Market Review: June 08, 2023

Closing Recap

Thursday, June 08, 2023





DJ Industrials




S&P 500








Russell 2000













After posting declines of over 1% for the Nasdaq on Wednesday and specific S&P weakness (namely technology), stocks were back in cruise control higher as weaker jobless claims data raised hopes the Fed will keep rates on pause next week at their policy meeting. 2023 leaders back to leading today after brief dip Wednesday; with Technology +1.1% (+32.8 YTD), Discretionary +1.4% (+24% YTD) and Communications +0.4% (+31.6% YTD); next best sector gainer YTD Industrials +4.25% YTD. Today was basically a reversal of yesterday’s trading action as technology was among market leaders while Smallcaps, which surged 8% in the first few days of June, saw profit taking. @bespokeinvest noted “the small-cap Russell 2,000 closed at its most overbought level relative to its 50-DMA in its history yesterday at 3.7 standard deviations above. Prior high was in January 1991.” Market sentiment certainly improving as AAII bulls jumped to an 18-month high this week, rising +15 to 44.5%, highest since 11/10/21 when there were 48, while Bearish sentiment falls -12 to 24.3%, lowest since the same week in 2021 as well. Momentum remains a key driver for markets as Tesla (TSLA) extends its winning streak to 10-days, longest streak since January 21, up 14% this month and at 7-month highs (+88% YTD). The theme of no market fear, climbing the proverbial “wall of worry” with the VIX at 2020 lows continues. Data still showing cracks in economy, but markets still betting on “soft landing.” Note new orders component within ISM Manufacturing has been <50 for 9 consecutive months, longest streak since early/mid-2009; Retail sales as measured by @redbookmag have eased to +0.6% year/year, which is slowest since September 2020.


Economic Data

·     Weekly Jobless Claims rose to 261K in the latest week vs. consensus 235K and vs 233K prior; the 4-week moving average rose to 237,250 from 229,750 prior week; continued claims fell to 1.757M from 1.794M prior and est. 1.8M; US insured unemployment rate unchanged at 1.2%.

·     Wholesale inventories for April revised to (-0.1%) vs. consensus (-0.2%) from -0.2%; April wholesale sales +0.2% (consensus +0.4%) vs March -2.7% (prev -2.1%) and April stock/sales ratio 1.40 months’ worth vs March 1.41 months.

·     Household wealth in the US increased to $148.8 trillion last quarter, according to the Federal Reserve; total credit rose 5.6% to $94.7701 trillion outstanding; domestic nonfinancial rose 3.5% to $69.512 trillion; domestic financial rose 12.3% to $20.446 trillion.


Commodities, Currencies & Treasuries

·     Oil prices tumbled and pared losses after the White House rebutted reports of an Iran uranium enrichment deal was reached. WTI crude finished lower -$1.24, or 1.71% to settle at $71.29 per barrel. Oil fell as low as $69.03 per barrel, down over 4% after the report, which cited two unnamed sources as saying that Iran and the U.S. are nearing a temporary deal that would trade some sanctions relief in exchange for reducing Iran’s uranium enrichment. But prices bounced after the White House said the report was false. Natural gas prices rose for a fifth consecutive session, up 1% at $2.352/MMBtu, but are still down -50% so far this year.

·     Gold prices jumped on Treasury yield/dollar pullback post Jobless Claims earlier; August gold ended the day higher by $20.20 or 1% to settle at $1,978.60 an ounce with dollar index (DXY) -0.7% at 103.35 and yield slower.

·     Weekly Jobless Claims data came in worse than expected, which boosted Treasury buying and pushing yields lower as the 10-yr note yield fell 6-bps to 3.72%; the 2-yr yield down -2.5 bps to 4.52%. The data also weighed on the dollar (DXY -0.7% to 103.35) on higher bets that the Fed will hold rates steady at next week’s meeting.






WTI Crude















10-Year Note





Sector News Breakdown

Retailers & Staples:

·     GME fired CEO Matt Furlong and said Chairman Ryan Cohen will take on a new executive role; also reported Q1 sales of $1.24B, missing the estimates of $1.34B but posted narrower loss.

