Mid-Morning Look: September 09, 2022

Mid-Morning Look

Friday, September 09, 2022

Index

Up/Down

%

Last

 

DJ Industrials

301.97

0.95%

32,076

S&P 500

46.25

1.15%

4,052

Nasdaq

181.41

1.53%

12,043

Russell 2000

29.16

1.58%

1,876

 

 

U.S. stocks surging, currently on track to snap their 3-week losing streak, as the S&P 500 and Russell 2000 both move back above their respective 50-day moving averages in the process. S&P futures (ES) rise more than 1% to highs of 4,058, best level in 2-weeks and above its 50 and 100-day moving average resistance levels (4,031-4,032 levels), while the Russell 2000 tops its 1,857 50-day and the Nasdaq-100 QQQ approaches its 50-day moving average of 306.50. Stocks have risen over the last week amid oversold market conditions, extending gains despite very hawkish Fed commentary over the last few weeks about needing to raise rates more aggressively to tame inflation. The consensus at this point appears to be a 75-bps rate hike from the FOMC in 2-weeks, despite what the August CPI and PPI inflation data shows next week (data Tuesday and Wednesday). The U.S. dollar pulls back from 20-year highs as the euro and yen rebound (yen off worst levels in nearly 25-years), while Treasury yield ease as well, giving a boost to high growth tech and metals & mining stocks. China’s consumer, producer inflation slows in August as COVID saps demand. The euro bounces after a 75-bps hike yesterday and talk of QT, while taking a more aggressive outlook on rates going forward as well. All 11-S&P sectors higher early, led by Technology, Communications, Discretionary, Industrials and Materials.

 

 

Macro

Up/Down

Last

 

WTI Crude

2.39

85.93

Brent

2.28

91.43

Gold

3.90

1,724.10

EUR/USD

0.0048

1.0042

JPY/USD

-1.54

142.55

10-Year Note

-0.005

3.287%

 

 

Sector Movers Today

·     Auto sector: Manheim Consulting released its Used Vehicle Value Index for August. The overall headline result was down 4.0% vs. July levels. On a y/y basis, used vehicle prices rose 8.4% on a +18.8% comp. By class type (y/y change): Compact +15.9%, Midsize +10.9%, Luxury +4.4%, Pickups +5.4%, SUV/CUV +6.6%, and Vans +14.0%. The rental risk index rose 15.7% y/y and was down 0.8% m/m. TSLA is considering setting up a lithium refinery in Texas, as it looks to secure supply of key component used in batteries amid surging EV demand; the Co says, decision to invest in Texas will also be based on the ability to obtain relief on local property taxes; KMX downgrade to underperform and tgt to $100 from $146, AXL cut to Neutral from Buy and tgt cut to $13 from $16 and SAH cut to Underperform from Buy in the auto sector at Bank America

·     Bitcoin news; COIN upgraded to Buy w/ $100 PT at Daiwa as believe Coinbase holds close to 15% of all circulating ETH on its platform, making it one of the largest holders of ETH globally; other Bitcoin related names rally with crypto bounce today (MARA, SI, MSTR, RIOT); FTX Ventures, the investment arm of Sam Bankman-Fried’s crypto exchange FTX, said it will buy a 30% stake in SkyBridge Capital, the investment firm founded by Anthony Scaramucci. SkyBridge will use some of the cash from the investment to buy $40 million worth of cryptocurrencies to hold on its corporate balance sheet as a long-term investment, the companies said

·     Consumer Staples: it has been a rough week for consumer product names as a handful of companies have negatively pre-announced, mainly on deteriorating demand trends, with KHC, NWL, CHD, KHC, REYN and HRL late last week among them; this morning KR Q2 adj EPS $0.90 vs. est. $0.83; Q2 sales $34.6B vs. est. $34.5B; Q2 Identical sales w/o fuel rose +5.8%; authorized a new $1B share buyback program; raises FY adj EPS to $3.95-$4.05 from prior view of $3.85-$3.95 and lowers FY CAPEX to $3.4B-$3.6B from $3.8B-$4.0B prior

 

Stock GAINERS

·     BKR +4%; energy stocks rebound after weakness earlier this week, oil prices also edge higher, lifting HAL, EOG, others

·     COIN +5%; upgraded from Outperform to Buy w/ $100 PT at Daiwa as believe Coinbase holds close to 15% of all circulating ETH on its platform, making it one of the largest holders of ETH globally; other Bitcoin related names rally with crypto bounce today (MARA, SI, MSTR, RIOT)

·     DOCU +8%; delivered strong Q2 results that beat on the top and bottom-line with revenues increasing 22% y/y beating the Street and billings grew 9% y/y coming in at $647.7 million and handily beating the Street expectation of $601.8 million

·     FCX +3%; broad based strength in industrial metals, material names, extends gains from yesterday across the board (VALE )

·     KR +3%; Q2 adj EPS $0.90 vs. est. $0.83; Q2 sales $34.6B vs. est. $34.5B; Q2 Identical sales w/o fuel rose +5.8%; authorized a new $1B share buyback program; raises FY adj EPS

·     REGN +3%; trades all-time highs – upgraded at Morgan Stanley and Jefferies citing high-dose Eylea data, with one analyst saying results on Q16W looks “encouraging” and safety looks “clean”

·     ZS +18%; strong F4Q results, with billings growth reaccelerating to +57% y/y vs. the Street at 41% and 54% last quarter, and FY23 billings were guided $1.93bn at the midpoint vs. the Street at $1.88bn

 

Stock LAGGARDS

·     ALLK -2%; after mixed trial results – meets Co-primary goal of improvement in tissue specimen following biopsy, but other main goal of improvement in symptoms was not statistically significant

·     ENPH -7%; Guggenheim downgraded to Neutral from Buy based on belief that the stock is now fairly-valued and that upside to our estimates is unlikely, and they also cut SHLS to Neutral from Buy on valuation

·     IMCR -20%; after presents promising initial Phase 1 data for first off-the-shelf TCR therapy targeting PRAME at the ESMO 2022 Congress (meeting this weekend)

·     SPCE -5%; downgraded to Underperform from Market Perform at Bernstein saying Q2 results follow a pattern over the last two years that has meant delay of future flight operations, redesign of elements of its platform, and a need to raise more cash

·     SWBI -6%; and AOUT both slip early in the gun/ammo sector after Q1 results fell short of consensus on top/bottom line

·     ZUMZ -3%; after Q2 miss (2Q EPS $0.16/$220Mm vs est. $0.47/$231.5Mm) and lower guidance (guides 3Q sales $220-228Mm vs est. $277.2Mm)

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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.