Mid-Morning Look: October 16, 2023

Mid-Morning Look

Monday, October 16, 2023





DJ Industrials




S&P 500








Russell 2000






A very optimistic open for U.S. stock markets despite another bounce in Treasury yields as no news of ramped up escalation in Gaza this weekend helped ease geopolitical fears for the moment (oil, bonds, and gold slip after jumping late last week). Markets also see increased volatility into monthly options expiration on Friday, while “fear” subsides as the VIX tumbles over 10% in a nearly $3 drop from last week’s highs. The United States strived to prevent an escalation in tensions as Secretary of State Antony Blinken arrived in Israel for talks after top U.S. officials warned the conflict could worsen. The Smallcap Russell 2000 rebounds after having wiped out its YTD gains last week. Treasury yields hit new highs with the 10-yr up 9 bps to 4.72% and 2-yr +4 bps to 5.094% and the 30-yr up 9bps at 4.87%. A lot of bad news being overlooked this morning as vaccine stocks mixed despite disappointing guidance from PFE late Friday and discretionary stocks seeing strength despite the spike in Treasury yields. Bitcoin prices rose as much as 10% to around $30K before paring gains, lifting shares of cryptocurrency and blockchain-related companies (COIN, BITF, HUT, MARA, MSTR, RIOT) on speculation that the US SEC approved an exchange-traded fund that invests directly in the cryptocurrency – Blackrock later said the SEC is still reviewing https://tinyurl.com/bdfe4ujw . In earnings, SCHW is the only name today with a mixed report on weaker revs, but shares rebound. Stocks now extending gains, at highs up over 1%.


Economic Data

·     New York Empire State current business conditions index -4.6 in October vs. consensus -7.0 and below the +1.9 in September as new orders index -4.2 in October vs +5.1 in September, prices paid index +25.5 in October vs +25.8 in September, state employment index at +3.1 in October vs -2.7 in September and 6-month business conditions index +23.1 in October vs +26.3 in Sept.






WTI Crude















10-Year Note





Sector Movers Today

·     Vaccine makers volatile after several headlines: 1) PFE late Friday slashed its FY23 revenue guidance to $58B-$61B from prior $67B-$70B, below estimates $66B and lowers FY adj EPS $1.45-$1.65, from prior $3.25-$3.45 solely due to Covid products (shares opened lower but reversed higher after fresh 52-week lows); 2) shares of German partner BNTX disclosed it currently expects to record a charge of up to EU900M in Q3 as it writes of inventory of COVID-19 vaccine Comirnaty; NVAX and MRNA shares also fell in sympathy.

·     In Managed Care: After the close on 10/12, CMS released Medicare Advantage Star score data for the 2024 plan year, which are based on 2022 data and drive 2025 revenue. CVS’s Aetna National PPO (~60% of 2023 MA membership) returned to 4.0 Stars after falling to 3.5 Stars last year. ELV saw 3 of its 4 largest plans drop from 4+ Stars to 3.5, with total membership in 4+ Star plans falling to 34% from 64% last year. UNH had stable Star scores yoy, CI had a notable increase, and CNC had slight declines.

·     In Materials: ALB scrapped its proposed $4.16B takeover of Liontown Resources, scuttled by Australia’s richest person https://tinyurl.com/bdcsknnd . In Paper & Packaging: BCC downgraded to Underperform at Bank America and said ATR, CCK, SEE, WRK are their favorite ideas into quarterly earnings. The average packaging stock is down -10% YTD with a bottom-up decrease in earnings of -10% forecasted for 2023. Bofa forecasts currently call for a 7% decrease in paper/forest earnings and a 12% increase in packaging.

·     In REITs: SBRA upgraded and MPW downgraded to Underweight at Wells Fargo in 3Q23 Healthcare REIT Earnings Preview. SBRA upgraded to Equal weight, wrong to in assumption that tenant issues from earlier in the year would persist, d/g MPW to Underweight due to debt concerns, continue to favor WELL. In Towers, CCI downgraded to Sector Perform from Outperform at RBC Capital ahead of earnings, lowering PT to $100 from $125 on macro factors including interest rate expectations and forex rates, as well as the announced restructuring.



·     ALB +2%; scrapped its proposed $4.16B takeover of Liontown Resources, scuttled by Australia’s richest person https://tinyurl.com/bdcsknnd

·     LULU +9%; will replace ATVI in the S&P 500 after MSFT acquired Activision Blizzard in a transaction completed today, October 13.

·     PCTI +47%; after reaching an agreement to be acquired by APH in an all-cash transaction that values the company at about $139.7M, with holders to receive $7 per share in cash https://tinyurl.com/mr2u47fz

·     PRTA +15%; shares jumped on report the company us exploring options including potential sale, Bloomberg reported https://tinyurl.com/2pvdrrn3

·     SCHW +4%; reported -44% drop in Q3 profit to $1.13B, but the adj EPS of $0.77 topped the $0.75 estimate saying clients chase higher interest-yielding alternatives, taking cash away from its funds and dragging down its net interest revenue by 24% to $2.24B.



·     BNTX -6%; disclosed it currently expects to record a charge of up to EU900M in Q3 as it writes of inventory of COVID-19 vaccine Comirnaty.

·     MANU -10%; on reports Qatar’s Sheikh Jassim bin Hamad Al Thani is withdrawing his offer to buy soccer club Manchester United (MANU), a person with knowledge of the process told The Associated Press on Saturday. https://tinyurl.com/2zkc4j89

·     MAXN -10%; was downgraded from Buy to Neutral at Bank America and slash tgt to $12 from $31 as grows increasingly bearish on resolution with SPWR, margins across residential channels and end market demand.

·     OMER -46%; after announcing it will discontinue its kidney disease study after its therapy failed to meet main goal in late-stage trial; said narsoplimab drug failed to show statistically significant improvement in reducing elevated levels of protein in urine compared to placebo.

·     VSTO -16%; guided FY adj EPS to $3.65-$4.05, below prior $4.50-$5.00 and said it has reached an agreement to sell its sporting products business to Czechoslovak Group A.S. (CSG) in an all-cash deal valued at $1.91B.


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.