Market Review: June 27, 2023

Closing Recap

Tuesday, June 27, 2023





DJ Industrials




S&P 500








Russell 2000













Another incredible performance for U.S. stocks, rebounding after last week’s declines as markets rally into month, quarter and 1H end this Friday, looking to register one of the best first halves in a long time for the Nasdaq (since 1983, up +27%). Markets dipped Monday behind an outperformance in value vs. growth, but just like that, stock markets rallied behind the biggest winners of the first half of 2023, with Communications (XLC +34% YTD), Technology (XLK +37% YTD) and Consumer Discretionary (XLY +29% YTD) leading major averages today. The Philly semi-index (SOX) rises 3.5% to around 3,640, leading the Nasdaq in Q1 with a near 40% YTD move. Transport stocks have been strong this month, rising as much as 2.85% or 425 points today above 15,300 behind FDX strength, as well as airlines after improved DAL guidance (52-week high at 15,888 for Transports). Homebuilders have made new 52-week highs several days this month, extending gains with the XHB +31% YTD, and ITB +39% YTD despite higher interest rates. Healthcare stocks sunk today, ending lower after Walgreens (WBA) lower guidance and REG CRL letter. Even REITS (which are down 6.7% YTD) have seen a boost the last two days after SLG asset sale boosted sentiment about a potential thawing in the commercial real estate market. Animal spirits are high is the bottom line, with markets trading higher than where they were prior to when the 500-bps rate hike cycle from the Fed began (with more hikes expected in coming meetings) as inflation fears have eased.


A day after value broadly outperformed growth, sector strength was wide-spread Tuesday (NYSE market breadth 3:1 advancers topping decliners) on growing optimism that a “soft landing” can be achieved as economic data continues to come in better-than-expected. Durable goods orders unexpectedly rose 1.7% vs (-0.9%) estimate, Consumer Confidence jumped to highest levels since early last year and housing data points beats across the board in big way with May New Home sales jumping 12% m/m, and FHFA Housing and CaseShiller results beating. Fears about global growth that weighed on sentiment last week following several central bank rate hikes were tempered this morning by more news that China’s policymakers were getting ready to take more significant steps to stimulate growth. Focus mid-week will be on commentary from the ECB’s annual retreat with Lagarde speaking today and other central bankers on the schedule tomorrow.


Economic Data

·     Consumer Confidence index for June jumps to 109.7 vs. consensus 104.0 while May revised to 102.5 from 102.3; present situation index 155.3 in June vs May revised 148.9; consumer expectations index 79.3 in June vs May 71.5; 1-year consumer inflation rate expectations 6.0%.

·     New Home Sales for May were very strong rising +12.2% m/m to 763K (best since Feb ’22), well above the est. 675K and prior month of 680K; May new home supply 6.7 months’ worth at current pace vs April 7.6 months; median sale price $416,300, was -7.6% y/y. May home sales northeast +17.6%, Midwest +4.1%, South +11.3%, and West +17.4%.

·     Durables Goods Orders rose +1.7% above the consensus (-1.0%) and vs April +1.2%; Durables ex-transportation orders +0.6% v. est. (-0.1%) and vs April -0.6% and Durables ex-defense orders +3.0% vs April (-0.5%). Durables shipments +1.7% vs April -0.6%.

·     S&P CoreLogic Case-Shiller Home Price Index for April showed seasonally adjusted HPI Composite for 20 cities: +0.9% vs. +0.5% consensus and +0.4% in March (revised from +0.5%). HPI Composite for 20 cities, not seasonally adjusted: +1.7% vs. +1.0% expected and +1.6% prior.

·     April FHFA House Price Index: 0.7% vs. +0.3% expected and +0.5% in March (revised down from +0.6%). On a Y/Y basis, the index rose 3.1% compared with 3.7% in the prior month vs. 3.6%.

·     The Richmond Fed Index for June reported at (-7), better than expected (-12) and prior (-15).


Commodities, Currencies and Treasuries

·     Precious metals were one of the few weak spots in the broad market rally as investors opted for riskier stock and high growth names over more defensive and haven-related assets. August gold fell -$10.00 or 0.51% to settle at $1,923.80 an ounce. Prices fell as traders positioned for Federal Reserve Chair Jerome Powell’s speech at a meeting in Europe tomorrow and economic data that could offer clues on future interest rate hikes. Gold has shed about 2% this month – set for a second consecutive monthly fall if losses hold.

