Mid-Morning Look: December 06, 2023

Mid-Morning Look

Wednesday, December 06, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks open higher, buoyed by dovish economic data as private payroll ADP job additions were smaller-than-expected, along with higher productivity readings and lower unit labor costs (following the drop in JOLTs on Tuesday), raising the bets that the Fed will cut rates in early 2024. The 10-year Treasury yield fell to three-month lows around 4.13% (down from 16-year highs above 5% 10/23) on the data and Fed rate cut bets – ADP private payroll data showed jobs growth coming below economists’ expectations, rising 103K jobs vs. the 130K jobs prior and prior month revised down. Fed funds futures traders are pricing in a more than 50% probability that the Fed will begin cutting rates in March and see 125-basis points in rate reductions by December 2024. Yields also fell on Tuesday after data showed that U.S. job openings fell to more than a 2-1/2-year low in October. Another busy day of Wall Street conferences impacting various sectors, while shares homebuilders higher behind TOL results and lower rates while a handful of tech names (ASAN, BOX, MDB, OOMA, YEXT) fall on results/guidance. Overall, early strength in Industrials, REITs, Financials, Discretionary and weakness in Energy and Staples. Oil prices tumble again with WTI crude -2.7% approaching $70 level.


Economic Data

·     ADP Private sector employment for November at +103K vs. +130K expected and downwardly revised figure of +106K from +113K prior. Recall the government reported on Tuesday that job openings fell to more than a 2-1/2-year low of 8.733M in October.

·     U.S. Q3 non-farm productivity revised to +5.2%, above consensus +4.9% and vs. previous +4.7% while Q3 non-farm unit labor costs revised to (-1.2%) vs. consensus (-0.9%) and prior (-0.8%).

·     October International Trade in Goods and Services deficit at (-$64.3B) vs. (-$64.2B) consensus and (-$61.5B) in September (revised from -$61.2B), which reflected an increase in the goods deficit of $3.5B to $89.8B and an increase in the services surplus of $0.4B to $25.5B.







WTI Crude















10-Year Note





Sector Movers Today

·     In Food & Beverages: CPB Q1 adj EPS $0.91 tops the $0.88 est. on in-line sales of $2.52B as Q1 overall volumes were down -5% as consumers opt for cheaper private-label brands and other alternatives; also reaffirms FY 2024 net sales, adjusted EPS forecast. UNFI mixed Q1 results as revs of $7.55B miss ests $7.62B, but posts smaller-than-expected loss while backed its yearly forecasts; BF FY lowers FY organic net sales to 3%-5%, down from prior 5%-7% view citing elevated input cost pressures and ests organic income growth in the range of 4%-6%, compared with prior range of 6%-8% (follows Q2 sales miss $1,11B vs. est. $1.15B).

·     In Restaurants: MCD held its Investor Day today and said it plans to open 10,000 new restaurants by 2027 in what the company described as the fastest period of growth in company history and plans to grow its loyalty program to 250 million by 2027 from 150 million now. SHAK upgraded to Strong Buy at Raymond James as believe the company is still in the early innings of driving improved margins and lowering development costs and see idiosyncratic opportunities into 2024 to increase margins/stimulate traffic; PLAY Q3 revenue fell -3% y/y to $466.9M vs. est. $473.1M, but better EPS as efficiencies and lower G&A more than offset slightly softer comps.

·     Electric Vehicles strong: Shares of TSLA, RIVN, LCID, FREY, as well as chargers BLNK, CHPT higher after the European Commission proposed delaying by three years a tightening of local content rules that would have led to import tariffs on many electric vehicles (EVs) traded between the European Union and Britain from the start of 2024. The Commission also said it was setting aside an additional 3 billion euros ($3.24 billion) to boost the EU’s battery manufacturing industry. In Chinese Auto: NIO rises after Reuters said the company is mulling spinning off battery production unit in efforts to turn profitable; says the spin-off could happen as early as end of this year.

·     In Consumer Finance/Cards: MA announces $11B share buyback and raises dividend by 16%. COF and DFS were both upgraded to Buy from Neutral at Bank America and raise tgts to $129 and $116 (from $112 and $94) respectively as believes it is in the latter stages of the current credit cycle and expect losses to peak in 2H2024.



·     ALB +6%; as lithium stocks rebound after falling in recent days on cautious analyst comments given sharp decline in lithium pricing this year (LTHM, LAC, SQM also active).

·     CAR +10%; announced a special cash dividend of $10 per share of common stock.

·     HOOD +8%; revealed November crypto notional trading volumes 75% above October 2023 levels as users contributed about $1.4B in net deposits in Nov, a 31% jump from 2022 and average revenue per user (ARPA) rose 23% to $77/user.

·     OLLI +4%; qtrly comparable store sales increased 7.0% from the prior year increase of 1.9% on higher sales of $480.1M, boosted its FY23 comparable sales to rise 5.3%-5.6% above prior view for a rise of 4%-4.5% and guides FY23 adj EPS $2.77-$2.83 vs prior view $2.65-$2.74.

·     PHVS +32%; announces positive top-line phase 2 data from the chapter-1 study of deucrictibant for the prophylactic treatment of HAE attacks as its primary endpoint was met.

·     S +17%; delivered strong results and raised its full year guidance for revenue, ARR, pro forma GM, and pro forma OM because of strong demand and execution; raises annual revenue forecast to $616M from prior view of $605M.



·     ASAN -15%; after results as RBC noted revenue upside was subdued, billings significantly missed consensus, and cRPO declined sequentially for the first time. Firm noted operating margin outperformance was impressive again but was overshadowed by soft leading indicators.

·     BOX -19%; 3Q results and provided 4Q roughly in line with consensus, ex: Forex and one-time items, but Q3 billings miss and another slight FY24 revenue guide down while FY24 operating margins were lowered by 100 bps and the FY25 margin outlook was ~130 bps below consensus.

·     BTI -7%; said it will take a hit of around $31.5B as it writes down the value of some U.S. cigarette brands such as Newport, Camel, Pall Mall, and Natural American Spirit.

·     INMD -8%; cut its full-year EPS view to $2.47-$2.50 from prior $2.53-$2.57 to reflect stronger-than-expected headwinds from the current macro env’t causing a slowdown in platform sales, mainly in North America and sees sales $485M-$495M vs. prior view $500M-$501M.

·     MDB -6%; posted a solid top-line beat, and some unexpected upside to its Enterprise Advanced business; Atlas results, although better than expectations (+36% Y/Y vs. +31% consensus), likely fell short of the buyside’s elevated estimates post SNOW’s and ESTC’s commentary last week.

·     OPTN -20%; announced a 3-month extension to its CRS sNDA PDUFA action date (now 3/16/24) to allow FDA time to review a new data analysis.

·     PLTR -5%; dipped after Japan’s Sompo Holdings sold part of its stake in the data analytics firm as a spokesperson for Japanese insurer says stake sale was for undisclosed amount, but Sompo booked profit of 86B yen ($584.20M).

·     SHOP -3%; downgraded to Neutral from Outperform at Wedbush citing valuation with $68 tgt saying continues to hold a favorable view of Shopify’s overall strategy and competitive positioning within eCommerce, but shares have risen +53% since Q3 results.


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.