Mid-Morning Look: September 28, 2023

Mid-Morning Look

Thursday, September 28, 2023





DJ Industrials




S&P 500








Russell 2000






U.S. stocks open lower following mixed economic data signals, but stocks have since pared losses with most S&P sectors pushing higher. Utilities remain a weak spot in S&P, down another -1.2% (down a 6th straight day) hurt by the persistent climb in Treasury yields (weighing on high dividend paying sectors). After a brief dip after the GDP and Jobless Claims data at 8:30 AM to 4.6%, the 10-yr yield has since moved to highs around 4.69% in a relentless bond sell-off (last 4.65%). Dow component Nike (NKE) comes into earnings tonight down 17 out of last 18 sessions (including 9-straight) and down -23% YTD. The auto industry strike (GM, STLA) moves into a 3rd week tomorrow and the gov’t shutdown appears to be happening this weekend as Congress has failed to put together a workable deal, which will affect gov’t economic data going forward (jobs data next Friday). WTI crude hit $95.03 per barrel high earlier before falling back to around $92.50 last (now down over -1%). One big piece of economic data that could impact markets tomorrow is the Fed’s preferred core PCE reading tomorrow morning.


Economic Data

·     Weekly Jobless Claims rose to 204K from 202K the prior week and below the 215K est.; the 4-week moving average fell to 211K from 217,250 the prior week (previous 217,000) and continued claims rose to 1.670M from 1.658M the prior week (est. 1.675M).

·     U.S. Q2 GDP growth was +2.1%, on an annualized basis, in the third estimate, unchanged from the previous estimate and in-line with consensus. US Q2 Personal Consumptions +0.8% vs. est. and prior reading of +1.7%.

·     Inflation portion of GDP: The PCE price index rose +2.5%, vs. +2.5% expected previous estimate of 2.5% and core PCE Prices final 3.7%, in-line with consensus and prior reading; the Q2 GDP Price deflator index 1.7% vs. 2.0% est. and core PCE.

·     The Pending Home sales index for August fell (-7.1%) vs. est. (-0.8%) and went down (-18.7%) y/y.






WTI Crude















10-Year Note





Sector Movers Today

·     Aerospace & Defense: Deutsche Bank initiated coverage of the A&D sector with a positive view on commercial aero, and a preference for aftermarket over OE. Specifically, the overall risk/reward on OE generally looks worse given challenges with price/cost, supply chain performance, and a variety of idiosyncratic risks. Top 5 Buy-rated ideas: HWM, WWD, CR, GE, GD. HII was upgraded from Neutral to Overweight at JP Morgan with $247 tgt (down from prior $250) noting shares are down 10% the past three months on little news, and while it has been a tough market for Defense stocks, sees this as an attractive entry point.

·     Industrials: AGCO is forming a joint venture with positioning-technology company TRMB in a deal that includes AGCO’s acquisition of an 85% stake in Trimble’s portfolio of agriculture assets and technologies, paying $2B in cash. OSK and TEX both downgraded to Sector Weight from Overweight at Keybanc as think order rates could moderate from recently elevated levels and at the same time supply chain improvements allow for revenue increases and faster backlog monetization.



·     CHS +62%; to be acquired by Sycamore Partners for $1 billion, with holders to receive $7.60 per share in cash, a 65% premium from yesterday. https://tinyurl.com/3bv5p74v

·     GME +2%; as its board of directors has elected Ryan Cohen as president and chief executive officer, effective immediately.

·     GRTS +16%; after announcing they will receive as much as $433 million from the US government to conduct a trial of its next-generation Covid-19 vaccine.

·     JBL +10%; mixed Q4 results as EPS $2.45 top ests $2.32 but revs of $8.46B below ests $8.54B; guidance also mixed as sees Q1 core EPS $2.40-$2.80 above consensus $2.33 but guides Q1 revs $8.4B-$9B vs. consensus $9.18B.

·     PTON +14%; after announcing a 5-year strategic partnership with LULU that enhances Peloton’s workout offerings while also winding down Lulu’s exposure to the segment.

·     SYK +3%; broad strength in MedTech stocks early (ZBH, DXC, TNDM, PODD).



·     ACN -4%; Q4 EPS above views on light revs amid weak bookings which fell -10% to $16.6B while providing FY24 guidance of 2-5% in constant currency revenue growth; Q4 consulting bookings were down 2% and outsourcing bookings were up 10%.

·     JCI -3%; after saying experienced disruptions in portions of its internal information technology infrastructure and applications resulting from a cybersecurity incident.

·     JEF ; Q3 profit declined -74% as EPS $0.22 below the est. $0.33 and revs $1.18B missed the $1.25B est.; Q3 Investment banking revenue at Jefferies dipped -2% y/y to $644.6M but nearly 28% higher q/q; Q3 asset management unit revs fell -97% y/y.

·     KMX -8%; as Q3 revenue fell 13% y/y to $7.07B (above est. $7.02B) while used-vehicles sales were -11% lower and wholesale vehicle sales down -22%; said Total retail used-vehicle sales were down 7.4% on-year at 200,825 units and avg selling price -4% for Q3.

·     MU -4%; reported better results, while guidance was mixed (revs beat, while GM/ EPS was slightly lower); sees F4Q as the bottom in pricing and expects pricing to improve over the next several quarters and sees positive GM through 2H24.

·     NAPA -6%; after the CEO announced he is retiring while 4Q EPS $.015 tops consensus $0.13, while FY $0.68 mid-point vs consensus $0.70.

·     WDAY -9%; after lowered its subscription revenue growth outlook for next three years to between 17% and 19%, owing to macroeconomic conditions, down from prior view of 20% plus growth w/ op margins targeted at 25%+ in FY27 vs. 25%+ in FY26 last year.



·     Coty (COTY) 33M share Secondary priced at $10.80.

·     Immunovant (IMVT) 7.37M share Secondary priced at $38.00.

·     Soleno Therapeutics (SLNO) 3M share Spot Secondary priced at $20.00.


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.