Market Review: September 27, 2023

Closing Recap

Wednesday, September 27, 2023





DJ Industrials




S&P 500








Russell 2000













Another nutty day on Wall Street as 6-hours of market weakness following a further surge in Treasury yields and the U.S. dollar turned quickly into a buying blitz around 2:30 PM on no specific headlines other than sellers appeared “tired” and markets were into good support levels after a sharp sell-off this month. There were some headlines out of Washington on the spending bill, but the two sides were still nowhere close to a compromise heading into the weekend. The 10-year Treasury yield took out yesterday’s highs, back to fresh 2007 highs above 4.64% while the U.S. dollar, on track for an 11th straight week of gains (up over 6.5% during that stretch) has pummeled metals (gold particularly) and multi-national companies. There was one big bright spot in the S&P today, energy stocks, (XOM new all-time highs, APA, OXY) outperforming as oil prices jumped over 3.5% above $93.50 for WTI crude. Interest rate sensitive sectors, such as utilities, were down the most. In the auto space, Reuters reported UAW President Shawn fain is set to announce new strike targets Friday and workers would walk off job at additional facilities Friday at 12 PM absent serious progress with GM/STLA. Next up tomorrow morning GDP data, weekly jobless claims and PCE data and then mor inflation core PCE data Friday, personal income and spending among others.


Market concern over the spending bill fight remains in Washington as without a budget in place for the coming fiscal year, which begins on Sunday, parts of the government would shut down that morning. It appears a partial closure is likely to happen, even as some lawmakers are working on a short-term funding deal. In a “half glass full” view: Bespoke invest tweeted last night: "Last four Septembers for the S&P: 2020: -3.92%. 2021: -4.76%, 2022: -9.34%, 2023: -5.19% (thru 9/26). Last three Q4s: 2020: +11.69%, 2021: +10.65%, 2022: +7.08%, 2023?” Also, QuantifiablEdgs tweets: "Today Marks 4th time ever (1993 inception) that $SPY has made a lower low 9 days in a row. Other 3 along with ultimate streak length: 1/27/2003 (9), 8/4/2011 (12), 12/26/18 (9) $SPX.


Economic Data

·     Durable goods orders rose 0.2% in August, compared with the -0.5% decline expected and the -5.6% drop (revised from -5.2%) seen in July. Transports, core durable goods orders advanced 0.4%, compared with the 0.1% rise expected and the prior month’s 0.1% decrease.


Commodities, Currencies & Treasuries

·     Oil prices were one of the big stories today, with WTI crude cruising to more than 1-year highs of $93.68, rising $3.29 or 3.64% while Brent gained $2.59 or 2.76% to settle at $96.55 per barrel following bullish weekly inventory data. Weekly oil inventory data was bullish with a larger than-expected weekly drawdown in inventories of -2.169MM barrels for crude vs. exp. -900K barrels while gasoline had a build of +1.027MM barrels and distillate +398K build. SPR was drained by 250K in the last week. Momentum appears to be carrying prices this month.

·     Natural gas contract for October delivery, which expired today, finishes 4.1% higher on the day at $2.764/MMBtu, marking a fourth straight session of prices increases. The front-month now shifts to the November delivery contract, which climbed 1.9% today to finish at $2.899/MMBtu. Gold prices fell -$28.90 to settle at $1,890.90 an ounce, decimated again amid a surging dollar.

·     Treasury yields resume their upward trend and support the dollar, after this morning’s pullback. The 10-year reaches 4.64% and the two-year is at 5.138% while the Dollar Index (DXY) gains +0.4% to fresh November 2022 highs. U.S. Treasury sold $49 bln in 5-year notes at high yield 4.659%, vs. 4.671% when issued prior as the bid-to-cover ratio was 2.52 vs. 2.54 prior auction as primary dealers take 11.23% of U.S. 5-year notes sale, direct 17.62% and indirect 71.15%.






WTI Crude















10-Year Note





Sector News Breakdown


Retailers, Consumer Staples & Restaurants:

·     In Consumer Staples: Staples group (XLP) continues to underperform, falling -0.8% today and down -7.7% YTD with household products, food, and many other goods seeing 52-week lows; CLX shares fell for a 9th straight session.

