Mid-Morning Look

Wednesday, December 28, 2022

U.S. stocks choppy to start as volumes remain light in the final trading week of a tough 2022, where the S&P is down about -20% YTD, the Dow Jones Industrial Average down -8.5%, the Nasdaq Composite -33% YTD and the Russell 2000 down -22% YTD, with nearly all eleven S&P sectors down this year (Energy the lone bright spot up over 50% YTD). Will the market sell it down again after a brutal December? And, if so, how much of this is so-called tax-loss harvesting, especially in tech stocks with massive YTD losses in some of the largest mkt caps in the world? With stock news flow very quiet, and analysts on Wall Street on an apparent break until the New Year, a lot of the focus remains on the mega cap tech names, especially TSLA and AAPL which both hit fresh 52-week lows yesterday (TSLA 2-yr). Dip buyers are trying to save Tesla from an eighth straight day of losses after tumbling over 11% Tuesday. Economic Data mixed on the day, but not major market moving data points. New highs for Treasury yields – 10-yr above 3.85% coincides with stock mkt pullback in volatile trading.

Economic Data

·     Richmond Fed composite manufacturing index rises +1 in Dec vs -9 in Nov; shipments index +5 in Dec vs -8 in Nov; services revenues index -12 in Dec vs -2 in Nov

·     Pending Home sales index for November fell -4.0% to 73.9 vs. -4.6% prior month and estimate of down -1%; Nov Pending Home sales -37.8% from November 2021

Stock Movers Today

·     Coal names falling (ARCH, BTU, CEIX, HCC) alongside the drop in natural gas futures (down -12%) as temperatures warm after the recent deep freeze

·     Solar stocks slide again (SEDG, ENPH, SPWR, FSLR) amid end of year selling pressure

·     GNRC initiated at Buy and $160 tgt at Janney noting shares are down ~80% from their peak, represent an opportunity to own an established brand

·     CXW and GEO shares slip early after the Supreme Court said that a Trump-era border restriction known as “Title 42” will stay in effect while legal challenges play out

·     TSLA shares looking to bounce after 7-straight declines, down -69% YTD and at lowest levels in over 2-years