Mid-Morning Look: May 05, 2023

Mid-Morning Look

Friday, May 05, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks rise for the first time in 5-days, getting a massive bounce following stronger AAPL quarterly results lifting technology, while a better jobs report for April failed to scare investors about further rate hikes by the Fed. With today’s nonfarm payroll report (higher wages, drop in unemployment, headline jobs strong, though revisions fell), as well as continued strength in the housing market, and good results from Apple, the likelihood of a rate cut by the Fed is pushed-out for the moment (barring something unforeseen like debt ceiling not being risen or more bank turmoil). Yesterday, CME Fed Watch was pricing a high chance of 25-bps in cuts by July; but after today’s stronger jobs data, Treasury yields jumped and expectations for the first possible rate cut was pushed out until August-September period as per Fed Fund futures (reminder Fed’s Powell said Wednesday that cuts were not in base case model at this time). Also helping markets, a massive relief spike in regional banks after days of selling as FRC became the 3rd big bank to fail last weekend. Oil prices rose on Friday but were poised for a third straight week of losses after markets registered dramatic drops on fears of a weakening U.S. economy and slowing Chinese demand. Gold and Silver prices erase much of this week’s advances amid a spike in Treasury yields and modest bounce in the dollar as investors rotate back into stocks. Dow Transports back above 14,000; erasing week-to-date losses. Treasury yields soar: the 1-month yield pares gains, now up 90 bps to 5.45% after rising over 100-bps prior to jobs data at record highs; the 2-yr yield jumps 16-bps to 3.89% and 10-year up 9-bps to 3.44% as jobs data pushes out hopes/chances of Fed rate cuts further into the year (as per Fed fund futures). So far, one straight hour and markets at highs, possibly on track to erase a week of losses in just a few hours.


Economic Data

·     Nonfarm payrolls for April stronger, rising +253K vs. est. 180K, though March was revised lower to 165K from 236K and February to 248K from 326K; private sector jobs rose +230K vs. est.+160K, manufacturing jobs rose +11K vs. est. -5K; the unemployment rate fell to 3.4% from 3.6% prior while wages jumped with average hourly earnings +4.4% y/y vs. est. 4.2% and average hourly earnings all private workers +0.5% m/m (cons +0.3%).







WTI Crude















10-Year Note





Sector Movers Today

·     Shares of U.S. regional lender rise early on Friday after a brutal week of losses that saw their peers FRC collapse and PACW exploring strategic options. Reuters on Thursday reported that U.S. officials at the federal and state level are assessing the possibility of “market manipulation” behind big moves in banking share prices in recent days. JPMorgan upgraded shares of ZION, CMA, WAL to Overweight from Underweight saying they appear substantially mispriced to them. Said with sentiment this negative, in their view it won’t take much to see a significant intermediate-term favorable re-rating of regional bank stocks.

·     Semiconductors: AAPL impact: stronger quarterly iPhone results from AAPL overnight help boost the semis. MCHP slips as reported Q4 results and gave a cautious outlook citing concerns about inventories and demand as headwinds. MPWR slumps after results as GM down 80bps Q/Q to 57.7% in 1Q and expected 50bps lower each in 2Q/3Q before stabilizing at ~56% in 4Q. CRUS posted in line F4Q (March) results and guided F1Q (June) lower given weaker smartphone (iPhone) volumes and weaker general market demand.

·     Software earnings movers: BILL shares jump after earnings beat and higher outlook and better-than-feared core TPV growth; TEAM shares stumbled as reported solid F3Q revenue upside, driven mainly by strong Data Center activity but Cloud revenue growth decelerated to 34% Y/Y (vs. 41% in F2Q) due largely to lower installed base expansion rates and guided Q4 revenue $900M-$920M vs. est. $919.51M; FIVN reported beat/raise 1Q23, with an implied slight downtick in C2H23 top line as 1Q/2Q upside was not flowed through to 2023 top-line increased guide; FTNT reported total billings growth of 30% Y/Y nicely surpassed the Street’s ~25% forecast with product revenue growth of 35% Y/Y also showing healthy upside, with higher Q2 guidance.

·     In online travel: BKNG 1Q22 nights/bookings were 7%/8% above consensus forecasts on strong demand and expanding booking windows. EBITDA was 6% below consensus, due to BKNG’s spending more on paid marketing; EXPE reported solid 1Q23 results, headlined by a $1.1 billion gross bookings beat coupled with a recovery in international.



·     AAPL +4%; reported a top and bottom-line quarterly beat, raised its dividend, and announced a $90B share buyback, but revs fell for the 2nd straight quarter and guidance for next quarter implies revs falling a 3rd straight. Q2 iPhone sales rose 1.5% to $51.33B (better), Mac sales fell more than 30% to $7.17B (miss), and services business grew 5.5% to $20.9B (in-line).

·     APLS +7%; reported Q1 Syfovre sales of $18MM, well above consensus of $2.5MM and disclosed that >6k vials were shipped to physicians during the first 5 weeks of launch.

·     BILL +16%; topped revenue and EPS, while the closely watched core TPV metric (excluding Divvy/I2G) came in at $61.0B, above the implied VA Street estimate of $58.4B.

·     CI +6%; beat profit and revenue expectations and raised its full-year outlook, even as total customer relationships fell.

·     COIN +10%; Q1 results beat, but company warns of lower subscription and services revenue – 1Q revs fell -34% y/y to $772.5M vs. est. $653.8M.

·     CVNA +30%; after posting a narrower-than-expected quarterly loss and said it hopes to achieve positive adjusted EBITDA this quarter.

·     DKNG +16%; boosted revs more than 80% from last year to $770M, crushing estimates of $705M, and now expect annual revenue to easily clear $3 billion for the first time and adjusted Ebitda.

·     IEP +14%; after saying it would pay a dividend of $2 per unit to investors.

·     ZION +17%; among regional bank stocks rebounding, with CMA, KEY, PACW, FHN, MCB rising.



·     BIO -18%; among worst in the S&P and qtrly miss ($3.34/$676.8M vs. est. $3.54/$689.8M and said sees FY23 currency neutral revenue growth of 4.5%.

·     CLFD -11%; Q2 EPS and revs beat but slashed Y23 EPS view to $1.80-$2.10 from $4.30-$4.50 and cuts FY23 revenue view to $260M-$275M from $380M-$393M citing customer order trends.

·     LYFT -18%; delivered a solid quarter, but 2Q guidance for +2% y/y revenue growth and ~500 bps of contribution margin impression weighed on shares.

·     TEAM -10%; reported solid F3Q revenue upside, driven mainly by strong Data Center activity but Cloud revenue growth decelerated to 34% Y/Y (vs. 41% in F2Q) due largely to lower installed base expansion rates and guided Q4 revenue $900M-$920M vs. est. $919.51M.

·     TRUP -24%; posted a wider first-quarter loss despite a surge in revenue as the costs of veterinary services rose sharply (up 15% vs. 3% assumptions).


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.