Mid-Morning Look: May 24, 2023

Mid-Morning Look

Wednesday, May 24, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks slide overnight and extend declines after the market opened as debt limit talks in Washington have hit an impasse, with negotiators far apart on key issues, especially the spending cuts demanded by Republicans, as time runs short to avert a U.S. default. Markets are starting to feel the concern approaching the June 1stX-date” as S&P futures are now down 100 from Monday night’s high. The CBOE Volatility index (VIX) rises over 10% after a 7.6% jump Tuesday to its highest levels since May 4th as there has been no sign that President Joe Biden and House Speaker Kevin McCarthy had spoken since their meeting at the White House on Monday. A new round of discussions between their negotiators on Tuesday ended with the two sides deadlocked. The focus in Europe was on the upside surprise in UK inflation, which sank European markets while German Ifo business climate survey missed. Retail in focus this morning with ANF, KSS, URBN rising on earnings results while EXPR, PLCE, SCVL slide on results. Software mixed bag after PANW solid results, Housing holding strong on TOL earnings, but all eyes on the chip and AI sector ahead of NVDA earnings tonight after the close.







WTI Crude















10-Year Note





Sector Movers Today

·     In Banks: Citigroup (C) announced it will pursue an initial public offering (IPO) of its consumer, small business and middle-market banking operations in Mexico following the planned separation of its leading institutional business that will remain part of Citi. PACW agreed to sell its real estate lending unit to Roc360, a property focused bank. FHN was upgraded to Buy from Hold at Jefferies and previews the upcoming Investor Day as views FHN as unique as this will be the first-time mgmt. provides guidance in 17 months post TD deal break. Said find risk/reward attractive given robust capital position/M&A optionality.

·     Truckers fall as LSTR lowered Q2 EPS view to $1.75-$1.85 from prior view $1.90-$2.00 and cuts rev forecast to $1.33B-$1.38 vs. prior $1.4B-$1.45B citing market conditions, trends in loads number; watch shares of other logistics and trucker names WERN, JBHT, ODFL, XPO.

·     Engineering and Design: DY strong quarterly results as Q1 EPS $1.73 vs. est. $0.70; Q1 revs $1.045B vs. est. $939.2M; sees 2Q contract rev increasing mid-single digit as percentage of contract rev vs year-ago (but shares slipped); positive for MTZannounces quarterly cash dividend and new $500 million stock repurchase program.

·     In IT Services; Comm Equipment: GLW announces 20% increase to display glass substrate prices; ANET and FTNT added to the US 1 List at bank America and removed CSCO and QCOM said it had secured an up to $2.6 billion deal with the Internal Revenue Service (IRS) for modernizing the government tax agency’s systems.



·     ANF +24%; raised its FY sales outlook to +2%-4%, vs. previous range of +1%-3% growth citing steady demand for its clothes and accessories; posted Q1 sales $836M topping est. $814.5M.

·     GLW +3%; announces 20% increase to display glass substrate prices.

·     KSS +8%; posted an unexpected Q1 profit of $0.13 vs. est. loss (-$0.42), helped by tighter inventory management and cost control while maintained its annual sales and profit forecasts; said Q1 gross margin improved 67-bps to 39%, while inventory declined 6% to $3.5B.

·     PANW +7%; delivered a beat with key metrics above Street estimates, punctuated by billings (+26%-Y/Y), revenue (+24%-Y/Y), NGS ARR (+60%-Y/Y), and operating margin/FCF Margin about 360/450bps above consensus; raised its annual forecasts for revenue.

·     RETA +11%; Stifel said with less fear of near-term competition from PTCT, RETA can continue to work on the pediatric sNDA for Skyclarys to extend its addressable population to all FA patients.

·     TOL +1%; reported Q2 earnings results ahead of expectations on both the top and the bottom lines as net orders were down -18.8% y/y but above consensus estimates of a -26.7% decline and raised its FY23 guidance on almost every metric.

·     URBN +13%; reported a strong EPS beat, driven by top-line upside at Anthropologie and Free People and gross margin well-ahead of expectations and was upgraded to Overweight at Barclays and tgt raised to $38 on accelerating sales.



·     A -10%; after 2Q23 topped estimates but guided FY23 from 5.5-6.5% to 3-4.5% for the year and cut its FY23 adj. EPS forecast to $5.60-$5.65 from prior $5.65-$5.70.

·     ADI -8%; after guided Q3 revenue and profit below analysts’ estimates as sees revs $3.1B plus/minus $100M missing the $3.16B est. and EPS $2.52 plus/minus 10c vs. est. $2.65 as says expects revenue to moderate given the economic uncertainty and normalizing supply chains.

·     INTU -6%; slightly missed Q3 revenue due to weakness in tax, it beat EPS by $0.47 and raised its FY23 revenue and margin/EPS guidance; disappointing TurboTax results stemming from a 2% decline in IRS returns volume was headwind.

·     LSTR -2%; lowered Q2 EPS view to $1.75-$1.85 from prior view $1.90-$2.00 and cuts rev forecast to $1.33B-$1.38 vs. prior $1.4B-$1.45B citing market conditions, trends in loads number.

·     PLCE -24%; lowered 2023 adj net income forecast to $1.00-$1.50 from prior range of $2.50-$3.00 and lower sales view of $1.58B-$1.59B vs. prior $1.62B-$1.66B after Q1 net sales fell 11.2% to $321.6M on larger EPS loss.

·     PTCT -22%; after the announcement of the discontinuation of preclinical and early research programs in gene therapy as part of a strategic portfolio prioritization.

·     SRPT -9%; after saying an approval decision on its gene therapy for Duchenne muscular dystrophy (DMD has been delayed from May 29 until June 22.

·     XPEV -10%; after provided weaker-than- expected guidance on revenue and deliveries for Q2; said Q1 deliveries of 18,230, compared with 34,561 y/y and deliveries were down ~18% q/q; Q1 revs of 4.03 bln yuan was down ~46% /y/ from 7.45 bln yuan (LI, NIO active in sympathy).


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.