Mid-Morning Look: October 25, 2023

Mid-Morning Look

Wednesday, October 25, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks sink behind a weaker round of earnings results (GOOGL, TXN, TMO, BYD) offsetting better results from MSFT and as Treasury yields resume their upward momentum. Company stock prices have been hammered this quarter if results have disappointed even slightly, with today being no exception. The financial technology/payment sector being crushed after European competitor Worldline slashed its sales and margin outlook, pressuring the likes of PYPL, SQ, and others. Investors and traders aggressively sold off the 30-year Treasury bond, sending its yield up by as much as 8 bps to highs above 5.04% while the 10-yr rises above 4.9% ahead of another bond auction later, GDP data tomorrow morning and PCE inflation data on Friday. Early pop in precious metals with gold and silver but gives it back along with another leg lower for stocks following a stronger-than-expected New Home Sales reading, coming in well above consensus and renews fears of future rate hikes by the Fed to cool off the economy. Getting into the heart of earnings with over 130 S&P companies reporting thus far (should be over 200 by end of the week), with results better, but guidance been punishing names. No where to hide this morning as stocks, bonds, commodity prices all lower. Today’s decline also takes the S&P back below its 200-day moving average of 4,238 support for a 3rd straight day.







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10-Year Note





Economic Data

·     Sept single-family home sales jumped 12.3% to 759K annual rate, above consensus of 680K and vs. Aug 676K; Sept home sales Northeast +22.5%, Midwest +4.7%, South +14.6%, West +7.5%; the Sept new home supply 6.9 months’ worth at current pace vs aug 7.7 months and the Sept median sale price $418,800, -12.3% from Sept 2022 ($477,700).


Sector Movers Today

·     FinTech/Payments: European payments company Worldline SA (WRDLY) shares plummeted after cutting its sales outlook; Worldline said it now sees organic sales growth in 2023 of between 6% and 7%, compared with 8% to 10% previously. It also forecasts a 150-basis-point drop in its operating margin. The stock’s plunge mirrored that of peer Adyen NV (ADYEY) in August – shares of US payment companies (PYPL, SQ, GPN, FIS, FI) declined in sympathy.

·     In Consumer Finance: Visa (V) posted an 11% Q4 revenue rise to $8.61B topping the $8.56B estimate (on better EPS) as payments volume grew 9% in the quarter, unchanged from the prior quarter and processed transactions also remained flat at growth of 10%, but cross-border volumes increased 16% (also announced $25B buyback and raised dividend). Also, The U.S. Federal Reserve is expected on Wednesday to propose an official review of the fees banks can charge retailers for debit card transactions, setting up a battle between the two industries.

·     In Transports: NSC Q3 adj EPS $2.65 misses by 4c on better revs of $2.97B, noting earnings were nearly cut in half, dragged by ongoing costs tied to the February train derailment; CNI reported 3Q23 adjusted EPS of C$1.69, slightly below consensus – top line miss driven by yields. Ryder (R) authorizes board authorized 2 new share buyback programs, raised guidance for the year after Q3 results (EPS beat/revs miss); HA reported adjusted 3Q EPS loss of -$1.06, below consensus -$0.94 as weaker performance above and below the line drove the downside. ODFL reported Q3 EPS $3.09 vs. est. $2.92 on in-line revs of $1.52B in freight/logistics.



·     DB +6%; net profit attributable to shareholders was 1.031B euros, beating the around 937M; said it would potentially return more capital to investors than the 8BEU it had envisaged through ’25.

·     GD +3%; trying to snap its 7-day losing streak (longest in 4-years) as Q3 profit and revenue topped saying strong demand continued; revs grew 6% to $10.57B vs. est. $10B amid better revs from marine systems, combat systems and technologies businesses which offset a miss by aerospace.

·     HLT +1%; reported Q3 adj EPS $1.67, in-line with consensus on better revs at $2.67B vs. est. $2.62B; Q3 system-wide comparable RevPAR increased 11.4%, on a currency neutral basis; sees FY23 adjusted EPS $6.04-$6.09, consensus $6.07.

·     LRN +16%; after providing an upbeat FY outlook saying sees 2024 revenue in the range of $1.96B-$2.03B above ests. $1.94B and reported Q1 record revenue of $480.2M driven by higher enrollment in general education and career learning.

·     MSFT +3%; after an EPS/revenue beat as Azure and other cloud services revs +29% above ests of around 26%; intelligent cloud revs +19%. Accelerating Azure growth (+29%/28% Y/Y-CC), besting management’s guidance by 250 basis-points

·     SNAP +2%; after posting and EPS beat on higher revs and midpoint of Q4 revs topped consensus but did warn expects muted spending from many brand-oriented ad campaigns.

·     TMUS ; followed strong results from VZ and AT recently as EPS $1.82 topped $1.70 est., though revs $19.25B was below the $19.37B est. as now expects to gain between 5.7M-5.9M postpaid net customers for the full year.



·     BYD -9%; shares slumped after Q3 adj EPS $1.36 missed the $1.47 estimate saying results impacted by declines in play from retail customers and ongoing cost pressures; posted a 3% EBITDAR miss (regional gaming shares were volatile after print – IGT, PENN, CZR, RRR, LNW).

·     CSGP -7%; bottom line Q3 results missed and guided year revs $2.445-2.450B below est. $2.461B, adj EBITDA $485-490Mm vs est. $517.84Mm noting high interest rates force consumers to rethink property purchases.

·     DDD -16%; announces additional restructuring initiative and provides prelim Q3 results as sees Q3 revenue $123M-$124M, below est. $129.97M and withdraws year guide; said restructuring initiative targeted to deliver incremental annualized savings of $45M-$55M by end of 2024.

·     GOOGL -8%; Q3 EPS and revs topped consensus, but shares slid as cloud revs slowed to +22.5% at $8.411B vs est. $8.6B and down from 28% growth last quarter – but positively posted ad revs $59.65B up from $54.48B last year.

·     SPWR -20%; said its unaudited financial statements for Q1 and Q2 of 2023, as well as its audited annual report for the period ended Jan. 1, 2023, submitted to the SEC should no longer be relied upon.

·     TDOC -6%; reported 3Q results that missed on revenue and beat on EBITDA. BetterHelp revenue came in below consensus while Integrated Care revenues were above.

·     TMO -6%; Q3 revs $10.57B vs. est. $10.61B.; cuts FY23 adjusted EPS view to $21.50 from $22.28-$22.72 (est. $22.31) and cuts FY23 revenue view to $42.7B from $43.4B-$44B (est. $43.53B).

·     TXN -4%; mixed Q3 results (top line missed/bottom line beat), and guided guides Q4 EPS $1.35-$1.57 and revs $3.93B-$4.27B below consensus $1.75/$4.49B saying demand suffers across its key markets; had strong auto demand trends, weaker Industrial and Comm Equipment.


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.