Mid-Morning Look: November 30, 2022

Mid-Morning Look

Wednesday, November 30, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks mixed early as investors try to make heads and tails of this mornings mixed economic data – with Chicago PMI huge miss, GDP reading slightly better (but inflation readings edged higher), weaker housing data and JOLTs, while ADP private payrolls rose less than estimates. Treasury yields not really moving w 10-yr at 3.77%. Fed Chairman Powell set to speak at 1:30 likely is what market appears to be waiting for. Across China, local governments and state-run media seem to be taking a softer stance on Covid restrictions, suggesting the country may soon loosen its zero-tolerance policy with regards to the virus. Oil prices rose by over $2 on signs of tighter supply, a weaker dollar and optimism over a Chinese demand recovery while the likelihood that next week’s virtual OPEC+ will leave output unchanged limited the gains. Meanwhile U.S. crude oil stocks dropped by 7.9 million barrels in the week ended Nov. 25, according to the American Petroleum Institute. There continues to be disparity between oil and energy stocks with crude oil down -40% from 52-week highs but energy stocks only down -4% from 52-week highs. Handful of tech stocks mixed on earnings/guidance with HPE, WDAY rising on results while CRWD, NTAP shares slide – ahead of results tonight from CRM, SNOW, SPLK, NTNX, PSTG, OKTA, BOX tonight. Financials the biggest drag early in the S&P down over 1%. Financials leading to downside.


Economic Data

·     U.S. 3Q prelim GDP +2.9% vs consensus +2.7% and previous +2.6%; but inflation readings a bit higher than expected with GDP Price deflator for Q3-P +4.3% vs. est. +4.1% and core PCE Prices prelim +4.6% vs. est. +4.5%; consumer spending +1.7% from 1.4% prior; Q3 business investment +5.1% (vs. prior +3.7%); equipment +10.7% (vs. prior +10.8%)

·     Chicago PMI a huge drop, falling to 37.2 from 45.2 the prior month and well below the economist estimate of 47.0; prices paid rose at a slower pace; signaling expansion while new orders fell at a faster pace; signaling contraction

·     November ADP Jobs Report: +127K vs. 200K consensus and +239K in October; Goods-producing jobs up 86,000, service-providing jobs up 213,000

·     October goods trade deficit moved higher to $99 billion vs. $90.6 billion est. & $91.9 billion in prior month (rev from $92.2 billion)

·     Pending home sales drop for fifth straight month in October as October Pending Home Sales fell -4.6% M/M to 77.1 vs. -5.0% consensus and -8.7% in September (revised from -10.2%)

·     US Job Openings (JOLTs) fell to 10.33mln in Oct. from 10.69mln







WTI Crude















10-Year Note





Sector Movers Today

·     Hardware, Components & Services: Last night China officially lifted the lockdown on Zhengzhou, also known commonly as iPhone city with Foxconn’s main AAPL production artery located in this key area. Wedbush noted this is some good news in what has been a horror show for Apple around iPhone production, which has been operating at roughly 20%-30% of capacity there; NTAP posts mixed Q2 with EPS beat and rev miss, but shares fall on lower Q3 guide and cuts FY23 EPS view to $5.30-$5.50 from $5.40-$5.60 (est. $5.52) and cuts FY23 rev growth to 2%-4% from 6%-8%; HPE posts Q4 revs of $7.9B topping the estimate of $7.42B, helped by sustained demand from its edge-to-cloud portfolio and guided Q1 revs $7.2B-$7.6B vs. est. $7B

·     Software movers: Internet security software stocks slide after CRWD new subscriptions slightly missing estimates, ARR grew 54% to $2.34B vs est. 2.35B and sees 4q adj EPS $0.42-$0.45 vs. est. $0.34 and revs $619.1M-$628.2M below est. $634.8M citing macroeconomic headwinds and elongated sales cycles with smaller customers (OKTA, FTNT, PFPT, ZS, QLYS slide); WDAY raised its outlook and launched a $500M share buyback program, revs rose to $1.6B from $1.33B in the year-ago quarter, while subscription revenue rose 22% to $1.43B from a year ago

