Mid-Morning Look: October 31, 2022

Mid-Morning Look

Monday, October 31, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks slipping early, giving back some of last week’s big gains ahead of another busy week of earnings and results from the November FOMC policy rate meeting mid-week where another 75-bps hike is expected. Treasury yields bounce after slipping last week with the 10-yr up 4 bps to 4.05% and the 2-yr up 7.5 bps to 4.5%. High inflation data overnight in Europe (Eurozone CPI a record high) and weaker manufacturing data in China a reminder of a slowing global economy. We have a huge slate of SMID Cap earnings a handful of large caps and 168 S&P members this week after 33% of S&P names reported last week, as the bellwether week was disappointing, but the market remained resilient in hopes of slowing rate hikes from the Fed after this week expected 75-bps hike. New flow quiet to start ahead of the busy week, with profit taking early after last week’s S&P 500 +3.9% advance, the Dow +5.7% and the Nasdaq rose +2.2%, as all on track for big gains for the month of October. Chicago PMI for October falls to 45.2 from 45.7 and below est. 47.0 in another weak US data point.







WTI Crude















10-Year Note





Sector Movers Today

·     Semiconductors: ON Q3 revs rose 26% y/y to $2.19B vs. est. $2.12B and EPS above views on better margins; Foxconn Technology Group, the world’s largest maker of iPhones, said it may boost capacity at alternative sites to mitigate potential disruption at its main Covid-stricken plant in China; AMD downgraded from Outperform to Market Perform at Northland with $60 tgt saying they believe indigenous Chinese demand will be very slow to recover and ARM CPU market share gains will continue, particularly in China; Deutsche Bank noted SIA data showed September semi revs of $49.4B came in below their ests ($53.1B) and below typical September seasonality (total revs +5% m/m vs. 10-yr avg +11% m/m)

·     Media, Internet: Twitter is planning to start charging $20 per month for verification / And if the employees building it don’t meet their deadline, they’ll be fired by Elon Musk, the Verge reported https://bit.ly/3Wh9nNb ; for DIS, Shanghai’s Disney Resort abruptly suspended operations on Monday to comply with COVID-19 prevention measures, with all visitors at the time of the announcement directed to stay in the park until they return a negative test for the virus; PARA downgraded from Equal Weight to Underweight at Wells Fargo and cut tgt to $13 from $19 saying they can no longer justify its premium multiple amid our more negative view on linear trends and an uncertain DTC outlook; Citigroup opened a 30- day positive catalyst watch for ROKU into earnings saying there is a reasonable correlation between YouTube’s and Roku’s revenue growth rates; China stocks BABA, BIDU, JD, PDD slip early, adding to recent weakness after data showing factory and services activity in China contracted in October

·     Healthcare Services: Cowen noted on Friday, CMS announced it will finalize its long-delayed MA RADV rule by 2/1/23 – a surprise to them as had expected CMS to delay at least another year – and said as implemented in 2012, viewed the rule as relatively immaterial; VillageMD, which is majority owned by WBA is said to evaluating a deal to merge with Warburg Pincus-backed Summit Health, the parent of CityMD. The acquisition of Summit Health is expected to value the combined company between $5B-$10B said Bloomberg report https://bit.ly/3Wsqaw ; in Healthcare IT, Wells Fargo initiated DOCS overweight tgt $38, HCAT equal weight tgt $10, and VEEV Equal weight tgt $180



·     AR +5%; along with gains in EQT, CHK, RRC, SWN as natural gas producers outperform in strong energy sector with nat gas up over 11%

·     EMR +1%; enters into an agreement to sell a majority stake in its climate technologies business to Blackstone Inc. in a deal that values the business at $14.0B, with the co to receive upfront cash proceeds of $9.5 billion

·     GME +9%; no news, but “meme” stocks AMC, BBBY seeing early strength

·     SLB +3%; energy stocks lone sector outperforms in the S&P early

·     SXC +9%; after better earnings results

·     WYNN +10%; after Golden Nugget owner Tilman Fertitta has amassed a 6.1% stake, buying 7 million shares



·     BIDU -2%; China stocks JD, PDD slip early, adding to recent weakness after data showing factory and services activity in China contracted in October

·     EPIX -22%; as announced that Janssen R&D is suspending enrollment into the Phase 1 clinical study of EPI-7386 with apalutamide or EPI-7386 with abiraterone acetate plus prednisone in metastatic castration-resistant prostate cancer patients

·     GPN -6%; Q3 EPS and revs reported in-line with ests while said for 2022, continue to expect constant currency adjusted net revenue growth of 10% to 11% over 2021, excluding dispositions – higher operating costs weigh on shares

·     HBI -5%; double downgraded from Overweight to Underweight at Wells Fargo and cut tgt to $5 from $13 as now see greater risk to numbers, and potential headwinds via the company’s debt/leverage position

·     HWM -4%; cut its revenue guidance for the full year to $5.6B-$5.65B from prior $5.65B-$5.72B and slightly lower EPS after a narrow miss for Q3

·     PARA -3%; as Wells Fargo downgraded the company to underweight from equal weight, saying that the stock’s premium valuation is not warranted amid worsening trends

·     PBR -3%; downgraded to Neutral at JPMorgan saying as a state-owned enterprise, Petrobras’ strategic directions do change with changes in the country’s political leadership

·     TIL -37%; shares tumble after voluntarily pausing patient enrollment in trials testing its experimental cancer therapies, ITIL-168 and ITIL-306

·     TSP -44%; after terminates its CEO – move comes after reports the Co faces three US federal investigations into whether it improperly transferred technology to a Chinese startup, the Wall Street Journal reported, citing people familiar with the matter

·     YMAB -48%; said an advisory committee to the U.S. FDA unanimously voted against the use of its cancer drug in a vote of 16-0, saying it did not provide sufficient evidence that its drug omburtamab improves overall survival in pediatric patients with neuroblastoma


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.