to-drink category continued to grow, with New Mix sales surging 52%; Heineken (HEINY) downgraded to underperform from sector perform and lowers PT saying the anticipated cost of revitalizing its portfolio constrains margin expectations so that by 2025 it forecast Heineken’s EBIT margin to be 210bps below 2022.

·     In property & Casualty insurance: Wells Fargo said Hurricane Idalia is the first major storm of 2023 and should result in insured losses of ~$10 billion and shows potential losses by P&C insurer assuming industry loss of $5 billion, $10 billion (base case) and $20 billion. The largest hit to equity will be felt by reinsurers and PGR while top ideas are reinsurers ACGL, EG and RNR.

·     PC Market/Hardware: The road to recovery for personal computers (PCs) has been challenging coming off explosive years in 2020 and 2021, but signs of growth are finally returning. According to the IDC Worldwide Quarterly Personal Computing Device Tracker, PC shipments are forecast to grow 3.7% on year in 2024 reaching 261.4 million units. This shipment volume will be higher than the 259.6 million in 2018, but still below 2019 levels.

·     In Hardware earnings: HPE delivered revenues that slightly beat expectations, as continued demand strength in Intelligent Edge offset weakness in Compute and Storage. Operating profit came in below expectations on higher opex, while EPS benefitted from below the operating line items. For C4Q, the top line guide, at midpoint, is below Street expectations. HPQ delivered mixed results as better-than-expected PC segment revenues were more than offset by weakness in the Print segment, specifically in the consumer print HW segment; lowers FY adj EPS view to $3.23-$3.35 from $3.30-$3.50 prior and FY FCF view to low end of prior $3B-$3.5B guidance.



·     CONN +23%; reported smaller-than-expected Q2 EPS loss while revs overall missed, eCommerce sales increased 41.5% to a second quarter record of $27.2 million; Retail gross margin increased to 36.9% from 34.6% in the prior year.

·     GSAT +5%; after rallying nearly 24% on Tuesday, as the company named former CEO and executive chairman of Qualcomm Paul Jacobs as its new CEO.

·     PVH +1%; reported Q2 revenue growth +4% above guidance of +LSD reported-revenue growth and EPS of $1.98 came in above guidance of $1.70 and raised year EPS guidance.

·     RUN +3%; upgraded to Buy/High Risk at Citigroup saying higher rates and NEM impacts appear to be largely priced-in, but RUN is not getting due credit for several issues.

·     VRA +9%; swung back to a profit for Q2, easily topping estimates (EPS $0.33 vs. est. $0.12) though revs fell to $128.2M from $130.4M y/y and consensus $131M; mid-point of year guide below.



·     AMBA -17%; as reports In-line Jul Q revs of $62.1mn, +0.2% vs guidance mid-point but issues materially lower Oct Q revs mid-point of $50.0mn (-19.5% q/q), -23.9% vs $67.4mn est., on sharper-than-expected inventory correction (esp. IoT) + pockets of softening demand.

·     BOX -9%; reported in line F2Q24, but lowered the F2H24 (Jan FYE), which implies a ~4% top-line growth rate (6% cc) in F4Q24, below prior guide of ~10% cc growth for FY24 (new guide 8%).

·     FGEN -24%; after announcing topline results from LELANTOS-2, a phase 3 clinical study of Pamrevlumab in ambulatory Duchenne Muscular Dystrophy (DMD) saying the study did not meet the primary endpoint — Pamrevlumab was generally safe and well tolerated.

·     HPQ -9%; better-than-expected PC segment revenues were more than offset by weakness in the Print segment, specifically in the consumer print HW segment; lowers FY adj EPS view to $3.23-$3.35 from $3.30-$3.50 prior and FY FCF view to low end of prior $3B-$3.5B guidance.

·     MCFT -12%; reported better Q4 results with EPS $1.37/$166.6M sales topping consensus $1.07/$162.08M, but guided 2024 net sales $390M-$420M, well below estimates $568.8M and said sees 2024 adj. EBITDA $42M-$52M below est. $102.4M.

·     OTLK -83%; after saying the FDA has issued a Control Response Letter (CRL) for the company’s Biologics License Application for a treatment for wet age-related macular degeneration.

·     RA -20%; after the fund’s board announces 40% cut to monthly distribution for Oct, Nov, and Dec; to reset monthly distribution from $0.1990 per share to $0.1180 per share.

·     TXN -2%; downgraded from Market Perform to Underperform at Bernstein with $145 tgt.


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.