Market Review: September 29, 2023

Closing Recap

Friday, September 29, 2023





DJ Industrials




S&P 500








Russell 2000













US equity futures trended higher overnight on hope for an agreement to avert potential US government shutdown and more benign Eurozone inflation data. An in-line August core PCE reading in the US also buoyed equities pre-open. The year/year increase of 3.9% was the first sub-4% gain since July of 2021 and the month/month rise of 0.1% beat expectations of +0.2% and was the lowest monthly gain since November of 2020. Following this morning’s data, the implied probability of a Fed pause at the November meeting was 83.4%. By late morning, US equity futures had eased back off the early highs, but breadth remained strong at almost 3:1 in favor of advancers. Consumer Discretionary, Real Estate and Technology were sector leaders, all gaining more than 1%, while Energy and Healthcare were laggards and the only sectors in the red.


Data-wise, definitely a mixed bag. The AAII sentiment survey (actually out yesterday) was the lowest bullish reading since May 25, highest bearish reading since May 11 and most negative bull-bear spread since May 18. Similarly, @KobeissiLetter highlighted US housing affordability is now at the lowest point in history, even versus the 2008 financial crisis, when affordability was still 15% better than current. On the opposite side, @RyanDetrick noted the dynamics of presidential cycles: stocks typically don’t do as well in the first two years, but better in years three and four. He noted we have been solid so far this year and is optimistic next year (year four) could be strong as well. I doubt the Fed is listening.


Stocks faded through the morning and into early afternoon, with major indices crossing to red and breadth retreating to about even. Heading into the final hour of trading, US equities had moved off afternoon lows with the NASDAQ in positive territory but the S&P still modestly lower. The sector picture was not much different than the morning view, with Real Estates (XLRE, +0.59%) and Consumer Discretionary (XLY, +0.54%) leading the gainers, followed by Technology (XLK, +0.46%) and Utilities (XLU, +0.37%). Energy was the biggest decliner (XLE, -1.96%), followed by Financials (XLF, -0.88%) and Healthcare (XLV, -0.61%). Both growth and value were in the red, but the Russell 1000 Growth was only off 0.08%, while its Value counterpart was -0.55%. Small caps were -0.44% (IWM), moderately softer than the S&P 500. All eyes will be on government shutdown discussions from here.


Economic Data

·     Personal Income M/M for August rose +0.4%, in-line with consensus (and up from +0.2% last month), while Personal Spending rose +0.4% vs. est. +0.5%; Aug personal saving rate 3.9%.

·     Aug Core PCE price index rises 0.1% M/M vs. est. 0.2% and +0.2% prior (better)

·     Aug core PCE price index rises 3.9% y/y, in-line with estimates (below prior month +4.2%) and marks the first reading below 4% since July of 2021 (better)

·     Aug PCE Price Index M/M rises +0.4% vs. est. +0.5% (prior +0.2%) and Y/Y rises +3.5%, in-line with consensus but slightly up from prior +3.3% reading. (mixed)

·     August Advance International Trade in Goods deficit shrinks to (-$84.27B) from (-$90.92B) in July and below (-$91.20B) consensus. Exports of goods were $168.9B, $3.6B more than July exports and Imports of goods were $253.1B, $3.1B less than July.

·     August Retail Inventories (Advance) +1.1% to $793.4B vs. +0.5% prior.

·     Chicago PMI for September fell further into contraction territory, reported at 44.1 from 48.7 in August and below consensus of 47.6.

·     The University of Michigan consumers sentiment final Sept 68.1 vs. est. 67.7 and vs. Final Aug 69.5; current conditions index final Sept 71.4 vs prelim Sept 69.8 and final Aug 75.7 and the expectations index final Sept 66.0 vs prelim Sept 66.3 and final Aug 65.5.

·     University of Michigan surveys of consumers 1-year inflation outlook final sept 3.2% vs prelim 3.1% and final aug 3.5% and 5-year inflation outlook final sept 2.8% vs prelim 2.7%; final Aug 3.0%



·     December gold futures slipped $12.50/oz, or -0.66%, settling at $1,878.60, the lowest in about six months. The move also pushed gold to finish the month with a 4.6% decline and the quarter with about a 3.6% fall. Gold has been slipping since the Fed’s more hawkish stance as the US Dollar and Treasury yields have bounced, but the metal does still enjoy some underlying demand as a hedge against a hard landing.

