Mid-Morning Look: October 12, 2023

Mid-Morning Look

Thursday, October 12, 2023





DJ Industrials




S&P 500








Russell 2000






U.S. stocks are mixed as large cap technology and energy sectors outperform early while defensive Consumer Staples, REITs, and Utilities are the biggest drags along with Materials. Small Cap stocks (Russell 2000) are seeing the biggest pullback as Treasury yields and the dollar rebound following a slightly “hotter”, to in-line Sept CPI inflation report, though coming in a bit better than the PPI results yesterday. Note major averages came into today riding a 4-day win streak, with the S&P 500 having bounced just shy of its 200-day MA last week and has extended momentum higher ever since. The rally began despite a much stronger nonfarm payroll reading last Friday (raising expectations of a more aggressive Fed on rates), a conflict in the Middle East after Isarael was attacked by Hamas this weekend, and higher inflation readings this week. Attention will turn to earnings as well going forward with big banks reporting tomorrow (JPM, C, WFC) as well as UNH in Healthcare.


A day after hotter September producer prices (PPI), headline consumer prices (CPI) rose +0.4% slightly above estimate and prior +0.3% while the y/y headline held steady at 3.7% (estimate was for dip to +3.6%). The core CPI (excludes food and energy) was in-line with ests M/M and for Y/Y also in-line, but down from the prior month. U.S. benchmark 10-year yields rose as high as 4.65% (off earlier lows 4.53%) and the two-year yields, which reflect interest rate expectations, turned higher as well, last up 7.2 basis points at 5.075%. The dollar strengthened to 2-week highs.


Economic Data

·     Consumer Price Index (CPI) headline M/M for Sept rose +0.4% vs. est. +0.3% and headline Y/Y for Sept rose +3.7% vs. est. +3.6%. Core CPI Ex: Food & Energy M/M for Sept rose +0.3% vs. est. +0.3% and Y/Y core rose +4.1% vs. est. +4.1% (down from +4.3% prior month reading but hasn’t been below 4% since May 2021). Housing-related inflation was back up to 0.6% MoM, bringing the 3-month annualized trend in rent of shelter up to 5.5%.

·     Weekly jobless claims unchanged at 209K from prior week and vs. est. 210K; the 4-week moving average fell to 206,250 from 209,250 prior; continued claims rose to 1.702M from 1.672M prior week and the U.S. insured unemployment rate unchanged at 1.1%.






WTI Crude















10-Year Note





Sector Movers Today

·     In Solar & Renewables: FSLR was upgraded to Overweight from Equal weight at Barclay’s with $224 price target saying in an environment where there is uncertainty around the trajectory of utility-scale growth, thinks FSLR’s contracted backlog, and current valuation offers an attractive entry point. Oppenheimer said FSLR, SHLS, and HASI top picks in renewables into Q3 earnings, but said reflecting valuation trends and industry-wide asset timing considerations, is lowering estimates and price targets for AMRC to $55 from $67, CWEN to $34 from $38, and ORA to $84 from $96, while trimming estimates for ENPH and SEDG.

·     In the E&C Sector: MTZ was upgraded by Craig-Hallum to Buy from Hold with a $98 price target as believes the recent pullback of 45% since MasTec reported its Q3 results has been overdone and is taking the opportunity to upgrade. UBS addressed the selloff in MTZ, PWR, PRIM on the back of investor concerns around renewables development saying the main issues are uncertainty around solar tax incentives related to IRA and rising interest rates – but the firm believes the long-term outlook for renewables is positive.

·     In Casinos: TD Cowen previews the quarter saying they are cautious into quarterly results. The firm noted YTD industry data suggest Nevada gaming revenue will continue to expand in 2023, but the story for regional properties is less clear given the interest rate environment and precarious Consumer Confidence – decreased estimates and tgt for both BALY and CZR.



·     FAST +6%; shares rise behind higher Q3 sales and earnings topping ests and as 3Q daily sales rate for manufacturing customers outpaced that of non-residential construction customers and resellers (shares of GWW, MSM moved in sympathy early).

·     FSLR +1%; was upgraded to Overweight from Equal weight at Barclay’s with $224 price target saying its contracted backlog, and current valuation offers an attractive entry point.

·     LL +31%; shares surge as Live Ventures (LIVE) offered to acquire the company for about $180M in cash, or $5.85 per share, https://tinyurl.com/yknj4j2x

·     TGT +2%; upgraded to Buy at bank America and raised its price tgt to $135 from $120 noting shares have declined 19-20% since the end of July (vs. the S&P down -5%).

·     VSAT +6%; said it expects to recover less than 10% of the planned throughput from its failed ViaSat-3 F1 satellite and will not replace it but instead finalize a $420M insurance claim by year-end; said it can still meet customers’ current and future needs; also lowered capex.

·     WBA +3%; posted mixed Q4 results, with slightly better US revs, offset by worse margins noting higher operating costs in the quarter from certain legal and regulatory accruals and settlements, and costs from its cost restructuring efforts.



·     AMR -10%; cuts its 2023 metallurgical coal shipment guidance to 14.8m tons-15.2m tons; tightened and adjusted our full-year guidance ranges for shipment volumes.

·     BYND -6%; downgraded to Underperform from Neutral at Mizuho while maintain buys on STKL and OTLY (tgt cut to $4 from $7) saying YTD, plant-based stocks have significantly underperformed including BYND (-28%), OTLY (-60%), and STKL (-65%).

·     CMC -7%; after Q4 miss; Q4 EPS $1.69 vs. est. $1.82; Q4 sales $1.9B vs. est. $2.12B; Q4 North America segment adjusted EBITDA increased from the prior year period.

·     F 2%; said about 8,700 union members walked out of its Kentucky plant, its biggest globally, halting production of Super Duty trucks as United Auto Workers union expanded its strike

·     HRL -8%; as holds Investor Day meeting today.

·     INFY -5%; cut the top end of its full-year revenue growth to 1%-2.5% on a constant currency basis, compared to its prior view of 1%-3.5% after reporting quarterly profit slightly below estimates, hurt by an uncertain demand environment.

·     INMD -21%; after lowering its full-year revenue guidance to $500M-$510M from the prior $530M-$540M citing slowing economic conditions and financing constraints.

·     KBH -4%; along with weakness in DHI, LEN, MTH, PHM in homebuilder sector as rates rebound.


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.