Market Review: September 08, 2023

Closing Recap

Friday, September 08, 2023





DJ Industrials




S&P 500








Russell 2000













US equity futures were flattish into the open but shrugged off the recent overhang from China policy initiatives and macro concerns to rally through the morning in hopes of avoiding a fourth consecutive down day. Heading into midday, Energy was leading the sector gainers with the XLE up about 1.3%, followed by Technology, Consumer Discretionary and Communications recovering some of their recent losses. Laggards included Consumer Staples, Industrial and Real Estate, all of which were modestly in the red. Overall, breadth mirrored the indices’ modest gains at about 3:2 in favor of advancers. S&P futures are battling two levels today on the upside, having failed to hold the $4,474 resistance pivot on several attempts through the morning and facing a 50dma test at $4,500 if the pivot does not hold.


Data-wise, per @carlquintanilla, KR made some interesting inflation comments this morning with its earnings report, saying, “.. disinflation is occurring at a greater rate than we originally anticipated .. . Inflation ended the quarter approximately 350 basis points lower than the start of the quarter.” Clearly, there has been some inflation disconnect across sectors making life more difficult for both the Fed and investors. @PaulHickey, a co-founder of @bespokeinvest gave a solid on-the-one-hand, … commentary about the mixed bag of leading indicators this morning on CNBC saying, “I could come on today and argue that a recession is imminent, or I could come on and say we’re early cycle.” Separately, on oil, @KobeissiLetter highlights just how much we’ve slipped at refilling the SPR, noting the current level remains the lowest since 1983 and is just 46 days of supply, the lowest on record. For comparison, the May 2020 level was a record 92 days and the historical average is 65 days.


Heading into the final hour of trading, US equities had retreated to flattish with breadth leaning just slightly in favor of advancers. Industry group performance also balanced out with Healthcare (XLV) and Consumer Discretionary (XLY) slipping into the red. Energy (XLE, +1%) and Utilities (XLU, +1%) were leading gainers, while Real Estate (XLRE, -0.7%) was the primary laggard followed by Industrials (XLI, -0.6%). Interestingly, both growth and value were slightly positive and about equal with the Russell 1000 Growth +0.08% and the Value counterpart +0.07%. Small caps lagged, with the IWM -0.11%.


Key Events next week: on Monday 9/11, ORCL earnings expected after the close. On Tuesday 9/12, Apple (AAPL) reveals its latest product launch as Wedbush said this week they expect a $100 price increase on the iPhone 15 Pro and iPhone 15 Pro Max model for the first price increases from Cupertino in years. On Wednesday 9/13, the August Consumer Price Index (CPI) data is expected with ests for headline M/M to rise +0.6% (vs. prior +0.2%) and Y/Y to rise +3.6% (vs. prior +3.2%) and on a core basis (ex: food & energy) to rise +0.2% M/M (in-line w prior) and rise +4.3% Y/Y (down from +4.7%). The recent spike in energy prices has led to higher ests. Lastly, on Thursday 9/14, the UAW contract with the Big Three US automakers (GM, F, STLA) is set for Thursday 9/14 and strike could hurt OEMs as well as part/suppliers (ADNT, BWA, DAN, MGA, VC) as well as the European Central Bank (ECB) meeting, Adobe (ADBE) earnings and the August Producer Price Index (PPI) is expected at 8:30 AM. Also, another busy week of Wall Street Conferences including Financial, Healthcare, and Industrial conferences.


Economic Data

·     U.S. July wholesale sales +0.8% (consensus -0.2%) vs June -0.8% (prev -0.7%); U.S. July wholesale inventories revised to -0.2% (consensus -0.1%) from -0.1%; U.S. July stock/sales ratio 1.39 months’ worth vs June 1.41 months.



·     December gold futures inched up by $0.20/oz, to $1,942.70 but still slipped about -1.2% for the week on the backs of higher Treasury yields and a rising Dollar. Recent economic data has pushed investors to face the potential of higher-for-longer interest rates, but next week’s CPI will once again be viewed as a swing factor ahead of the next Fed meeting later this month.

·     WTI crude futures enjoyed an up day, settling +$0.64/bbl, or +0.74%, at $87.51. Brent, likewise, climbed $0.73/bbl, or +0.81%, to settle at $90.65. Concerns about supplies following recent announcements from Saudi Arabia and Russia to extend production cuts more than offset worry about Chinese demand to push both WTI and Brent higher for the week and resume a winning streak that had run for more than a week until yesterday. Meanwhile the US SPR remains at significantly depleted levels with the uptick in pricing providing no opportunistic buying window.


Currencies & Treasuries

·     The Bloomberg Dollar Spot Index weakened initially for the first time in four days against most major currencies, trimming recent gains amid the possibility of an ECB rate increase next week, while the Fed is forecast to hold later this month. The DXY is slightly lower as the greenback weakens less than 0.1% versus the euro while strengthening 0.2% versus the yen.

·     Treasury yields finish mixed, extending their losses early as markets await US August inflation data due Wednesday while considering the economic slowdown in China and Europe. The 10-year was at 4.250% and the two-year at 4.953%, both still higher for the week.






