Mid-Morning Look: August 23, 2023

Mid-Morning Look

Wednesday, August 23, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks off to a strong start for the trading day, opening in the “green” and climbing all morning after mixed economic data and as Treasury yields pullback from highest levels in over 15-years ahead of the annual Fed meeting in Jackson Hole starting tomorrow. Not helping matters are renewed concerns in the retail sector as Foot Locker (FL) shares plunge on sharply lower guidance and weaker results (follows bad results from Macy’s, Dicks Sporting Goods yesterday). Retail in general has been suffering this quarter (EL in Beauty, TGT as well), with many retailers citing the rise of theft (or “shrink”) that has impacted earnings, margins, etc. Energy is the other laggard, falling the most as oil prices tumble the most since late June. Outside of those sectors, early strength broad-based as technology the early leader ahead of NVDA earnings tonight (semis rebound from early weakness after lower ADI guide). NYSE breadth more than 2:1 advancers leading decliners; the 10-year yield hit lows below 4.21%, WTI crude falls over -2% to $77.76 per barrel before paring losses; would be largest 1-day decline since June 27 if holds. Gold prices jump nearly 1% in reaction to roll in Treasury yields. Looks to be positioning by traders ahead of the 2-day Fed Jackson Hole meeting starting tomorrow.


Economic Data

·     Weaker manufacturing data as S&P Global August flash composite PMI at 50.4 (vs 52.0 in July) and S&P Global August flash services PMI at 51.0 (vs 52.3 in July). S&P Global August flash manufacturing PMI at 47.0 (vs 49.0 in July).

·     July single-family home sales rose 4.4% to 714K unit annual rate vs. est. 705K and June 684K; US July home sales Northeast -2.9%, Midwest +47.4%, South -6.3%, West +21.5% as July new home supply 7.3 months’ worth at current pace vs June 7.5 months. July median sale price $436,700, -8.7% from July 2022 ($478,200).







WTI Crude















10-Year Note





Sector Movers Today

·     In semiconductors: NVDA expected to report earnings tonight – a barometer for the need/strength in AI space with shares +212% YTD into the print. But semis tumbled ahead of results following disappointing guidance from ADI this morning, a big player in industrial/auto sectors. ADI reported Q3 adj EPS $2.49 below est. $2.52 on revs $3.08B vs. est. $3.1B; but company said the customer inventory adjustments they mentioned last quarter have accelerated as economic conditions deteriorate and our lead times continue to improve; guides Q4 EPS $1.90-$2.10, below est. $2.40 and revs $2.7B plus/minus $100M vs. est. $3.01B. ADI primarily sells chips to the industrial and automotive sectors, which weighed on shares of NXPI, ON, STM.

·     In Beverages: BFB was double upgraded from Underweight to Overweight at Morgan Stanley and raised tgt to $75 from $66. In beer (BUD, TAP, SAM), Bank America said Industry beer volume declined -2.7% in the 4-weeks to August 12th (vs -2.8% in July and June -3.5%). Compared to 2019, volume declined -9.7%. In China beer sector, CRBeer (CRHKY) and Tsingtao-H (TSGTF) both upgraded to Outperform at Bernstein as expects China beer demand to outperform other consumer staples categories in the face of macro headwinds.



·     AAP +5%; announced a new CEO and announces a strategic review after mixed Q2 results and guidance as Q2 EPS $1.44 missed est. $1.69 on better revs $2.69B vs est. $2.66B.

·     ANF +16%; after Q2 results as sales +16% y/y to $935.3M topping the $846M estimate on better gross margins 62.5% and better comp sales growth +4.3%; also raised its FY net sales view to up 10% from prior view up 2%-4%.

·     APLS +35%; after provided an update on the eye-disease drug Syfovre, which has been hurt by safety concerns in recent weeks; APLS said a causal relationship hasn’t been established between structural variations in a 19-gauge filter needle and events of retinal vasculitis.

·     BFB +3%; double upgraded from Underweight to Overweight at Morgan Stanley, with GM headwinds likely to turn to a tailwind, reduced concerns over earlier US spirits industry softness, and a compelling relative valuation.

·     DY +4%; better Q2 results as EPS $2.03 tops est. $1.66; Q2 adj EBITDA $130.8M vs. est. $119.6M; Q2 revs rose 7.1% y/y to $1.04B vs. est. $1.03B; approves new $150M share repurchase program; sees Q3 revenues in line with Q3 of FY22.

·     NFLX +3%; NFLX has continued to add new users in the US after its crackdown on customers sharing their passwords, according to new research from Antenna, data that suggests the company is on track for another strong quarter of growth at home – Bloomberg.

·     RCUS +35% and ITOS +47%; shares of anti-TIGIT drug makers ITOS, RCUS gain after Roche posted positive data from a study of its new immunotherapy for patients with lung cancer, as the study used new experimental class of drugs known as anti-TIGIT. Shares of large cap cancer names such as MRK and GILD also saw upside momentum.

·     TMO +3%; after Reuters reported that NVO has hired the life sciences firm as its second contract manufacturer for its weight-loss drug Wegovy.

·     URBN +2%; Q2 EPS $1.10 tops consensus $0.89 on better revs $1.27B as comps +4.9% vs consensus +4.7%, helped by strong comps continuing at Free People Group (growth 27%) and Anthro (+10.6%).



·     ADI 1%; reported Q3 adj EPS $2.49 below est. $2.52 on revs $3.08B vs. est. $3.1B; guides Q4 EPS $1.90-$2.10, below est. $2.40 and revs $2.7B plus/minus $100M vs. est. $3.01B; ADI primarily sells chips to the industrial and automotive sectors, which weighed on shares of NXPI, ON, STM

·     AMC -3%; on track to suffer a third day of double-digit losses following a Delaware Supreme Court’s ruling that the company’s stock conversion can proceed.

·     EQT -3%; as energy names among biggest drags in the S&P (APA, VLO, OXY).

·     FL -35%; after cutting guidance and pausing dividend; Q2 Comparable sales fell (-9.4%) vs. (-10.3%) y/y; Q2 adj EPS $0.04 in-line and sales -9.9% y/y to $1.86B vs. est. $1.88B; lowers year FY sales to down -8%-9% from prior -6.5%-8% and cuts FY EPS to $1.30-$1.50 from prior $2.00-$2.25.

·     NKE -4%; posts 10th straight day of losses and fresh YTD lows after FL and DKS results last 2-days.

·     PTON -21%; on mixed results/lower guide; reported in-line Q4 revs $642M but guided Q1 revs $580M-$600M below est. $647.8M citing seasonal slowdown in hardware sales and guided Q1 adj. EBITDA loss (-$10m-$20m) vs. est. profit $5.68m after larger Q4 Ebitda loss.


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.