Market Review: September 23, 2022

Closing Recap

Friday, September 23, 2022





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     US equities faced another day of risk-off selling following the Fed’s recent raise and hawkish commentary. Also weighing on sentiment was another set of S&P year-end target reductions from the sell-side. Goldman cut its S&P year-end target to 3,600 from 4,300 because of the higher Fed rate path. Both the S&P and NASDAQ faded throughout the day but staged a late mini rally to keep us from closing on the lows. Both still finished off close to 2%. No S&P sector was spared, ranging from Healthcare (XLV) "only" off by about -75bps, while Energy (XLE) was the big laggard, falling close to 7%. Consumer Discretionary (XLY), Materials (XLB), Industrials (XLI) and Communications (XLC) all slid about 2-2.5%. Similarly, both value and growth segments of the Russell 1000 each fell about 2%.

·     Bank America Securities strategist Michael Hartnett is calling the current bond crash the "3rd Great Bond Bear Market", with the first being 1899-1920, and the second being 1946-1981. He said it is a "doozy" thus far. The strategist said 2022 global govt bond losses are on course. for "worse since 1949 (Marshall Plan), 1931 (Credit-Anstalt), 1920 (Treaty of Versailles). Bond funds recorded outflows of $6.9 billion during the week to Wednesday, while $7.8 billion was removed from equity funds and investors plowed $30.3 billion into cash, they said.



·     December gold settled at $1,655.60/oz, -1.5% (-$25.50/oz), to mark the lowest settlement since April 2020. Fears of aggressive moves from the Fed have created a rapid climb in Treasury yields and pushed the Dollar index higher as well, both keeping sustained pressure on gold. For the week, the most active contract slipped 1.7%.

·     WTI crude oil slid $4.75/barrel, or -5.69%, to settle at $78.74/barrel. The move marked the lowest settlement since January and reflected a broad risk-off sentiment and ongoing global economic concerns following another round of aggressive Fed action and commentary earlier in the week. Brent also slid with a settlement of $86.15/barrel, or -$4.31 (-4.76%). The moves appear fully demand-focused and currently ignore a potential set-up for another round of under-supply as we head into the winter heating season. Oil fell 7% on the week.


Currencies & Treasuries

·     The US dollar jumped to a new two-decade high against its rivals, with the dollar index (DXY) rising as much as 1.6%, essentially going vertical to highs above 113.20 as most major currencies were bludgeoned. The greenback rose +3.1% this week to 113.16, the highest level since at least 2002, driven by weakness in the euro which fell on weaker data (down 15% YTD). The dollar strengthened by 0.3% against the Japanese yen this week, largely thanks to the Bank of Japan’s decision to intervene. Meanwhile an absolute meltdown in the British Pound, falling 3.5% vs. the dollar to $1.085, lowest level in over 35-years after UK tax plan news.

·     The 2-year yield has now posted 12-consecutive high yield closes as per CNBC, rising above 4.25% earlier today (15-year highs) while the benchmark 10-yr yield hit an 11-year high above 3.82% earlier (but pared gains to end lower on day). The U.S. central bank on Wednesday hiked interest rates by 75 basis points and signaled more increases are to come. The target interest rate was increased to a range of 3.00%-3.25% and new projections in the “dot plot” showed its policy rate rising to 4.40% by the end of this year before topping out at 4.60% in 2023. A much “hawkish” view from the Fed caught markets off-guard. Next week the Treasury will sell $123 billion in coupon-bearing supply next week, including $43 billion in two-year notes on Monday, $44 billion in five-year notes on Tuesday and $36 billion in seven-year notes on Thursday.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers: COST delivered a roughly in-line quarter as earnings of $4.20 were only modestly above the consensus estimate while comps remained robust in Q4 (+9.6% in the US ex. fuel; +10.4% globally) but were already disclosed in the August sales results (membership fees membership momentum accelerated, resulting in MFI cFX growth of +10% vs. +9% in 3Q); YETI announces resignation of CFO Paul Carbone, effective 10/28/22

·     Restaurants: DPZ upgraded from Market Perform to Outperform at BMO Capital saying against the backdrop of lowered expectations, they see attractive risk/reward reflecting a favorable demand outlook as indicated by their survey work

·     Casinos, Gaming, Lodging & Leisure sector: Cruise lines (CCL, RCL, NCLH) shares fall on Hurricane Fiona disruption concerns in holiday regions; FUBO upgraded to Outperform at Wedbush saying they are confident that fuboTV can do both raise capital and cut cash burn, but it is uncertain how dilutive the capital raise will be and how rapidly their cash burn will improve.