·     In Warehouses/Clubs: COST reported F4Q EPS of $4.86 (vs. our $4.41 est.) which included a 53rd week and comps increased +3.8% for the total company (ex-gas, FX) and +3.1% for the US (ex-gas) driven by traffic (+5.2% worldwide and +5% US) as worldwide and US ticket declined -3.9% and -4.5%, respectively. F4Q GM increased +16bps ex-gas deflation.

·     In Office Furniture: MLKN shares jump after better results as Q1 adj EPS $0.37 vs. est. $0.21; Q1 revs $917.7M vs. est. $899.6M; Q1 Organic order growth of 2.1% for the Americas Contract segment y/y; guides Q2 adj EPS $0.52-$0.58 vs. est. $0.51.

·     In Research: BURL and Macy’s (M) downgraded to Hold at Gordon Haskett and TSCO downgraded to accumulate; LEVI rated New Outperform at TD Cowen with $16 tgt.

·     In Servies: WW was upgraded to Hold from Sell at Craig Hallum saying Weight Watchers has an opportunity to play a key role in the new, GLP-1 driven landscape for weight loss.

Leisure, Gaming & Lodging:

·     In Casinos: (LVS, MGM, WYNN, CZR), WSJ reported Las Vegas Strip workers voted to authorize a possible strike as union contract negotiations continue with casino companies.

·     In Lodging: MAR said it expects RevPAR to grow at a compound annual growth rate of 3% to 6% from 2023 to 2025, down from 12% to 14% expected in 2023 as the post-pandemic travel boom cools off; plans to add 230,000 to 270,000 net rooms over three years, representing a compound annual growth rate of 5% to 5.5%; comments ahead of analyst event later today. Marriott is targeting y/y adj EPS growth of 25%-29% this year.

·     In Electric vehicles: UBS initiated coverage on several names, including a Buy on BLNK ($7 tgt) and CHPT ($9 tgt), as well as other auto related parts names with VNT a Buy ($38 tgt). For BLNK, UBS said it believes investors do not fully appreciate positive attributes including its unique business model is unique and margins improvement potential.


Energy, Industrials and Materials

·     In Energy: MRO, OXY, PXD, APA among leaders in the S&P as oil prices jump 3.5% above $93.50 for WTI crude; TTE announced some positive results at an exploration well in Namibia and added it would increase its returns to shareholders. KOS upgraded to Buy from Neutral at Bank America with a price target of $10, up from $8.70 given its advantages in growth, reserve life and a pivot towards liquified natural gas, or LNG. NEP shares fell after guiding its limited partner distribution per unit growth rate between 5%-8% per year through at least 2026 vs prior 12%-15% view.

·     In Solar: Guggenheim cut its tgt on NOVA to $17 from $30 saying its high-leverage, high-growth strategy may have been reasonable during an era of lower interest rates, but now is creating significant risks for equity investors, and prefers RUN in residential solar.

·     In Freight: XPO upgraded from In Line to Outperform at Evercore/ISI and tgt raised to $79 from $72 even though the stock is already up 100+% YTD, noting XPO has a lot moving in its favor now such as being a direct beneficiary of the YELL liquidation. Benchmark raised price tgt on SAIA to $475 from $450 given Saia’s third quarter operating data are higher than its expectations while noted ODFL operating data showed acceleration in LTL tonnage volume growth, but below peers. WNC downgraded to neutral from Buy at Davidson saying the mgmt tone at recent Industrials Conference on 2024 was less optimistic than they had expected.

·     In Aerospace & Defense: AIR reported Q4 EPS and revs that beat consensus by 8% and 10%, respectively, while adj EBITDA was $52M (9.5% margin) compared to RBC’s estimate of $48M, and sales growth was 23% in the quarter, led by Parts Supply (up 40%).

·     In Metals: CLF said it’s raising the base prices for all carbon hot rolled, cold rolled and coated steel products to $750 per net ton. Gold miners crushed again (AEM, NEM, GOLD) with gold prices tumbling on surging Treasury yields and dollar which tend to weigh on metals.

·     In Paper & Packaging: Jefferies upgraded IP and PKG to Hold from Sell saying with demand bottoming and expectations for further price cuts, JEFF is incrementally more positive on the containerboard space – but remain on the sidelines with both trading closer to peak multiples.



