Mid-Morning Look: August 21, 2023

Mid-Morning Look

Monday, August 21, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks looking to rebound after last week’s drop, but the S&P and Nasdaq are still on track to snap 5-month winning streaks after a rough August thus far on rising rate hike expectations amid surging Treasury yields and better economic data. U.S. Treasury yields are hitting fresh 16-year highs for the 10-year, topping 4.34% ahead of Fed Chairman Powell speech at Jackson Hole annual meeting later this week. Technology and Consumer Discretionary sectors outperform behind semiconductors ahead of NVDA earnings this week and security software co PANW reporting better results Friday after the close. Defensive Utilities, REITs, and Energy lagging early. No US economic data on the calendar today to move market sentiment. A busy week ahead with Fed’s Bowman and Goolsbee (both Voters) speaking tomorrow as well as earnings from LOE, Wednesday S&P PMI data, New Home Sales, and earnings from NVDA, NTAP, AAP, BBWI, ADI; Thursday Jackson Hole begins, Jobless claims, Durable goods orders and earnings from DLTR, INTU, ULTA and Friday U. Mich Sentiment, Fed’s Harker (Voter) speaks, and Powell speaks at Jackson Hole (10:05). Overnight, China’s benchmark 1-year Loan Prime Rate (LPR) fell by 10bp to 3.45% today, smaller than market expectations of a 15bp decline, given the PBoC cut 1y MLF rate by 15bp last week. Meanwhile, the 5y LPR was kept unchanged at 4.20%, also undershooting expectations of a 15bp reduction. Gold rises, on track for back-to-back gains following a four-week losing streak. Note the Dow is coming off worst week since March, and the S&P and Nasdaq.







WTI Crude















10-Year Note





Sector Movers Today

·     The Philly semi-index (SOX) was down 4% last week, again underperforming SPX down 3%, though SOX YTD performance remains up 36% vs SPX up 14% YTD. There have been more downward than upward revisions thus far following earnings results from most semis. Key earnings this week in the space are: NVDA, MRVL and ADI

·     In MedTech sector: PODD upgraded at Citigroup while reiterating positive catalyst watch on BSX and opening a positive catalyst watch on ESTA. The firm said while the bar for companies in 1Q23 was to meet expectations and maintain guidance, the “hurdle rate” this quarter was for a beat-and-raise. Citi is upgraded PODD, reiterating its Positive Catalyst Watch on BSX, and opening a Positive Catalyst Watch on ESTA, and adjusting TPs for BAX, BDX, NVRO, SGHT, and TNDM.

·     In media: LSXMK and LSXMA both upgraded from Neutral to Buy at Seaport Global and placing a $32 PT on each of the share classes as thinks the story is cleaner now, post-reclassification, which separated out the 30% ownership of LYV into its own tracking stock. In telecom: CCOI upgraded to Neutral from Sell driven by several key factors, including: 1) Accelerating revenue growth, driven by new services and 2) Adjusted EBITDA margin expansion and improving FCF growth.



·     ESTE +16%; after Permian Resources (PR) agreed to acquire ESTE in an all-stock transaction valued at approximately $4.5 billion, inclusive of debt with holders to receive a fixed ratio of 1.446 shares of Permian Resources common stock. https://tinyurl.com/4d87pfx4

·     KVUE +2%; after JNJ said about 23.8% of tendered J&J shares will likely be swapped for Kenvue shares; this so-called preliminary proration rate is closely followed by investors.

·     PANW +14%; Q4 metrics were above expectations (NGS ARR, margins, cash flow), FY24 billings/EPS/FCF were in-line to above consensus, and FY26 targets were better-than-feared across the board, despite an ongoing shift towards shorter billings/cash collections.

·     REGN +1%; after the FDA approved Eylea HD (aflibercept 8mg) in wet age-related macular degeneration (wAMD), diabetic macular edema (DME) and diabetic retinopathy (DR), following the unexpected CRL in late June.

·     SCU +3%; Boaz Weinstein and several other high-profile investors including William Ackman and Marc Lasry have made a rival offer for Sculptor Capital Management (SCU), a hedge–fund firm that already agreed to sell itself to another investment firm – WSJ. https://tinyurl.com/ef2achy3

·     TSLA +5%; to start the week – note shares are down almost 30% from 2 months ago, comes into today with 6-day losing streak and down 10 of the last 11.

·     VMW +4%; after UK’s competition regulator CMA clears AVGO’s $61B deal to acquire VMW (excluding debt) as Broadcom says it expects deal to close on October 30 as scheduled.

·     XPEV +12%; upgraded to Buy from Neutral at Bank America on expectation that stronger cost controls and a pact with Volkswagen can enable the company to turn a profit in 2025.



·     EL -3%; adds to Friday earnings related losses; down a 7th straight day and down 15 of last 16 trading days to new 52-week lows.

·     HE -8%; on further weakness related to Maui wildfires.

·     HL -7%; after reports damage due to fire at its Lucky Friday mine; said fire has been contained and efforts are ongoing to extinguish it.

·     NSCC -40%; after the company preannounced on Friday weaker FQ4 revenues and said it would restate the prior 3 quarters of F23 due to cost-accounting errors that are expected to have impacted nine-month EPS by ~$0.26.

·     PODD -2%; upgraded at Citigroup while reiterating positive catalyst watch on BSX and opening a positive catalyst watch on ESTA

·     VLO -3%; as refiners underperform in energy sector early.


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.