Market Review: July 03, 2023

Closing Recap

Monday, July 03, 2023





DJ Industrials




S&P 500








Russell 2000













As expected, US stock markets trade in a narrow range (light volumes) in this abbreviated stock market trading day, closing at 1:00 PM today ahead of the 4th of July Holiday tomorrow (where US stock and bond markets are closed). The Consumer Discretionary sector outperformed, led by shares of TSLA after better quarterly deliveries boosted shares as well as strength in REITs. Healthcare was the biggest drag in the S&P along with technology after a strong 1H’23 (where Nasdaq rose 31%). Markets are closed Tuesday in the US, but the heavy dose of economic data kicks in later this week with ADP on Thursday out with hiring trends at U.S. companies followed by Friday’s government employment report for June.


Asian stock markets jumped overnight after China’s Caixin PMI Manufacturing for June fell to 50.5 from 50.9 prior but was a little higher than expectations and still in “expansion” (above 50 marker), while reports that Treasury Secretary Yellen will travel to China July 6-9 to meet senior Chinese Govt officials also boosted market sentiment. European PMI data overnight: All with sub-50 readings: France slightly better at 46.0 vs the prior 45.5, and a small downgrade to Germany’s data from 41.0 to 40.6 for June. The Spanish PMI beat expectations very marginally, while Italy PMI slipped from 45.9 to 43.8. Japan’s Q2 Tankan Large Manufacturing Index improved for the first time in 7 quarters (5 vs. 3 est.).


Market data stats: RyanDetrick tweets: "S&P 500 up >10% the first 6 months? July and the next 6- and 12-month returns are much better than avg. Also, the past 11 times this happened, the next 6 months, where higher every single time." @RyanDetrick also noted for July: S&P 500 higher nine of the past 10 years and QQQ higher every single year since 2008.


Economic Data

·     S&P Global June final manufacturing PMI at 46.3 (vs flash 46.3).

·     ISM U.S. manufacturing activity index dips to 46.0 in June vs 46.9 in May (vs. est. 47.0) as prices paid index 41.8 in June vs 44.2 in May, new orders index 45.6 in June vs 42.6 in May, and the employment index 48.1 in June vs 51.4 in May.

·     Construction Spending for May rose +0.9%, above consensus +0.6% to $1.926 trln, vs April +0.4% (prev +1.2%) and May private construction spending +1.1%, public spending +0.1%.

·     @bespokeinvest noted: ISM Manufacturing has been below 50 for the last 8 months. Longest streak since early 2009. Prices Paid have been below 50 (price declines) for seven of the last nine months.


Commodities, Currencies and Treasuries

·     US crude prices reverse earlier gains and fall -0.2% to $70.50 after a monthly ISM report showed the US manufacturing sector contracted at its steepest pace since May 2020, and saw shrinkage for an eighth straight month, the longest contraction since the ’08-’09 Great Recession. Prices had jumped overnight after oil exporters Saudi Arabia and Russia said they would extend voluntary oil output cuts of one million barrels per day for another month to include August, adding that the cut could be extended beyond that month. Soon after, Russia announced it would reduce its own exports by 500K bbl/day.

·     Treasury yields end slightly higher in quiet trading (bond market closes at 2:00 PM ET). The spread between the 2-year and 10-year U.S. Treasury note yield hit the widest since 1981 at -110.80 basis points in early trade, a deeper inversion than in March during the U.S. regional banking crisis. Bitcoin prices topped $31,000 early afternoon while the US dollar (DXY) was flat on the day. Gold prices looking little changed around the $1,930 an ounce level.






WTI Crude















10-Year Note





Sector News Breakdown



·     Electric Vehicles out with monthly and quarterly updates; lifting share prices on better results.

·     TSLA delivered 466,140 vehicles in the three months ended June 30 and produced 479,700 vehicles (+85.5% y/y), the 5th period in a row when Tesla reported a higher level of vehicles produced compared to deliveries (Refinitiv estimate was for 445,000 vehicles). Tesla delivered 254,695 vehicles in the year-ago quarter.

·     RIVN said it delivered 12,640 vehicles in the quarter to June 30, +183% from the 4,467 vehicles delivered in the same period a year ago and said produced 13,992 EVs in the latest quarter, up 217.9% from last year’s 4,401.

·     Monthly regular auto sales out today for some: 1) HMC said June U.S. sales up 56.9% to 111,498 units, 4th straight sales month over 110K units and Honda brand sales increased over 40% in Q2 to 347,025 units and 54% in June to 98,327 units. 2) Mazda North American operations reported total June sales of 29,786 vehicles, up 96.9%. 3) Nissan Group announced total U.S. second quarter sales of 244,353 units, an increase of 33.4% versus the prior year. 4) Subaru of America reported sales of 55,168 vehicles for June, a 28% increase y/y from 43,175.