·     CURV Q1 EPS missed, and revs declined -11% to $293.9M missing the $309Mm estimate noting sales trends were strong in February, but traffic dropped off beginning in mid-March, through April and most of May; said traffic both online and in stores was down dramatically in 1Q.

·     OXM 1Q was a solid quarter overall, with sales, gross margins, and EPS above consensus, but the company said it saw a slowdown in trends in late March that continued into April, causing mgmt to lower its 2Q and 2H expectations (Q2 EPS below consensus at $3.30-3.50 vs est. $4.11).

·     RENT shares fell as Q1 beat overshadowed by weaker guidance as guides 2Q revs $77-79Mm vs est. $81Mm and adj EBITDA mgn 7-8%.

·     SIG shares slide as reports lower Q1 EPS and sales and gives Q2 sales forecast that missed and cuts its FY24 sales forecast to $7.10B-$7.3B from $7.67B-$7.84B and lowered its year EPS forecast to $9.49-$10.09, from $11.07-$11.59.


Leisure, Gaming & Lodging:

·     In autos: for electric vehicles, China’s commerce ministry announces an automobile purchase promotion campaign that will last from June to December (TSLA, RIVN, FSR shares active). LCID is set to enter China selling imported cars, its head of China operations Zhu Jiang said on Thursday.

·     In auto suppliers: APTV upgraded from Peer Perform to Outperform w/ $130 PT at Wolfe saying they see several upcoming catalysts, including a strong upward trajectory for margins and significant potential for upside to consensus estimates; ALV said it plans to cut around 8,000 jobs, and will be implemented by 2025 and will close several sites in Europe.

·     In auto research: Wolfe with several changes as well: QS downgraded from Peer Perform to Underperform w/ $7 PT and FSR downgraded from Peer Perform to Underperform w/ $6 PT as continues to view Fisker as the most speculative OEM within its coverage.

·     In retail auto: CVNA shares jumped after saying it expects to report improving profit metrics in Q2; to post adjusted Ebitda of more than $50 million in Q2 and adjusted gross profit per unit is expected to be above $6,000, up 63% from a year ago.

·     In casinos & Gaming: WYNN downgraded from Buy to Hold at Jefferies as believes the set-up for the shares is more balanced at present levels and downgraded LVS to hold as well as believes the bull and bear cases are approximately balanced within the shares at present levels, and absent near term catalysts, it expects the shares to remain range-bound; IGT announced strategic alternatives headlines for its Global Gaming and PlayDigital divisions.


Energy, Industrials and Materials

·     In chemicals, group lower today with EMN, LYB speaking at Deutsche Bank conference, and issuing come caution into Q2 numbers. Reuters reported midday that BG is putting the final touches on a deal to merge with GLNCY backed peer Viterra and create an agricultural trading giant worth more than $30 billion. Ag chemicals MOS, CF underperforms.

·     In Metals & Mining: precious metals prices bounce, with gold and silver sharply higher as weekly data showed U.S. weekly jobless claims surged last week, boosting prospects that the Federal Reserve will pause its interest rate hiking cycle; gold miners AEM, GOLD, NEM, AUY rise. NEM suspended operations at its Peñasquito mine in Mexico, the gold miner said on Thursday.

·     In Industrials: CARR downgraded to Equal Weight from OW at Morgan Stanley saying the Viessmann acquisition and planned sales of Fire & Security and Commercial Refrigeration set up CARR for resi heat pump adoption in Europe and should be all-in accretive for 2025…but portfolio rerating takes time; REVG boosted its FY23 sales and adj earnings outlook saying higher prices helped push Q2 results well past analyst forecasts – guides year revs $2.45B-$2.55B vs. $2.41B; TTC cut sales to grow between 7%-8% vs 7%-10% growth forecast previously; adjusted EPS is projected to be between $4.70 and $4.80 vs earlier view of $4.70-$4.90.

·     In Utilities: Goldman Sachs recommends investors: Buy SO for Nuclear earnings growth; Buy NEE for Renewables growth; Buy AEP and XEL for Grid Reliability investments (E.G., transmission); Buy SRE for LNG upside. Initiate with a Neutral rating on DUK, D and PEG and a Sell rating on ED and EXC as they screen less attractive on valuation and exposure to the themes identified above.