·     WTI crude futures slipped $0.92, or -1%, to $90.79/bbl, reversing gains early in the session but still posting a solid month. Brent crude also finished in the red, but only by $0.07/bbl, or -0.07%, to $95.31. This week’s less-robust economic data gave traders an excuse to book some profits, though many still expect tight supply to create a floor here.






WTI Crude















10-Year Note





Sector News Breakdown



·     Big three auto makers (GM, Ford, STLA) pressured early after reports the UAW to strike three assembly plants for each. TSLA Q3 delivery totals expected shortly and many analysts weighed in: 1) Piper cut its Q3 delivery forecast from 515k+ to 445k unit after plant shutdowns (change is due entirely to downtime in Shanghai and Austin, where Tesla shuttered its plants). 2) Canaccord noted Tesla is set to report 3Q23 deliveries soon and estimates have an unusually high standard deviation this quarter. – and firm said it is looking past this quarter’s delivery number.


Consumer Staples & Restaurants:

·     In Food & Beverages: APRN to be acquired by Wonder Group for $13.00 per share in cash, in deal valued at $103M, a 137% premium to yesterday closing price ; WK Kellogg Co. (KLG) will be added to the S&P SmallCap 600 AVD effective prior to the open of trading on Tuesday, October 3 (S&P 500 constituent Kellogg Co. (K) is spinning off WK Kellogg). BUD was upgraded to Buy from Neutral at Bank America saying the company’s margins are at an inflection point, as cost of goods sold pressures have started to ease.

·     In Restaurants: EAT upgraded from Hold to Buy at Stifel with $45 tgt from $38 saying they came away more constructive from mgmt meetings regarding Chili’s turnaround efforts and believes plan mirrors the strategic playbook of successful restaurant turnarounds; WING remains top pick at TD Cowen and seen as best positioned in restaurants following California’s FAST Act while analysis of California suggests Market Perform rated JACK, SHAK, BROS and SG are most disadvantaged with the greatest potential EBITDA risk. QSR upgraded to Buy at Loop Capital after better-than-expected results from latest Burger King checks – indicated same-store sales were up 8.5-9.0% QTD through late September, ahead of consensus at up 7.7% for 3Q.


·     NKE helping boost a beaten retail sector as results were better than feared with 12% cc growth in China and a maintained FY outlook while Q1 inventories fell -10% y/y to $8.7B; 1Q revs missed consensus slightly while EPS beat by $0.18; revenue grew 2% cc led by 12% growth in Greater China, 6% growth in EMEA, and 3% growth in APLA offset by a -1% decline in North America.

·     Shares of sporting goods and footwear saw strength following the better-than-feared results from Nike overnight, with UAA, DKS, FL among movers.

·     Luxury stocks in Europe benefit from an upgrade from Bank of America, raising the sector from market weight to overweight after hitting its lowest level since January, marking a 20% drop from its record peak in May, but says a lot of the bad news is now priced in.


Leisure, Gaming & Lodging:

·     In Cruise stocks: CCL Q3 EPS $0.86 tops $0.75 estimate as revenue rose 59% y/y to $6.85B topping the $6.69B consensus with better Ebitda; said passenger Cruise Days 25.8M, +46% y/y, and passengers carried 3.6M, +40% y/y below some ests.

·     In Leisure: MTN reported a better-than-expected pass sales update while initial FY24 EBITDA guide brackets the Street, but Q4 EPS loss and sales below views – Q4 EPS loss (-$3.35) vs. est. loss (-$3.27); Q4 revs $269.8M vs. est. $282.7M; Q4 Ebitda $834.8M vs. $836.9M y/y; Q4 effective Ticket Price $67.71 and total skier visits 867,000 vs. est. 1.06M.



