Mid-Morning Look: January 17, 2023

Mid-Morning Look

Tuesday, January 17, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks starting the week how they left off, trading to the upside as investor optimism remains very high to start the New Year. S&P 500 (SPX) tops the 4,000 level (above its 200-day MA of 3,983), trying for its 5th straight day of gains, while the Nasdaq Comp looks for its 7th straight day of gains on semi strength. The NY Fed’s Empire Manufacturing survey for January contracted sharply coming in at -32.9, the lowest level since mid-2020 and represents the fifth-worst reading in series history – but a softer “prices paid” component and “employment” index help boost the case for a Fed rate hike pause and potential pivot by year end. Adding to the market gains was a headline that the ECB may opt for 25-bps hike in March after 50-bp move in Feb. Treasury yields tumble to lows this morning after the eco data and ECB comments – with the Fed and its outlook on interest rates remaining the key driver for markets to start the year (many anticipate a weak 1H followed by a bounce in 2H – but investors getting a an early jump – so far in 2023, the S&P 500 has risen 4.2%, the Dow 3.5% and Nasdaq up 5.9% – coming into the day). Bitcoin makes it an 11th straight day of gains after an awful 2022, topping $21K and lifting several related names. The Dow Jones Industrial Average lags the S&P and Nasdaq following weak quarterly results from GS and guidance from TRV. Technology, Discretionary, Utilities and Energy early leaders, while Communications and Financials leading the S&P lower


Economic Data

·     NY Fed Manufacturing data huge miss, but prices ease: NY Fed’s empire state current business conditions index down -32.9 in January vs -11.2 in December (vs. est. -9.0) as new orders index tumbles -31.1 in January vs -3.6 in December, prices paid index +33.0 in January vs +50.5 prior and state employment index at +2.8 in January vs +14.0 in December







WTI Crude















10-Year Note





Sector Movers Today

·     Trucking sector changes at Bank America as sees truck demand near floor, Rails to grow on service. Firm upgraded SNDR to Buy from Underperform and raise tgt to $29 and $50 (from $23 and $42), as turn positive on truckload ahead of the group’s upturn. Upgraded ODFL to Neutral (from U/P), with a $334 PO (from $266) while lower XPO to U/P (from Neutral). Downgraded CHRW to U/P (from Neutral) given margin pressure. In equipment, they swap GBX (U/P from Neutral) for WAB (Neutral from U/P).

·     Software movers: Piper downgraded BAND, DOCN to Neutral from overweight, upgraded NICE to Overweight, continue to recommend NTNX (which is moved to top-idea following checks), FIVN, ANET, TWLOtweaks its cloud automation software ratings; Guggenheim downgrades shares of software co’s MSFT, ZS, WDAY, SPLK, NET, PANW saying we’re in a prolonged macro slowdown and no one is immune, not even security. The positive secular forces of Software and the favorable characteristics of the Software financial model remain intact. But there have been changes. Stays buy rated on CRM, ORCL, PRGS, SMAR, SNOWwas downgraded to underweight at Morgan Stanley; CHKP was upgraded to Equal weight from Underweight at Wells Fargo citing a shift in investor sentiment toward profitability

·     Restaurants: Morgan Stanley assumed coverage of the Restaurant & Food Distribution sectors, with a focus on the company’s best positioned to drive sales and unit growth in a potentially tougher ’23. The firm upgraded DPZ to OW from EW, downgrade CMG to EW from OW; PTLO to OW & stepping aside on select other SMid-caps. Top Pick, YUM Downgrade SG and DNUT to EW from OW and lastly downgrade SHAK to UW from EW; CAKE was downgraded to Neutral from Buy at Citigroup; TXRH downgraded to Outperform from Strong Buy at Raymond James; WEN downgraded to Hold at Deutsche Bank



·     CHD +4%; upgraded to OW at Morgan Stanley following substantial stock underperformance in 2022, which presents a compelling entry point

·     CLF +2%; announced another price increase for hot rolled, cold rolled and coated steel products due to strong demand in its automotive steel business

·     MS +6%; Q4 adj EPS $1.31 vs. est. $1.26; Q4 revs $12.75B vs. est. $12.43B; Q4 Equities Sales & Trading revs $2.18B vs. est. $2.40B and FICC Sales & Trading revs $1.42B vs. est. $1.68B; Q4 provision for credit losses $26M

·     NATI +17%; to be acquired by EMR for $53 per share, in deal valued at $7.6B, up from its prior bid of $48 a share submitted in May 2022 https://on.mktw.net/3IY52tZ

·     NVCN +30%; to be acquired by SWAV for $27,25 per share in cash upfront on completion of the Transaction, corresponding to an enterprise value of approximately $100M, plus deferred payments of up to approximately $47M https://on.mktw.net/3IWgXbW

·     RBLX +8%; reported the number of daily active users (DAUs) soared 18% year-over-year (YoY) to 61.5 million while hours engaged increased 21% YoY to 4.7 billion

·     SBNY +5%; another name leveraged to crypto, Q4 EPS $4.65 vs. est. $4.89; qtrly net interest income reached $638.7M up $102.8M, or 19.2% y/y; Q4 credit loss provision was $42.76M

·     SI +19%; following quarterly results, and reduction in workforce, but broadly another squeeze in crypto related names – MARA, RIOT, COIN, MSTR gain again – surging to start the year



·     AN -1%; Morgan Stanley downgraded to underweight and cut tgt to $96 from $104 as they lower franchise dealer forecasts following bellwether KMX’s disappointing results

·     EMR -5%; after announcement to acquire NATI in $7.6b deal

·     GS -4%; misses as Q4 EPS $3.32 vs. est. $5.59; Q4 revs $10.59B vs. est. $10.7B; Q4 provision for credit losses $972M; loans $179B; Q4 Investment banking revenue $1.87B vs. est. $1.64B, Q4 equities sales & trading rev $2.07B vs. est. $2.14B and Annualized ROE +4.4%, vs. est. +7.42%

·     PFE -2%; downgraded from Overweight to Equal Weight at Wells Fargo as think an earnings down-revision cycle is coming for the company in near term

·     TRV -4%; guided Q4 core EPS $3.40, below est. $4.04 which included the company’s estimate for catastrophe losses of $459M pre-tax, $362M after-tax, net of reinsurance

·     XPEV -7%; cut prices for most of its vehicles by around 10%, joining other auto makers in lowering prices as competition heats up in the EV sector


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.