Market Review: December 23, 2022

Closing Recap

Friday, December 23, 2022





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Pre-holiday trading and news flow was particularly quiet, as expected. Market moved mostly sideways after some bouncing on early economic data but held close to flat. Modestly better Michigan sentiment and new home sales combined with a slightly above-expected core PCE did little to shift investor expectations or sentiment on a low-volume day.

·     Some contrasting data items of note today: @MBjogovic notes in November less than 2% of the unadjusted CPI inflated. In other words, more than 98% of the CPI either disinflated or deflated. @RenMacLLC highlighted recessions don’t happen when real incomes net of transfers is on the rise, and this is up 3.2% annualized since June. Retail gasoline prices have declined about 25 cents per gallon so far in December. Thus, one should expect to see real incomes continue climbing. On the other hand, @rbadvisors pointed out the inflation story isn’t exactly over. Global supply chain pressures got marginally worse and remain high relative to history. 

·     From a sector perspective, Energy (XLE) paced the gainers with a late afternoon gain of 2.9% on the back of higher crude prices following comments on production cuts from Russia. Utilities (XLU), Communications (XLC), Real Estate (XLRE), Consumer Discretionary (XLY) and Materials (XLB) all gained about +50-75bps. Technology (XLK) and Healthcare (XLV) were the only sectors in the red by late afternoon, with modest declines in the -10-20bps range. Both growth and value cohorts gained, with value leading. The Russell 1000 Value climbed about 50bps vs its Growth counterpart gaining about 20bps.

·     February gold settled +$8.90, or +0.5%, to $1,804.20/oz after another round of economic data failed to shift investor expectations for ongoing rate hikes from the Fed and fears of looming recession. Today’s higher close marked the third weekly gain over the past four weeks. WTI crude oil gained $2.07, or 2.67%, to settle at $79.56/bbl, while Brent gained $2.94, or +3.63%, to settle at $83.92/bbl. Comments out of Russia indicating it would favor production cuts over agreeing to price caps spurred the rally. Specific comments mentioned potential daily production cuts of up to 700,000 barrels. Ten-year Treasury yields rise 7.7 basis points to 3.746% as investors digested slumping durable goods orders and softening personal spending.


Economic Data:

·     U.S. Personal Spending for Nov (m/m) rises +0.1% vs 0.8% previous and below est. +0.2% while Personal Income for Nov (m/m) +0.4% vs +0.7% previous and above est. +0.3%; the personal saving rate for Nov rises +2.4% vs. Oct 2.2%

·     November headline PCE inflation +5.5% y/y, in-line with ests +5.5% and +6.1% in prior month while core PCE y/y rises +4.7% vs. +4.6% est. but down from +5% prior. On a m/m basis, PCE price index rises +0.1% (in-line with ests) and PCE core +0.2% m/m (also in-line)

·     Durable Goods Orders for Nov fell (-2.1%) vs. est. decline (-0.6%) and core durable goods orders +0.2%, versus +0.1% expected.

·     University of Michigan Sentiment consumers sentiment Dec-F reported at 59.7 vs. est. 59.1 and Final Nov 56.8; current conditions index final Dec 59.4 final Nov 58.8; expectations index final Dec 59.9 vs final Nov 55.6

·     University of Michigan surveys of consumers 1-year inflation outlook final December 4.4% vs preliminary 4.6% and final November 4.9% and University of Michigan surveys of consumers 5-year inflation outlook final December 2.9% vs preliminary 3.0% and final November 3.0%

·     New Home Sales for November rose 5.8% to 640,000 annual rate, better than the expected decline of (-5.7%) and 600K estimate






WTI Crude















10-Year Note





Sector News Breakdown


·     TSLA CEO Elon Musk said he will not sell any more Tesla stock for another two years; foresees the economy will be in a "serious recession" in 2023 and consumer demand will be lower

·     LMNR posted a wider-than-expected 4Q loss – Q4 adj EPS loss (-$0.32) vs. est. loss (-$0.10), but quarterly revenues topped views


Energy, Industrials and Materials

·     Cowen with tgt changes on majors as BP $36 (Prior $35) SHEL $63 (Prior $60) TTE $61 (Prior $59) saying for 4Q earnings, we like the setup for SHEL and are more cautious on CVX, TTE

·     FDX and UPS warn severe winter weather could delay holiday packages, airlines ax more flight; airlines also impacted by winter storms in transports

·     MMM slips after judge ruled the company barred from shifting liability in earplug litigation

·     APA, COP, CVX, FANG, OXY, HES, PXD leaders in the S&P as energy leads



·     ACCD rises after TRICARE Awards T5 Contracts awarded – Truist noted after speaking with ACCD that it is a good outcome, given it subcontracts with one of two contract winners

·     BIIB slips early as Japan drug making partner Eisai’s reported a 3rd death in Alzheimer’s trial

·     HUM, ACCD movers: Healthcare Services: The Department ff Defense announced the winners of their TRICARE Managed Care East and West Region contracts – HUM announced the re-procurement of the TRICARE East Region contract, where the company was the incumbent following its prior 2016 award. The contract will go into effect in 2024. Through the DoD’s new T-5 contract, six states currently in the East region will transfer to the West (AR, IL, LA, OK, TX, WI), representing ~1.5M beneficiaries. Additionally, TriWest Healthcare Alliance (Private) was awarded the West Region contract, currently serviced by incumbent Health Net/Centene (CNC)


Technology, Media & Telecom

·     PARA downgraded to Sell from Hold and cut tgt to $14 at Loop Capital as do not see a buyer willing to pay a premium for the entire company, nor do they see a near-term change in the company’s streaming strategy and believe EBITDA and FCF estimates for 2023 are too high;

·     CHTR upgraded at Wells Fargo noting investor day outlined the network evolution including DOCSIS4.0, leaning into mobile solutions + Spectrum One and significant line extension plans to grow the subscriber base into rural America

·     NWSA rises after Axios reported Michael Bloomberg is interested in acquiring either Wall Street Journal parent company Dow Jones or The Washington Post, a source familiar with his thinking told Axios.


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.