Mid-Morning Look: November 07, 2022

Mid-Morning Look
Monday, November 07, 2022
Index |
Up/Down |
% |
Last |
|
||
DJ Industrials |
148.60 |
0.63% |
32,551 |
|||
S&P 500 |
3.00 |
0.08% |
3,773 |
|||
Nasdaq |
-29.49 |
0.28% |
10,445 |
|||
Russell 2000 |
1.75 |
0.10% |
1,801 |
|||
U.S. stocks very choppy to start the trading day and week, seeing continued strength in market leader energy stocks (XLE) as well as a small rebound early in lagging tech (XLK) and communications sectors (XLC) after surging interest rates/slowing growth fears have sent the Nasdaq down -33% YTD. Defensive utilities and consumer discretionary the big sector drags early. Some potentially major market moving catalysts this week include mid-term election results tomorrow night (Republicans expected to take back control of the House but Senate remains unclear), along with inflation data late week (CPI on Thursday) and plenty of Fed speakers on the week. The bulk of large cap earnings season behind us (few big names left in retail and tech, DIS this week), with over 430 names having reported this quarter in what has shown generally good results, but very cautious outlooks/guidance citing macro concerns, rising rates, increasing costs and uncertainty. Treasury yields extending gains, with the 10-yr at 4.2% and 2-yr 4.72%, while oil slips, gold is flat and the dollar index (DXY) down over -0.5%. Stocks finished last week with losses, with the S&P 500 sliding more than 3% for the 10th time this year. The declines came after the Federal Reserve disappointed investors by signaling that officials might raise borrowing costs next year more than they had projected. Friday’s jobs data, which showed that the labor market remains strong, further complicated the outlook for the trajectory of interest rates.
Macro |
Up/Down |
Last |
|
||
WTI Crude |
-0.22 |
92.39 |
|||
Brent |
-0.22 |
98.37 |
|||
Gold |
2.00 |
1,678.60 |
|||
EUR/USD |
0.0026 |
0.9986 |
|||
JPY/USD |
-0.01 |
146.58 |
|||
10-Year Note |
0.047 |
4.205% |
|||
Sector Movers Today
· Coal, Utilities & Solar: BTU shares jump as M&A deal talks with Australia’s Coronado Global Resources Inc ended; DQ said its subsidiaries Xinjiang Daqo and Inner Mongolia Daqo have signed a five-year high-purity polysilicon supply agreement with a ‘leading’ solar manufacturing company in China; also announces a $700 mln share repurchase program; NRG Q3 EPS $0.29 vs. est. $1.43; Q3 revs $8.51M vs. est. $7.89B; NI Q3 EPS $01.0 vs. est. $0.11 while narrows FY22 EPS view to $1.44-$1.46 from $1.42-$1.48 and to sell a minority interest in NIPSCO business following review; in research, Dominion (D) downgrade by several Wall Street analysts (JPM, CSFB, UBS) saying the co’s announced business review would result in large earnings reset and dilution
· Biotech movers: BNTX reports Q3 profit of 1.78B euros, compared with 3.21B euros a year earlier and quarterly revenue of 3.46B euros vs estimates of 2.06B euros on lower sales of the COVID-19 vaccine and raises lower end of FY22 forecast; ICPT announces additional positive data in fibrosis due to NASH from new analysis of phase 3 REGENERATE study at AASLD the liver meeting; AXSM reported mostly in-line quarterly results for Q3; BLUE cash and cash equivalents $186M, raised $46M via ATM in Q3, received two PRV’s in Q3 – exploring options to monetize both PRVs and said Q4 cash burn projected to $75M-$80M
· Software movers: PLTR posted a 22% rise in its quarterly revenue (slowest since went public in 2020) to $478M vs. est. $470M while EPS missed by a penny and forecast a better-than-expected Q4 revenue due to renewal and expansion of U.S. government contracts and a growing commercial business; SE upgraded to Overweight at JPM citing urgency to achieve self-sufficiency and be cash flow positive supports positive earnings revisions; OKTA upgraded from Neutral to Buy at Guggenheim with $65 tgt noting faces challengers, but finds current valuation levels too compelling to ignore; WDAY upgraded from Sell to Neutral at Guggenheim given the recent market turmoil that has sent shares down below current price Target; CERT jumps after Arsenal Capital Partners Increases Investment Certara with $449M Stock Purchase
Stock GAINERS
· BTU +5%; shares jump as M&A deal talks with Australia’s Coronado Global Resources Inc ended
· CERT +20%; jumps after Arsenal Capital Partners Increases Investment Certara with $449M Stock Purchase
· DWAC +21%; after Donald Trump mentions possibly running for 2024 election; suggested this weekend at a rally in Pennsylvania that an announcement for another run was imminent
· IAA ; to be acquired by RBA in stock, cash transaction valued at $7.3B; combines highly complementary businesses operating in adjacent verticals to unlock accelerated growth https://on.mktw.net/3DGVGP7
· META +5%; is planning to begin large-scale layoffs this week, according to people familiar with the matter; Meta reported more than 87,000 employees at the end of September, the WSJ reported this weekend
· OYST +38%; as Viatris agrees to acquire for $11/share in cash https://bit.ly/3FUxvQ2
· SE +6%; upgraded to Overweight at JPM citing urgency to achieve self-sufficiency and be cash flow positive supports positive earnings revisions
Stock LAGGARDS
· AAPL -1%; said over the weekend that it expects lower shipments of the iPhone 14 Pro and Pro Max models after a production cut at a Foxconn plant in China’s Zhengzhou
· APRN -13%; Q3 EPS loss (-$0.74) vs. est. loss (-$0.50); Q3 revs $109.7M vs. est. $118.87M; withdraws previous guidance of 2022 revenue growth of 7%-13%
· COST -2%; downgraded to Equal Weight at Wells Fargo saying it remains a high-quality name but see several hurdles in the path of this rich multiple stock moving forward
· CVNA -15%; extend last week earnings decline, now down -96% YTD – Barron’ s noted that prices are coming down and that is creating a new problem for auto dealers such as Carvana
· D -6%; downgrade by several Wall Street analysts saying the company’s announced business review would result in large earnings reset and dilution
· PLTR -8%; posted a 22% rise in its quarterly revenue (slowest since went public in 2020) to $478M vs. est. $470M while EPS missed by a penny and forecast a better-than-expected Q4 revenue
· THS -6%; after posted surprise loss and misses, hurt by a strong dollar, rising costs – issued Q4 guidance of 22%-24% net sales growth y/y
· VERV -24%; said the FDA placed on hold its clinical trial application for evaluating gene editing treatment VERVE-101 which is being tested as a potential treatment for a subtype of atherosclerotic cardiovascular disease
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.