Market Review: September 15, 2023

Closing Recap

Friday, September 15, 2023





DJ Industrials




S&P 500








Russell 2000













US equity futures gave up slight overnight gains to go red ahead of economic data and continued to trend lower after stronger Industrial Production and NY Fed Manufacturing results. University of Michigan preliminary sentiment also weighed on markets, coming in light of expectations. The sentiment spread narrowed from 10.2 to 3.5 in a more negative shift toward recessionary levels. US Treasury yields pushed higher on the mixed data, but the implied probability of a Fed pause for September remained around 97%. By mid-morning, stocks seemed to stabilize with the S&P outperforming the NASDAQ and overall market breadth at about 2.25:1, favoring decliners. Utilities were the lone gainer among S&P sector groups, holding just slightly in the green, while Technology and Consumer Discretionary paced the remaining groups to the downside. 


From a data perspective, @RBAdvisors gave a couple takeaways from today’s reports, noting: Empire Manufacturing Survey joins the list of economic indicators that suggest the #economy is taking off and not landing. Trough seems in the past….and…If you don’t drive Core #Import Prices were flat. But just in case you do drive or transport something, headline Import #Prices (which include petroleum) jumped by the most in 15 months. And on the subject of oil, @KobeissiLetter notes: US oil prices just crossed above $91.00/barrel for the first time since November 2022. Oil prices are now up ~40% from their lows this summer. Meanwhile, oil prices are up 20% since the US said they would delay refilling reserves due to "market conditions." Gas prices are now up 11% over the last month and a massive 50% since 2020 with US oil reserves at their lowest since 1983. All as UAW strikes begin which are expected to drive car prices even higher.


Into the final hour of trading, US equities remained near lows. All S&P sector groups moved into the red with Utilities (XLU, -0.24%) continuing to fare the best, followed by Real Estate (XLRE, -0.5%) and Financials (XLF, -0.6%). Largest laggards remained Technology (XLK, -1.9%) and Consumer Discretionary (XLY, -1.8%). Both Value and Growth followed the indices lower, with Value the relative outperformer (Russell 1000 Value -0.64% vs Russell 1000 Growth -1.6%). Small caps, meanwhile, were performing similarly to the S&P 500, with IWM -1.08% and breadth expanded a bit to almost 5:2 favor of decliners.


Economic Data

·     NY Fed’s Empire State current business conditions index +1.9 in September (consensus -10.0) vs -19.0 in August; new orders index +5.1 in September vs -19.9 in August; prices paid index +25.8 in September vs +25.2 in August; employment index at -2.7 in September vs -1.4 in August and six-month business conditions index +26.3 in September vs +19.9 in August.

·     Aug export prices rose +1.3% vs. consensus +0.4% and vs July +0.5% while Aug import prices rose +0.5% (biggest gain since May 2022) vs. consensus +0.3% and vs July +0.1%. Aug y/y import prices -3.0%, export prices -5.5%; Aug non-petroleum import prices unchanged, y/y -1.1%.

·     Industrial Production for August rose +0.4% vs. est. +0.1% and July +0.7% as Aug mining output +1.4%, utilities output +0.9%; Capacity utilization rate 79.7% vs. consensus 79.3% and July 79.5%. U.S. Aug motor vehicle assembly rate fell to 10.74 mln units/y from July 11.77 mln units per year.

·     University of Michigan surveys of consumers sentiment prelim Sept 67.7 vs. consensus 69.1 and vs final Aug 69.5; current conditions index prelim sept 69.8 (consensus 75.3) vs final aug 75.7 and expectations index prelim sept 66.3 (consensus 66.0) vs final aug 65.5.

·     University of Mich surveys of consumers 1-year inflation outlook prelim September 3.1% vs final August 3.5%; the 5-year inflation outlook prelim September 2.7% vs final August 3.0%.

·     China’s August data dump was generally stronger-than-expected. China’s retail sales rose by 0.31% MoM, after standing still in July with -0.02% MoM. China’s industrial production rose 0.5% MoM to be 4.5% YoY. China’s property investment -8.8% year-to-date. China’s fixed asset investment eased to 3.2% YoY. China’s jobless rate eased 0.1% to 5.2%. China average new home prices fell -0.29% MoM, the third monthly fall in a row, and 5 months of price increases.



