Mid-Morning Look: May 01, 2023

Mid-Morning Look

Monday, May 01, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks mixed on easing banking turmoil fears after JPMorgan acquires most assets and assumes certain liabilities of First Republic (FRC) in a transaction expected to add $500M to Net Income after the company was put in receivership this weekend by the FDIC. FRC was the 2nd largest bank failure in US history, surpassing SBNY and SIVB earlier this year while Washington Mutual was the only bigger bank failure. After trading to 8-month highs for the Nasdaq-100 (QQQ), no fear still into the FOMC policy meeting this Wednesday where yet another rate hike is widely anticipated. S&P futures (Spuz) approaching April 18th high of 4,198.25 (hasn’t topped 4,200 level since 2/2 when it hit 4,208.50 high). Commodity prices/stocks holding up well despite the mixed China PMI data over the weekend: China’s manufacturing activity unexpectedly contracted in April, as the official manufacturing PMI fell to 49.2 from 51.9 in March; China’s non-manufacturing PMI eased slightly to 56.4 in April, from 58.2 last month. Data this morning showed continued weak manufacturing (ISM), holding contraction territory though prices paid rose while construction spending was higher. Treasury 2-year yield rises 8-bps to 4.15%; 10-yr +6.7 bps to 3.52% after eco data. Oil prices slip, gold rises. Markets in Europe closed for May Day. NYSE with 50 new 52-week highs (many in consumer space – ULTA, CMG, MCD, HSY, SBUC new highs) vs. only 7 new 52-week lows early.


Economic Data

·     ISM Manufacturing data for April bounced off 3-year lows at 47.1 after 46.3 prior month, still weak/contracting but above ests 46.8 (now marks the 6-month below the 50 level). ISM survey’s forward-looking new orders sub-index rose to 45.7 last month from 44.3 in March, while measure of prices paid by manufacturers rebounded to 53.2, the highest reading since last July.

·     Construction spending for March rises +0.3% above ests +0.1%, to $1.835 trln, vs Feb -0.3% (prev -0.1%) and March private construction spending +0.3%, public spending +0.2%.

·     S&P Global April final manufacturing PMI at 50.2 (vs flash 50.4).







WTI Crude















10-Year Note





Sector Movers Today

·     Big banks rise, regional banks mixed after JPM acquires most assets and assumes certain liabilities of FRC in a transaction expected to add $500M to Net Income, ex: one-time gain of $2.6B post-tax at closing and $2.0B in expected restructuring costs over 2023/24. Getting $173B in loans at a $150B market value, $30B in securities at market value, and $87.5B in deposits, after removing their prior $5B deposit, which will be eliminated on consolidation, and will repay $25B to U.S. banks.

·     In Transports: AAL pilots vote overwhelmingly to authorize a strike saying with over 96% of APA membership participating, over 99% voted in favor of authorizing a strike. In industrials: in crane survey, Wells Fargo upgraded MTW to equal weight saying rising project pipelines is boosting sentiment. The firm also upgraded OTIS shares to EW from UW saying the stock looks increasingly attractive for its unique defensive characteristics through the sizable Service profit stream.

·     In semis: ON reported beat and raise, helping auto related semis (NXPI ahead of its earnings tonight) as Q1 adj EPS $1.19/$1.96B top consensus $1.09/$1.92B and guides Q2 EPS $1.14-$1.28 vs. est. $1.06 and sees Q2 revs $1.98B-$2.08B vs. est. $1.93B). March total semis sales down -19.6% YoY, ex-memory sales down -12.7% YoY, memory sales down -47.3% YoY, according to the Semiconductor Industry Association. Total semis ASPs down -0.2% YoY, ex-memory ASPs up +3.1% YoY, memory ASPs down -44.8% YoY.



·     ASND +20%; received a Complete Response Letter (CRL) from the FDA TransCon PTH for adults with hypoparathyroidism, but shares rise as manufacturing issues seen as the “better” of possible negative outcomes (FDA did not request any new studies).

·     CDLX +17%; after announces update to Bridg Earnout payments.

·     GM +3%; upgraded to Overweight from Equal-Weight at Morgan Stanley and raised tgt to $38 from $35 citing recent strong results, raised guide.

·     ISEE +15%; as Astellas Pharma Inc. (ALPMF) agreed to acquire ISEE for $5.9 billion, paying $40 a share, representing a 22% premium to Iveric’s closing price on Friday. https://bit.ly/3NrwO4d  

·     JPM +3%; new all-time highs after saying it expects to realize a $500M boost to annual earnings from its acquisition of FRC after the bank was seized by regulators; JPM getting $173B in loans at a $150B market value, $30B in securities at market value, and $87.5B in deposits.

·     NCLH +5%; Q1 revs $1.8B topped the $522M y/y figure and above ests $1.7B while EPS loss of (-$0.30) was smaller than the expected (-$0.42) estimate; said revenue per passenger cruise day rose about 17.5% y/y; raised outlook.

·     ON +5%; reported beat and raise, helping auto related semis (NXPI ahead of its earnings tonight) as Q1 adj EPS $1.19/$1.96B top consensus $1.09/$1.92B and guides Q2 EPS $1.14-$1.28 vs. est. $1.06 and sees Q2 revs $1.98B-$2.08B vs. est. $1.93B).

·     TDC +8%; upgraded from Neutral to Buy at Guggenheim based on channel checks that indicate Teradata may be at a positive inflection point.



·     APLS -3%; Citigroup noted the market may initially view the ISEE news as implying APLS’ probability of M&A is materially lower.

·     CFG -6%; several regional banks pressured early following the JPM acquisition of FRC assets, with PNC, RF, among decliners early.

·     CHKP -4.5%; reported Q1 revs of $566M, just shy of $568.9M estimate as EPS of $1.80 topped the $1.74 consensus estimate.

·     GPN -6%; said CEO Jeff Sloan will step down and Cameron Bready will replace him, effective June 1 while guided 2023 revs $8.64B-$8.74B as mid-point misses $8.72B est. and EPS $10.32-$10.44, vs. $10.27 estimate.

·     PLRX -25%; after announces long-term data from the INTEGRIS-IPF Phase 2a trial.

·     XOM -1%; pulling back from all-time highs last week as Goldman Sachs downgraded from Buy to Neutral following sharp multi-year outperformance.


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.