Morning Preview: April 03, 2023

Early Look

Monday, April 3, 2023









S&P 500










U.S. futures are looking mixed with the Dow Jones looking higher, the S&P 500 flat and the Nasdaq lower after U.S. stocks extended their winning streak last week. Stocks closed at the highs on Friday afternoon, with a late day surge pushing to S&P 500 above the 4,100 level in the final minutes, closing out a solid week, month, and quarter for stocks. For the week, the S&P 500 rose 3.5%, the Dow rose 3.2% and the Nasdaq rose 3.4%; for the month, the S&P rose 3.5%, the Dow rose 1.9% and the Nasdaq rose 6.7%; for the quarter, the S&P 500 rose 7.0%, the Dow rose 0.4% and the Nasdaq rose 16.8%. Government data early Friday showed the Federal Reserve’s preferred measure of inflation, core personal-consumption expenditures (PCE), slowed in February, lifting hopes the central bank could limit its campaign to curb inflation sooner than originally expected. The dollar strengthens as Treasury yields rise in response to the oil output cuts. In Asian markets, The Nikkei Index jumped 146 points to 28,188, the Shanghai Index rose 23 points to 3,296, and the Hang Seng Index inched higher 9 points to 20,409. In Europe, the German DAX is up a few points to 15,633, while the FTSE 100 rises 60 points to 7,692.


Oil prices jumped this weekend after OPEC+ announced an unexpected crude oil production cut of about 1.15 million barrels a day starting in May. The group had previously stated that it would hold supply steady. Saudi Arabia will cut output by 500,000 barrels per day. Kuwait, the United Arab Emirates, Iraq, Algeria, and Kuwait are among members that will also cut. Russia said its already-planned March-June cut will now last through 2023. If oil prices rise significantly and stay elevated, that could complicate the inflation picture while slowing economic growth. The Financial Times reported that people familiar with Saudi Arabia’s thinking say Riyadh was irritated last week that the Biden administration publicly ruled out new crude purchases to replenish SPR.


Market Closing Prices Yesterday

·     The S&P 500 Index spiked 58.48 points, or 1.44%, to 4,109.31.

·     The Dow Jones Industrial Average rose 415.12 points, or 1.26%, to 33,274.15.

·     The Nasdaq Composite surged 208.44 points, or 1.74%, to 12,221.91.

·     The Russell 2000 Index advanced 34.10 points, or 1.93% to 1,802.48.


Economic Calendar for Today

·     9:45 AM ET            S&P Global Manufacturing PMI, March-F…prior 49.3

·     10:00 AM ET          ISM Manufacturing PMI for March…est. 47.5 (prior 47.7)

·     10:00 AM ET          Construction Spending for February…est. 0%





















10-Year Note





World News

·     China’s Caixin China Manufacturing PMI fell to 50.0 vs 51.4 expected and 51.6 prior.

·     Japan’s large manufacturers confidence deteriorated for the fifth straight quarter in Q1, falling to 1 from 3, according to BoJ’s Tankan report. This was the weakest number in 2years.

·     ECB’s de Guindos warned of broad fin sector risks, ECB is closely monitoring current tensions and will act to preserve Euro area fin stability; headline inflation likely to fall this year, underlying inflation will remain firm – Reuters.


Sector News Breakdown


·     Tesla (TSLA) delivered 422,875 vehicles, up 36% y/y, but compared with analyst expectations for 430,008 vehicles, according to Refinitiv data (RBC estimated 445K deliveries and Deutsche Bank 416K). TSLA said Q1 production was 440,808 units; produced 421,371 Model 3 and Y vehicles in Q1 and delivered 412,180.

·     LI Auto (LI) said it delivered 20,823 vehicles in March 2023, surpassing 20,000 monthly delivery mark again and representing an increase of 88.7%; Q1 deliveries to 52,584, up 65.8% y/y; cumulative deliveries of Li auto vehicles reached 309,918 as of end of March.

