Morning Preview: April 05, 2023

Early Look

Wednesday, April 5, 2023









S&P 500










U.S. futures pointing to a slightly lower open, with the S&P 500 closing at the 4,100 level Tuesday, snapping its 4-day win streak along with the Dow after evidence of a cooling economy exacerbated worries that the Fed’s campaign to rein in decades-high inflation may cause a deep downturn. Federal Reserve Bank of Cleveland President Loretta Mester said late Tuesday that the U.S. central bank likely has more interest rate rises ahead amid signs the recent banking sector troubles have been contained, with calls for the real fed funds rate to move above 5%. Yet another call from Fed members of higher rates while stock and bond markets continue to call their bluff, with expectations for rate cuts by mid-year. The Aussie and Canadian central Banks recently paused their rate hike cycle, while New Zealand overnight raised rates by 50-bps but remove explicit tightening bias. Bank stocks took a hit yesterday after JPMorgan Chase & Co CEO Jaime Dimon warned in a letter to shareholders that the U.S. banking crisis is ongoing and that its impact will be felt for years. Losses were led by industrials, materials, and energy Tuesday amid the slowing economic growth fears. In Asian markets overnight, the Nikkei Index tumbled -474 points to 27,813, while the Shanghai and Hang Seng Index were both closed for holiday. In Europe, the German DAX is down -54 points to 15,550, while the FTSE 100 gains 33 points to 7,668.


Market Closing Prices Yesterday

·     The S&P 500 Index dropped -23.91 points, or 0.58%, to 4,100.60.

·     The Dow Jones Industrial Average slid -198.77 points, or 0.59%, to 33,402.38.

·     The Nasdaq Composite slipped -63.13 points, or 0.52%, to 12,126.33.

·     The Russell 2000 Index declined -32.66 points, or 1.81% to 1,769.65.


Economic Calendar for Today

·     7:00 AM ET           MBA Mortgage Applications Data

·     8:15 AM ET            ADP Private Payrolls for March…est. 200K

·     8:30 AM ET            International Trade for February…est. (-$69.0B)

·     9:45 AM ET            S&P Global Composite PMI, March-F …prior 53.3

·     9:45 AM ET            S&P Global Services PMI, March-F…prior 53.8

·     10:00 AM ET          ISM Non-Manufacturing PMI for March…est. 54.5

·     10:30 AM ET          Weekly DOE Inventory Data


Earnings Calendar:

·     Earnings Before the Open: CAG SCHN SMPL

·     Earnings After the Close: RELL SEAC SLP


Other Key Events:

·     BMO Capital Healthcare Property Tour, 4/4-4/5, in Boston, MA

·     Cantor Future of Oncology Virtual Symposium (virtual), 4/3-4/5

·     China Caixin Services PMI





















10-Year Note





World News

·     Federal Reserve Bank of Cleveland President Loretta Mester said late Tuesday that the U.S. central bank likely has more interest rate rises ahead amid signs the recent banking sector troubles have been contained. To keep inflation on a sustained downward path to 2% and keep inflation expectations anchored, Mester said she sees monetary policy moving “somewhat further into restrictive territory this year, with the fed funds rate moving above 5% and the real fed funds rate staying in positive territory for some time.”

·     New Zealand’s central bank unexpectedly raised its cash rate by 50 basis points to a more than 14-year high of 5.25%; but Goldman Sachs notes they remove explicit tightening bias and firm expects rates on hold this year.


Sector News Breakdown


·     Wal-Mart (WMT) said still sees FY adj eps $5.90-$6.05, vs. est. $6.14; and still sees FY net sales +2.5% to +3%; sees FY Walmart-only US stores comparable sales ex-gas +2% to +2.5% vs. estimate +2.75%; guides Q1 EPS $1.25-$1.30 vs. est. $1.30; aims to have about 65% of its stores serviced by automation by 2026 end.

·     Philip Morris International (PMI) said progressing toward 2025 aspiration of becoming a majority smoke-free co, CEO says; to ultimately phase out cigarettes; focusing resources on developing and commercializing smoke-free products that are less harmful than smoking; says adult users of co’s smoke-free products estimated at 24.9m in 2022 vs. 21.7m in 2021.

