Mid-Morning Look: September 12, 2023

Mid-Morning Look

Tuesday, September 12, 2023






DJ Industrials




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Russell 2000






U.S. stocks trading cautiously ahead of tomorrow’s key August consumer prices (CPI) inflation report as Treasury yields hold around the high end of August highs (10-yr 4.3%) and the dollar rebounds. Large cap technology stocks lagging early after Oracle slowing cloud rev growth last night sinks shares and as investors await the annual Apple (AAPL) product launch later this afternoon. No Fed speakers as we remain in “blackout period” ahead of Fed meeting next week. The FOMC is still expected to keep rates unchanged at its upcoming September 19-20 policy meeting, but a “hotter” reading could influence somewhat for future outlooks on rates. There has been some concern over the rise in oil prices and their effect on inflation. Shares of Detroit three automakers (GM, F, STLA) rallying after the UAW said on Monday there was some progress in labor talks, but wide divide remains (ahead of the strike deadline this Thursday 9/14). In economic data, the NFIB’s Small Business Optimism Index decreased 0.6 of a point in August to 91.3, the 20th consecutive month below the 49-year average of 98.







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10-Year Note





Sector Movers Today

·     In Banks: Barclays held a financial services conference today. Among headlines: 1) WFC said was comfortable’ with existing NII guidance and says overall real estate portfolio is doing well with no systematic stress seen apart from stress in the office space; 2) ZION says net interest income increased in August vs July at conference; 3) CMA CEO said bank expects average loan balances in q3 below prior forecast; 4) NTRS shares tumble in trust banks following presentation.

·     In software: ORCL shares stumbled after reported Q1 cloud sales growth that slowed in the quarter to +30% from +54% of the prior quarter, dimming enthusiasm; sales growth driven by strength in OCI Gen 2 (66% Y/Y growth) and back-office apps (17% Y/Y growth). CRM and GOOGL expand their partnership to deliver a new era of business productivity powered by generative AI. PERI was downgraded to Market Perform from Outperform at Raymond James on valuation noting the stock has outpaced many of its AdTech peers (in some cases considerably) since the pandemic recovery started in late 2020. LAW shares tumbled after the abrupt announcement that the CEO and Co-founder resigned from the company and board yesterday. SKIL Reported 2Q24 inline on revs and a slight EBITDA beat, Reit. FY24E guide; expecting continued demand and engagement from employee re-skilling.



·     CASY +9%; after Q1 EPS beat ($4.52 vs est. $3.36) while revenue of $3.87B just below consensus $3.90B with better EBITDA $315.5M vs consensus $266.1M; reaffirms FY inside comp sales +3-5%.

·     GDDY +3%; after activist Starboard said the co was “deeply” undervalued and that the web services firm should consider a potential sale if it cannot improve its financial performance.

·     LYRA +7%; reported a successful Phase 2 study of its LYR-220 drug candidate in the inflammatory sinus disease chronic rhinosinusitis; said primary endpoint met with no serious adverse events.

·     MLTX +14%; after competitor SLRN announced top-line data for Izokibep (IL-17 drug) from the Phase 2/3 trial in HS (Hidradenitis Suppurativa). Cantor said they believe this is a big positive for MLTX as it mitigates the risk from a competitor in HS, putting SLK significantly ahead in HS.

·     WRK +5%; and Smurfit Kappa (SMFKY) agreed to merge to create the world’s largest listed paper and packaging company worth nearly $20B. WestRock stockholders will get one share in the new company, called Smurfit WestRock, and $5 in cash for each share they hold, or $43.51 per share.

·     ZION +5%; says net interest income increased in August vs July at conference.



·     AAP -4%; after ratings agency S&P Global downgrades the company’s credit and debt ratings from investment grade (BBB-) to junk (BB+).

·     AER -3%; after a 40.68M share Spot Secondary priced at $59.00; GE unit to sell about 40.7 mln AER at $59 each for about $2.44B in all.

·     LAW -26%; after the abrupt announcement that the CEO and Co-founder resigned from the company and board yesterday.

·     OFIX -20%; after fires CEO, CFO, and Chief legal officer following probe saying the investigation found that each of those three executives “engaged in repeated inappropriate and offensive conduct that violated multiple code of conduct requirements.”

·     ORCL -13%; reported Q1 revenue in-line with consensus, while EPS were modestly ahead by $0.04 but Q2 guidance was below Street expectations (missing by $270M on revenue); reported Q1 cloud sales growth that slowed in the quarter to +30% from +54% prior quarter.

·     RTX -3%; adds to yesterday weakness after as Barclays and RBC Capital downgraded their recommendations after the aerospace and defense company cut its full-year sales forecast.

·     SGHT -43%; after lowered Q3 rev guidance to $19M-$20M vs. est. 423.7M and cut its FY sales view to $80M-$82M from prior $89M-$94M view (est. $92M) citing reductions in new account additions and a decrease in year-over-year utilization.

·     SLRN -57%; after saying its lead product, izokibep, did not meet the primary endpoint of a clinical trial of patients with hidradenitis suppurativa, a chronic inflammatory skin condition.


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.