Mid-Morning Look: July 18, 2023

Mid-Morning Look

Tuesday, July 18, 2023






DJ Industrials




S&P 500








Russell 2000






The S&P 500 index and Nasdaq slip initially from 15-month closing highs on Monday following another round of mixed economic data that showed Americans increased their retail spending in June, as inflation eased, and wages grew while Industrial Production slumped. But quickly, investors “buy the dip” as every pullback, no matter how slight, has been a buying opportunity the last few months. Retail sales rose a seasonally adjusted 0.2% last month from the month before, after strong increases in May and April, and May’s increase was revised to +0.5% from an earlier reading of +0.3%. Meanwhile Industrial Production and Capacity both stumbled. Earnings this morning in the banking sector were mostly better with SCHW shares jumping on results, while Bank America, Bank of New York, Morgan Stanley all react favorably to results initially. Dow Transports at fresh 52-week highs above 16,200 early, rising over 350 points led by gains in FDX and ODFL.


Economic Data

·     Retail Sales for June increased +0.2% m/m in below the +0.5% estimate; June retail sales ex autos, gas rise +0.3% m/m, in-line with consensus estimates; US gasoline sales fell -1.4% m/m for June vs. May -2.1%; June Retail Sales Ex-gasoline +0.3% vs May +0.7%.

·     Industrial Production for June fell (-0.5%) vs. consensus 0.0% while Capacity Utilization reported at 78.9%, well below the consensus 79.5%.

·     July NAHB Housing market index 56 (consensus 56) versus 55 in June; index of current single-family home sales 62 versus 61 in June; index of home sales over next six months 60 versus 62 in June; index of prospective buyers 40 versus 37 in June.

·     Business Inventories for May rise +0.2% vs. consensus +0.2% and vs April +0.1% (prev +0.2%); May inventory/sales ratio 1.40 months’ worth vs April 1.40 months; Business sales +0.2% vs April -0.1% (prev +0.1%).







WTI Crude















10-Year Note





Sector Movers Today

·     In Cruise lines: CCL upgraded from Hold to Buy at Argus with $21 tgt citing the company’s increased marketing spending, which should help to boost revenue; improved liquidity ($7.3 billion as of the end of 2Q23); and efforts to reduce debt. NCLH was downgraded to Hold from Buy at Truist (but up tgt to $23 from $17, while raise tgt on CCL to $16 from $11 and RCL to $115 from $72 noting it remains very clear to US that the industry is on a strong path to recovery.

·     In Aerospace & Defense: LMT Q2 adj EPS $6.73 tops est. $6.43 on better sales at $16.69B vs. est. $15.89B as backlog rose 17% y/y to $158.01B; raises FY eps view to $27.00-$27.20 from prior $26.60-$26.90 and sees FY cash flow from ops at least $8.15B; RKLB deploys satellites for NASA and commercial constellation operators, successfully recovers booster; ATRO sees prelim Q2 sales $170M-$175M vs. est. $167.5M; Q2 orders about $200M.

·     In Internet: few analyst calls and previews: PINS upgraded to Outperform from In Line at Evercore ISI with $41 tgt and downgraded SHOP to In Line following outperformance. TTD was downgraded to Sell from Neutral at New Street with a price target of $69 (up from $57). KeyBanc raised price tgts on GOOGL to $140, TTD to $100, and PINS to $35 saying preference remains large-cap advertisers with product cycles like Overweight rated META and TTD and laggards with improving execution and margin drivers like Overweight-rated GOOGL and PINS.

·     In Banks: BAC Q2 EPS beat estimates by $0.04 and revs rose 11% to $25.2B vs. est. $24.98B as Q2 trading revs ex DVA $4.39B vs. est. $3.98B; Q2 FICC revs ex DVA $2.76B vs. est. $2.44B; equities trading revs ex DVA $1.62B vs. est. $1.54B; BK Q2 results better than comp STT last week in Trust banks as Q2 EPS $1.38 vs. est. $1.22; Q2 revs $4.45B vs. est. $4.38B; PNC Q2 revs fell short of estimates ($5.293B vs. $5.449B est.), said loans were stable but deposits fell by 2%, net interest margins fell by 5 bps and lowered its FY net interest income (NII) forecast to 5% to 6% Y-o-Y growth vs previous forecast of 6% to 8% growth.

·     In brokers: MS record revenue in its wealth management segment offset a muted quarter for its institutional securities business; Q2 revs $13.46B tops $13.11B estimate while EPS $1.24 topped the $1.15 estimate; said investment banking revenue, including fees from mergers and acquisitions, was about flat from a year ago at about $1.08 billion. MS trading revenue fell 22% from a year ago, following declines of 10% at JPMorgan and 13% at Citigroup; SCHW shares rose after EPS beat $0.75 vs. est. $0.71 as revs fell to $4.66B but topped ests $4.61B; said client cash flowed out at a slower rate than in previous months.



·     NVS +3%; Q2 sales rose to $13.62B from $12.78B y/y and above est. $13.45B; Q2 net profit rose to $2.32B from $1.70B y/y but missed est.; raised its guidance.

·     PINS +4%; upgraded to Outperform from In Line at Evercore ISI with $41 tgt as sees clear evidence of Digital Ad spend stabilizing as it moves further away from the trough levels of late ’22, with increasing tentative evidence of an H2 recovery.

·     RIG +7%; after being awarded a $518 million ultra-deepwater drillship contract by an independent operator in the Gulf of Mexico offshore Mexico.

·     SCHW +13%; after EPS beat $0.75 vs. est. $0.71 as revs fell to $4.66B but topped ests $4.61B; said client cash flowed out at a slower rate than in previous months, and the bank expects the realignment of funds to conclude before the end of the year.

·     TDOC +4%; said it is furthering its collaboration with MSFT by “working together” on integrating Azure and Nuance artificial-intelligence tools into its platform.

·     TDS +11%; after saying its subsidiary assessed its network across the country and located around 10 miles of lead-covered cables.



·     COMM -4%; downgraded from Buy to Hold at Deutsche Bank and cut tgt to $6 from $8 citing lingering pressure on customer orders, with recent data points.

·     FREY -4%; downgraded to Neutral at Goldman Sachs with $10 tgt saying although remains bullish on end-market demand, it believes the EU market will face intensifying pressure from Chinese LFP oversupply.

·     MASI -21%; after guides Q2 prelim revs $453M-$457M vs. est. $553.23M saying large orders that were anticipated for Q2 were delayed to the second half of year.

·     PLD -1%; after earnings results.

·     PNC ; Q2 revs fell short of estimates ($5.293B vs. $5.449B est.), said loans were stable but deposits fell by 2%, net interest margins fell by 5 bps, lowered FY net interest income forecast.


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.