·     NIO Inc. (NIO) said it delivered 10,378 vehicles in March, +3.94% from 9,985 a year ago but -14.6% from 12,157 in February; delivered 31,041 vehicles in the first quarter, slightly above the lower end of its previous guidance range of 31,000 to 33,000 vehicles.

·     Xpeng (XPEV) delivered 7,002 vehicles in March, up 16.51% from 6,010 in February, but down 54.57% from 15,414 in the same month last year; XPEV delivered 3,030 units of the P7 series sedan in March, up 32% (MoM), without disclosing breakdown figures for the P7i and P7.

·     McDonald’s (MCD) is temporarily closing its U.S. offices this week as it prepares to inform corporate employees about layoffs; McDonald’s did not disclose the number of employees being laid off – WSJ.


Energy, Industrials and Materials

·     Crude oil prices jump as OPEC+ announced an unexpected crude oil production cut of about 1.15 million barrels a day starting in May. The group had previously stated that it would hold supply steady. Saudi Arabia will cut output by 500,000 barrels per day. Kuwait, the United Arab Emirates, Iraq, Algeria, and Kuwait are among members that will also cut.

·     Ovintiv (OVV) is nearing a deal to acquire oil exploration and production assets in Permian Basin for about $4 bln, including debt, sources told Reuters on Sunday; the assets are controlled by private equity firm EnCap Investments.

·     Atmos Energy (ATO) files to sell $5B of common stock, debt securities.



·     Extra Space Storage (EXR) will combine with Life Storage (LSI) in a $12.7B deal, The Wall Street Journal reported; according to executives, Life Storage stockholders are set to receive 0.8950 of an Extra Space shares for each share they own, or $145.82.

·     Deposits at top 25 U.S. Banks fell to $10.65 trln in week ending March 22, from $10.74 trln March 15 (or $125.7B): Fed data late Friday showed. Borrowings at small U.S. Banks fell to $714.8 bln in week ending March 22, from $739.1 March 15.

·     UBS Group AG (UBS) will cut its workforce by between 20% and 30% after completing its takeover of Credit Suisse Group AG, slashing as many as 36,000 jobs worldwide, Swiss newspaper Sonntagszeitung reported.

·     Regionals banks’ exposure to commercial real estate loans could be the next thing to come under scrutiny, as growing vacancies and a possible recession fuels the risk of defaults. Barron’s assembles a list of the 15 lenders that have the highest concentration in commercial property, led by Valley National Bancorp (VLY), PacWest Bancorp (PACW) and Bank OZK (OZK). But as of end-2022, nonperforming loans amounted to less than half the regional bank median of 0.84% of total loans for 11 of the banks, indicating this isn’t a problem, yet.



·     Apellis (APLS) is said to attract takeover interest according to Bloomberg; larger drugmakers are eyeing $7.6 billion company:

·     In managed care (CNC, CVS, ELV, HUM, UNH): late Friday, US finalizes 1.12% cut to Medicare Advantage 2024 rates, a smaller cut than earlier proposal; Proposed rate adjustment for insurers excludes risk-score trend.

·     Y-mAbs Therapeutics (YMAB) downgraded to Neutral from Buy at Guggenheim.


Technology, Media & Telecom

·     Intel (INTC) upgraded to Market Perform from Underperform at Bernstein.

·     Barron’s noted Facebook parent Meta Platforms Inc. (META); Alphabet Inc. (GOOGL), parent of Google’s YouTube; and Snapchat owner Snap Inc. (SNAP), are seen to benefit the most for a TikTok ban in the U.S. noting: about 95 million Americans currently use TikTok for an average of 90 minutes daily, estimates Morgan Stanley analyst, who calculates that every 10% of that time captured from TikTok would boost Meta’s profits by 20c a share. If YouTube were to capture half of TikTok’s US time, that would add about $2 billion to its revenue. Meanwhile Snap’s share price already factors in the platform taking 25% of TikTok time, when 5% would be more likely.


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.