·     Auto sector: TSLA retail sales in China also nearly doubled in November from a year earlier, according to data from China Merchants Bank International; Retail sales for BYD Co Ltd. totaled 152,863 vehicles from Nov. 1 to Nov. 27, logging a nearly 83% increase in average daily sales; XPEV surged on broader China stock strength despite warning that its vehicle deliveries could more than halve in the current three-month period and reported a wider loss for Q3 due to a rise in expenses; at Evercore/ISI, FSR initiated outperform with $15 target, 107% upside, LCID initiated in line with $12 target, 23% upside and RIVN initiated in line with $35 target, 21% upside; CVNA downgraded to neutral at Bank America saying without fresh financing “liquidity will dry up” and the equity value will fall to zero

·     Transports, Industrial & Machinery: TITN advances following quarterly results; China Manufacturing PMI for November was weaker-than-expected at 48.0 vs 49.2 prior and non-Manufacturing was also soft at 46.7 vs 48.7 prior; in shipping, the Baltic Dry overall index, which factors in rates for Capesize, Panamax and Supramax shipping vessels carrying dry bulk commodities, rose 28 points, or about 2.1%, to 1,355, its highest level in 3-weeks; XPO was downgraded to neutral from Buy (reinstated lower) saying while valuation remains compelling, think macro headwinds will likely dampen tonnage growth



·     BA +1% after gets support for deadline extension for 737 Max plane

·     BBW +12%; posted higher sales and earnings for Q3 as revs rose 10% to $104.5M while raised its full-year sales guidance to $455M-$465M from $440M-$460M

·     BHC +7%; designated 1261229 B.C. Ltd., the entity that directly or indirectly holds 88.7% of the issued and outstanding shares of Bausch + Lomb Corporation, as an unrestricted subsidiary of the Company in accordance with the terms of the Company’s debt documents

·     BIIB +6%; Eisai Co. and BIIB’s Alzheimer’s drug, called lecanemab, slowed cognitive decline by 27% compared with a placebo over 18 months in a study of more than 1,700 people with early-stage Alzheimer’s according to a new study

·     HZNP +28%; reported that the company is in preliminary discussions with three pharma companies (AMGN, JNJ, SNY) regarding a potential takeout offer – Guggenheim said other stock(s) that could be impacted include VRDN

·     STT +6%; after mutually agreed to terminate acquisition of BBH’s Investor Services business

·     TITN +12%; after quarterly results and raises guidance for the year

·     W +7%; said it recorded a low single-digit sales increase in the U.S. over the same period last year; said November revenue trends strengthened relative to the lower quarter-to-date trends it previously disclosed

·     WDAY +9%; raised its outlook and launched a $500M share buyback program, revs rose to $1.6B from $1.33B in the year-ago quarter, while subscription revenue rose 22% to $1.43B y/y

·     WOOF +10%; reported higher third-quarter sales and earnings that met analyst expectations



·     CRWD -17%; posted a disappointing quarter, with a top-line beat well below historical trends (1% vs. 4.5% avg), in addition to the company’s first ARR miss (downgraded at Stifel)

·     HRL -4%; Q4 EPS $0.51 vs. est. $0.50; Q4 revs $3.3B vs. est. $3.38B; Q4 operating margin 11.2%; Sees FY net sales $12.6B-$12.9B vs. est. $13.01B and EPS $1.83-$1.93 vs. $2.01

·     KEY -3%; as financials broadly lower on day into Fed Chairman Powell speech – RF, NTRS slide

·     LESL -7%; issued FY23 EPS and sales below consensus $1.56B-$1.64B vs. est. $1.65B saying inflation, rising interest rates and other macroeconomic factors could weigh

·     NTAP -10%; cuts outlook following large deceleration in PCS business and cloud softness; cuts FY23 rev growth to 2%-4% from 6%-8%


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.