Mid-Morning Look: December 11, 2023

Mid-Morning Look

Monday, December 11, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks trade in a narrow range ahead of what is expected to be a jam-packed week (at least first 3-days) of potential market moving macro catalysts. Among focus today/this week, a combined $108B of 3-year, 10-year and 30-year bonds hit the block Monday and Tuesday, along with $213B of shorter-term bills (recall stocks slipped following the last 30-year auction 2-weeks ago which was poorly received). Then tomorrow morning 12/12, the November consumer price index (CPI) 8:30 AM, then on Wednesday the November Producer Price index (PPI) at 8:30, followed by the FOMC policy meeting (2:00 PM 12/13) and Powell press conference (2:30) which is expected to keep stock/bond markets on their toes. Will Powell try and talk back the market expectations for up to 120-bps worth or rate cuts in 2024 – including cuts potentially as soon as March (as per fed fund futures)? The S&P 500 is flat, coming into the day riding a 6-week winning streak, its highest since March 2022 while the Nasdaq 100 closed at its highest level since January 2022 after rising 0.69% on Friday. Mega cap tech under pressure early (AMZN, AAPL, GOOGL, META), but the Philadelphia semiconductor index (SOX) touches over four-month high, last up 2.2% to 3,860 (52-week highs at 3,875). Strength early in Consumer Staples, Industrials, and Financials, while Communications and Energy slip. Note in addition to the FOMC policy meeting this week, we also get the European Central Bank and the Bank of England, among others, are also scheduled to deliver their interest rate decisions later this week. Oil prices stabilize after longest losing streak since 2018 (fell a 7th straight week last Friday). Reminder: starting today, December 11th, ES (Spuz) rolls over from December front month contract to March and December will formally expire Friday (currently, roughly a 55-point spread between S&P (SPX) and futures (Spuz). There were several Changes to the Nasdaq 100 index (announced late Friday): CDW, CCEP, DASH, MDB, ROP and SPLK were added to the index while ALGN, EBAY, ENPH, JD, LCID, ZM were removed.







WTI Crude















10-Year Note





Sector Movers Today

·     Life Science/Tools sector: Citigroup downgraded MTD to Sell ($975 tgt), QDEL downgraded to Neutral ($72 tgt), while upgraded ILMN to Neutral ($120 tgt) and FTRE upgraded to Buy ($40 tgt). Firm names BRKR its top pick in Tools given its best-in-class organic growth performance this year, attractive setup into next year with clear revenue visibility; names QGEN its top pick in Diagnostics given strong financial execution this year, sustainable growth drivers in the product portfolio and names FTRE its top pick in CROs and Labs given evidence of healthy bookings, a compelling margin turnaround story underway, and attractive valuation relative to peers when applying its revised FY25 EBITDA target.

·     In Restaurants: DPZ was downgraded from Overweight to Neutral at Piper on valuation and Risk-Reward based decision, and Piper is not negative on the business or the strategy. Benchmark upgraded DPZ to a Buy rating with $455 tgt saying it has a better appreciation for the company-specific drivers of same store sales growth that Domino’s possesses in a challenging macro env’t and downgraded WING to Hold from Buy as believes that following their 47% move since its August 3rd upgrade to Buy, the shares now have a balanced risk/reward outlook going forward. SHAK announced long time CEO is retiring, while backs Q4 guidance.

·     In Insurance: MFC said it agreed to have Global Atlantic reinsure $13B of its reserves across four legacy/low return-on-equity blocks and the company plans to buy back $1.2B in stock as part of the deal. In research, Jefferies upgraded RGA & EQH to Buy in the life insurance sector saying they are constructive on the sector arguing that companies and investors appear to have been playing defense of late, and they see the potential for a pivot to offense. The firm said their top picks are CRBG, MET and UNM, with AMP and JXN also rated Buy. LNC is Underperform-rated.

·     In Chemicals: Morgan Stanley lowered its Chemicals industry view from Attractive to In-Line coming off trough conditions but at a very modest slope; said 2024 back half loaded at best; and limited base case upside to most equities. The firm downgraded HUN to Equal weight saying its $28 price target requires a significant stretch to the implied EBITDA multiple in 2024. Also remains Underweight ALB as it continues to see risk to lithium multiples as lithium prices decline and believes that expectations for a recovery in Underweight OLN EBITDA remain both too high.



·     ALL +3%; approaching all-time highs amid strength in the sector. in life insurance names; among top gainers in the S&P; note RGA and EQH upgraded to Buy at Jefferies.

·     AVGO +5%; tops $1,000 per share leading semi-chip names – Citigroup earlier resumed Buy and $1,100 tgt due to strength in core business/accretion from the VMware deal.

·     CI +17%; announced an additional $10B stock buyback, bringing its total share repurchase to $11.3B. Separately, the WSJ reported that Cigna and HUM could not agree to terms of an M&A deal, and they are shifting its efforts toward a smaller acquisition. https://tinyurl.com/3k55vvff

·     HOLI 7%; to be acquired by Ascendent Capital Partners for $26.50 in Cash. https://tinyurl.com/7dvehzr3

·     M +16%; after reports that an investor group has made a $5.8B offer to buy the company, the WSJ reported. Arkhouse Management and Brigade Capital Management on Dec. 1 submitted a proposal to acquire the shares they don’t already own for $21 a share https://tinyurl.com/5cka6885 (KSS, JWN shares rise in sympathy).

·     NKE +2%; upgraded to Buy from Neutral with a price target of $135 up from $100 at Citigroup saying while the company’s sales challenges remain, they are more optimistic about Nike’s ability to “protect” earnings in fiscal 2024 and 2025 despite a “choppy” macro environment.

·     SHAK +7%; announced long time CEO is retiring, while backs Q4 guidance.



·     AEM -1%; gold miners AEM, NEM, GOLD decline further as gold prices dip under $2,000 an ounce (after all-time highs reached last week above $2,150 an ounce).

·     BMEA -38%; after reporting topline updates from a dosing cohort of a mid-stage trial for its drug in the treatment of patients with type 2 diabetes.

·     COGT -56%; after announces data from ongoing phase 2 apex trial evaluating Bezuclastinib in patients with advanced systemic mastocytosis.

·     COIN -3%; shares of MARA, RIOT, COIN, BITF shares slide 4% or more as Bitcoin prices slide 6% below $42K after topping $44K last week/overnight.

·     GIL -10%; as announces leadership changes; Vince Tyra appointed as president and CEO as Glenn Chamandy leaving while Craig a. Leavitt to serve as interim president and CEO until Mr. Tyra assumes responsibilities on February 12, 2024.

·     META -2%; seeing weakness early in large cap tech (AAPL, AMZN, GOOGL, MSFT).

·     SE -6%; after reports TikTok to spend $1.5 billion taking over GoTo’s Indonesia Shop; Chinese firm will combine its shopping business with GoTo unit; TikTok has used Indonesia as template for global shopping push https://tinyurl.com/4y9c53t3

·     UNG natural gas prices tumble further, weighing on RRC, SWN, AR.


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.