·     Oil prices were also weak, with WTI crude falling -$1.67 or 2.41% to settle at $67.70 per barrel (2-week lows), while Brent declined -$1.92 or 2.59% to settle at $72.26 per barrel. Natural gas prices fell 2.8c, or 1.0%, to settle at $2.763 per million British thermal units (MMBtu) a day after closing at its highest since March 3rd. Oil prices slipped recently on signals that the European Central Bank is not done with interest rate hikes, while investors awaited data that could shed light on U.S. fuel consumption during the peak summer driving season.






WTI Crude















10-Year Note





Sector News Breakdown



·     In OEM/Electric vehicles: RIDE filed for Chapter 11 bankruptcy protection and said it was putting itself up for sale/also said it filed litigation against Foxconn after a deal to provide the start-up with about $170 million in cash fell through; Ford (F) said it will begin layoffs this week, impacting mostly engineering jobs in the U.S. and Canada; LCID shares active after Saudi Public Investment Fund buys more shares for $1.8B and now owns about 65% of stock outstanding.

·     In auto retailers: AZO said Bill Rhodes would step down as CEO and President in January 2024 and become executive chairman while 29-year vet of the company Philip Daniele will replace. CVNA shares soared with broader averages, squeezing over 15%.

·     In auto suppliers: LEA boosted its FY free cash flow (FCF) view to $480M-$580M, from prior $375M-$525M, raised its FY23 revenue view to $22.35B-$23.05B from $21.2B-$22.2B, boosted 2023 core operating earnings view to $1.01B-$1.14B from $875M-$1.08B.


Retailers, Consumer Staples & Restaurants:

·     In Food: Kellogg (K) upgraded to Buy at Goldman Sachs as sees a stock mispriced for the growth potential it offers investors; it sees opportunity to exploit the dislocation it believes this exacerbated concern has created and recommend investors buy this growth stock on sale.

·     In sports equipment/leisure: XPOF shares tumbled following short report from Fuzzy Panda

Leisure, Gaming & Lodging:

·     In lodging: Morgan Stanley HST downgraded to Underweight and SHO upgraded to equal weight in swap as refreshes RevPAR tracker for Q2 – says latest company RevPAR tracker showed most of the C-Corps trending below consensus 2Q estimates in North America, but international trends should act as an offset for several. As a result, MSCO lowers estimates across most of coverage.

·     In online gaming: Susquehanna said FanDuel and DKNG continue to consolidate the OSB market with DKNG a notable QTD standout gaining ~3% share to ~30% (vs. ~27% in 1Q23), where approximately half came from FD and the rest from sub-scaler operators. Within iCasino, FD and DKNG also gained a combined +80 bps of share vs 1Q23, with most coming from BetMGM.



·     In Energy, E&P: JP Morgan upgraded CTRA to Overweight and downgraded AR to Neutral after Energy Conference updates. JPM said thinks the market will significantly reward companies that can deliver outsized volumes as evidenced by the positive reaction to SM’s pre-announcement of 1.9% higher full-year volumes at 4.5% lower CAPEX. Operationally, sensed positive momentum at CTRA, FANG, and PXD on the back of strong or strengthening its well productivity trends.

·     In Solar, Alternative Power: PLUG said it is part of a group of companies that received a $21.8M grant from the European Commission to build a hydrogen production plant off the coast of Belgium. BLDP was downgraded to Neutral from Buy at B Riley and cut tgt to $4 from $6 as continue to see challenges to gross margin into 2024. In solar, Oppenheimer said expect n-t rotation into US utility scale plays ARRY, FSLR, SHLS ahead of IRA related rule finalization and remain constructive on the group as see 3x+ growth for the industry through end of the decade.



Banks, Brokers, Asset Managers:

·     In Banks: UBS note Looming changes in bank regulation; from Basel 3 endgame treatment of risk weighted assets (RWAs) to capital changes for regional banks, and this week’s release of DFAST results have been a hot topic among large-cap bank and card investor.