·     December gold futures gained $13.40/oz, or +0.69%, to $1,946.20 to manage a gain of 0.2% for the week after a recent pullback. A slight weakening in the US Dollar helped gold a bit today after facing a strengthening Dollar in recent sessions. At this point, all eyes will be on next week’s Fed meeting to determine direction for most asset classes, with expectations remaining for a Fed pause.

·     WTI October crude futures gained 0.68%, or $0.61/bbl, to settle at $90.77. Brent also climbed 0.25%, or $0.23, to $93.93/bbl. The gain marks a new high for the year for WTI and the third consecutive weekly rise. The move higher this summer and into fall has generally been on expectations of a second-half supply deficit and potential for a demand bounce in China. Previously, a string of recent, uninspiring Chinese economic data and issues within the property sector had weighed on the demand side of investors’ forecasts. Now we wait on the Fed to add color for the demand side of the equation.






WTI Crude















10-Year Note





Sector News Breakdown



·     Thousands of UAW members went on strike at plants owned by GM, Ford (F) and Stellantis (STLA). The walkouts, the first to hit all three Detroit automakers simultaneously, affected factories in Michigan, Ohio, and Missouri. They came after the union and the car companies failed to reach a new labor deal for about 146,000 U.S. factory workers by the deadline. UAW President Shawn Fain said more sites could go down if talks with the automakers stall. Auto suppliers ADNT, BWA, VC, AXL, LEA, MGA, also moved on the strike headlines.

·     Possible beneficiaries (at least near-term) to the Big 3 auto strike included TSLA, extending the EV maker’s gains from recent months as Tesla’s workers aren’t unionized, so the company doesn’t have to negotiate with the UAW. Also, may see increased need for used cars, lifting shares of names such as AN, CVNA, KMX, LAD, PAG, SAH in recent days (mixed today).

·     In Online auctions: CPRT Q4 adj EPS of $0.34 topped consensus of $0.32 as volumes continued to rebound (US units +8% y/y) supported by total loss rates +170 bps y/y as US ASPs were +2% y/y, encouragingly outperforming the Manheim -11% y/y.


Retail, Consumer Staples & Restaurants:

·     Instacart (CART) raised the proposed price range for its planned initial public offering to $28 to $30 from $26 to $28 previously. Instacart is planning to offer 22 million shares to raise $660 million at the top of that range at a valuation of $8.3B. 

·     In Restaurants: SHAK upgraded from Neutral to Buy w/ $85 PT at Northcoast to reflect its more bullish outlook on the brand fundamentals saying recent checks and review of NCR foot traffic index, it believes traffic has increased, in-store, relative to the prior quarter.


Leisure, Gaming & Lodging:

·     In Leisure sector: In golf industry (MODG), Jefferies said survey of Topgolf’s foot traffic in August, rolling 3-month visits decreased ~8% YoY and ~1% on a 2-Yr stack. However, rolling 3-month visits increased ~21% vs 2019. In motorcycles, HOG slips after UBS noted the co offered $1,000 in credit to customers that are new leads. Says it’s very unusual for Harley to offer coupons or discounts of any kind other than financing offers." PLNT shares tumble after Board decision to transition to new leadership, resulting in Chris Rondeau’s departure as the Company’s CEO.

·     In the RV sector: Truist said CWH, PATK, WGO remain favorites, but reducing price targets across space following Fall RV dealer survey showing that in addition to growing dealer hesitance to restock prior to ’24, greater than anticipated invoice deflation could present unique challenges across the RV complex – lower lowering ests/PTs to reflect increased risk to numbers.

·     In ride hailing/delivery: DASH was downgraded to market perform from outperform at MoffettNathanson and cut tgt to $93 from $110 citing reduced spending among DASH’s young consumer base.


Homebuilders, Building Products, Home Furnishing:

·     In Homebuilders: LEN reported adj Q3 EPS of $3.91, well ahead of consensus of $3.51 amid better-than-expected deliveries and gross margin, as well as well-controlled SG&A expenses while home sales revenue decreased 2% YoY. Bank America noted Q4 guide implies some slowdown (also noted adj home sales gross margin fell about 480bps YoY). In Home Improvement retail: LOW estimates lowered at Morgan Stanley but remains OW rated and $255 tgt saying weaker demand backdrop persisting; tone balanced/cautious. Lowering 2H’23 estimates to reflect slightly weaker sales.



