Mid-Morning Look: January 24, 2023

Mid-Morning Look

Tuesday, January 24, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks with a volatile/wild market open, as the NYSE experienced technical glitches leading to huge moves in large cap names…and after it was ironed out, market action was just as kooky, with a sharp spike, preceded by a quick fall and then pop again as the S&P 500 index battles the 4,000 level for the first hour after a spectacular last two-days of gains. Earnings results this morning however were by no means spectacular, with Dow components MMM posting a miss and sharply lower guide in industrials, VZ posted better revs and subs, but guides year profit lower in Telco, TRV reported in-line quarterly results after recently guiding lower in insurance, Pharma giant JNJ reports beat and slight raise and tonight MSFT will be the first major software company to report. Economic data mixed as S&P Global manufacturing tops views while Richmond Fed survey weak. Treasury yields spike following the better January flash PMI readings, with the 10-yr up above 3.55%; and two-year yields hit one-week high, last up 1.5 bps at 4.252% then fall on Richmond data. No Fed speak into FOMC meeting next week. Can markets hold their recent rally above key technical levels, will earnings propel markets higher? Those remain some of the short -term questions.


Economic Data

·     U.S. S&P global January flash manufacturing PMI at 46.8 (vs 46.2 in December) and S&P global January flash composite PMI at 46.6 (vs 45.0 in December)

·     Richmond Federal Reserve Manufacturing Survey for January fell -11 vs. -5 consensus and +1 prior as shipments dropped -3 vs. +5 prior and volume of new orders -24 from -4 prior.







WTI Crude















10-Year Note





Sector Movers Today

·     Aerospace and defense supplier RTX Q4 EPS $1.27 tops $1.24 est. as strong travel demand across the globe boosted demand for its jet engines, parts, and services: guides 2023 EPS $4.90-$5.05 vs. est. $5.03 and sales $72B-$73B vs. est. $72.34B; defense co LMT posted better 4Q results and mostly in-line 2023 guidance and said deliveries of the F-35 remain suspended as it works with the Pentagon to investigate the cause of a Dec. 15 crash in Fort Worth – suspension left 2022 deliveries at 141 — one fewer than in 2021.

·     In chemical sector: CC upgraded to Buy from Neutral at UBS and lift tgt to $43 as believe TiO2 earnings will recover through 2023 from current trough levels; UBS also makes changes in ag chemical sector as they update est’s & PTs (CF, IPI, LXU, MOS, NTR) to reflect generally lower fertilizer pricing expectations, partially offset by lower nat gas input costs and downgrade MOS to Neutral from Buy on a more balanced risk/ reward outlook and highlight NTR as top pick.

·     Housing and Products: Homebuilder DHI Q1 EPS $2.76 vs. est. $2.26; Q1 revs $7.26B vs. est. $6.4B; Q1 net sales orders decreased -38% to 13,382 homes and 40% in value to $4.9 billion compared to 21,522 homes and $8.3 billion in the same quarter of the prior year; order backlog of homes under contract by the end of last year was down 46% y/y at 15,759 homes, below estimates of 18,370. MLM and VMC both downgraded to neutral from Overweight at Atlantic Equities in the building products sector saying consensus estimates for 2023 already discount higher growth, and there are some underestimated risks to both volumes and price.

·     Energy: In E&P, Morgan Stanley downgraded APA to EW from OW and upgraded MRO to OW from EW saying with results kicking off this week, they are still generally below consensus on 4Q and see a mixed setup for 2023 guidance. While we remain constructive beyond earnings, driven by a positive oil view, they are increasingly selective. Cowen raises tgts in E&P 4Q22 Preview: APA $44 (Prior $40) AR $36 (Prior $39) CPE $65 (Prior $68) CTRA $38 (Prior $42) EQT $48 (Prior $54) HES $150 (Prior $122) MTDR $67 (Prior $65) PDCE $95 (Prior $94) RRC $30 (Prior $36) SM $47 (Prior $60) – said expect relatively clean quarters from FANG, HES and CTRA in 4Q22. For SMIDs, MTDR + PR feel safest to own into print. OVV + PDCE remain top picks for 2023 but 4Q prints could be messy given weather impacting results.



·     ALLO +15%; upgraded to Overweight at JPMorgan calling it a valuation driven change by upside from the current level.

·     DHI +2%; Q1 EPS $2.76 vs. est. $2.26; Q1 revs $7.26B vs. est. $6.4B; Q1 net sales orders decreased -38% to 13,382 homes.

·     HPK +7%; rises after the oil producer’s board voted to initiate a process to evaluate strategic alternatives including a potential.

·     LYFT +2%; upgraded to Overweight at Keybanc saying ridesharing data appears stable in their Key First Look Data sample, with Lyft data improving over the course of December.

·     PCAR +2%; after Q4 EPS $2.64 beats $2.21 on better revs $8.13B vs. est. $7.11B

·     TRV +1%; Q4 core EPS $3.40 below consensus $3.40 (recall recently lowered guidance) and revs $9.64B vs. est. $8.68B; book value per share 92.90, down 22% from year-end 2021.



·     AMD -2%; follows outperformance on Monday, as downgraded to MP from OP at Bernstein, growing increasingly concerned over the current dynamics in PCs and see potential for incremental margin risk.

·     GE -1%; as results beat (Q4 adj EPS $1.24/$21.8B revs tops est. $1.13/$21.59B) but guides FY organic rev growth mid-to-high teens and sees FY adj EPS $1.60-$2.00 below consensus $2.37.

·     LULU -3%; downgraded to Underperform and $290 tgt at Bernstein saying after delivering 25% sales growth and 30+% earnings growth for five straight years, Lululemon has a reset coming.

·     MGA -8%; narrows 2022 revenue view to $37.8B from $37.4B-$38.4B (est. $37.79B) and said 2022 Adjusted EBIT Margin is expected to be about 4.3%, which is below the 4.8% to 5.0% range disclosed in November.

·     MMM -6%; mixed Q4 results (EPS $2.28 vs. est. $2.36; Q4 revs $8.1B vs. est. $8.04B) and guides year EPS $8.50-$9.00 vs. est. $10.22 saying slower-than-expected growth was due to rapid declines in consumer-facing markets.

·     SAVA -20%; after reporting top-line Phase 2 results for its oral Alzheimer’s candidate simufilam from a study involving patients with mild-to-moderate disease.

·     VZ -1%; posted higher revenue for Q of $35.3B, posted net gain of 217,000 phone connections under postpaid billing plans (est. +210K) but guided year profit to $4.55-$4.85, below consensus of $4.97 and sees capex spend $18.25B-$19.25B


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.