Mid-Morning Look: May 04, 2023

Mid-Morning Look

Thursday, May 04, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks are lower to start, adding to yesterday declines as the ongoing fears in the banking sector weighs on market sentiment, with regional bank selling pressure hurting the Smallcap Russell 2000 the most. The Fed hiked rates 25-bps yesterday to 5%-5.25% range, highest since 2006 but markets appear convinced the Fed will “pause” at the June meeting and then proceed to cut rates going forward (according to fed fund futures – 3 cuts are expected by year-end). The bond market has rallied despite the rate hikes, with yields tumbling. The ECB followed the FOMC move, raising their benchmark refinancing rate by 25-bps to 3.75% vs 3.50% (as expected and 7th straight increase), raises interest rate on marginal lending facility to 4.00% vs 3.75%, raises interest rate on deposit facility to 3.25% vs 3.00% and ECB says inflation outlook continues to be too high for too long. “We have more ground to cover, we are not pausing,” ECB President Christine Lagarde told reporters. An incredibly tough predicament for the Fed which waited 12-years before hiking rates, now in a quandary as they fight higher inflation (keeps decelerating, but at slow pace than they want), while at the same time a debt ceiling limit is being met by beginning of June (raising US default fears), while the regional banking sector is tumbling as uninsured deposits are the focus of investor fears. In the last month, we have lost three big banks (FRC, SBNY, SIVB) and several more are in jeopardy as stock prices plummet. Precious metals jump with gold and silver higher as investors flee to haven assets. Nearly 400 S&P companies have reported this far, with Apple (AAPL) results looming later tonight.


Economic Data

·     U.S. Q1 non-farm productivity fell -2.7% vs. consensus (-1.8%) and vs Q4 +1.6%; Q1 non-farm unit labor costs +6.3% topping consensus +5.5% and above Q4 +3.3%.

·     Weekly Jobless Claims rose to 242,000 in the latest week from 229,000 prior and est. 240,000; the 4-week moving average rose to 239,250 from 235,750 prior week; continued claims fell to 1.805 mln from 1.843 mln prior.

·     U.S. March trade deficit $64.2 bln vs. consensus $63.3 bln) and vs Feb deficit $70.6 bln; March goods deficit $86.59 bln, services surplus $22.37 bln; March exports +2.1% imports -0.3%







WTI Crude















10-Year Note





Sector Movers Today

·     In solar: space has been mixed bag this earnings period, with SEDG a positive report last night as Q1 EPS $2.90 vs. est. $1.92, Q1 revs $943.9M vs. est. $932.5M and guided Q2 revenue $970M-$1.01B vs. est. $986.4M, sees Q2 gross margin expected to be within the range of 32% to 35% (FSLR, SPWR, ENPH among solar names that have disappointed in recent weeks). RUN reported a wider-than-expected Q1 loss but said sales rose 20% y/y and orders placed by customers rose 30%, with 80% gains in California ahead of a major policy change in the State.

·     In leisure/fitness: PLNT Q1 EPS $0.41 misses $0.46 estimate as revs rise 19% y/y to $222.2M but below ests $238.3M; reaffirms year outlook; PTON Q3 results were better than expected and rev guidance above views too ($630M-$650M vs. est. $614M) but shares fell on additional commentary that expects q4 hardware sales to be lower versus q3; LESL missed across the board but maintained (2Q low vol qtr), citing weather.

·     Regional banking concerns not going away as PACW tumbles after reports last night the company has been weighing a range of strategic options, including a sale https://on.wsj.com/3ASDscj . The Bloomberg report follows three bank failures over the last month (SBNY, SIVB, FRC) and took shares of other regional bank stocks lower today (CMA, BKU, WAL, MCB, TFC, ZION, etc.). FHN also tumbles after mutually agreeing to end their merger agreement with TD Bank (TD). Shares of ZION, MCB, CMA, CFG, KEY, TFC all pressured again this morning.



·     ARNC +27%; confirmed an agreement to be acquired by private-equity firm APO for 430 per share in a deal valued at $5.2 billion, which represents a 33% premium to Wednesday’s closing price https://on.mktw.net/413iAtB

·     BALL +14%; Q1 EPS and revs topped consensus and said is well positioned to achieve long-term targets.

·     FLT +7%; 1Q results that featured upside to both revenue (+230 bp) and EPS (+300 bp) relative to the Street and 2Q outlook was mixed.

·     NEM +4%; rising along with other gold miners GOLD, AEM in flight to safety as gold rises.

·     RCL +6%; posts smaller-than-expected loss of (-$0.23) vs. est. (-$0.70) on better revs of $2.89B and raises year adj EPS $4.40-$4.80, vs. prior $3.00-$3.60 and said yields are now exceeding record highs.

·     SEDG +12%; on results as Q1 EPS $2.90 vs. est. $1.92, Q1 revs $943.9M vs. est. $932.5M and guided Q2 revenue $970M-$1.01B vs. est. $986.4M.

·     SHAK +13%; posted a smaller-than-expected adjusted loss and revs of $253M tops $245.7M estimate as Q1 Same-Shack Sales up 10.3%.

·     SHOP +26%; Q1 earnings and revenue topped analyst estimates, announced the sale of its delivery and logistics business to Flexport; said will let go 20% of its workforce in a second round of layoffs.

·     W +16%; shares jump after smaller Q1 EPS loss and better revs of $2.82B with smaller EBITDA loss $14M, -88% y/y.

·     ZG +8%; reported strong 1Q23 results, beating consensus revenue and EBITDA by almost $45M.



·     EVA -63%; after cuts guidance to net loss of ($186M-$136M) from prior loss (-$48M-$18M) and eliminates dividend (double downgraded to Sell at Truist).

·     FHN -35%; after mutually agreeing to end their merger agreement with TD Bank (TD). TD informed First Horizon that TD does not have a timetable for regulatory approvals to be obtained; TD to make a $200 mln payment to FHN https://on.mktw.net/3nxpzNN

·     OPCH -22%; after saying it is acquiring AMED in an all-stock deal valued at $3.6 billion, including debt; AMED stockholders will receive 3.0213 shares of OPCH common stock for each share held (values AMED around $97.38).

·     PACW -59%; after reports last night the company has been weighing a range of strategic options, including a sale https://on.wsj.com/3ASDscj

·     PARA -25%; after lowering dividend, reports Q1 revs of $7.27B missing the $7.42B est. on weaker earnings, and said it added 4.1Mm subscribers, compared with 9.9Mm in the prior quarter.

·     PLNT -14%; Q1 EPS $0.41 misses $0.46 estimate as revs rise 19% y/y to $222.2M but below ests $238.3M; reaffirms year outlook.

·     QCOM -6%; reported Q2 FY23 revenue above estimates, while EPS was in line; guided Q3 FY23 revenue/EPS below estimates citing headwinds in handsets and IoT driven by inventory adjustments lasting longer than expected and lack of signs of a China recovery.

·     REGN -5%; as Q1 results beat but lowered margin guidance for 2023 to a range of 87% to 89% from 88% to 90% previously.

·     SYNA -20%; as Q3 results beat but guides Q4 revenue $210M-$240M, significantly below consensus $330.39M, citing that demand for consumer IoT products has deteriorated.

·     WAL -55%; on banking fears, despite the bank providing an update saying there was no unusual deposit activity over the last weekend (during FRC failure) as deposit balances held stable at $48.8B from Friday 4/28 to Tuesday 5/2. Shares tumbled further after FT reports bank to explore potential sale https://on.ft.com/3I2fm35 – Bloomberg reported about 30-min later that Western alliance says report of deal talks `absolutely false” as shares pared losses.


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.