Mid-Morning Look: September 01, 2023

Mid-Morning Look

Friday, September 01, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks advanced following a best-case scenario August payroll report from the BLS, as headline jobs data came in better, but revisions for prior months were lower, wages slipped y/y, and the unemployment rate rises to 3.8% from 3.5% as labor market gets less “tight” given the jump in labor participation rate, topping the pre-covid levels. The data lowered expectations of additional rate hikes from the Fed this year, helping boost interest rate sensitive sectors and growth stocks as Treasury yields and the dollar fell, lifting precious metals. However, after a sharp drop to lows of 4.06% after the payroll data, markets saw a big reversal in yields as the 10-yr moved to highs above 4.15%; the 2-yr yield down 3bps at 4.83% (but off lows – still down 25 bps for the week). WTI oil futures hit $85 a barrel for the first time since November on track for weekly gains. The tech heavy Nasdaq saw big gains out of the gate behind better results from DELL, IOT, MDB, NTNX, S overnight, but quickly faded in another “sell the news” moment for US stocks. Stocks have since rebounded with NYSE breadth more than 3.5:1 advancers leading decliners amid big gains in Financials, Materials and Energy.


Economic Data

·     Better headline jobs data, but revisions lower, wages slip, and unemployment rises. August Nonfarm payrolls rose +187,000 vs. consensus +170,000 while July revised down to +157,000 from +187,000), and June +105,000 from +185,000). U.S. August private sector jobs +179,000 (cons +150,000) – headline better but revisions to downside. US August Unemployment rate rises to 3.8% vs 3.5%. The Labor Participation rate was 62.8%, higher than the 62.6% pre-covid.

·     U.S. August average hourly earnings +4.3% from year earlier vs. consensus +4.4%, U.S. August average hourly earnings all private workers +0.2% from prior month (cons +0.3%).

·     ISM U.S. manufacturing activity index 47.6 in August (contracts for 10th straight month) above consensus 47.0 and 46.4 in July while the prices paid index 48.4 in August was above 42.6 in July, new orders index 46.8 in August vs 47.3 in July and employment 48.5 in August vs 44.4 in July.

·     S&P global august final manufacturing PMI at 47.9 (vs flash 47.0)

·     July construction spending rose +0.7% topping the consensus +0.5% to $1.973 trln, vs June +0.6% (prev +0.5%); US July private construction spending +1.0%, public spending -0.4%.







WTI Crude















10-Year Note





Sector Movers Today

·     In Media: ESPN and ABC’s local stations were pulled from CHTR as the two companies failed to strike a new carriage deal; Charter serves more than 32 million customers in 41 states through its Spectrum brand, according to its website. It said on Friday that Disney has “not seriously engaged” on its partnership proposal – shares of other media co’s PARA, FOX, WBD tumbled.

·     In EV: TSLA announced a revamped version of tits cheaper Model 3 comes with a longer range but also a higher price, up about 12% to around $36,000. Tesla also slashed prices on its expensive Model S and Model X cars, which start at about $100,000. In Chinese Autos: XPEV recorded monthly deliveries of 13,690 Smart EVs, a 24% increase over the prior month and a 43% increase y/y. LI delivered 34,914 vehicles in August, up 663.8% y/y, with monthly deliveries for each of the three Li L series models exceeding 10,000 vehicles. NIO delivered 19,329 vehicles in August, representing an increase of 81% y/y.

·     In Apparel & Accessories: LULU Q2 beat on revenue, GM%, operating margin% and EPS, and raised FY23 top- and bottom-line outlook again – beat high end of rev guidance by 2% and high end of EPS guidance by 7% as traffic up >20% in stores and online; DD gains in all categories; while growth slowed q/q, it remained very strong y/y with revenue +18% (vs. guidance +15-16%). OXM reported mixed Q2 results but cuts FY24 adjusted EPS view to $10.30-$10.60 from $10.80-11.20 (est. $10.78) and lowers FY24 revenue view to $1.57B-$1.6B from $1.59B-$1.63B.

·     In Metals: precious metals and miners saw early strength following mixed jobs data monthly report, which raised expectations the Fed rate hike cycle may have concluded for now (AEM, AUY, NEM, GOLD rises early); VALE was upgrade to overweight at JPMorgan noting it has de-rated as it is down 27.2% YTD and valuations are now at 4.2x 2024E EV/EBITDA from a peak of 5.9x in early Feb/23 and as China overproduces steel, it overconsumes iron ore.



·     DELL +20%; posted a solid beat at both ISG and CSG as overall results were better than rival HPQ this week. In addition to building strength through the qtr in both PCs and Servers, Dell disclosed they had ~$2B in AI Server orders in backlog as AI servers increased to 20% of orders in H1:24.

·     EOSE +32%; after announcing that the Department of Energy’s Loan Programs Office has issued an up to $398.6 million conditional commitment to the battery startup.

·     ESTC +19%; posted a ~3% top-line beat mostly driven by Self-managed outperformance while SaaS revenue was meaningfully better than feared, increasing ~$8.8M sequentially after only increasing $1.6M Q/Q last quarter and raised FY24 EPS/revs guidance.

·     HZNP +2%; after AMGN reached a settlement with the FTC that will allow the company to move forward with its takeover of HZNP after accepting a binding deal that the combined company will bundle together some of its drugs (news helped other M&A deals in FTC review like PFE).

·     MDB +4%; delivered a beat-and-raise, as Q2 revenue beat consensus by 8%, led by more multi-year Enterprise Advanced and licensing deals than expected EPS of $0.93 easily topped consensus $0.46 on better non-GAAP operating margin of 19% (est. 10%).

·     NTNX +13%; reported a strong F4Q and beat all the guided metrics as ACV billings continued to benefit from strong renewals (saw some pull-in of renewals from F24 into F23) and announced $350M share repurchase program.

·     S +5%; Q2 ARR beat by 1% and EBIT margin beat by 13pts while FY24 ARR growth guide rose to “high 30s%” from “mid 30s%” previously and EBIT margins raised by 2pts as mgmt noted stable macro and competitive trends compared to last quarter.



·     AVGO -4%; reported in-line JulQ and guided in-line OctQ to $9.27B, slightly below the consensus of $9.28B, up 4% q/q; said networking/AI remain strong with a $1B AI tailwind and accelerating.

·     DG -3%; downgraded by several Wall Street analyst after results Thursday.

·     DIS 2% CHTR -3%; after ESPN and ABC’s local stations were pulled from CHTR as the two companies failed to strike a new carriage deal; weakness in general media space amid dispute (PARA, WBD, FOXA all weaker).

·     OLN -13%; announced a mutual agreement that Scott Sutton will step down as President, Chief Executive Officer, and Chairman of the Board in the first half of 2024.

·     PD -7%; shares fell as guided Q3 EPS below views 13c-14c vs. est. 15c) but mid-point of revs above views after Q2 beat.

·     WBA -3% said CEO Rosalind Brewer stepped down and named Lead Independent Director Ginger Graham as interim; also sees 2023 adjusted EPS to be at or near low end of range.


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.