·     In Insurance: Brookfield Reinsurance has agreed to acquire all the outstanding shares of AEL not already owned for $55.00 per share in a $4.3B deal; shareholders will receive $38.85 in cash and several BAM shares having a value equal to $16.15.

·     In crypto/digital currency: Bitcoin prices rose again along with stocks leveraged to it (COIN, MARA, MSTR, RIOT) after The Block reported Fidelity is preparing to submit spot bitcoin ETF filing (follows June 15th filing that Blackrock submitted filing). APLD estimate that Q4 revs will be approximately $22M (consensus at $26.9M), est. net loss overall will be approximately $6.8M.

·     In lending: FMCC said total mortgage portfolio increased at an annualized rate of 3.7% in May and single-family delinquency rate decreased from 0.61% in April to 0.58% in May.

·     In brokers/online: HOOD cuts about 150 jobs or 7% off full-time employees in 3rd round of layoffs – the WSJ reported last night.

·      In Data Center REITs: EQIX downgraded from Buy to Hold at Truist and cut tgt to $815 from $870 on valuation, accompanied by high expectations and potential deceleration in AFFO growth from tough comp, interest expenses, and CAPEX.



·     ABCM released refined 2024 guidance with the revenue range narrowed to the higher end and adjusted Oms of 32%-36% and reiterated its 2023 guidance.

·     ACET downgraded to market perform at JMP (tgt to $19) and tgt cut to $17 from $30 at Wedbush after reports positive data from ongoing adi-001 phase 1 trial in patients with relapsed or refractory aggressive b-cell Non-Hodgkin’s Lymphoma (NHL).

·     ACIU shares surged as receives FDA fast track designation for anti-amyloid-beta active immunotherapy, ACI-24.060, to treat Alzheimer’s Disease.

·     ALDX announces statistically significant reduction in cough frequency in mid-stage clinical trial of orally administered ADX629 in patients with chronic cough; said ADX-629 was well tolerated and no safety concerns were identified.

·     AZN said its Xigduo XR, a once-daily fixed-dose combination, has been approved by China’s National Medical Products Administration for the treatment of adults with type-2 diabetes.

·     BDTX reported promising initial results from a Ph 1 trial of lead asset BDTX-1535 in metastatic NSCLC patients who have failed ≥1 prior EGFR inhibitor due to intrinsic EGFR driver mutations and/or acquired resistance mutations to Osimertinib (Tagrisso)

·     LLY said its experimental drug retatrutide in a mid-stage trial helped patients with obesity lose up to 24.2% of their body weight after 48 weeks. STAT News noted that the drug that acts on three hormones (rather than the single target in NVO’s Wegovy) led to the greatest weight loss yet seen by a new generation of drugs.

·     REGN shares dropped as the FDA issued a Complete Response Letter, or CRL, for the Biologics License Application, or BLA, for aflibercept 8 mg for the treatment of patients with wet age-related macular degeneration, diabetic macular edema, and diabetic retinopathy.


Healthcare Services & MedTech movers:

·     In pharmacy retail: WBA shares tumble on Q3 miss and lower guidance; Q3 adj EPS $1.00 missed the consensus $1.07 on better revs $35.42B (est. $34.25B) and raised FY adj EPS to $4.00-$4.05, vs. prior $4.45-$4.65 citing lower demand for COVID-19 tests and vaccines as well as sluggish consumer spending (shares of CVS, RAD fell in sympathy).

·     In Dialysis: shares of DVA, FMS slip early after the Centers for Medicare & Medicaid Services (CMS) proposes an increase of 1.6% in dialysis payment rates for 2024 Medicare plans, lower than market projection of 3-4%.


Industrials, Materials & Transports

·     In Industrials: CIR accepted a proposal from affiliates of investment funds managed by KKR to increase the price of its previously announced definitive merger deal from $49 to $51 per common share in cash, in a deal valued at $1.7B (with debt). ENVX said it received a purchase order to produce battery cells for the U.S. Army, to be used for soldiers’ central power source. GNRC among top gainers in the S&P on reports sees rising demand for backup power generators during Texas heat wave.

