Mid-Morning Look: September 06, 2022

Mid-Morning Look

Tuesday, September 06, 2022






DJ Industrials




S&P 500








Russell 2000






Stocks sink again! U.S. futures were looking at a strong open initially, but much like the last 2-weeks were unable to hold overnight gains, sliding on the open and breaking below last week’s lows as selling pressure intensifies. Treasury yields spiking with the 10-yr at highs up 15-bps to 3.34%; the 2-yr up 10.7bps to 3.505% (inversion narrows to under 20-bps). The U.S. dollar resumes upward momentum to 110.25 for the dollar index back to fresh 20-year highs as the euro breaks below 0.99 and the dollar nears 143 against the yen. Stocks have been in a downward spiral after the S&P failed its 200-day moving averages resistance three weeks ago. The energy situation in Europe also plaguing sentiment Russia’s biggest natural gas pipeline to Europe (Nord Stream 1) will not resume pumping until Siemens Energy repairs faulty equipment. Economic data has failed to lift markets as worries grow that the Fed will continue its aggressive rate hike path to slow inflation, with expectations of a 3rd straight 75-bps hike at its next meeting. The Fed has grown overly hawkish in a short period of time trying to get inflation down to its desired 2% level (a far cry from the current 8% level). Also concerns ahead of the midterm elections, which are roughly 60 days away. No place to hide this morning with stocks, bonds, gold, oil, Bitcoin all turning lower. Defensive sectors a few bright spots (utilities, healthcare, and REITs). U.S. stock markets come into the week with a 3-week losing streak.


Economic Data

·     S&P Global August final composite PMI at 44.6 (vs flash 45.0) and final July 47.7 and S&P Global august final services PMI at 43.7 (vs flash 44.1); U.S. Services sector final PMI for August at 43.7 vs flash 44.1 and final July 47.3; final prices charged index at 59.2 vs flash 60.2 and final July 60.4; final U.S. Composite output prices index for August at 59.8 vs flash 60.7 and final July 61.4

·     ISM U.S. Non-manufacturing sector shows PMI 56.9 in August vs 56.7 in July; ISM non-manufacturing business activity index 60.9 in August vs 59.9 in July; prices paid index 71.5 in August vs 72.3 in July (lowest since January 2021); new orders index 61.8 in August vs 59.9 in July; employment index 50.2 in August vs 49.1 in July







WTI Crude















10-Year Note





Sector Movers Today

·     Semiconductors: AMD will replace DD in the S&P 100; in memory, for MU, Wells Fargo noted small Taiwan-based DRAM provider Nanya (~3% market share), reported August revenue at NT$ 3,419 million (~$115M at avg. FX rate), which represents a 22.2% m/m decline and -58.4% y/y – says they highlight this as an incremental weak DRAM data point; the SIA monthly data in July followed up a weaker June with another softer month. Specifically, July semi revs of $44.5B came in below Deutsche Bank ($46.7B) and below typical July seasonality (total revs -11% m/m vs. 10-yr avg -7% m/m) with a below seasonal decrease in ASPs (-4% m/m vs. 10-yr avg -1% m/m). The U.S. Department of Commerce released its plan for implementing its $50 billion program to subsidize domestic chip manufacturing and expand research early on Tuesday.

·     MedTech Equipment; MTD upgraded from Hold to Buy at Stifel with a $1,500 tgt as believe it is a stock that is best bought when the macro environment yields an opportunity, and with shares down 30% YTD, see the current moment as one of those times; GKOS announces more than 1M iStent technologies implanted worldwide; BSX receives FDA approval for expanded labeling of WATCHMAN FLX LAAC device for dual anti-platelet therapy as post-procedural medication option; SWAV downgraded to Underperform from Perform at Oppenheimer; ILMN will have to divest biotechnology company Grail after an EU veto of the $7.1B acquisition; PHG was upgraded to Neutral from Sell at UBS saying challenges well-reflected in stock price

·     Healthcare Services: CVS announced it will acquire SGFY for $30.50 per share in cash, with a total transaction value of ~$8B. This follows a report on 9/2/22 that CVS was in advanced talks to acquire Signify and had apparently prevailed over other interested parties, including AMZN and UNH https://on.mktw.net/3AJqWvm ; CAH announced initiatives aimed at positioning the Company for long-term success, building on Cardinal Health’s previously announced growth plans as initiatives have benefited from input received from Elliott Investment Management L.P.; AMZN disclosed that it received a request for additional information from the Federal Trade Commission related to its planned $3.9 billion purchase of ONEM The FTC received a so-called “second request” from the FTC on Friday.

·     Bank movers; large cap bank Citigroup (C) downgraded to Hold from Buy and both GS and MS downgraded to Sell from Hold at Odeon Capital saying that the top 6 US investment banks & CS saw a steep July & August decline in volume in debt markets banking year over year outside of investment grade bonds; JEF was upgraded to Outperform at KBW and raises target from $30 to $38 saying Jefferies is an attractive way to play a potential recovery in investment banking activity, with idiosyncratic catalysts, a cheap valuation (0.95x TBV), and, with limited downside; CG was double downgraded from Buy to Underperform at Bank America and cut tgt to $33 from $58 driven by a reduction to our distributable earnings estimates and lowered multiple due to an expected deceleration in growth, emerging fundraising challenges, and surprise CEO departure



·     ADT +11%; announces partnership with State Farm which will invest $1.2 billion in ADT at $9.00 per share, acquiring approximately 15% of the company, invest up to $300 million in an opportunity fund while GOOGL commits an incremental $150 million into a success fund

·     CSGP +5% and INVH will replace PVH and PENN respectively in the S&P 500

·     ECOM +54%; to be acquired for $23.10 per share by CommerceHub; cash price represents a premium of ~57% over the company’s Sep. 2 closing stock price https://bit.ly/3AQaWaP

·     ILMN +5%; will have to divest biotechnology company Grail after an EU veto of the $7.1B acquisition

·     ISEE +46%; said a second Phase 3 clinical trial for its geographic atrophy treatment Zimura met its primary endpoint with statistical significance and a favorable safety profile 

·     NEE +3%; upgraded to Overweight at Morgan Stanley and raise tgt to $99 driven by increased renewables growth relating to the emergence of a large green hydrogen industry in the US

·     ROL +3%; upgraded to Outperform at RBC Capital and $40 tgt saying the pest-control firm offers a recession- resilient model against a tough current backdrop



·     ALVO -6%; after the FDA declined to approve its anti-inflammatory drug candidate, AVT02 which is a biosimilar drug candidate of ABBV’s Humira

·     BBBY -15%; tumbles after announcement of CFO Arnal over the weekend

·     CG -2%; double downgraded from Buy to Underperform at Bank America and cut tgt to $33 from $58 driven by a reduction to our distributable earnings estimates and lowered multiple due to an expected deceleration in growth, emerging fundraising challenges, and surprise CEO departure

·     DWAC -10%; after reports the blank-check company did not get enough shareholder support for a one-year extension to complete its merger with Donald Trump’s social media company.

·     FDX -2%; downgraded to Neutral at Citigroup citing concern that macro headwinds in the near-term are going to be more impactful to shares pressuring earnings growth potential in F2023

·     GLT -20%; and CAMP -16% after AEO and MTX replace them in the S&P SmallCap 600

·     SWAV -6%; downgraded to Underperform from Perform at Oppenheimer


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.