Mid-Morning Look: March 23, 2023

Mid-Morning Look

Thursday, March 23, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks open higher, quickly erasing the late day downdraft in stocks Wednesday after mixed messages on banks from Fed Chairman Powell and Treasury Secretary Yellen. Fed Chair Powell also delivered a rate hike of 25-bps as expected and said rate cuts by year end were unlikely. Investors, however, were betting that the Fed will deliver cuts before year-end with a lower terminal rate outlook, helping equities to find support. As has been the case for the first 3-months of 2023, Technology (XLK), Communication (XLC) and Consumer Discretionary (XLY) sectors lead the charge today and are up +17%, +17% and +11.4% Year-to-Date respectively, All other S&P sectors are actually down on the year with Energy (XLE) -9.3%, Financials (XLF) -8.3%, and Utilities (XLU) -8.7% the biggest decliners. The Semiconductor index (SOX) also a big part of Nasdaq gains YTD, up another 3% today with YTD totals above 22%. Homebuilders outperform behind KBH earnings, up +8.6% as shares of TOL, PHM, MTH, LEN, DHI up over 3% in sympathy (as well as slide in Treasury yields the last week and mortgage rates). It was comments late yesterday from Treasury Secretary Janet Yellen that appeared to have spooked markets initially by saying there were no plans to extend deposit insurance at banks higher than the current limit. That drove bank shares lower after the turmoil from the collapse of Silicon Valley Bank and Credit Suisse this month. But today, no concern again as investors buy the dip with stocks surging early. Fear remains nonexistent with the CBOE Volatility index (VIX) down again, lows around 20 after highs of 31 a week ago after two big banks failed. The Dollar is down, stocks are rising, and bonds are rallying.


Economic Data

·     Weekly Jobless Claims fell to 191K from 192K last week and below expectations of 197K; the 4-week moving average fell to 196,250 from 196,500 prior week; continued claims rose to 1.694M in latest week from 1.684M prior (est. 1.684M).

·     U.S. current account deficit narrowed $12.2B to -$206.8B in Q4, after the $18.2 B increase to -$219.0 (was -$217.1B) in Q3 from -$237.2B (was -$238.7B) in Q2. The balance on goods and services edged up to -$205.0B from -$207.0 (was -$210.6B).

·     New home sales data for February rose +1.1% M/M to 640K vs. 650K consensus and 633K prior (revised from 670K); the median sales price of new houses sold during February was $438.2K, higher than $427.5K in January; Feb new home supply 8.2 months’ worth at current pace vs Jan 8.3 months.






WTI Crude















10-Year Note





Sector Movers Today

·     Semiconductor index (SOX also a big part of Nasdaq gains YTD, up another 3% today with YTD totals above 22%. Just massive outperformance to start 2023 after big losses in 2022. Toshiba Corp. (TOSYY) said Thursday that it has agreed to a deal worth 2 trillion-yen, equivalent to $15 billion, to take the company private. Toshiba said the buyout would be led by Japan Industrial Partners Inc., a Tokyo-based investment fund. https://on.wsj.com/40ahFYO

·     In steel earnings: CMC better Q4 as EPS $1.51 tops consensus $1.44, as Q4 revenue of $2.02B topped the consensus estimate of $1.97B; WOR Q3 adj EPS $1.04 vs. est. $0.72; Q4 sales fell -20% y/y to $1.1B vs. et. $979.5M; Gross margin increased from the prior year quarter to $143.8M given higher earnings in Steel Processing via mix coupled with stronger pricing/margins; MT upgrades to Buy from Neutral at Bank America saying the recent share price decline means shares now trade at deep value = interesting entry point.

·     In Homebuilders: KBH authorizes $500M buyback; 1Q EPS $1.45 vs est. $1.15 on revs $1.38B vs est. $1.27B, housing adj gr mgn 21.8%, homes delivered -3%, avg selling price +2%; guides FY housing revs $5.2-5.9B, avg selling price $480-490K, housing gr mgn 20.5-21.5%, SG&A 10.0-11.0%, homebuilding op mgn 10.0-11.0%. The sector seeing broad gains on the earnings results as well as recent tumble in Treasury yields, bringing mortgage rates lower.



·     ACN +6%; Q2 adj EPS $2.69 vs. est. $2.50; Q2 revs $15.8B vs. est. $15.59B; sees revenue +8% to +10%, vs. prior view +8% to +11%; Sees operating cash flow $8.7B-$9.2B vs. prior $8.5B to $9.0B.

·     GBIO +27%; enters a strategic collaboration with MRNA to expand the application of each company’s platform.

·     KBH +7%; authorizes $500M buyback; 1Q EPS $1.45 vs est. $1.15 on revs $1.38B vs est. $1.27B, housing adj gr mgn 21.8%, homes delivered -3%, avg selling price +2%.

·     NFLX +8%; leading gains in S&P as tech sector outperforms broader market.

·     REGN +6%; after the co and partner SNY said their asthma drug Dupixent led to a 30% reduction in acute exacerbations of chronic obstructive pulmonary disease (COPD) in a late-stage study.

·     SCS +15%; as 4Q adj EPS $0.19 vs est. $0.11 on sales $801.7Mm vs est. $751.4Mm, adj EBIT $38.6Mm vs est. $33.3Mm; guides 1Q revs $710-735Mm vs est. $693.8Mm.

·     TCEHY +7%; reported a return to revenue growth in Q4 as net profit rose 12% from a year earlier and revenue rose 0.5%, the company said Wednesday, beating analysts’ forecasts. Advertising revenue was the strongest segment, rising 15% (boosts other China stocks BABA, BIDU, JD).



·     CHWY -6%; issued softer-than-expected FY23 guidance (revs $11.1B0$11.3B vs. est. $11.14B), with plans for international expansion likely to pressure margins; 4Q results also showed declining customer numbers (shares downgraded to Hold from Buy at Deutsche Bank).

·     COIN -14%; after the largest US crypto exchange said it received a notice from the SEC formally declaring the securities regulator’s plans to bring an enforcement action against it.

·     FDS -4%; following quarterly results and guidance.

·     PHR -6%; reported a solid beat with total revenues topping consensus by ~3% driven by continued strong growth in clients (36% y/y); adjusted EBITDA also beat consensus expectations with better cost controls; guides FY24 revenue $353M-$356M vs. est. $357.8M.

·     SQ -17%; negative “short” call by Hindenburg research. Report alleges that Block has wildly overstated its genuine user counts and has understated its customer acquisition costs. Despite its current rich multiples, Block is also facing threats from key competitors like Zelle, Venmo/PayPal and fast-growing payment solutions from smartphone powerhouses https://bit.ly/42zWLUr

·     ZION -2%; already seeing some weakness in regional banks after early gains.


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.