Morning Preview: October 13, 2023

Early Look

Friday, October 13, 2023









S&P 500










U.S. futures are pulling back overnight, adding to Thursday’s losses ahead of big bank earnings and further developments in the Middle East. Oil prices jump 3% to $86 per barrel amid rising fears that Israel is close to launching a ground invasion of Gaza after its military ordered more than a million people in the territory to flee south. China released monthly inflation and trade data overnight while the U.S. gets import/export data this morning as well and University of Michigan sentiment and inflation expectations. Earnings for banks get underway with Citi, Wells, JP Morgan, PNC Blackrock out this morning and Dow component United Health (UNH) posted a beat and raise. Treasury yields ease, with the 10-year at lows around 4.60% after topping 4.7% late yesterday. The S&P 500 snapped its 4-day win streak on Thursday as U.S Treasury yields advanced after data showing consumer prices came in higher than expected, suggesting that the Federal Reserve could raise interest rates one more time this year. An auction of U.S. 30-year bonds showing poor demand also sent Treasury yields higher. The weak 30-year auction followed lackluster sales of 10-year and three-year notes this week. In Asian markets, The Nikkei Index dropped -178 points to 32,315, the Shanghai Index fell -19 points to 3,088, and the Hang Seng Index tumbled -424 points to 17,813. In Europe, the German DAX is down -154 points to 15,271, while the FTSE 100 is down -45 points to 7,600.


Market Closing Prices Yesterday

·     The S&P 500 Index slumped -27.34 points, or 0.62%, to 4,349.61.

·     The Dow Jones Industrial Average fell -173.73 points, or 0.51%, to 33,631.14.

·     The Nasdaq Composite dropped -85.46 points, or 0.63%, to 13,574.22.

·     The Russell 2000 Index declined -39.04 points, or 2.20% to 1,734.25.


Economic Calendar for Today

·     8:30 AM ET                  Import Prices M/M for September

·     8:30 AM ET                  Export Prices for September

·     8:30 AM ET                  US Trade Balance for September

·     9:00 AM ET                  Fed’s Harker Speaks on the 2023 Economic Outlook

·     10:00 AM ET                University of Michigan Sentiment, Oct-P

·     10:00 AM ET                University of Michigan 1 and 5-yr inflation expectations, Oct-P

·     1:00 PM ET                   Baker Hughes Weekly rig count data


Earnings Calendar:

·     Earnings Before the Open: BLK C JPM PGR PNC UNH WFC





















10-Year Note





World News

·     China consumer price index (CPI) was unchanged in September from a year earlier, data by the National Bureau of Statistics (NBS) showed, missing the forecast of a 0.2% gain. CPI rose 0.1% in August. Year-on-year core inflation, excluding food and fuel prices, was 0.8%, in line with August.

·     The producer price index (PPI) fell 2.5% from a year earlier, the 12th straight month in negative territory though the pace of decline slowed from August. Economists had predicted a 2.4% fall

·     Outbound shipments in September declined 6.2% from a year ago, following a drop of 8.8% in August, and beating economists’ forecast for a 7.6% fall in a Reuters poll.


Sector News Breakdown


·     Dollar General (DG) announced Todd Vasos, current Board member and former Chief Executive Officer, has been appointed CEO effective today; trims FY comp sales range to -1% to 0%, vs. prior view about -1% to +1%; cuts top end of FY23 EPS view to $7.10-$7.60 from prior $7.10-$8.30 (est. $7.73) and sees FY23 rev growth 1.5%-2.5% from 1.3%-3.3% prior.

·     California is preparing a lawsuit to block Kroger’s (KR) $24.6B acquisition of Albertsons Cos. (ACI) on concerns the deal could hurt consumers and workers, Attorney General Rob Bonta said Thursday



·     JPMorgan (JPM) Q3 EPS $4.33 vs. $3.2 y/y; Q3 adj revenue $40.69B vs. est. $39.92B; total deposits $2.38 trillion; provision for credit losses $1.38B vs. est. $2.49B; non-interest expenses $21.76B, vs. est. $21.78B and return on equity (ROE) 18%; Q3 Investment banking revs $1.61B.