·     In Chinese EV’s:

·     LI said it delivered 32,575 vehicles in June, topping the 30K monthly delivery mark for the 1st time and representing an increase of 150.1% Y/Y and brought Q2 deliveries to 86,533, up 201.6% Y/Y.

·     NIO said delivered 10,707 vehicles in June 2023 (6,383 premium smart electric SUVs, and 4,324 premium smart electric sedans) and delivered 23,520 vehicles in Q2.

·     XPEV delivered 8,620 Smart EVs in June, rising 15% M/M, with the P7 series deliveries +17% M/M; said total Smart EV deliveries rose 27% Q/Q for Q2 at 23,205 units.

·     GuyDealership tweets: "The average monthly car payment reached a new high of *$733* in Q2. This is up from $730 in Q1 and $678 in Q2 2022… (via Edmunds)"


Leisure, Gaming & Lodging:

·     Online travel names saw strength early with ABNB, EXPE pushing higher; cruise lines among top gainers in the S&P the first 6-months of the year coming into the day: CCL shares up +133% YTD, RCL +109%, and NCLH +77%.

·     In Casinos: WYNN, MGM, LVS active as Macau posts 514% GGR increase for June; for the year so far, Macau’s figures are 205% higher than in 2022 – totaling MOP 80.1bn.



·     In payments: Financial Times reported this weekend that PE firms (Advent and GTCR named) are considering buying a majority stake in Worldpay from FIS at a valuation of >$15B, and banks have discussed providing funding for such a transaction (FIS bought Worldpay for $35B in 2019 and in Feb said it would spin off Worldpay via IPO).

·     In cards: WSJ reported late Friday that GS is considering exiting its partnership with AAPL and is in talks with AXP to take over its Apple credit card and other ventures with the tech giant.

·     In REITs: AVB, EQR, DLR, EQIX, FR, SPG, PEAK, KIM, CUZand HIW mentioned positively in Barron’s this week saying they are weathering the downturn in real estate and could be winners as conditions improve.

·     In Crypto: COIN shares outperformed after Reuters reported exchange operator CBOE late Friday refiled an application with U.S. SEC to launch bitcoin ETF by Fidelity, saying it plans policing partnership with the crypto exchange.



·     AZN shares slide after interim analysis of a Phase 3 trial for datopotamab deruxtecan led to improvement in progression-free survival in patients non-small cell lung cancer, a primary endpoint of the study and there was also a positive early trend on overall survival – but analysts had been hoping for a clearer signal of benefit.

·     CHRS said it launched a biosimilar of ABBV’s blockbuster arthritis drug Humira in the U.S., available commercially at a list price of $995 per carton, representing an 85% discount to Humira.

·     DERM said it expects topline results from the phase 3 clinical trials (mvor-1 and mvor-2) evaluating dfd-29 (minocycline hydrochloride modified release capsules, 40 mg) for the treatment of papulopustular rosacea to be announced week of July 10, 2023.


Industrials & Materials

·     LMT: Israel has approved the purchase of a third squadron of F-35 stealth fighter jets (25 in total) in a deal worth $3B, the Ministry of Defense said; also, LMT secured a $70.3M modification to a US Navy contract, according to a Friday notice posted on the US Defense Department’s website.

·     In Tankers: Baltic Dry Index Falls 2.11% to 1,068 in London, down for a Sixth Day. Capesize -3.12% to $13,692, Panamax -1.8% to $7,794, Supramax 58k tons -0.24% to $8,221.


Materials, Metals & Mining

·     In steels (X, NUE, CLF): On Friday, the US spot HRC prices declined to the lowest level since mid-February on lower mill offers. The spot HRC prices plummeted 4.6% d/d at $840/st (-6.7% w/w, -16.0% m/m, but still +20.0% YTD).

·     Credit Suisse reduced estimates on DOW, LYB, OEC, CBT, OLN, HUN for stocks with upstream chemical businesses saying there’s always too much inventory if end demand is declining. If demand is stable to rising, supply chain contractions normally only last 1-2 quarters.



·     AAPL reportedly cut its Vision Pro headset first year production goals by more than 50% because it’s so complex for manufacturers to make.

·     AMT PT lowered to $233 (from $241), SBAC PT lowered to $276 (from $290) at RBC Capital in Towers, updating models for changes in interest rates and forex rates ahead of results.

·     MCHP said it will invest $300 million over multiple years to expand its presence in India.

·     Twitter put a temporary limit on the number of tweets that users can see each day. The limit, imposed to "address extreme levels of data scraping and system manipulation". Users cannot view tweets without logging in to the platform. Verified accounts can now read 6,000 posts per day, unverified accounts 600 posts and new un-verified accounts 300 posts. After that, users will get a message that says, "rate limit exceeded". Musk has said that limit will "soon" increase to 10,000 for verified, 1,000 for unverified and 500 for new unverified.


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.