Mid-Morning Look: October 04, 2022

Mid-Morning Look

Tuesday, October 04, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks on cruise control higher for a second day, with the S&P 500 up about 200-points during that stretch, recovering after hitting its lowest levels since November 2020 as Treasury yields and the dollar drop further and markets remain hopeful of a less aggressive Fed. Fear subsides for the moment as the CBOE Volatility index (VIX) slides under 29, down -4% after having closed above the 30 level for the last 6-trading sessions. Meanwhile the BOE confirmed that it will carry out bond purchases until October 14th and stood ready to buy up to £5B of gilts at each reverse auction. After hitting fresh 20-year highs last week for the dollar index (DXY) of 114.78, posting its biggest quarterly gains since Q1’15, the buck has fallen 5-days to 110.72 with the main news overnight being the Reserve Bank of Australia hiking by a “dovish” 25bps (vs consensus hike of 50bps) which is helping the “peak tightening” narrative for now for central banks. Fed Funds terminal rate now at 4.3%, down from about 4.8% in late September. Crude rises again post yesterday’s rally as expectations for significant OPEC+ production cut tomorrow remain. U.S. stocks got off to a strong start to Q4 on Monday as investors are hoping to put September’s terrible market behind them, bidding up stocks as recently spiking bond yields continue to drop. Note if the S&P can hold gains today it would mark first back-to-back daily gains since 4-day win streak 9/7-9/12. Yields lower across the curve – the 2yr Bond yield was 4.34% a week ago, today down to 4.06% and the 10-year yield has moved from 3.945% to 3.567% in five sessions.


Economic Data

·     U.S. Aug factory orders unchanged, in-line with consensus and up vs. July -1.0%; factory orders ex-transportation +0.2% vs July (-1.1%); factory orders ex-defense (-0.3%) vs July (-0.6%)

·     U.S. Aug Durables orders unrevised at (-0.2%); nondurables orders +0.2% vs July (-1.9%); total manufacturing inventories (-0.1%) vs July unchanged; Aug inventories/shipments ratio 1.46 months’ worth vs July 1.47 months

·     JOLTS data weak – Job Openings 10.053MM, vs. expected 11.088MM (prior 11.239M); Quits rate at 2.7%, private sector rate down to 3%







WTI Crude















10-Year Note





Sector Movers Today

·     Auto sector: RIVN said produced 7,363 vehicles in Q3, delivered 6,584 vehicles in Q3 and says figures remain in line with the Co’s expectations; Yippit data on CVNA showed: our preliminary data suggests that 3Q22 unit sales declined -6% Y/Y, well below Visible Alpha consensus of +8% Y/Y, while revenue declined -3% Y/Y (vs. VA consensus of +12% Y/Y); HYRE said fleet partner AmeriDrive bought initial tranche of vehicles and reached agreement to purchase 1,500 more over next 6 months from one of the top three rental car cos in U.S. Sept Car sales up about 9% yoy, pickup truck sales up about 6% yoy, and SUV sales up about 12% yoy. Absolute units were down month-on-month to about 1.12M from 1.15M in August but up yoy from 1.02M y/y

·     Semiconductors: AXTI guides Q3 revs to range $34M-$35M, below prior view $39M-$41M and below consensus of $40M, primarily attributable to weakening macroeconomic conditions; Goldman Sachs reduces client and server CPU industry assumptions to reflect near-term weakness in PC and enterprise server end-demand as well as the ongoing inventory correction. Said they expect Buy-rated AMD to grow market share in server CPUs and believe near-term headwinds are well understood – lower tgt to $88 from $112 and INTC to $24 from $30; MU pledges up to $100 billion for semiconductor factory in New York, NY Times reported

·     Chemicals: MOS announced impact from Hurricane Ian, which RBC Capital viewed as a modest negative, as there was some hope the Hurricane had minimal impact given the path shifted away from Mosaic’s phosphate facilities; KeyBanc lowered prices tgts of AXTA to $29 from $31, DD to $80 from $82, DOW to $38 from $45, LYB to $65 from $73, OLN to $56 from $61, and WLK to $79 from $90, and took numbers down across industrial/commodity chemicals universe to reflect a weaker demand outlook, with ag and lithium being the main exceptions. Said they see 3Q earnings season to be much tougher than healthy 2Q



·     AYI +5%; Q4 adj EPS $3.95 vs. est. $3.59; Q4 revs rose 12% y/y to $1.11B vs. consensus $1.08B; posted higher profit and sales for its fiscal fourth quarter, citing strong demand across its end markets even as the lighting company raised prices.

·     CCL +7%; seeing strength in leisure, discretionary spending sectors CZR, DAL, RCL on hopes of Fed rate hike slowdown given recent run of mixed data

·     DPZ +4%; upgraded to Buy from Neutral at UBS, while cut tgt to $385 from $430 given belief that demand weakness concerns are overblown; catalysts exist to accelerate US sales trends and compelling LT growth profile should remain largely intact

·     ILMN +10%; upgraded to Outperform from Market Perform at Leerink with a price target of $270, up from $220, after NovaSeq X+ debuted last week should become “the instrument of choice” as both clinical and research end markets pivot to whole genomes

·     INBX +33%; rises after announces potential to pursue accelerated approval in U.S. for INBRX-101

·     POSH +13%; agreed to be bought by South Korean internet company Naver in a $1.2 billion deal, paying $17.90 in cash per share, a 15% premium https://on.mktw.net/3fFQTF6; Shares of resale comps SFIX, REAL, TDUP jump in sympathy)

·     RIVN +8%; reported a boost in production and reaffirmed its annual goal to build 25,000 electric vehicles – said produced 7,363 vehicles in Q3, delivered 6,584 vehicles in Q3

·     VIR +5%; said it had received $55 million in funding from the U.S. government to support its influenza-focused antibody drug that is expected to enter mid-stage trials this year



·     AXTI 21%; guides Q3 revs to range $34M-$35M, below prior view $39M-$41M and below consensus of $40M, primarily attributable to weakening macroeconomic conditions

·     DG, DLTR; shares of discount retailers lagging with broader “risk-on” appetite early

·     KALV -55%; after terminates mid-stage trial of experimental oral therapy KVD824 to prevent attacks in patients with hereditary angioedema citing elevated levels of liver enzymes after administering drug, which could lead to liver damage

·     TFX -1%; Wells Fargo said UroLift tracker indicates sales were down sequentially in Q3


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.