·     Wells Fargo (WFC) Q3 Net interest income $13.11B, vs. est. $12.75B; total average loans $943.2B, vs. Bloomberg est. $946.47B; Q3 revs $20.86B vs. est. $20.16B; Return on equity 13.3%, Common equity Tier 1 ratio 11%; Provision for credit losses $1.20B vs. est. $1.33B.

·     BlackRock (BLK) Q3 adj EPS $10.91 vs. est. $8.20; Q3 revs $4.52B vs. est. $4.51B; clients pull a net $13B in l-t investment funds, the first outflows since the onset of the pandemic in 2020; ended Q3 with $9.10 trillion in assets under management (AUM), up from $7.96 trillion y/y.

·     Discover Financial Services (DFS) credit card delinquency rate 1.63% at Sept end vs 1.51% at Aug end; credit card charge-off rate 1.94% at Sept end vs 1.98% at Aug end.

·     Lending Club (LC) sees Q3 revenue $198M-$200M vs. consensus $199.42M; said sees Q3 net income $4M-$5M and said originated approximately $1.5B of loans in Q3.



·     United Healthcare (UNH) Q3 adj EPS $6.56 vs. est. $6.32; Q3 revs $92.36B vs. est. $91.37B; Q3 medical loss ratio was 82.3%, compared with analysts’ estimates of 82.82%; raises FY23 adjusted EPS view to $24.85-$25.00 from $24.70-$25.00 vs. est. $24.84.

·     Biotech ETF (XBI) hit fresh 52-week lows on Thursday on rising yields; financing becomes a serious issue for small biotech with rates this high.

·     Nuvalent (NUVL) announced updated preliminary data from the Phase 1 dose-escalation portion of its ongoing ALKOVE-1 Phase 1/2 clinical trial of NVL-655 for patients with advanced ALK-positive non-small cell lung cancer, or NSCLC, and other solid tumors.

·     Outset Medical (OM) sees prelim Q3 revs up 9% y/y at $30.4M, but below consensus $36M; said total cash, including restricted cash, cash equivalents and short-term investments, was $197M as of sept. 30, 2023

·     Relay Therapeutics (RLAY) announced that initial data from a key cancer trial came in better than expected and the company extended its cash runway after a pipeline change.


Technology, Media & Telecom

·     Comtech Telecom (CMTL) Q4 adj EBITDA $18.9Mm vs est. $13.23Mm on net sales $148.8Mm vs est. $140.13Mm; entered into a definitive agreement with Stellant, which will acquire Comtech’s Power Systems Technology product line for a total cash purchase price of $40M.

·     Smart Global (SGH) Q4 EPS $0.35 vs. est. $0.45; Q4 revs $316.7M vs. est. $375M; Q4 non-GAAP gross margin increased to 31.7%, up 460 bps y/y; guides Q1 EPS $0.00-$0.30 below consensus $0.40 and revs $250M-$300M below consensus $383.4M.

·     Belden (BDC) guided Q1 revs about $625M vs. est. $685.2M; narrows Q3 EPS view down to $1.75-$1.77 from $1.75-$1.85 (est. $1.82) and cuts Q3 revenue view to $625M from $675M-$690M (est. $685.2M) saying demand to weaken in Q3.

·     Applied Materials (AMAT) and Lam Research (LRCX) were both upgraded to Buy from Hold at Needham saying LRCX looks to be an outperformer in 2024-2025 and expects resilience from AMAT; expects memory WFE to normalize at ~40% of total WFE by 2025.

·     Netflix (NFLX) downgraded to Peer Perform from Outperform at Wolfe Research without a price target saying the company’s 2024 average revenue per user expectations look full while today’s paid-sharing net additions will lead to tomorrow’s gross adds shortfall.

·     Microsoft’s (MSFT) $69 billion acquisition of Activision Blizzard (ATVI) was finally cleared by UK regulators on Friday after it forced the Xbox owner to sell the steaming rights to games including “Call of Duty” to address its competition concerns.


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.