Mid-Morning Look: March 30, 2023

Mid-Morning Look

Thursday, March 30, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stock markets continue to defy calls for caution despite bank failures, higher inflation and a Fed dead set on slowing it by hiking rates, setting more than 1-month highs for the S&P 500, while gains in technology stocks push the Nasdaq back above the 12,000-level heading into key inflation data tomorrow morning. After yesterday’s advance the Nasdaq 100 has rallied 20% off its lows, marking a new bull market, extending gains today. Data this morning showed economic growth (GDP) in the final three months of last year was revised down to an 2.6% seasonally and inflation-adjusted annual rate, from the previously estimated 2.7% gain and 3.2% last quarter, largely reflected downward updates to exports and consumer spending. Treasury yields rise and erase most of past week’s loses despite fresh data pointing to a slowing economy and potentially less hawkish monetary policy (10-year is at 3.578% and the two-year at 4.163%). The euro rises to a one-week high vs. the greenback after softer GDP data in the U.S. and as German inflation eased to an annual rate of 7.4% in March from 8.7% in February. All eleven S&P sectors open in positive territory for a 2nd straight day as REITs +1% followed by Materials +0.95%, Discretionary +0.9%, and Technology +0.9%. Could the end of month ramp on no specific news be end of month/quarter “window dressing” by PMs? The momentum has been very strong with major averages pushing back above key technical resistance levels, can it continue?


Economic Data

·     U.S. 4Q Final GDP +2.6% vs prelim GDP +2.7% and vs. +3.2% in Q3; inflation readings showed: 4Q Final PCE Price Index +3.7% vs Prelim +3.7%; Q4 Core PCE Prices +4.4% vs. est. +4.3% and previous +4.7%; 4Q Consumer Spending +1.0% vs prelim +1.4% (and prior +2.1%)

·     Weekly Jobless Claims rose to 198,000 in latest week vs. est. 196,000 and vs. 191,000 prior week; the 4-week moving average rose to 198,250 from 196,250 prior week; continued claims rose to 1.689 mln from 1.685 mln prior week.







WTI Crude















10-Year Note





Sector Movers Today

·     Solar space strong: TSLA has missed its solar-roof installation targets by a massive margin due to stiff competition from GAF Energy and other rivals, according to industry analysis firm Wood Mackenzie. In research, Goldman Sachs upgraded SHLS from Sell to Neutral as see a more balanced risk-reward profile and upgraded SPWR from Sell to Neutral with $13 tgt noting that consensus expectations and valuation have come down significantly. Goldman also upgraded FLNC from Neutral to Buy driven by better visibility on an improving gross margin trajectory and upside from IRA battery production tax credits. In earnings, SMA Solar (SMTGY) boosted its EBITDA and sales forecast for 2023.

·     In REITs: sector among top S&P leaders on rising bets of lower interest rates by the Fed by year-end. Wells Fargo upgraded APLE and downgraded PKin lodging REITs and adj. Ests/PTs Across Coverage saying with operations taking a slight backseat to liquidity/maturities, they make the changes based on our analysis considering the lodging REITs’ historical spread to the 10yr Treasury, liquidity, maturities, and our ’23/24E. In tower REITs, Moffett upgraded AMT, CCI and SBAC to Outperform noting the shares “have come in a fair amount,” logging their worst rolling three-year performance vs. the S&P 500 Index in nearly 2-decades.

·     Media/streaming: Wells Fargo provided a scenario analysis on NFLX’s paid sharing efforts, which appear to be creating significant upside to estimates. Said they see this is a key part of the long-term NFLX bull case with Q1 commentary likely a positive catalyst. The YES Network launching streaming service to give non-cable viewers access to Yankees games. MSGE said its board has approved the planned spinoff of its traditional live entertainment business, and that the move is expected to be completed on April 20.

·     Staples: In food: HRL was downgraded to Hold from Buy at Argus noting the co is struggling to raise margins and earnings, and recently posted 1Q23 EPS that fell 10% from the prior year and missed the consensus estimate. Management has also cut its FY23 EPS guidance. In grocers: Bank America said its Food retail Dallas Pricing Study showed food prices were +22% on avg. Trends varied by retailer, with prices up as much as +36% at DG and as little as +11% at WFM maintained lowest overall prices (except vs. Aldi) and held or improved positioning.



·     CXM +14%; beat on the top and bottom lines and issued upside to Street estimates for FY24 operating profit and subscription revenue growth.

·     JD +5%; proposed spin-off and separate listing of JD Property on main board of stock exchange of Hong Kong limited.

·     PAYC +4%; and PCTY both upgraded to Buy from Neutral at Davidson saying the downside risk to estimates outside of a severe recession is limited.

·     PM +3%; upgraded to Overweight at JPMorgan saying IQOS ILUMA has stepped up Heated Tobacco share for PMI in its initial launch markets, yet it’s been impacted by supply chain constraints.

·     SCYX +54%; following a deal with GSK to license an antifungal medication being tested to treat the drug-resistant fungus; GSK will pay $90 million up front, plus up to $503 million more in potential milestone payments.



·     ANGO -21%; after Q3 EPS and revs miss estimates and lowers FY23 adj EPS view to loss (6c)-(1c) from 1c-6c and cut FY23 rev view to $338M-$342M from $342M-$348M.

·     CNXC -5%; entered into an agreement to combine with Webhelp in a transaction valued at approximately $4.8 billion, including net debt.

·     RH ; pares loess; reported a top and bottom line miss for 4Q ($2.88 vs est. $3.34 on revs $772.5Mm vs est. $779.8Mm), while guidance disappoints (1q net revs $720M-$735M, below est. $828.3M and sees FY net revs $2.9B-$3.1B also below consensus of $3.48B)

·     RNA -19%; after the company said a partial clinical hold on its experimental treatment for adults with myotonic dystrophy type 1 is still in place by the FDA.

·     SCHW -4%; downgraded to equal-weight at Morgan Stanley, saying that Schwab’s clients are pulling cash out of the firm’s low- interest-rate bank accounts at twice the rate that MS expected.

·     SMTC -24%; posted a slight Jan Q beat but big Apr Q miss, driven esp. by China & Consumer weakness, w/ $100mn for core-SMTC rev’s coming in below Stifel prior estimate of $150.0mn est.


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.