·     Kura Sushi (KRUS) adj EBITDA $2.3Mm vs est. $0.39Mm on sales $43.9Mm vs est. $41.8Mm; guides FY23 sales $185-188Mm vs est. $185.4Mm.

·     Resources Connection (RGP) 3Q adj EBITDA $16.6Mm vs est. $13.4Mm, gr mgn 38.3%, revs $186.78Mm vs est. $183.9Mm.

·     Dutch Bros (BROS) upgraded to Outperform from Neutral at Wedbush.


Energy, Industrials and Materials

·     In lithium sector: Albemarle (ALB) downgraded to Underperform from Neutral at Bank America and tgt cut to $195 from $262; Livent (LTHM) upgraded to Buy from Neutral at Bank America and cut tgt to $27 from $29.

·     Sealed Air (SEE) upgraded to Buy from Neutral at UBS.

·     California’s power grid operator said this week the state will need to spend $9.3B over the next decade on grid upgrades to support its transition to renewable energy and electric vehicles.



·     First Citizens (FCNCA) upgraded to Buy from Sell at UBS.

·     SLM Corp. (SLM) upgraded to Overweight from Underweight at Morgan Stanley.

·     Western Alliance Bank (WAL) provided unaudited financial information as of March 31, 2023: Total insured deposits, including collateralized and pass-through insured deposits, represent approximately 68% of total deposits, significantly higher than year-end. As of quarter-end, immediately available liquidity exceeded uninsured deposits, with a coverage ratio greater than 140%. As of quarter-end, the Bank had no borrowings outstanding from the Federal Reserve’s discount window after balance sheet repositioning. Western Alliance expects its CET1 ratio to be materially consistent with year-end 2022. Unrealized losses on Securities and Held for Investment loans have improved since year-end primarily due to lower interest rates, as well as other factors.



·     Johnson & Johnson (JNJ) subsidiary LTL Management LLC re-files for voluntary Chapter 11 to equitably resolve all current and future talc claims; the Company has agreed to contribute up to a present value of $8.9B, payable over 25 years, to resolve all the current and future talc claims.

·     AstraZeneca PLC (AZN) said that its Lynparza and Imfinzi combination met its endpoint in the treatment of patients with advanced ovarian cancer; said the combo improved progression-free survival in newly diagnosed patients with advanced ovarian cancer without tumor BRCA mutations, in a DUO-O Phase 3 trial.

·     InflaRx (IFRX) shares rise overnight after the FDA granted an emergency authorization to the firm’s antibody treatment for critically ill Covid-19 patients.

·     NGM Biopharmaceuticals (NGM) said it would cut about 33% of its workforce; said its headcount would be reduced by 75 people and that it expects to incur about $5M in restructuring charges; GAAP EPS of -$0.45 beats by $0.07, revenue of $18.18M beats by $11.56M.

·     UnitedHealth (UNH) and Cigna (CI) upgraded to strong at Raymond James, with the broker saying the 2023 setup for the US health insurers has improved markedly.


Technology, Media & Telecom

·     Watch semiconductor after China said it will respond if Japan doesn’t change new restrictions on chip exports to the world’s second-biggest economy. On Tuesday, China’s commerce ministry called on Japan to change its “wrong practice” after the country last week said it would restrict 23 kinds of semiconductor manufacturing equipment.

·     Britain’s antitrust watchdog said on Wednesday it would restrict how much Motorola Solutions Inc (MSI) could charge the emergency services to use its radio network, Airwave.

·     Smart Global (SGH) 2Q adj EPS $0.76 vs est. $0.60 on revs $429.2Mm vs est. $434.9Mm, gr mgn 25.7%; guides 3Q sales $355-395Mm vs est. $408.2Mm, gr mgn 27-29%, adj EPS $0.30-0.50 vs est. $0.42.

·     Rambus (RMBS) said it had extended its patent license agreement with South Korean semiconductor giant SK Hynix for an additional ten years.

·     Ribbon Communications (RBBN) files $250M mixed securities shelf.


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.