Banks, Brokers, Asset Managers:

·     In brokerage: SCHW shares slide after August data showed average interest-earning assets in August were down 23% from the year-ago period to $449.5 billion and were down 4% from July; Total client assets were $8.09 trillion as of month-end August, up 14% y/y but down 2% m/m.

·     In Bank Research: KEY upgraded to Overweight from Neutral at Piper while the firm downgraded TFC to Neutral in regional banks noting after several intra-Q updates for 3Q this week in industry, got confirmation that deposit pressures have passed their crescendo, some clarity on RWA impacts from reg proposals, and validation that credit remains benign.


Bitcoin, FinTech, Payments:

·     Monthly Master Trust c/c data (charge-offs and delinquencies):

·     AXP card member loans net write-off rate-principal only 1.7% at Aug end vs 1.8% at July end; U.S. small business card member loans 30 days past due loans as a% of total 1.2% at aug end vs 1.2% at July end

·     BAC credit card delinquency rate was 1.26% at Aug end vs 1.24% at July end and said that credit card charge-off rate was 2.12% in August vs 1.88% in July.

·     Citigroup (C) reported charge-offs for August of 1.97% and delinquencies 1.28%.

·     COF Aug auto net charge-offs rate 1.82% vs 1.71% in July; domestic credit card net charge-offs rate 4.55 % vs 4.48% in July; 30+ day performing delinquencies rate for auto 5.80% at Aug end vs 5.63% at July end; the 30+ day delinquencies rate for credit card 4.09% vs 3.95% at July end.

·     JPM credit card charge-off rate 1.68% in aug versus 1.55% in July; the credit card delinquency rate 0.90% at aug end versus 0.89% at July end.

·     In credit cards: Jefferies said with portfolios from Citizens, UniCredit, and DB set to flip to MA from Visa (V) in the near-term, they size the impact on volume and revenue growth for both in ’24 & ’25. Est. the portfolios will swing ~$125bn of volume at full run-rate (we expect by CY25), which they believe will support ~13% volume growth for MA in ’24 and ’25 (vs. 7% and 8% for V)) and drives higher degree of confidence in current Street revenue ests. for MA than V in ’24.


Insurance & Services:

·     AXS was upgraded to Buy from Underperform at Bank America noting over the past 12-months, ex-catastrophe underwriting income has narrowed at AXIS as the company largely exited the property reinsurance markets. This gives a deceptive picture that suppresses the extent to which core earnings have grown at AXIS.

·     PGR monthly August data released: reported combined ratio for August of 97.2% vs. 93.6% y/y; said net premiums earned $4.60B, +20% y/y and net premiums written $4.74B, +16% y/y.



Biotech & Pharma:

·     IOVA rises after its Lifileucel’s PDUFA had been pushed back by the FDA to Feb 24, 2024, a three-month delay, but analysts positive noting the FDA reiterated that there are no major review issues, there are no plans for an AdCom meeting, and all pre-approval inspections of clinical sites, internal & external manufacturing and testing facilities have been successfully completed.

·     PTCT shares tumble after saying the European Medicines Agency’s Committee for Medicinal Products for Human Use has recommended against converting the conditional marketing authorization of the co’s Translarna treatment for nonsense mutation DMD to full approval.

·     In Cannabis: sector with early strength on reports the Secure and Fair Enforcement (SAFE) Act, will be voted on in committee by the end of the month and should have enough votes to pass the U.S. Senate, according to a report by NBC-TV. Three sources familiar with the talks told NBC-TV the Senate Banking, Housing, and Urban Affairs Committee plans to hold a markup meeting for SAFE Banking during the week of Sept. 25.


Healthcare Services & MedTech movers:

·     In Hospitals: it’s been a tough week for hospital operators (HCA, THC, UHS), falling again today after the CA Assembly amended Senate Bill (SB) 525 (on 9/11), which increases minimum wage requirements for healthcare workers across the state. The move would increase minimum wage requirements at both Acute and Behavioral hospitals to $25 by 2026 and Wells Fargo had said they estimate a 0.7% / 0.5% gross EBITDA impact for THC / UHS vs. pre-bill trajectory.