·     Energy stock movers: Oil prices and energy stocks fell on Friday as demand fears were stoked by rising interest rates and a stronger dollar, though losses were capped by Moscow’s mobilization campaign in its war with Ukraine and apparent deadlock in talks on reviving the Iran nuclear deal. The Biden administration is not considering right now any restrictions on U.S. oil product exports, U.S. Energy Secretary Jennifer Granholm told reporters on Friday.



·     Bank & Asset Managers: APO upgraded to Neutral from Underperform at Bank America; EVR was downgraded to Sell from Neutral at UBS as their shrinking deal pipeline increases the risk of inflexibility in their expense; MC was also downgraded to Sell at UBS saying the degree of fixed compensation expense (deferred comp + salaries) is likely to add considerable upward pressure to the company’s adjusted comp ratio; HOOD introduced Robinhood Gold benefit that enables members to earn 3% interest on their brokerage cash-up from 1.5% for non-Gold members

·     Consumer Finance: ALLY downgraded to Equal Weight from Overweight at Wells Fargo as believe it will be difficult for the stock to outperform as used vehicle price declines accelerate, NIM is pressured from Fed hikes, and consumer works through the headwind of inflation; FIS tgt to $90 from $116 at Deutsche Bank after management meetings

·     REITs: in data centers, DLR was downgraded to Underweight from Equal Weight and EQIX downgraded to Equal Weight from Overweight at Barclays. Said for DLR contracting organic metrics and weak ROIC reflect asset obsolescence and expensive acquisitions, in their view and for EQIX, evaluate rising energy prices, evolving cloud offerings, and accounting practices, among other factors that may lead to a lower earnings trajectory



·     Pharma & Biotech movers: IONS said ION449 will not advance into phase III development as it met primary endpoint in phase 2b SOLANO study for patients with Hypercholesterolemia but did not achieve pre-specified efficacy criteria and AZN has decided not to advance ION449 (AZD8233) into Phase 3 development for hypercholesterolemia.

·     MedTech Equipment & Healthcare Services: CANO shares rally a second day after the WSJ reported late Thursday that HUM, other potential buyers are circling shares of Cano Health ; STE was downgraded to Hold from Buy at Needham


Industrials & Materials

·     Aerospace & Defense: BA said it will settle $200 mln in civil charges with SEC that it misled investors about its 737 MAX, which was grounded for 20 months after two fatal crashes that killed 346 people; RTX beat out LMT and BA for a $985M contract award from the U.S. Department of Defense contract to design, develop and produce the new Hypersonic Attack Cruise Missile; SPIR announced the receipt of a new $9.9M follow-on contract to provide NOAA with six months of satellite radio occultation data; WSJ reported a growing body of evidence suggests that pro-Russian hackers and online activists are working with the country’s military intelligence agency, according to researchers at Google; AIR with mixed Q1 results as EPS beat, but revs fall 2% y/y to $446M, missing estimates led lower by soft Government sales

·     Transports, Industrials, & Machinery; PNR is working with an adviser and the business may be valued at $800 million in a sale, according to a Bloomberg report; FDX shares erase late day gains yesterday afternoon after reporting early, as analyst cautious on company commentary

·     Metals & Materials; shares of U.S.-listed metal miners slump premarket, tracking prices of industrial metals amid broader market weakness, weighed down by a stronger dollar and fears of recession-hit metals demand after further rate hikes (copper, aluminum, steel, iron ore names fall – extending recent pullbacks for likes of AA, CENX, CLF, FCX, VALE, X, NUE, STLD). Reuters reported Spiraling energy costs have forced steel makers to cut output across Europe, threatening mass plant shutdowns some warn could be permanent in a sector that employs more than 300,000; Gold miners slide (NEM, GOLD, AUY, AEM) as gold prices hit 2-year lows on surging Treasury yields and US dollar; LITM announces collaboration with LG Energy Solution


Technology, Media & Telecom

·     Media, Internet; SNAP cautious mention at JPMorgan, reiterates Underweight saying market for ad revenue choppy, macro volatility, iOS platform changes, competition headwinds for company – does note Aug. sales show improvements

·     Semiconductors: the semiconductor index (SOX) year-to-date low stands at 2,386 (7/5), but close today with rising fears of interest rates, supply glut, a worsening PC end market and headwinds on the client business, including a collapse in gaming GPUs – shares of AMD, NVDA among chip names making fresh 52-week lows

·     Telecom movers: for towers (AMT, CCI, SBAC), Deutsche Bank said this week they picked up two incrementally positive data positive data points supporting their view that tower fundamentals remain strong both over the near and long-term


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.