Market Review: August 11, 2023

Closing Recap

Friday, August 11, 2023





DJ Industrials




S&P 500








Russell 2000













US equities were slightly lower coming into the economic data, slumped on slightly hotter Core PPI results, then attempted a rally into and following generally in-line Michigan Sentiment and stable inflation expectations. Mid-morning breadth was only slightly in favor of decliners before sellers came back into the markets. Heading into mid-day, equities had faded again with the NASDAQ back near pre-market lows and the S&P off modestly. Breadth had widened to closer to 3:2, still in favor of decliners. Interestingly, Fed rate expectations remained fairly stable versus pre-data levels, with the probability of a pause in September at 88.5% (90.5% prior to economic data).


Data-wise, while the Michigan inflation expectations results have been stable for the past three months, it is interesting to note the current one-year reading of 3.3% remains above the range of 2.3-3.0% of the two years pre-pandemic and the five-year result of 2.9% is also above the pre-pandemic range of 2.2-2.6%. Also on the subject of economic data, @bespokeinvest questions/notes: The release of August CPI ahead of the 9/20 FOMC meeting will test Powell’s stated focus on core over headline inflation. Headline CPI’s nowcast estimate for August is currently at a very hot 0.77% MoM yet odds for a hike are at just 11%? Lastly, as we move toward the end of earnings season, @DataTrekMB highlights: Wall Street analysts have raised their current quarter & next year earnings estimates for most US Big Tech companies over the last 30 days (i.e., post Q2 results). These names are in much better fundamental shape as a group – save $TSLA – than the S&P 500 as a whole…That’s particularly true for $GOOG, $AMZN & $META, which is why they’re the only Big Tech companies higher QTD.


Heading into the final hour of trading, stocks were off lows but still struggling to gain traction. Energy (XLE, +1.3%) was the leading sector, following oil higher, while Healthcare (XLV, +0.6%) and Utilities (XLU, +0.5%) also showed some strength. Laggards in the red included Technology (XLK, -0.7%), Communications (XLC, – 0.4%), Consumer Discretionary and Materials (XLY and XLB, -0.3%). Value gained (Russell 1000 Value +0.23%), while Growth faded with the NASDAQ (Russell 1000 Growth -0.3%).



Economic Data

·     July core PPI came in slightly hotter than anticipated at +2.4% yr/yr versus consensus of +2.3%, but in-line with the previous +2.4%. The core mo/mo reading was +0.3% versus consensus of +0.2% and above the previous +0.1%.

·     University of Michigan Preliminary Sentiment for August was generally in-line at 71.2 versus expectations of 71.3 and previous 71.6. The sentiment spread expanded modestly from 8.3 to 10.1 on both a small gain in current conditions and a small slip in expectations.

·     University of Michigan inflation expectations remained fairly stable, with the one-year at 3.3% versus consensus of 3.5% and previous 3.4%, while the five-year was 2.9% versus consensus of 3.0% and previous 3.0%.


Commodities, Currencies & Treasuries

·     August gold futures slipped $2.30/oz, or -0.11%, to settle at $1,946.60 after slightly hotter Core PPI date pre-market. The day’s action marked the worst weekly move since late June. Moves to the upside in both US Treasury yields and the Dollar added pressure as investors continued to struggle to determine the Fed’s most likely path.

·     WTI September crude futures gained 0.45%, or +$0.37/bbl, to settle at $83.19. Brent also gained 0.47%, or +$0.41, to $86.81/bbl. The move marked the seventh consecutive weekly gain for each after early IEA reports indicated crude supplies could continue to tighten with Russia and Saudi supply cuts through 2H, as global demand expands.







WTI Crude















10-Year Note





Top Movers

·     In Solar: MAXN shares tumbled as Q2 revs rose 46% y/y to $348.4M vs. est. $374.3M; guides Q2 revs $280M-$3320M, below consensus of $394.8M.

·     In REITs: MPW downgraded by two analysts after earnings this week, with Raymond James triple downgrading to Underperform from Strong Buy.

·     In Aerospace & Defense: SPCE CEO Richard Branson said it aims to launch its next space tourist mission in early September.

·     In Pharma news: PSTV said the FDA approved the continuation of early-stage study testing its radiotherapy against a complication of advanced cancers.

·     In Healthcare Facilities: CANO tumbles after issued a going concern warning and said it is exploring a sale following earnings results (also downgraded at Citigroup).

·     In semi chips: Digitimes reported that Samsung plans to further reduce DRAM production with 2H23 demand recovery unlikely (MU, WDC shares were active in reaction)

·     In IT Services & Consulting: IONQ reported Q2 revs that were above consensus estimates as the company experienced some accelerated revenue recognition.

·     In Software: TWLO upgraded to Buy from Hold with $72 tgt at Argus.

·     In Leisure, Gaming & Lodging: In Gaming, a midday Sportico article reported a regulatory filing from Barstool Sports President & ex-Penn Gaming employee in which he registered to potentially sell 1.25M of of the1.48M PENN shares that he owns. Portnoy quickly responded, saying he had no intention of selling his shares at these levels. PENN shares, which had spiked on Wednesday’s ESPN (DIS) news, finished the week -4%.

·     In Energy, Industrials & Materials: Shares of aerospace firm TGI bounced back from earlier lows to finish lower by less than -2% after a double downgrade to Underperform by BofA on fading sentiment. eVTOL aircraft company ACHR finished the day relatively unchanged after gaining as much as +25% in early trading following last night news that they had settled litigation with BA and in turn received a $125M investment from Boeing.

·     In Financials: The shares of UBS gained over +5% after news that the Swiss bank announced the voluntary termination of its Loss Protection Agreement (LPA) with the Swiss government valued at CHF 9B. The company has also decided to conclude Public Liquidity Backstop (PLB) of up to CHF 100 billion with Swiss National Bank, which was guaranteed by the Swiss government, signifying UBS has not found any hidden issues in their purchase of failed peer Credit Suisse.


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.