Mid-Morning Look: September 19, 2023

Mid-Morning Look

Tuesday, September 19, 2023





DJ Industrials




S&P 500








Russell 2000






U.S. stocks off to a rocky start Tuesday, with major averages down across the board as all eleven S&P sectors are in the “red”. Treasury yields hit cycle highs and investors position themselves ahead of tomorrows FOMC rate policy meeting. Though expectations are for no changes in interest rates, markets remain on edge about the outlook from Chairman Powell given the recent bounce in economic data and inflationary prices. In Corporate news, the second high-profile IPO to debut priced last night with Instacart (CART) pricing 22M shares at $30 last night (still waiting on stock to open), which followed SoftBank’s ARM 95.5M shares IPO that priced last week. The surge in oil prices is a key driver to watch with WTI crude about $92 per barrel and Brent above $95, having risen 4-straight sessions. Treasury yields hitting current cycle highs with the 2-yr +2.6bps at 5.09%, the 5-yr +3.9bps at 4.50%, and the 10-yr up 4.2bps at 4.36% (at highest points today but has since pared gains). August housing starts were lower than expected as total housing starts fell 11.3% to 1.3Mm, while ests were for a -1.5% decline.


Economic Data

·     Housing Starts for August fell -11.3% M/M to 1.283M (lowest since June ’20) well below the 1.435M expected reading and 1.447M prior (revised from 1.452M). Building Permits, however, rose +6.9% M/M to 1.543M vs.1.440M expected and 1.443M prior (revised from 1.442M). Aug single-family permits +2.0% to 949,000-unit rate; multifamily +15.8% to 594,000-unit rate.






WTI Crude















10-Year Note





Sector Movers Today

·     In Cruise lines: Industry active this morning after Truist upgraded shares of CCL to Hold from Sell) and RCL (to buy from Hold) and raised tgts to $17 and $137 respectively saying they are once again positive on the sector after dropping to neutral earlier this summer amid a runup in the sector’s stock prices. They say fundamentals remain strong, with demand holding up. Separately, Reuters reported China’s Transport Ministry said it is fully resuming from Tuesday international cruise ship transport to and from ports in the country.

·     In Auto Retail: AZO reported Q4 EPS $46.46 topping est. $45.00 as net sales rose 6.4% y/y to $5.69B above est. $5.62B while operating profit $1.22B, +11% y/y; said Q4 comp sales +4.5%, topping est. +2.53%, but shares fell as the domestic commercial business fell short of forecasts (total domestic commercial sales increased 3.9% to $1.499B missing ests. of $1.55B). KMX shares fell further below 50-day MA of $82.70 after Wedbush noted earlier that CAF delinquencies loss rates jumped for the second straight month in August.

·     In Solar: ARRY shares rise after Bank America added it to the US 1 list underpinned by (1) secular revenue growth, (2) significant option value from the IRA still absent in street estimates, and (3) a track record of execution at a discounted multiple. ENPH shares initially higher after last night Director Rodgers reported buying 32,600 shares for $4M on 9/14 as per filing.



·     APLS +5%; after competitor Iveric (owned by Astellas) announced the outcome of a 2-yr efficacy analysis of Izervay, its approved treatment for a common type of age-related vision loss. May not be competitive against a similar medicine marketed by APLS.

·     CART prices IPO at $30 a share, valuing grocery-delivery company at about $10 billion 

·     CVS +1%; was upgraded to Outperform at Evercore/ISI and raises price tgt to $83 from $81 saying they see operational issues improving and an attractive current valuation.

·     MEOH +9%; upgraded at Raymond James to Outperform and tgt raised to $60 saying spot methanol prices are on the rise after an 18-month slide and are poised to tighten further.

·     X +3%; said it sees 3q adj EPS $1.10-$1.15, above est. $0.92 and sees Q3 adj EBITDA to be approximately $550M vs. est. $485.6M; said expect to end Q3 with cash on hand of approximately $3B (better updates than comps NUE, STLD in recent days).



·     DE -2%; and CNHI both downgraded to In-Line from Outperform at Evercore/ISI saying feedback from its component contacts highlight revenue risk across agriculture is already here for 2023.

·     DIS -3%; said it would nearly double its capital expenditure for the parks business to about $60 billion over the next ten years.

·     KNTE -15%; said it is restructuring its operations and will explore alternatives for exarafenib monotherapy and its KIN-3248 FGFR program, along with pausing development of its KIN-7136 MEK inhibitor program (also downgraded to HCW and Wedbush on headlines).

·     NIO -10%; as announced proposed offering of US$1 billion convertible senior notes.

·     PLNT -4%; extending recent decline after CEO departure announced a few days ago; was downgraded at JPMorgan today.

·     RKLB -8%; said its 41st mission ends after the rocket experienced an issue minutes after launch and that it is working with FAA to investigate root causes; the company said its next mission, scheduled before the end of Q3, will be postponed.

·     SBUX -2%; was downgraded from Outperform to Market Perform at TD Cowen and cut tgt to $107 pointing to worrisome macro & competitive pressures.

·     SQ -2%; announced that Alyssa Henry, Square’s CEO, will be leaving Block in the coming weeks after roughly 9 years with the company.


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.