·     In Banks: TD upgraded from Neutral to Outperform at Credit Suisse, noting shares have underperformed the peer group on a YTD basis by a wide margin (TD -11% YTD, Big Six excl. TD +1% YTD) owing to several factors.

·     In Crypto: COIN tgt cut from $55 to $39 at Berenberg saying it’s a crowded short but notes its large balance of cash and equivalents gives it some cushion and flexibility, and it expects that management will continue to pull the levers available to it in terms of additional expense reductions and other actions aimed at extending its runway.

·     In insurance: AIG said to curb home insurance policies in some regions, WSJ reports. MMC upgraded from In Line to Outperform w/ $199 PT from $195 at Evercore/ISI saying now sees 4-5% upside to consensus EPS with more visibility given a greater ability to leverage Centers of Excellence and a valuation that is below AJG and Aon on ’24 Cash EPS; CRBG 65M share Secondary priced at $16.25; SKWD 3.9M share Secondary priced at $23.00.

·     In REITs: EXPI will replace HSKA in the S&P SmallCap 600 prior to trading 6/14; Mars Inc. is acquiring Heska in a deal expected to be completed soon pending final conditions.



Biotech & Pharma:

·     AKYA 8.7M share Spot Secondary priced at $5.00.

·     ANVS said its late-stage study of lead compound buntanetap aimed at Parkinson’s disease has reached full enrollment.

·     FDMT reported positive interim clinical data from a trial for the treatment of cystic fibrosis lung disease; said interim data from the study will be presented on June 8.

·     MRK said the FDA has accepted for review a new supplemental Biologics License Application seeking approval for KEYTRUDA, Merck’s anti-PD-1 therapy, in combo with standard of care chemo for treatment of patients with advanced unresectable/metastatic biliary tract cancer.

·     RCKT receives FDA Fast Track and Orphan Drug Designations for RP-A601 gene therapy for PKP2 Arrhythmogenic Cardiomyopathy


Healthcare Services & MedTech movers:

·     CAH said its board approved an additional $3.5 billion of share repurchases through 2027, boosting the company’s buyback capacity to $4.75 billion; sees FY adj EPS $5.65 to $5.80, saw $5.60 to $5.80 and sees prelim 2024 adj EPS $6.45-$6.70, est. $6.48.

·     GEHC 25M share Secondary priced at $78.00.



Internet, Media & Telecom

·     After tumbling on Wednesday given profit taking and a rebound in Treasury yields, tech shares (high growth names) rebounded as Treasury yields softened following weaker jobless claims data; in research, Wells Fargo initiated AMZN at OW (top pick) along with UBER in Large Cap internet sector; Equal Weight on GOOGL, META, PINS, SNAP, DASH, EBAY and LYFT and Underweight on ETSY, ABNB, BKNG and EXPE. In online travel, TCOM Q1 results easily top consensus and raised 2Q23 and FY23 growth outlook.


Hardware & Software movers:

·     ADBE said it is launching subscriptions for new generative AI features that will include copyright protection.

·     HCP shares tumbled as posted a moderate F1Q24 top-line beat ($4.8M vs $11.6M Q/Q) as management highlighted continued large deal scrutiny, driving a reduction in FY24 guidance to 19% (vs 25% Q/Q) and an 8% RIF; sees year revs $564M-$570M vs. est. $593.46M.

·     SMAR shares fell as reported revenue upside and much better profitability than expected in 1QF24 but mkts concerned about weak relative 2Q billings guidance (~11% vs 20% in 1Q) and increased risk to 2H billings which imply a steep jump versus 2Q.



·     MBLY 38.5M share Secondary priced at $42.00.

·     MU announced it signed a 15-year virtual power purchase agreement for its U.S. operations with Terra-Gen, a leading developer of renewable energy.

·     SMTC reported results that were better than expectations for the April quarter with mixed guidance for July as guides Q2 revs $233M-$243M as midpoint misses est. $242.7M.


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.