·     After surging to fresh 10-month highs above $95 per barrel mid-week, WTI crude has since fallen over $4 and subsequently, pressured shares of energy stocks the last two days, with many pulling back after nearing 52-week high in some cases (XOM hit all-time high midweek). Mizuho noted yesterday, the MLP-focused AMZI updated its inclusion methodology to include ‘compression and marketing’ in its qualifying activities for index inclusion – the firm downgraded SUN, USAC based on the development.



Banks, Brokers, Asset Managers:

·     Barron’s noted insiders at FCNCA, SMMF, CBSH, BHLB and BKSC had recently bought up stock on the open market. The S&P 500 index has dropped 4.6% so far in September, while the S&P Bank exchange-traded fund (KBE) has lost 6.3%

·     Citigroup announced Bank initiations with neutrals on FCNCA, NYCB (neutral) and Buy ratings on HBAN, ZION saying they remain constructive on the sector given its view that the best time to buy bank stocks is the transition from late-cycle to early-cycle when it believes credit will fare better than market concerns – said top pick among regionals remains KEY.



·     Tower REITs (AMT ) – Deutsche Bank said is broadly trimming ests and tgts for Comm. Infrastructure group, with Towers seeing sharper cuts though sees greater upside potential in Tower stocks (relative to Data Centers DLR ) over a 12-month time frame. The move comes as DB estimates now assume very modest interest rate reductions in 2024/2025.



Biotech & Pharma:

·     ABBV said a Phase 3 study evaluating the safety and efficacy of its venetoclax cancer drug in combination with dexamethasone missed its key goal in certain patients with the blood cancer multiple myeloma.

·     ACAD shares defended at Canaccord (reit Buy and $38 tgt) after falling -16% the day prior after the US District Court for the District of Delaware held a hearing yesterday (9/27) on a motion for summary judgment in MSN’s (private company) generic challenge on Nuplazid (pimavanserin).

·     EDIT upgraded from Hold to Buy at Stifel in the gene editing space and raise tgt to $17 from $9 saying EDIT-301’s (sickle cell disease) progress has received minimal credit from investors.

·     GPCR shares jump after the company delivered positive results for its weight-loss drug GSBR-1290 and disclosed a $300 million private placement; the results demonstrated significant weight loss in healthy overweight or obese individuals at 28 days of dosing.

·     PTCT announced a 25% workforce reduction, confirms plans to re-submit to EU for Translarna; said the implementation of these cost saving measures is expected to result in an approximate 20% reduction in annualized operating expenses compared to 2023 OPEX guidance.

·     REGN said it won FDA priority review of its application seeking approval of odronextamab for certain patients with the two most common subtypes of non-Hodgkin lymphoma.

·     RMD downgraded from Outperform to Peer Perform at Wolfe Research, setting $140- $160 fair value range which is 20 times $7/$8 EPS 1-2 years out.

·     WBA shares rose after Bloomberg reported the company is considering former CI executive Tim Wentworth to be its next chief executive.


Industrials & Materials

Aerospace & Defense

·     GD mentioned positively in Barron’s saying a government shutdown is looming—but that’s no reason to avoid the defense contractor General Dynamics as any politics-induced weakness would just make the stock even more attractive.

·     Cathay Pacific Airways said it had purchased 32 Airbus (EADSY) A321-200neo aircraft from Airbus for a basic price of $4.66 billion.


Materials, Metals & Mining

·     Paper & Packaging sector: BALL was upgraded to Buy at Jefferies, noting shares have fallen about 50% from the stock’s peak and the return of valuations to pre-Covid levels while its free cash flow also re-accelerating and sees upside.



·     Semis with a nice bounce back day early with MU rebounding after yesterday earnings-related pullback; SOX index down about -5.5% in September, paring YTD gains to 35%.

·     US listed Chinese stocks, specifically in tech (BABA, BIDU, JD, PDD) rise initially after China’s cyberspace regulator proposed easing its stringent cross-border data-security controls.

·     FROG announced CFO Jacob Shulman will be leaving the company to pursue another opportunity at the end of the year. Stepping into the CFO role as of January 1, 2024, is Ed Grabscheid, who currently serves as VP of Finance at FROG.


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.