Mid-Morning Look: September 21, 2023

Mid-Morning Look

Thursday, September 21, 2023





DJ Industrials




S&P 500








Russell 2000






U.S. stocks down about 85-points at lows since the FOMC decision/commentary late yesterday as a further spike in Treasury yields not helping stock market sentiment. New highs for the 10-yr yield up 14 bps to 4.49%, 5-yr up 11 bps to 4.63%, 2-yr up 3 bps to 5.155% and the 30-year yield rises 15 basis points to 4.55%. Weakness in bonds comes after the Federal Reserve signaled Wednesday it would likely keep interest rates higher for longer after staying at 5.25%-5.5% (as expected) but signaled another hike could come later this year. The Fed’s dot-plot of rate-path projections suggested its policy rate target would remain above 5% through the end of 2024 (reducing chances of aggressive cuts next year). Several stocks stories today as well as the macro rates/economic data, with a big $22B deal in software sector (CSCO buys SPLK), while homebuilders fall on KBH outlook/margins and transports hold up well after FDX raised guidance. All eleven S&P sectors in the “red” to start with Consumer Discretionary, REITs, and technology leading the declines. Bank of England and Swiss National Bank hold rates steady. Both recent top IPOs CART and ARM both dropped below their respective deal prices today.


Economic Data

·     Weekly Jobless Claims fell to 201K in the latest week from 221K prior and well below the consensus 225K; the 4-week moving average fell to 217,000 from 224,750 prior week and continued claims fell to 1.662M from 1.683M prior week.

·     Philadelphia Fed business conditions for September tumbles to -13.5 from +12 in August and worse than consensus -0.7 as the prices paid index for Sept 25.7 vs August 20.8 as new orders index plunges to -10.2 vs August 16.0, weaker employment index -5.7 vs August -6.0 and the six-month business conditions September 11.1 vs August 3.9.

·     Existing Home Sales for August reported at 4.04M unit rate (down -0.7%), below consensus 4.10M and vs. July 4.07M; Aug inventory of homes for sale 1.10 mln units, 3.3 months’ worth and the national median home price for existing homes $407,100, +3.9% from Aug 2022.






WTI Crude















10-Year Note





Sector Movers Today

·     In Metals & Mining: Gold mining stocks/sector tumble early (AEM, GOLD, AUY, NEM) given the spike in the US dollar and Treasury yields following the “hawkish” tilt for a future rate hike by the Fed at its policy meeting yesterday. Reuters reported CLF clashes with US Steel (X) as sale process gets underway noting U.S. Steel has not opened its books to Cliffs since announcing on 8/13 it will explore a sale, even as it accepts initial bids this week from other potential acquirers, because Cliffs will not agree to its conditions https://tinyurl.com/yc38mun8

·     In Paper & Packaging: IP was upgraded from Hold to Buy at Truist and raised its price tgt to $43 from $30 while raising estimates/price tgts for all containerboard producers (WRK to $44, PKG to $170) as believes that the containerboard market is reaching a positive inflection point and poised for recovery due to improving demand from the end of destocking and increasingly balanced inventories.

·     In Insurance: AIZ said it currently expects global housing segment to record less than $50M pre-tax of reportable catastrophes 3Q23; submitted a plan to sell its Miami office to a potential buyer and expects to log a gain in 2024 above the current carrying value of $44.4M if deal completed. ALL estimated its August catastrophe losses at $551M (+76% m/m), or $435M after-tax, as the month’s catastrophe losses include 18 events estimated at $641M, with about half the losses related to the Maui wildfire. BHF downgraded to Sell at Goldman Sachs as they forecast weaker cash earnings than consensus anticipates driven by tepid equity returns on long-dated annuity contracts that carry high hurdle customer guarantees.



·     CRWD +1%; after raising its target for subscription gross margins by 400 basis points and for operating margins by 900 basis points and free cash flow margin of 34%-38% of revenue, up 500bps from prior target at midpoint.

·     FDX +5%; after raising its full-year profit outlook (FY24 adj EPS to $17.00-18.50 vs prior $16.50-18.50 and est. $17.50), as efforts to cut billions in costs helped its bottom line despite continued weaker shipping demand.

·     GBX +4%; said it has won orders for 15,300 new railcars valued at $1.9B, as orders came in Q4.

·     NTNX +2%; upgraded to Buy at Bank America and raise tgt to $50 PT sees fundamentals improving over the next few years including ACV billings, revenue, and operating margin.

·     PARA +2%; along with gains in WBD, NFLX as CNBC reported last night that writers and producers are near an agreement to end the Writers Guild of America strike after meeting face to face on Wednesday. https://tinyurl.com/3wvzsv49

·     SPLK +21%; said it would be acquired by CSCO for $157 a share in cash in a deal with an enterprise value of about $28 billion. https://tinyurl.com/bddsc9d6

·     VLO +3%; as refiners rally (MPC, PSX) after Russia has temporarily banned exports of gasoline and diesel to all countries outside a circle of four ex-Soviet states.

·     WMG +2%; after falling -8.5% over the past 2 days due to a negative development (expected loss of BMG’s distribution biz); several analysts defended shares today (Barclays, JPM, Truist).



·     AMZN -3%; falls for a 6th straight day as higher rate fears weigh on consumer spending stocks.

·     AVGO -3%; after The Information reported GOOGL executives have discussed dropping Broadcom as a supplier of artificial intelligence (AI) chips as early as 2027 https://tinyurl.com/ycxnpnxe

·     IOT -2%; shares fall an 8th straight day after short seller SprucePoint issued a Strong Sell opinion on the company saying it sees 45%-75% downside risk saying the company has a material hardware business that gives them a uniquely poor business model.

·     KBH -3%; posted as Q3 top/bottom line results beat consensus, but orders came in light of street, while the 4Q GM% guide is also underwhelming and said now expects Q4 to be the inflection point for gross margins vs. previous forecast of Q3.

·     TKO -13%; after announced that USA Network has pinned down the rights for “SmackDown,” the WWE wrestling hit that currently airs on Fox as TV rights start next fall following the 5-year deal (“SmackDown” aired on USA from 2016 to 2019 prior to moving to Fox).

·     TVTX -40%; after saying a late-stage study of Filspari in IgA nephropathy (rare kidney disease) failed in a head-to-head study vs. irbesartan fell short of producing a statistically significant difference by one measure of kidney function.


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.