Mid-Morning Look: October 10, 2022

Mid-Morning Look
Monday, October 10, 2022
Index |
Up/Down |
% |
Last |
|
||
DJ Industrials |
-67.50 |
0.23% |
29,229 |
|||
S&P 500 |
-24.25 |
0.67% |
3,615 |
|||
Nasdaq |
-124.32 |
1.17% |
10,528 |
|||
Russell 2000 |
-2.66 |
0.16% |
1,699 |
|||
U.S. stocks lower, extending last Friday’s sharp declines led by weakness in technology amid further pressure in semiconductors (SOX falls another 4%, now down roughly 40% YTD) as the Nasdaq Composite trades to 2-year lows. Seeing defensive asset classes rebound early after leading declines last week with Utilities, REITs and Staples edging higher. Semi chip equipment stocks (AMAT, KLAC, LRCX) taking brunt of selling pressure early following new export rules by the US gov’t. Major averages snapped their 3-week losing streak last Friday, but overall disappointed, erasing most of the early week gains after strong jobs data. Investors are looking ahead to a busy week that includes the release of minutes from the Federal Reserve’s September meeting, a report on inflation in September, and the start of the third-quarter earnings season. European stocks fell for the fourth straight day as concerns mounted that central bank policy-tightening would send the global economy into a hard landing and the dollar extended its gains while bonds were closed for trading on the Columbus Day bond market holiday; cryptos were flat. Comments from Paul Tudor Jones this morning on CNBC showed: an uncertain macro environment is “best for investing” while consequences of Fed rate hikes are yet unknown. He noted wage hikes give inflation significant push, a very challenging situation for the Fed and said there are significant consequences if inflation is not tamed. Did say short term pain will mean long term gain.
Macro |
Up/Down |
Last |
|
||
WTI Crude |
0.00 |
92.64 |
|||
Brent |
0.21 |
98.13 |
|||
Gold |
-30.50 |
1,678.80 |
|||
EUR/USD |
0.0025 |
0.9716 |
|||
JPY/USD |
0.39 |
145.72 |
|||
10-Year Note |
Closed for |
holiday |
|||
Sector Movers Today
· Software movers: FTNT upgraded to Overweight at Morgan Stanley in Internet Security as think the market materially underestimates FTNT’s secular growth and share gains in an expanding TAM across security + networking; TOST upgraded to Buy at Mizuho as proprietary survey of 55 TOST restaurants uncovers the positive impact on sales and profits from cross-selling payroll and adjacent SaaS products; TENB downgraded to Neutral at BTIG following recent checks on the security space saying fieldwork leads them to believe that growth in TENB’s core vulnerability management Target market is slowing at a faster-than-expected pace; FIVN announces leadership transition as Mike Burkland to return as CEO as Rowan Trollope has resigned
· Auto sector: RIVN said it will recall about 13,000 vehicles it delivered to customers after discovering a minor structural defect, sending shares lower; at UBS, Ford (F) was downgraded to sell from neutral due to weak profit margin while GM was downgraded to neutral from buy and cut tgt to $38 from $56 saying the overall sector outlook for 2023 is deteriorating fast so that demand destruction seems inevitable at a time when supply is improving; the China Passenger Car Association said TSLA delivered 83,155 cars last month, an 8% increase from August that crushed the group’s previous best of just under 79,000 recorded in June; Nissan (NSANY) is said to back Renault EV (RNLSY) split to revamp alliance as Nissan said ready to take up to 15% stake in Renault EV unit; FREY entered into an agreement with Aleees
· Restaurants: Cowen said into 3Q results, are increasingly cautious on SHAK , while feel comfortable owning CMG into the print, and have the most confidence that EPS will serve as a positive catalyst for WING; Benchmark said improving traffic trends over the course of 3Q22 are an encouraging sign and allow them to raise Q3 comp sales on some covered Casual Dining names (said July results for the Index saw SSS of 0.3% (on traffic declines of 7.3%) which then accelerated to SSS of 5.7% in August (on traffic declines of 3.3%); for NDLS, Truist said would be buyers into 3Q22 results given expectation of a comp store sales beat (industry-wide acceleration and marketing/menu innovation), strong margin guidance (sharply lower chicken breast prices) and accelerating development
Stock GAINERS
· ATEC +10%; raised guidance as sees prelim Q3 revs to grow to $89M-$90M, above est. $81.4M
· INFY +3%; Indian IT names rise after Q2 profit of India’s top IT exporter Tata Consultancy Services rises 8.4% to 104.31B Indian rupees (vs. Reuters est. 102.44B) on the back of strong deal wins
· KHC +2%; upgraded to buy at Goldman Sachs and downgrades PG to neutral, adding more food exposure within US consumer staples coverage
· MOS +2%; Chicago wheat futures extend gains after Ukraine attacks this weekend, while ag chemicals (NTR, CF, MOS) advanced on supply fears
· MPW +2%; announces $500M share buyback
· MRK +4%; said the Phase III study of its sotatercept drug candidate met the key goals as an add-on to stable background therapy for pulmonary arterial hypertension (PAH)
· WBA +3%; strength in healthcare names; rises ahead of earnings this week
Stock LAGGARDS
· F -7%; was downgraded to sell from neutral at UBS due to weak profit margin while GM was downgraded to neutral from buy and cut tgt to $38 from $56 saying the overall sector outlook for 2023 is deteriorating fast
· FIVN -19%; announces leadership transition as Mike Burkland to return as CEO as Rowan Trollope has resigned
· PPG -3%; said it sees Q3 adj EPS to be between 5%-7% below the low end of the company’s forecasted range of $1.75-$2.00 prior (est. $1.83), as sales were impacted by further softening demand in Europe
· PYPL -4%; following a plan announced to charge customers $2,500 for misinformation was revealed; though later backtracked saying it was released “in error” and would not go into effect
· RIVN -9%; said it will recall about 13,000 vehicles it delivered to customers after discovering a minor structural defect, sending shares lower
· SUPN -1%; after saying the FDA declined to approve its experimental apomorphine infusion device, SPN-830, for continuous treatment of motor fluctuations in Parkinson’s disease as issues complete response letter (CRL) requiring additional information
· TENB -5%; downgraded to Neutral at BTIG following recent checks on the security space saying fieldwork leads them to believe that growth in TENB’s core vulnerability management Target market is slowing at a faster-than-expected pace
· WYNN -8%; Citigroup cut its estimate of Macau’s gross gaming revenue in October
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.