Mid-Morning Look: June 22, 2023

Mid-Morning Look

Thursday, June 22, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks start the day lower, but quickly reverse to the upside led by large cap movers, as the S&P 500 looks to snap its 3-day losing streak. Stocks started lower after several central banks overseas raised interest rates to slow global inflation. The Bank of England, Swiss National Bank, Norway, and Turkey all boosted rates, some more than expected, impacting currency markets. The US dollar bounced, pushing oil and gold prices lower while yields bounced. The NYSE breadth weak early, about 2:1 decliners leading advancers, as broader mkts bounce (opposite action from yesterday when breadth was stronger while big cap stocks weighed on broader markets – mkt rotation changes daily). Busy day of headlines with at least four Fed speakers on tap, lots of economic data (see below), and global central banks raising rates. Leaders back to the usual suspects with Tech (XLK), Discretionary (XLY) leading (up 36% YTD and 29% YTD respectively), while REITs (XLRE) down the most. Defensive Staples and Healthcare are higher.


Economic Data

·     Weekly Jobless Claims unchanged at 264K vs. est. 260K (prior week revised +2K); the 4-week moving average rose to 255,750 from 247,250 prior; continued claims fell to 1.759M from 1.772M prior week (est. 1.782M); Insured Unemployment rate unchanged at 1.2%.

·     U.S. Chicago Fed National Activity index fell -0.29 points to -0.15 in May after climbing 0.55 points to 0.14 (was 0.07). in April. March bumped to -0.41 (was -0.37) while February edged up to -0.33 (was -0.37).

·     Existing Home Sales rose +0.2% M/M to 4.30M unit rate vs. est. 4.25M and April 4.29M; May inventory of homes for sale 1.08 mln units, 3.0 months’ worth; May national median home price for existing homes $396,100, -3.1% y/y.

·     The Leading Index (LEI) for May M/M actual (-0.7%) vs. forecast (-0.8%) and prior (-0.6%); LEI now negative for a 14th consecutive month.

·     Current Account Balance for Q1 actual -$219.3B vs. estimate -$218B and prior -$206.8B.







WTI Crude















10-Year Note





Sector Movers Today

·     Chemicals: Bank America cautious on chemicals, downgraded DOW to Underperform and lowered ratings on CE and CC to Neutral and cut tgts and estimates across the board noting US commodity chemical companies have very back-half weighted earnings expectations for 2023. Considering much of these businesses are tied to North American and European construction, this weighting run counter to normal seasonality. In agricultural chemicals: MOS reported potash revenue of $672M for April/May, down from $976M a year earlier, while phosphates revenue for the period was $948M, down from $1.03B a year earlier (said sees Q2 potash volumes high end of range and phosphate vols low end).

·     In metals: aluminum producer AA downgraded from Equal Weight to Underweight at Morgan Stanley and cut tgt to $33 from $43 saying it sees material downside to consensus estimates; in steels, CMC posted a top and bottom line Q3 beat and said it expects financial performance to remain strong during the fourth quarter of fiscal 2023.

·     In software: SAP upgraded to Hold from Underperform at Jefferies and raise price target to EUR 115 from EUR 105 saying the firm’s prior bearish view has now played out and is now trading at a discount of 12% on price to earnings basis and 18% on FCF to MSFT. PANW trades back near all-time highs as software names rebound.



·     AMZN +3%; strength in large cap tech/retail early; note Prime Day less than 2-weeks away.

·     FDX +2%; erases yesterday’s losses after revs miss and lower guidance; shares near highs as transports outperform.

·     NRG +3%; boosted its share repurchase program to $2.7B from $1B (the co has been facing pressure from activist investor Elliott Investment for a strategic overhaul).

·     OSTK +11%; after winning an auction for Bed Bath & Beyond’s intellectual property, digital assets for $21.5 million during a bankruptcy-run auction.

·     PANW +3%; for top gainer in the S&P, back near all-time highs

·     ROIV +10%; reported maintenance data of its ulcerative colitis drug, RVT-3101, that showed a slight increase in efficacy over earlier results; rate of clinical remission improved to 36% at week 56 from 29% at week 14.

·     ROOT +40%; adding to late day gains yesterday after the WSJ reported that Embedded Insurance has made multiple approaches and offered to acquire Root for $19.34 per share, citing people familiar with the matter https://tinyurl.com/2mpjmp9j

·     SCS +8%; following quarterly earnings results.



·     AA -5%; downgraded from Equal Weight to Underweight at Morgan Stanley and cut tgt to $33 from $43 saying it sees material downside to consensus estimates.

·     ACN -2%; reported an in-line Q3 with mixed bookings ($8.9B vs. $9.39B est.), guided 4Q revs light at the mid-point and FY revs tweaked a touch lower; now expects revenue growth to be in the range of 8%-9% in local currency, vs. prior 8%-10%.

·     ALVR -28%; 20M share offering priced at $3.75 for $75Mm raise; 24% discount to last sale.

·     CDMO -10%; posted a solid 4Q23 beat, while backlog/bookings both came in ahead of expectations, but guided FY24 revs to $145M-$165M, below consensus $181M.

·     DOCN -3%; downgraded to underweight from Neutral at Piper citing high SMB exposure, and a likely top line cut coming given the firm’s analysis of customers.

·     DRI -2%; Q4 sales rose 6.4% y/y to $2.77B, in-line with consensus while comparable sales +4% vs. +11.7% y/y (Olive Garden comp sales +4.4% and LongHorn comp sales +7.1%); Expects full-year EPS of $8.55-$8.85, vs consensus estimate of $8.78.

·     SPR -11%; after saying it suspended factory production at its plant in Wichita, Kansas after workers rejected a proposed four-year deal and said they would begin a strike on June 24 (SPR is a key parts supplier to plane maker BA

·     TRUP -5%; shares add to yesterday’s -17% decline after California released an Objection Letter to the pet medical insurance provider’s proposed rate increase of 28% by cutting it to 12.6%.


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.