·     In Housing/Building Products: shares homebuilders (TOL, LEN, DHI), construction materials, and related companies rose sharply after the latest economic reports showed a stronger-than-expected increase in home prices in April and a continuing decline in housing inventory. 52-week highs in housing and building pace included: BZH, BLD, BLDR, EXP, DHI, LEN, LOW, MHO, MLM, PHM, SUM, TOL, VMC

·     In airlines, DAL provided upside guidance for Q2 as sees adj EPS $2.25-$2.50, above est. $2.21 and sees FY23 EPS at top end of $5-$6 range vs. consensus $5.81, sees FY23 operating margin at top end of 10%-12% range, with free cash flow $3B vs. prior view of greater than $2B.

·     In rails/trucking: JBHT estimates lowered at Benchmark as continued negative import/export TEU growth has led to negative intermodal growth in 2Q for all the rails and its main rail partner; SAIA upgraded from In Line to Outperform at Evercore/ISI and raise tgt to $360 from $298 saying the multi -year growth oppty remains robust and improving on both an absolute and relative basis. YELL shares tumbled after trucker files $137m lawsuit against Teamsters, alleging breach of contract in blocking efforts to modernize. In freight, FDX breaking out to 52-week highs, more than $20 bounce off the post earnings/lower guidance lows of $223.24 on 6/21. This afternoon, Bank America upgraded shares of ODFL, SAIA and XPO to Buy and boosted targets.

·     In Aerospace & Defense: ASTC shares jumped after Braden M Leonard said late yesterday it sent an acquisition proposal to the company to acquire 100% of equity for $17.25 per share in cash. SPR presented a new contract offer to the machinists’ union at a plant in Wichita, Kansas as union to hold stewards’ meeting on new offer on Tuesday.

·     In chemicals: OLN downgraded from Buy to Neutral at UBS and cut tgt to $53 from $68 while reduces its EBITDA forecasts in 2023/2024e by 10%/11% saying 2023 earnings are impacted by slower demand and recent 2Q update of higher turnaround costs.

·     In metals: gold miners tumbled led by weakness in AEM, NEM, GOLD, GFI, as gold prices dipped with investors rotating into more riskier assets as stocks continue to rise.



Internet, Media & Telecom

·     In Internet: GOOGL receives its second Wall Street analyst downgrade in as many days as Bernstein cut to market perform from outperform on valuation and as sees increasing competition from retail media, share-shift back to Meta, and yes, some Gen AI pressure capping near-term search growth (recall UBS downgraded shares yesterday).

·     In social media: META tgt raised to $360 from $315 at Citigroup saying with Reels ad loads reaching 17% QTD (and 18% in June) citing CITI’s proprietary tracking, and its view that the broader online advertising market is stable-to-improving based on its attendance.

·     In Online Retail: BABA downgraded to Market-Perform at Bernstein saying Alibaba GMV growth will show improvement in the June quarter, meanwhile merchant feedback has continued to point to anemic marketing spend intentions.


Semi’s Hardware & Software movers:

·     In semis: not much new to report, but that didn’t stop the Philly semiconductor index (SOX) to roar over 3.6% back above 3,600, adding to its 2023 gains (+38% YTD), as investors continue to pile into AI related plays and anything tech for growth as stocks extend YTD gains. Big gains across the board including some of the more popular names AMD, INTC, NVDA, TXN

·     In 3D sector: SSYS received a raised buyout bid from DDD, saying Stratasys shareholders will receive $7.50 in cash and $1.3223 new 3D shares for each Stratasys share they own valued at $19.53 each. 

·     In software: SNOW shares bounced after NVDA said that it is partnering with Snowflake to offer generative AI technology to the cloud-based data warehousing company’s customers. Unity Software (U) launches a new AI marketplace as a premier destination for AI solutions. MBLY said CFO, Anat Heller, will be stepping down from role for personal reasons, effective immediately. GWRE upgraded from Buy to Hold at Stifel and increased its target price from $75 to $85.

·     In Hardware: SNX Q2 EPS and sales fell short of estimates ($2.43/$14.06B vs. est. $2.55/$14.42B) and guided Q3 EPS and revs below views with $2.20-$2.70 (est. $2.76) and sees Q3 revenue $13.5B-$14.5B, below consensus $14.96B.


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.