Banks, Brokers, Asset Managers:

·     In Banks: UBS shares fell after Bloomberg reported this morning that the U.S. DOJ stepped up its probe into Credit Suisse and UBS over suspected compliance failures that allowed Russian clients to evade sanctions. In bank research: CBSH upgraded to EW at Morgan Stanley and firm downgraded VLY, ZION to Underweight saying higher for longer rates mean Street estimates for NII need to come down further and they expect the group to remain under pressure near term. They remain defensively positioned with Top Pick MTB. Truist downgraded SSB to Hold and adjusting its PTs, EPS ests. for banks and introducing ’25 ests. to reflect its updated interest rate forward curve assumption of 50 bps of rate cuts in 2H24 and 100 bps in 2025. Said banks most attractive near term, in its view, are Buy rated ABCB, IBTX, LOB, PB, and WAL

·     In Credit cards (COF, DFS, SYF): Citigroup noted credit card data for the 16 sub-sectors show that total spending in Sept week 3 (ended 9/23) decreased -10.9%, an acceleration compared to Sept week 3 (ended 9/16), which was -12.2%. Ex Food spending was -10.2% in Sept week 4 vs -13.7% in Sept week 3. September to date spending of -10.9% (-11.3% ex-food) is shaping up to be the weakest month of the year. August was – 10.2% (and -10.4% ex-food), the weakest month of 2023 thus far, and the 4th consecutive month of spending deceleration.



Biotech & Pharma:

·     BHVN shares jumped after posted pharmacodynamic updates for its BHV-1300 bispecific immunoglobulin G, degrader that showed greater than 90% reductions in IgG after repeat dosing.

·     CRDF announces positive clinical data in pancreatic cancer and small cell lung cancer, including single-agent activity from onvansertib monotherapy.

·     DNA shares rise as PFE signs an R&D deal worth up to $331M to develop RNA drugs according to Endpoint News.   

·     GH upgraded from Neutral to Overweight at Piper given recent weakness mixed with its industry data that suggests the company’s position in profiling should help it sustain ~20% growth.

·     IONS entered an agreement with RHHBY for two novel RNA-targeted programs for Alzheimer’s disease and Huntington’s disease.

·     MORF CEO Tipirneni takes leave of absence due to an emergency medical event.



Internet, Media & Telecom

·     In semis: MU reports earnings tonight after the close; ASML shares slid midday after TF International analyst Kuo said the company is likely to cut EUV equipment shipment forecasts significantly for 2024 by about 20–30%

·     In Media: (NFLX, PARA, WBD, DIS) The governing boards of Hollywood’s writers’ union approved a new contract with the studios and ended their strike, authorizing workers to return to their jobs. The board of the Writers Guild of America West and the council that oversees the Writers Guild of America East said their strike ended at 12:01 A.M. Los Angeles time on Wednesday. Union members will now vote on the new contract, with balloting scheduled to end Oct. 9.

·     In E-Commerce: SE shares rose on news that Indonesia has banned e-commerce transactions on social media platforms, the trade minister said on Wednesday, in a blow to short video app TikTok (Reuters note Indonesia’s e-commerce market is dominated by the likes of homegrown tech firm GoTo’s, SE’s Shopee and BABA Lazada)

·     In social media: META CEO Mark Zuckerberg unveiled the Quest 3 virtual reality headset. The device will start shipping Oct. 10 at a previously announced price of $499. The mixed-reality headset will have no wires and said the new headset has 10 times the pixels of Quest 2. The devices will support games from Microsoft Xbox.


Hardware & Software movers:

·     JBL announced a definitive agreement to divest its Mobility Business for $2.2B to BYD Electronic.

·     NET two announcements: 1) powers hyper-local AI inference with NVDA accelerated computing; 2) collaborates with MSFT to enable AI Models to run anywhere.

·     PANW in advanced talks to buy Talon and Dig in a $1B security sweep according to TechCrunch

·     Pegatron, the Taiwanese electronics firm that works with AAPL, said the company has resumed production after it incurred a fire on Sunday. The fire, which disrupted production for a few days, was caused by a short-circuit.

·     PRO shares spiked after Reuters reported the co is being advised by investment bank Qatalyst Partners as it explores options that include a potential sale

·     PRGS reported better than expected F3Q23 results on both the top and bottom line, driven by stronger than expected Maintenance and Services revenue.


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.