Mid-Morning Look: June 14, 2023

Mid-Morning Look

Wednesday, June 14, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks trading mixed early, as the S&P 500 (SPX) looks to climb for the fifth straight day and on track for its longest winning streak since July 8, 2022, while the Nasdaq Comp also looks for 5th straight day of gains (longest streak since January). The Dow Jones Industrial Average is under pressure early, on track to snap its 6-day win streak as weakness in UnitedHealth (UNH) drags the index and managed care names lower in general after higher medical loss guidance. Medical devices and Hospital names benefitting as UNH cited the higher losses from a rise in volumes of non-urgent surgeries in Q2. Another inflation reading reinforced market expectations that the Federal Reserve will likely keep interest rates steady for the first time in 15 months when they reveal their decision at 2:00 PM, but expectations are for a more hawkish outlook possible from Fed Chairman Powell at the 2:30 press conference (FedWatch tools still point to a 65% chance of a rate hike at next months meeting). May Producer Prices (PPI) showed declines in headline readings for M/M and Y/Y results (11th straight month of decline), below prior month, and economist estimates, though core PPI (ex: food & energy) was in-line with consensus. Oil prices rose on Wednesday as investors awaited the outcome of the U.S. Federal Reserve’s June meeting after bullish oil demand growth forecasts from the International Energy Agency (IEA) and OPEC. DAL looking to rise for a 14th straight day while TSLA slips early, threatens 13-day win streak.


Economic Data

·     The Producer Price Index (PPI) M/M for May fell (-0.3%) vs. est. (-0.1%) and on a Y/Y basis rose +1.1%, below the +1.5% estimate. On a core basis, or ex food & energy, PPI M/M for May rose +0.2%, in-line with ests and Y/Y for May rose +2.8% vs. est. +2.9%. results were also down from the prior month reading across the board.

·     @zerohedge noted “60% of the May decline in the goods PPI can be traced to a 13.8-percent drop in prices for gasoline. Over 40% of the May increase in prices for final demand services can be attributed to margins for automobiles and automobile parts retailing.”







WTI Crude















10-Year Note





Sector Movers Today

·     Managed care stocks slid after UNH warned of a Q2 spike in medical costs (MLR); said there has been a rise in volumes of non-urgent surgeries in second quarter, adding margin pressure to insurers (ELV, CI, HUM shares slide). UNH expects the medical care ratio in Q2 to land in the upper end or moderately above the upper bound of its original outlook (MLR of 83.1%-83.3%, vs the Street’s 82.4%), and the full-year medical care ratio to settle in the upper half of the full-year guidance range (82.1%-83.1%, vs the Street’s 82.5%). DBAB said for reference, a 25bps increase in MLR for the full year would impact EPS by $0.55-$0.60 and be just over 2% dilutive to EPS.

·     Hospitals and Medical Device makers, Ortho companies (SYK, BSX, SNN, ZBH, HCA, THC) rise on UNH results/comments. UNH said a few categories in outpatient services have been seeing elevated utilization trends, such as hips and knees procedures among the senior population and there has been a rise in volumes of non-urgent surgeries in second quarter.

·     Semi-equipment stocks ACLS, AEI, AMAT, KLAC, NVMI, ONTO all downgraded to Hold from Buy at Needham noting amid enthusiasm over exposure to generative acritical intelligence, the stock prices of many have reached new 52-week highs and, in some cases, all-time highs and with only 10% or less upside over the next 12 months believe risk/reward not justified. Deutsche Bank said their preferred names in the sector are LRCX in the large cap and ENTGin the mid cap as raises its company estimates and price targets across its coverage to reflect its industry view that 2025 is likely the normalized year of WFE spending.



·     AMD +2%; after Reuters reported Amazon Web Services is considering using new AI chips from AMD, an AWS executive told Reuter; though said AWS has not made a final decision.

·     COHR +17%; introduced its new PH20 SmartWeld+ laser processing heads optimized for precision control of welding depths that are ideal for electric vehicle (EV) manufacturing applications.

·     MAXN +3%; upgraded to Buy from Hold at RothMKM saying they were “encouraged” by MAXN’s first positive margin print since spinning off from SPWR, raising tgt to $40 from $21 saying recent raise/capacity expansion plans here should also support growth.

·     NEXT +34%; after TTE agreed to buy a 17.5% stake in the company, which is developing a terminal to export liquefied natural gas in Texas.

·     SHEL +2%; announced a 15% dividend increase; lowered its capital expenditure guidance for 2024-25 to $22B-$25B, with the company noting that the range doesn’t includes inorganic activity; said plans to stabilize liquid production in its Upstream business, which includes oil.

·     SOFI +3%; looks to rise a 9th straight day, BTIG initiated at Buy and $14 tgt as believes few names are as attractive in the consumer-focused fintech space.

·     ZBH +4%; medical device makers/hospitals rise (HCA, THC, UHS, EW, BSX, ISRG, MDT, SYK) after UNH signals elevated volumes for non-urgent surgeries.



·     ITI 7%; after reported adj Q4 EPS loss and Ebitda below expectations.

·     IVAC -11%; after guidance and Benchmark downgraded to Hold citing last week’s announcement of an unprecedented cancellation of $54M in 200 Lean system orders.

·     KURA -4%; 3.03M share Spot Secondary priced at $11.50.

·     LOGI -11%; unexpectedly announced that Bracken Darrell, President/CEO would be departing; Guy Gecht, previously a member of the non-executive board will assume the role of interim CEO.

·     PGR -2%; after May combined ratio after worsens year-over-year (99% vs. 96.5% y/y); premiums written $4.32B vs $3.72B last year and net premiums earned $4.49B vs $3.76B last year.

·     RDNT -5%; after 7.6M share Spot Secondary priced at $29.75.

·     TSVT -11%; said it paused its Phase I clinical trial for SC-DARIC33 in patients with Acute Myeloid Leukemia after a patient died.

·     UNH -6%; after guided Q2:23 medical loss ratio (MLR) to the high-end or slightly above the high-end of the company’s annual MLR guidance range of 82.6% +/- 50bp saying there’s been a rise in volumes of non-urgent surgeries in second quarter, adding margin pressure to insurers (shares of ELV, HUM, CI, CNC, MOH among names pressured as well).


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.