Mid-Morning Look: October 23, 2023

Mid-Morning Look

Monday, October 23, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks opened lower amid surging Treasury yields and investors expressing caution ahead of a busy week of quarterly earnings. The S&P 500 and Nasdaq both touched near five-month lows as the yield on the benchmark U.S. 10-year Treasury note topped 5.02% earlier (highest since 2007) while four of the biggest names in the market are expected to report this week (MSFT, GOOGL, META, AMZN). The S&P 500 (SPX) slipped below 4,200 points, a technical level that has been watched, and dropped further below its key 200-day MA support of 4,235. But getting a lot of attention in the bond market today, Pershing Square’s Bill Ackman tweeted earlier this morning that “We covered our bond short; saying there is too much risk in the world to remain short bonds at current long-term rates”. The headlines pushed bond markets higher and yields off overnight highs (10-yr dropped to 4.89% from highs above 5.02% prior). That lower move in yields helped ease sentiment for the moment, lifting interest rate sensitive sectors, while growth names (tech) rallied off lows. Outside of yields, headlines this morning were dominated by M&A action, with at least 5 deal announcements, the biggest being a $53B tie-up in the oil E&P sector with CVX buying HES (also a deal in the Pharma space, 1 in software and 2 in the industrials – details below). Chemical stocks were crushed as FMC shares fell to the lowest levels in over 6 years after lowering guidance ahead of earnings. U.S. stocks are looking to avoid a 5-day losing streak while the S&P looks to continue its amazing streak – S&P 500 is currently sitting at 15 straight green Mondays coming into the day – longest streak ever for the index. Oil prices edge lower as fears softened over the weekend that the conflict in the Middle East would escalate as Israel held off on its ground offensive into Gaza amid efforts to secure the release of more hostages.







WTI Crude















10-Year Note





Sector Movers Today

·     In Personal Care: Raymond James with a few ratings changes as ELF was upgraded from Outperform to Strong Buy and adding it to the Analyst Current Favorites list as it believes the ~27% sell-off from its highs more than reflects growth deceleration off its peaks. The firm upgraded CHD to Market Perform from Underperform as thinks relative valuation to HPC peers is more balanced after recent market moves since the midpoint of the year (CHD -10% vs HPC -8% and SPX -5%), and downgraded NWL to Strong Buy from Outperform citing a more muted recovery path offset by a FY outlook that was already lowered last quarter.

·     In Industrials: In Waste sector: WM and RSG both upgraded from Neutral to Buy at UBS and maintain Buy ratings on WCN & CWST as expects municipal solid waste stocks to be a popular way to ride out current market turbulence and risk of a rate-driven economic slowdown. FTV agreed to acquire electronic test solutions company EA Elektro-Automatik Holding for $1.45 billion in cash. https://tinyurl.com/26pc363m 

·     In Software: OKTA adds to Friday sharp declines after saying a hacker used a stolen credential to access its support system. “The threat actor was able to view files uploaded by certain Okta customers as part of recent support cases,” Okta’s Chief Security Officer said. In Cloud Applications: Piper flagged risk to SW application sector on mismatch given accelerating 2024 consensus growth prospects that appear too optimistic. The firm downgraded ratings on CRM, U, MTTR to Neutral and ASAN, AYX to Underweight and reducing estimates and PTs across coverage list to reflect a more muted recovery in 2024 on macro headwinds and AI monetization uncertainty that could temper further SW multiple expansion.



·     ESMT +10%; as Vista Equity agreed to buy the company in a deal valued at $4 billion as ESMT holders to receive $23 per share, an 11% premium https://tinyurl.com/26f3nnez

·     HES +1%; CVX said it would buy HES in an all-stock deal worth $53 billion to upgrade and diversify its portfolio, adding a large oil asset in Guyana and bolstering its U.S. shale operations. HES holders will receive $171 a share. https://tinyurl.com/yjr4p7ra 

·     MARA +5%; Bitcoin prices rose over 3% early trading around the $31,000 level and Ethereum rose over 4% to $1,670 as crypto space extends last week gains with COIN, HUT, MARA, MSTR, RIOT all benefiting early.

·     PHG +2%; raised its comp sales guidance to 6%-7% rise vs. previous guidance for mid-single-digit comparable growth and sees adj Ebitda margin at 10%-11% compared with previous guidance at the upper end of the high-single-digit range for 2023.

·     ROIV ; RHHBY agreed to buy immunology company Telavant Holdings from ROIV and PFE in a $7.1 billion deal. ROIV has a 75% stake in Telavant and PFE 25%. Roche take on the rights to develop and commercialize it in the U.S. and Japan. https://tinyurl.com/4nmdr6hv

·     TGH +43%; as Stonepeak has struck a deal to purchase shipping-container lessor TGH for more than $2 billion, as Textainer investors will receive $50 a share in cash (deal valued at more than $7B including debt https://tinyurl.com/24b262k2 

·     WBA +3%; upgraded to Overweight from Neutral at JP Morgan and raise tgt to $30 from $27 as believes that today commences a new era for shares as Tim Wentworth assumes the CEO role.



·     AJX -32%; after terminated its merger agreement with EFC saying the companies “intend to continue to work together on mortgage loan opportunities”.

·     FMC -18%; cut its Q3 and 2024 outlook citing lower sales volumes in Latin America as sees Q3 revs of $982M below consensus of $1.2B and Q4 revs $1.14B-$1.38B vs. est. $1.67B and for FY24 sees revs $4.48B-$4.72B vs. est. $5.54B.

·     LICY -43%; said it is pausing construction work on its Rochester Hub project, pending completion of a review of its go-forward strategy/expects costs of the project to exceed previous guidance.

·     OKTA -7%; adds to Friday sharp declines after saying a hacker used a stolen credential to access its support system.

·     RVMD -43%; shares tumbled after releasing test results for an experimental cancer treatment that Leerink Partners said were “at best, in line with expectations.”

·     UCTT -8%; as lowers Q3 EPS view to $0.04 from prior view of $0.08-$0.28 (consensus $0.15) primarily attributed to an abrupt decline in Services business volume, reduced efficiencies, and an unfavorable mix.


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.