Mid-Morning Look: September 23, 2022

Mid-Morning Look

Friday, September 23, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks move lower Friday, as the Dow drops 300 points, breaking below 30,000 on fear the Fed is overdoing its inflation fight, while the US dollar surged to fresh 20-year highs, Treasury yields jumped again in an unprecedented move this week (2-yr above 4.25% early and the 10-yr above 3.82%) as new signs of slowing global growth and U.K. plans for big, debt-funded tax cuts all impact markets. All three indexes remain on track for their fourth consecutive day of declines and another brutal week overall. Oil prices slide over 4%, with WTI crude dipping below $80, the lowest since January on slowing growth fears. The sharp selloff in stocks and bonds this week continues a stretch of turbulence Fed Chair Powell’s speech in Jackson Hole, WY, in which he reiterated the central bank’s resolve in fighting inflation through a series of rate increases and then “doubled down” on their aggressive stance this week as Fed officials project rates rising even more than previously projected. Coming into today, the Nasdaq 100 (QQQ) was down about 10.8% over the last 9 trading days when it opened this morning. Wall Street noting caution as well with Goldman Sachs cutting its year-end target for the S&P500 to 3,600 from 4,300, while Bank of America is noting that investors are flocking to cash and shunning almost every asset class with cash seeing inflows of $30.3B and equity funds outflows of $7.8B, turning the most pessimistic since the global financial crisis. Note after the Fed’s hawkish rate increase Wednesday, the SNB, Norges Bank and BoE followed up with rate hikes in Thursday’s session. Risk assets have been under pressure from hawkish central bank rhetoric and in particular the likelihood of more aggressive Fed action. The dollar surges again, making its biggest move against the British Pound which fell as much as 2% to 1.10, levels not seen since the mid 1980’s after UK‘s biggest tax cuts since 1972 prompt crash for the pound and local bonds. The UK government said it would cut payroll taxes, freeze corporation tax, ditch a cap on banker bonuses and spend billions to subsidize energy bills over the next two years. For now, we have a growth panic on our hands and with that a massive de-risk for many asset classes. Bitcoin remains just above its recent bottom around $18,500—which is also close to its lowest level all year as crypto another space feeling pain.







WTI Crude















10-Year Note





Sector Movers Today

·     Aerospace & Defense: BA said it will settle $200 mln in civil charges with SEC that it misled investors about its 737 MAX, which was grounded for 20 months after two fatal crashes that killed 346 people; RTX beat out LMT and BA for a $985M contract award from the U.S. Department of Defense contract to design, develop and produce the new Hypersonic Attack Cruise Missile; SPIR announced the receipt of a new $9.9M follow-on contract to provide NOAA with six months of satellite radio occultation data; WSJ reported a growing body of evidence suggests that pro-Russian hackers and online activists are working with the country’s military intelligence agency, according to researchers at Google

·     Metals & Materials; shares of U.S.-listed metal miners slump premarket, tracking prices of industrial metals amid broader market weakness, weighed down by a stronger dollar and fears of recession-hit metals demand after further rate hikes (copper, aluminum, steel, iron ore names fall – extending recent pullbacks for likes of AA, CENX, CLF, FCX, VALE, X, NUE, STLD). Reuters reported Spiraling energy costs have forced steel makers to cut output across Europe, threatening mass plant shutdowns some warn could be permanent in a sector that employs more than 300,000; Gold miners slide (NEM, GOLD, AUY, AEM) as gold prices hit 2-year lows on surging Treasury yields and US dollar; LITM announces collaboration with LG Energy Solution

·     Bank & Asset Managers: APO upgraded to Neutral from Underperform at Bank America; EVR was downgraded to Sell from Neutral at UBS as their shrinking deal pipeline increases the risk of inflexibility in their expense; MC was also downgraded to Sell at UBS saying the degree of fixed compensation expense (deferred comp + salaries) is likely to add considerable upward pressure to the company’s adjusted comp ratio; HOOD introduced Robinhood Gold benefit that enables members to earn 3% interest on their brokerage cash-up from 1.5% for non-Gold members



·     CANO +1%; shares rally a second day after the WSJ reported late Thursday that HUM, other potential buyers are circling shares of Cano Health https://on.wsj.com/3UxtZQw

·     DPZ +3%; upgraded from Market Perform to Outperform at BMO Capital saying against the backdrop of lowered expectations, they see attractive risk/reward reflecting a favorable demand outlook as indicated by their survey work

·     FUBO +6%; upgraded to Outperform at Wedbush saying they are confident that fuboTV can do both raise capital and cut cash burn, but it is uncertain how dilutive the capital raise will be and how rapidly their cash burn will improve

·     GNRC +1%; benefitting from increased damage by Hurricane Fiona

·     LITM +21%; after announces collaboration with LG Energy Solution

·     LLY +1%; as large cap Pharma rallies again today in rotation to defensive names



·     AIR 8%; with mixed Q1 results as EPS beat, but revs fall 2% y/y to $446M, missing estimates led lower by soft Government sales

·     ALLY -2%; downgraded to Equal Weight from Overweight at Wells Fargo as believe it will be difficult for the stock to outperform as used vehicle price declines accelerate, NIM is pressured from Fed hikes, and consumer works through the headwind of inflation

·     BA -4%; said it will settle $200 mln in civil charges with SEC that it misled investors about its 737 MAX, which was grounded for 20 months after two fatal crashes that killed 346 people

·     CCL -5%; weakness in cruise line stocks (RCL, NCLH) on Hurricane Fiona disruption concerns in vacation/holiday regions

·     DLR -3%; in data centers, DLR was downgraded to Underweight from Equal Weight and EQIX downgraded to Equal Weight from Overweight at Barclays

·     IONS -5%; said AZN will not advance ION449 into phase 3 development for hypercholesterolemia after the antisense medicine did show the required efficacy in a phase 2b study

·     YETI -6%; announces resignation of CFO Paul Carbone, effective 10/28/22


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.