WTI Crude















10-Year Note





Sector News Breakdown


Retail, Consumer Staples & Restaurants:

·     In grocers: KR missed Q2 sales of $33.85B vs. est. $34.17B and comp sales rose 1% ex-fuel below est. 1.5% while EPS of $0.96 beats the $0.90 est. and forecast “slightly negative” ID sales for the second half of the year; agreed to pay up to $1.2B to states in a nationwide opioid settlement; to sell more than 400 stores to C&S Wholesales in $1.9B in connection with ACI merger.

·     In Home related sector: RH shares slid after guiding Q3 revs to be between $740M-$760M below ests $772.3M and said expects the luxury housing market and broader economy to remain challenging throughout 2023. HOFT reports Q2 EPS $0.07 vs consensus $0.18 and revenue $97.8M vs consensus $127.7M but said expects demand and business to pick up in H2

·     In retail: RENT shares tumbles to all-time lows following disappointing earnings and lowered guidance; ZUMZ shares slide as reports Q2 EPS loss (-$0.44) vs consensus (-$0.67) on better revs but guides Q3 EPS ($0.25)-($0.15) vs consensus $0.29 and revenue $211M-$216M vs consensus $217.8M as Q3-to-date comps (8.6%).

·     In firearms: SWBI results beat both top and bottom-line expectations as units and ASP were above expectations with new products driving sales and lower operating expenses boosting the bottom line. AOUT narrows its 1Q loss despite sales declining -0.5% while reaffirming its prior forecast of full-year sales growth of 3.5%.


Energy, Industrials, and materials

·     In Solar: FSLR was upgraded to Buy from Hold at Deutsche Bank following analyst day saying the company had recently announced further production capacity to come online in the US by 2026 (Alabama facility, 3.5GW capacity, $1.1bn CAPEX); and therefore, expectations were geared towards a financial update, which First Solar’s Management delivered.

·     In Used Cars (CVNA, KMX): The monthly Manheim used car data out – Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) increased 0.2% in August from July. The Manheim Used Vehicle Value Index (MUVVI) rose to 212.2, down 7.7% from a year ago.



Banks, Brokers, Asset Managers:

·     In REITs: HPP suspends its qtrly dividend on its common stock, pointing to impact of ongoing Hollywood strike; OHI upgraded to Buy at Mizuho on several industry and company-specific positive factors that warrant a higher multiple. These include a more benign regulatory environment post the CMS minimum staffing standards, and several levers to drive upside to FY24 cash flow.

·     In Insurance: PRU said it has teamed up with private-equity firm Warburg Pincus to lead a $1 billion equity investment in Prismic Life Reinsurance Ltd., a new Class E life and annuity reinsurance company based in Bermuda.

·     In Business Servies: CLVT downgraded to Underweight at Barclays on a litany of shortcomings in the company’s three divisions and a lack of urgency to conduct a strategic review. GWRE beat across the board for 4Q23, with margin gains from its cloud transition beginning to materialize earlier than expected.



Biotech & Pharma:

·     CDMO Q1 EPS loss (-$0.03), in-line with estimates and revs $37.73M vs. est. $36.09M; backs FY24 revs to $145M-$165M vs. est. $155.7M; signed $36M in net new business orders.

·     GILD was upgraded from Neutral to Buy at Bank America and raised tgt to $95 from $88 as it thinks Gilead’s accelerating growth and expanding pipeline is underappreciated by inventors.

·     VIR was downgraded from Buy to Neutral at Bank America and cut tgt to $14 from $23 saying while remains bullish on Vir’s antibody platform and see the long-term opportunity in its infectious disease pipeline overall downgraded on limited n-t upside.



Hardware & Software movers:

·     ADBE was upgraded to Buy from Neutral at Mizuho and raised tgt to $630 from $520 saying its web traffic continues to accelerate, expect good upside to Q3 and Q4 annual recurring revenue (ARR) from digital media segment.

·     BRZE reported better-than-expected Q2 results with narrower-than-expected EPS loss and operating margin improvement of (7%) from (16%) q/q on better revs and total RPO of $524M, up 28% y/y, cRPO of $353M, up 29% y/y, and billings of $111M, up 34% y/y and raised outlook.

·     DOCN double downgraded to Underperform from Buy at Bank America saying the fundamental slowdown and CEO transition create headwinds in the trajectory of the business.

·     DOCU beats by $0.06, beats on revs; guides Q3 revs above consensus; guides FY24 revs above consensus; increases stock repurchase program by $300M; Q2 billings growth of 10% was flat with prior 2 quarters and net retention of 102%, down from 105% last quarter.

·     SMAR quarter was better across the board, highlighted by upside to billings, upside to operating and FCF margins, and generally steady customer metrics; sees FY revs $950-953Mm vs est. $945.8Mm, adj op Inc $62-67Mm vs est. $48.79Mm.



·     QCOM may be most affected by Huawei-SMIC collaboration according to a Digitimes article late Thursday saying “if Huawei can revive its handset business by rolling out more 5G and other handset-related chips with support from SMIC’s 14nm and 7nm manufacturing capability, Qualcomm and MediaTek will be negatively impacted, particularly the US chip vendor.”

·     Huawei has recently started accepting pre-orders for its Mate 60 Pro smartphone that runs on its in-house developed 5G processor. It seems to be a breakthrough for the Chinese vendor since the US government imposed strict trade sanctions on Huawei in 2020.


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.