Mid-Morning Look: January 16, 2024

Mid-Morning Look

Tuesday, January 16, 2024





DJ Industrials




S&P 500








Russell 2000






U.S. stocks were trading lower overnight following weakness in Asia and Europe as earnings season begins to pick up steam this week, but after briefly breaking below its overnight low for S&P futures, stocks have been bouncing since led again by the usual suspects (big cap tech). AMD hitting new 52-eek highs as semiconductors (NVDA) remain market leaders, along with gains in GOOGL, MSFT. NYSE breadth still favoring decliners by more than 4:1 margin over advancers early despite the bounce in tech. Boeing (BA) shares a drag in the Dow, falling over 6% after Wells Fargo downgraded and news that 737 Max 9 groundings were extended. Financials drop behind earnings miss by MS this morning. The US Dollar jumped early along with Treasury yields as markets continue to pare back bets of aggressive rates cuts by the Fed (started year with calls for 6-cuts in 2024 and now closer to 5-cuts forecasted), which has weighed on lending, solar and other sectors. The lone piece of economic data showed very weak manufacturing in the NY Fed region as NY Fed’s empire state current business conditions index tumbled -43.7 in January (vs. consensus -5.0) below the -14.5 in December as new orders index -49.4 in January vs -11.3 in December (previous -11.3) and prices paid index +23.2 in January vs +16.7 in December (previous +16.7). Gold prices sliding given the bounce in the dollar and weak production view from Barrick; nat gas prices nearly erased last week’s gains. Small caps still lagging as the Russell 2000 is down -4.5% in January (down again today).






WTI Crude















10-Year Note




Sector Movers Today

  • Semis: Barclays with sector call as they upgraded CAMT ($82 from $65), COHR ($60 from $38), NXPI ($260 from $200), WDC ($65 from $45) all to Overweight from Equal Weight. KeyBanc raised price tgts on AMD to $195 from $170, ARM to $75 from $65, MU to $115 from $100, NVDA to $740 from $650 and QCOM to $165 from $145 after quarterly findings in semis. The firm said broad-based end-demand trends remain weak, as auto and industrial end markets undergo inventory destocking; PCs are bouncing along the bottom, while Android smartphone demand is sustaining with iPhone seeing weakness in China. IDCC, ACLS raise guidance, WDC upgraded at Deutsche Bank to buy.
  • Chemicals: In paint stocks, Kelly-Moore Paints said it plans to cease operations and shut down, collapsed in part by years of asbestos lawsuits that have left the paint maker and retailer still saddled with some $170 million in liabilities. Shares of SHW and PPG were active on the news. Bank America upgraded DOW to Buy from Hold (tgt to $60 from $57) increasingly confident on a ~50% EBITDA growth by 2025; ECL upgraded to Neutral and downgraded FMC to Underperform from Neutral (tgt to $57 from $60) saying the outlook for crop chems remains cloudy; CE to Underperform (tgt to $135 from $124) following a 56% return in 2023, and DD to Underperform from Buy as see modest improvement in electronics/housing end markets and PFAS exposure.
  • REITs: Truist upgraded COLD, FRT, EQIX, WSR and MAA to Buy from Hold, and downgraded AVB, AKR, ELS, SUI, and SLG to Hold saying they are relatively bullish on REIT sector, following a challenging 2023 that was mired by volatile inflationary environment (RMZ +14% vs S&P500 +26%). The firm said REITs should benefit from a favorable backdrop of improved cost of capital environment, liquidity, and attractive valuation levels. Bank America downgraded OHI to Neutral from Buy and lowered tgt to $31 from $33 to reflect its view that the stock has more limited upside given continued tenant issues, choppy external growth & risk to dividend. Bank America upgraded VTR to Buy from Neutral and increased PO to $53 from $48 to reflect its view that VTR’s strong core growth (notably senior housing NOI) will flow to the bottom line in 2024 and 2025.
  • Restaurants: Morgan Stanley upgraded SBUX to Overweight after being more cautious in ’23 and downgraded both EAT and SG to Underweight; said given recent performance, don’t see as compelling of risk-reward skew in space but remain OW CAVA and DRI, and underweight on CAKE. The firm said slightly below-history growth, less pricing, pockets of risk, but relative cost/operating stability, stable consumer, better balance sheets leave US cautiously optimistic. MSCO is OW rated on DPZ, SBUX, MCD, YUM, CAVA, DRI, USFD, see less favorable risk/reward skew in most SMIDs. BROS was upgraded from Hold to Buy at Stifel and raised tgt to $35 as believes the company is poised to make meaningful progress on several fronts under Ms. Christine Barone’s leadership.



  • ACLS +3%; raises Q4 EPS view to $2.05 from $2.00 (est. $2.00) and reaffirmed its expectations for the full year; expects revenue for the Q4 to be greater than $300M, above the approximately $295M prior guidance.
  • AMD +5%; hit new 52-week highs, extending gains to above $155 as chips continue to lead.
  • IDCC +2%; guides Q4 adjusted EPS $1.34 on revs $105M, above consensus $0.71/$104.2M.
  • SNPS +4%; agreed to buy ANSS for $35 billion in cash and stock “bringing together Synopsys’ industry-leading EDA solutions with Ansys’ world-class simulation and analysis capabilities” Ansys shareholders will receive $197 in cash and 0.3450 share of Synopsys for each share http://tinyurl.com/2p86wxx6 .
  • TAST +12%; Burger King, which is owned by QSR, agreed to buy Burger King franchisee TAST in a deal valued at $1 billion. Under terms of the deal, Carrols shareholders will receive $9.55 in cash for each Carrols share they own, which represents a 13.4% premium over Friday’s closing price of $8.42 http://tinyurl.com/2w8kr5p7 .
  • WDC +4%; upgraded at both Barclays and Deutsche Bank this morning.



  • AAPL -1%; on reports the company is offering rare discounts on its iPhones in China, cutting retail prices by as much as 500 yuan ($70); sales of Apple’s latest iPhone 15 handsets have been far worse than previous models in China according to the reports. http://tinyurl.com/5c8ax7tm
  • ALLK -56%; after halting lirentelimab-related activities across clinical, manufacturing, research, and administrative function after did not meet their primary endpoint; also announcing a restructuring to focus on development of AK006 and said will reduce its workforce by approximately 50%.
  • APLD -21%; reported Q2 adj EPS loss (-$0.05) on revs $42.2M missing the $0.01/$57.3M estimate and said it will report FY24 revenue and EBITDA below lower end of its guidance citing delay in delivery of certain networking components for GPU clusters.
  • BA -6%; downgraded to equal weight from overweight at Wells Fargo, seeing a higher risk of production and/or delivery impacts with the US FAA taking a closer look into Boeing’s operations. Also, Bloomberg noted China’s aviation regulator has temporarily halted the restart of 737 Max jet deliveries to the nation.
  • BIDU -4%; after the company clarified media reports (in South China Morning Post on Friday) on its ERNIE Bot saying it has not engaged in any business collaboration or provided any tailored service to authors of the academic paper of a Chinese university or any institutions with which they are affiliated.
  • MS -3%; as Q4 EPS of $0.85 misses the $1.07 estimate, revenue of $12.9B beats by $80M boosted by strength in its investment banking business which increased 5%, as fixed income underwriting revenue jumped 25% while advisory and equity underwriting revenue were flat.
  • PYPL -4%; downgraded to Neutral from Buy at Mizuho saying their data suggests that market share loss to Apple Pay looks increasingly challenging.


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.