Morning Preview: May 24, 2023

Early Look

Wednesday, May 24, 2023









S&P 500










U.S. futures are pushing lower after falling sharply on Tuesday, with debt ceiling headlines relatively quiet over the last few hours and no meetings currently set yet for today as the White House and GOP remain at an impasse on a deal to raise the U.S. government’s $31.4 trillion borrowing limit. Currently substantial gaps remain, including over debt limit duration, spending, but some progress on some issues. Both parties have reiterated that default is off the table. Meanwhile stocks slumped on Tuesday as the S&P 500 posted its biggest daily decline in 3 weeks as U.S. debt-ceiling uncertainty weighs on stocks. The recent bounce in the U.S. dollar and Treasury yield may be finally weighing on stocks.


Two-year Treasury yields rose for the 9th consecutive session Wednesday, rising 4.9 bps to 4.367% from 4.318% while the benchmark 10-year yield rose 1.8-bps to 3.735%. Treasury yields this morning, especially those with shortest maturity, saw another spike as debt ceiling deadline looms; the 1-month yield rises 21 bps to 5.82% and the 2-month jumps 15-bps to 5.375%. The benchmark 10-yr down 1 bps to 3.69% and 2-yr at 4.287%. The U.S. dollar held just shy of a two-month high as U.S. debt ceiling negotiations dragged on, while the pound firmed and then softened after stronger-than-expected British inflation data. Also in focus was the New Zealand dollar, falling after the country’s central bank flagged an end to rate hikes.


WTI crude +$1.21 to $74.12, rising a third day after Saudi Arabia’s warning to short sellers that OPEC+ could reduce output further to keep prices high offset a lack of progress in US debt talks. Treasury Secretary Janet Yellen has warned that the federal government will no longer have enough money to pay all its bills as soon as June 1, raising the risk of a damaging default. In Asian markets, The Nikkei Index dropped -275 points to settle at 30,682, the Shanghai Index fell -41 points to 3,204, and the Hang Seng Index declined -315 points or 1.62% to 19,115. In Europe, the German DAX is down -277 points or 1.7% to 15,875, while the FTSE 100 slides -138 points or 1.78% to 7,625.


Market Closing Prices Yesterday

·     The S&P 500 Index dropped -47.05 points, or 1.12%, to 4,145.58.

·     The Dow Jones Industrial Average fell -231.07 points, or 0.69%, to 33,055.51.

·     The Nasdaq Composite slumped -160.53 points, or 1.26%, to 12,560.25.

·     The Russell 2000 Index declined -7.67 points, or 0.43% to 1,787.71.


Economic Calendar for Today

·     7:00 AM ET             MBA Mortgage Applications Data

·     10:30 AM ET           Weekly DOE Inventory Data

·     1:00 PM ET              US to sell $43B in 5-year notes.

·     2:00 PM ET              FOMC Meeting Minutes from May.


Earnings Calendar:

·     Earnings Before the Open: ADI ANF CRMT DY EXPR KSS LPG PLAB SCVL WOOF



Other Key Events:

·     B. Riley 23rd Annual Institutional Investor Conference, 5/24-5/25, in CA

·     Goldman Sachs Eighth Annual Leveraged Finance Credit Conference, 5/22-5/24, in CA

·     Goldman Sachs TechNet Conference Asia Pacific 2023 (virtual), 5/24-5/25

·     Jefferies 4th Renewables & Clean Energy Conference (virtual), 5/23-5/24

·     JPMorgan Annual Global Tech, Media & Communications Conference, 5/21-5/24, in Boston, MA

·     Mizuho 2nd Annual Industrials and Basic Materials Bus Tour, 5/24-5/25

·     Truist Securities 2023 Financial Services Conference, 5/23-5/24 in New York

·     UBS Global Energy Conference, 5/22-5/24, in Austin, TX





















10-Year Note





World News

·     UK Consumer prices (CPI) rose by 8.7% in annual terms in April, down from 10.1% in March but above the forecast of 8.2% but remains further away from October’s 41-year high of 11.1%. Only Austria has higher CPI inflation at 9.5% while Italy also shares a reading of 8.7%.

·     New Zealand Central Bank raised its cash rate 25bps to 5.5%; Official Cash Rate (OCR) set to remain restrictive; level of rates are constraining spending and inflation pressure; OCR will need to remain at restrictive level for foreseeable future to ensure inflation returns to 1-3% annual target; inflation is expected to carry on declining from its peak, but core inflationary pressures will remain until capacity constraints further ease.

·     The Bank of Japan said Wednesday it offered to buy outright on May 25 up to Y200.0 billion in Japanese government bonds maturing in 10-25 years. The bank’s previous operation in the same maturity range was also Y200.0 billion.


Sector News Breakdown


·     Toll Brothers (TOL) Q2 EPS rose 54% y/y to $2.85 vs. est. $1.91; Q2 sales rose 10% y/y to $2.51B topping the $2.06B estimate; Q2 backlog fell -28% y/y to $8.38B; sees Q3 deliveries 2,350 to 2,450 and sees FY deliveries 8,900 to 9,500, up from prior 8,000 to 9,000 view.

·     Urban Outfitters (URBN) 1Q EPS $0.56 vs est. $0.35 on revs $1.11B vs est. $1.087B; comparable retail sales +5%.

