Mid-Morning Look: July 07, 2023

Mid-Morning Look

Friday, July 07, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks bounce back initially after yesterday’s pullback, as an unprecedented string of 14 consecutive beats came to an end this morning, with the BLS reporting just 209K nonfarm jobs added in June vs forecasts for 230K. The news was a welcome sight for Wall Street after yesterday’s ADP private payroll report nearly doubled expectations, raising Treasury yields and expectations of tighter Fed rate hike actions. A 25 bp rate hike at the July 25-26 FOMC is widely expected at this point (even with CPI and PPI inflation data coming next week), but where the Fed goes from here is the big uncertainty. Smallcap Russell outperforms large caps this morning after wide underperformance on Thursday. Stocks have since pulled back slightly, flattish on the morning with Energy, Materials, and Industrials leading early and defensive REITs, Utilities and Healthcare lagging.


Economic Data

·     June Nonfarm payrolls rose +209K below consensus +225K and below downwardly revised +306K in May (from 339K) and April (to +217K from +294K). Private payrolls added +149K vs. est. +200K and gov’t jobs added +60K. Average hourly earnings of all private workers +0.4% from May (consensus +0.3%) and the unemployment rate fell from 3.7% to 3.6%, in-line with expectations.







WTI Crude















10-Year Note





Sector Movers Today

·     Insurance: Raymond James upgraded RE to Strong Buy from Outperform and raising tgt to $450 from $420 and downgraded MCY to Outperform from Strong Buy and cut tgt to $33 from $40 as expects personal lines carriers in its coverage to continue to report challenging underwriting results in 2Q23 due in part to personal auto severity trends and elevated catastrophe losses. Life insurers commercial real estate exposure: KBW Inc. said CRE stress is manageable, playing out gradually due to strong credit metrics and laddered maturities. Companies with the largest office exposures include EQH, MET, BHF, and CRBG. For alt. asset managers with RE exposure, they recommend a cautious stance noting BX and BAM have the most exposure.

·     In Media: PARA downgraded from Peer Perform to Underperform at Wolfe Research with $14 tgt saying with the highest exposure to non-sports linear advertising revenue amongst coverage, Paramount is worst positioned for a secular downturn in the linear ad market. Wolfe downgraded WBD to Peer Perform from Outperform saying the risk of a significant TV advertising downturn is imminent. Wells Fargo lowered estimates for DIS saying better visibility into future earnings growth from DTC will be required.

·     In Aerospace & Defense preview, TD Cowen raised its price tgt on GE to $110.00 from $96.00, HXL to $75.00 from $65.00, TDG to $960.00 from $860.00 and WWD to $125.00 from $110.00 into earnings saying Commercial aftermarket and OE have vigorous, extended tailwinds while bizjets are supported by robust backlogs. Said favorites are TDG, GD among large caps; MOG among SMID caps.



·     BABA +5%; as Chinese authorities announced a fine of 7.12 billion yuan ($984 million) for Ant Group for violating laws concerning consumer protection and corporate governance, ending a years-long regulatory overhaul of the fintech company.

·     BECN +4%; said it plans to repurchase 400,000 shares of Series A preferred stock from private equity firm Clayton, Dubilier & Rice for $804.5 million plus accrued and unpaid dividends.

·     FSLR +5%; along with gains in ENPH, SEDG as solar names the top three gainers in the S&P early.

·     GRRR +87%; after signs contract with Government of Egypt to implement Smart Government Security Convergence solution in the country; contract is worth more than $270M.

·     KRUS +6%; reported F3Q23 (May) results that were above consensus expectations for both EPS and EBITDA driven by better-than-expected margin performance.

·     RIVN +9%; win streak extends to 8-days following strong delivery data last weekend.



·     BIIB -1%; after its Alzheimer’s drug, developed with partner Eisai Co. got full approval from the US FDA as expected; but testing requirements and side effect warnings that may limit its use came as a surprise to analysts.

·     COST -1%; reported June US comp sales ex-gas, FX +2%, vs. est. +2.3%; June total comp sales -1.4%, below est. -0.4%.

·     FUN -3%; downgraded to Neutral from Buy at Citigroup citing weak visitation trends. Said its deep dive into the foot traffic, weather, ticket pricing, and operating calendar trends at US theme parks shows generally lackluster trends.

·     LEVI -6%; after cutting its annual profit forecast to $1.10-$1.20 from $1.30-$1.40 (below consensus of $1.29) and flagged price cuts on select wholesale items.

·     PARA -2%; downgraded from Peer Perform to Underperform at Wolfe Research with $14 tgt saying Paramount is worst positioned for a secular downturn in the linear ad market.

·     WSM -2%; was downgraded to Underweight from Equal Weight at Barclays and cut tgt to $115 from $126 saying ticket growth is moderating for all retailers.


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.