·     In Diabetes sector: Raymond James noted high tech diabetes stocks (DXCM, PODD, TNDM) are -33% (-18% weighted average) YTD vs -3% for MedTech. The firm said while there are various factors at work (competition, acceleration/deceleration sentiment dynamics, valuation, higher interest rates), the primary weight on sentiment has been the concern around GLP-1s. Truist said it does not expect there to be near-term risk to estimates because of GLP-1s, but the perceived impact on the TAM/terminal growth has understandably pinched valuations.


Industrials & Materials

·     In Industrials: LNN downgraded to Hold from Buy at Stifel saying survey of 50 domestic irrigation dealers shows dealers don’t expect demand ramp in the Fall. With a challenging near-term outlook and a lack of positive catalysts, Stifel is moving to the sidelines. Dealers reported domestic volume down 1.9% with prices up 0.9% over the past three months (F4Q23).

·     In Transports: it’s been a rough week for the sector given four airlines lowering guidance due to higher oil costs (AAL, DAL, SAVE, ULCC); today BMO Capital said in package delivery space they have downward EPS revisions to UPS but upward FDX numbers saying favorable seasonality combined with easy comparables y/y drove August flight hours to flat y/y following 16 consecutive months of contraction.

·     In Aerospace & Defense: NOC and LMT had sanctions imposed on them by China for providing weapons to Taiwan, the Chinese foreign ministry said on Friday. The sanctions are being enacted under China’s Anti-Foreign Sanctions Law, ministry spokesperson Mao Ning said.


Materials, Metals & Mining

·     In Steel sector: NUE guided Q3 EPS $4.10-$4.20 vs. est. $4.65; said expect earnings for the steel mills segment to decline in Q3 vs. Q2 primarily due to lower pricing, and to a lesser extent, volumes; said largest impact on earnings is expected to occur at sheet mills.

·     In Lithium sector: TD Cowen says seasonal strength for lithium prices is upon us while spot prices approach their lowest levels in over 2 years with China spot carbonate at ~$25/kg due to China macro concerns and a temporary oversupply leading to inventory build. TDCowen believes prices are at or near the bottom and are set to rebound heading and LTHM is favorite idea.



Internet, Media & Telecom

·     In Media Secor: DIS shares active again after reports that Byron Allen makes $10 Billion Bid for ABC, Other Disney Networks; Disney said it hasn’t made any decisions on sale of properties ; Yesterday it was reported today that Disney has been in preliminary talks with NXST on potentially selling the ABC Network, which could be worth $4.0B or more while Bloomberg reported DIS is expected to cut its target for Disney+ streaming subscribers from its previously provided range from F3Q22 of 215M-245M. Keybanc said this morning it sees a potential sale of ABC as negative, while the cut of subscriber targets is neutral.


Hardware & Software movers:

·     In Software: ADBE delivered slight FQ3 rev upside and inline FQ4 rev guide, with beat in net new ARR (FQ3 $54M, FQ4e ~$60M), with better Q4 EPS outlook but guides Q4 revs $4.98B-$5.03B vs. est. $5.0B. Citigroup noted despite the Q4 DM NNARR guide beat consensus, it looks softer than typical seasonality (also notes shares +64% YTD).

·     KEYS was upgraded from Equal Weight to Overweight at Morgan Stanley saying its double digit earnings profile and defensive nature of stock create a compelling opportunity.

·     Unity Software (U) upgraded to Buy from Neutral w $56 tgt at Bank America on expected pricing/plan change upside and a more constructive ad business outlook; said shares oversold following install pricing actions; known risks represent less downside.



·     The group was weak from the start after an overnight Reuters report saying TSM asked its chip making suppliers to delay their deliveries. Suppliers currently expect the delay to be short-term, the sources said, said the report . Shares of semi-equipment stocks declined the most (AMAT, ASML, KLAC, LRCX).

·     ARM rose as much as 10% pre-mkt and opened higher after rallying 25% in its highly-anticipated trading debut on Thursday, but shares volatile today, ending lower.


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.