·     VF Corp. (VFC) Q4 revs fell -4.4% y/y to $2.7B vs. est. $2.73B; Q4 EPS $0.17 vs. est. $0.14; said for FY 24 “confident that we have the right plan to deliver improved operating performance and financial results”; sees Q1 revenue down high single digits; sees FY24 $2.05-$2.25 vs. est. $2.17; sees FY24 revenue “flat to up slightly.”

·     Nautilus (NLS) Q4 EPS loss (-$0.66) vs. est. loss (-$0.57); Q4 revs $68.4M vs. est. $57.07M; sees FY24 revenue $270M-$300M vs. est. $273.13M and FY24 adj EBITDA ($15M) to breakeven.

·     Express (EXPR) Q1 EPS loss (-$0.99) vs. est. loss (-$0.78); Q1 revs $383.26M vs. est. $389.43M; sees FY23 EPS loss of ($1.50)-($1.70) vs. est. loss (-$0.99); sees FY23 revenue $1.9B-$2B vs. consensus $1.96B and FY23 capital expenditures $30M.

·     Shoe Carnival (SCVL) Q1 EPS $0.60 vs. est. $0.69; Q1 revs $281.2M vs. est. $288.1M; cuts FY23 EPS view to $3.60-$3.85 from $3.96-$4.20 (est. $3.73) and cuts FY23 revenue view to $1.23B-$1.25B from $1.26B-$1.32B (est. $1.26B).

·     XPeng (XPEV) Q1 adj. EPS loss RMB2.57 vs. lossRMB1.80 a year ago, wider than consensus loss of RMB1.99; Q1 revenue down 46% to RMB4.03 bln, below consensus RMB4.99 bln.

·     Vita Coco (COCO) 5M share Secondary priced at $23.00.



·     Dycom (DY) Q1 EPS $1.73 vs. est. $0.70; Q1 revs $1.045B vs. est. $939.2M; sees 2Q contract rev increasing mid-single digit as percentage of contract rev vs year-ago.

·     HASI (HASI) files to sell $300M in common stock.

·     Landstar (LSTR) lowered Q2 EPS view to $1.75-$1.85 from prior view $1.90-$2.00 and cuts rev forecast to $1.33B-$1.38 vs. prior $1.4B-$1.45B citing market conditions, trends in loads number; watch shares of other logistics and trucker names WERN, JBHT, ODFL, XPO.



·     Intuit (INTU) 3Q adj EPS $8.92 vs est. $8.48 on revs $6.018B vs est. $6.096B; sees 4Q adj EPS $1.43-1.48 vs est. $1.48; guides FY revs $14.279-14.317B vs est. $14.17B; said revenue for its QuickBooks online accounting, part of its small business and self-employed group, increased 25% driven primarily by customer growth, higher prices, and mix-shift.

·     RenaissanceRe (RNR) 6.3M share Spot Secondary priced at $192.00.



·     Agilent Technologies (A) Q2 EPS $1.27 vs. est. $1.26; Q2 revs $1.72B vs. est. $1.67B; sees Q3 EPS $1.36-$1.38 vs. est. $1.43 and Q3 revs $1.64B-$1.675B vs. est. $1.77B; guides FY23 EPS $5.60-$5.56 vs. est. $5.69 and FY23 revs $6.93B-$7.03B vs. est. $7.09B.

·     PTC Therapeutics, Inc. (PTCT) shares fell -20% after announced the discontinuation of preclinical and early research programs in gene therapy as part of a strategic portfolio prioritization.

·     INOVIO (INO) announced that the European Commission, or EC, has granted orphan drug designation for INO-3107, the company’s product candidate for the treatment of Recurrent Respiratory Papillomatosis.

·     The White House announced a proposal to advance prescription drug transparency in Medicaid. CMS said new HHS proposal would shed light on cost of prescription drugs and save states and federal government money in Medicaid.

·     Abbot Labs (ABT): The FTC is investigating whether baby-formula makers colluded on bids for lucrative state contracts. The agency, in documents posted to its website, said it is looking into whether Abbott Laboratories and other formula manufacturers have “engaged in collusion or coordination with any other market participant regarding the bidding” for state contracts – WSJ.

·     Phathom Pharmaceuticals (PHAT) 11.125M share Spot Secondary price at $11.75.

·     89bio (ETNB) files automatic mixed securities shelf.


Technology, Media & Telecom

·     Palo Alto Networks (PANW) 3Q adj EPS $1.10 on revs $1.72B; guides FY revs $6.88-6.91B and adj EPS $4.25-4.29 up from $3.97-$4.03 (est. $4.02), sees FY total billings $9.18-9.23B.

·     New Relic (NEWR) 4Q revs $242.49Mm vs est. $241.1Mm, adj gr mgn 79%, adj op mgn 10.7%, adj EPS $0.42 vs est. $0.22; guides 1Q revs $238-240Mm vs est. $251.2Mm, sees FY revs $1.02-1.03B.

·     Ooma Inc. (OOMA) 1Q adj EPS $0.16 vs est. $0.14 on revs $56.9Mm vs est. $56.5Mm, adj EBITDA $4.8Mm; guides 2Q revs $57.4-57.9Mm and adj EPS $0.13-0.15; sees FY revs $235.5-238.5Mm vs est. $236.3Mm and adj EPS $0.55-0.63 vs est. $0.59.

·     Photronics (PLAB) Q2 EPS $0.54 vs. est. $0.45; Q2 revs $229.3M vs. $11M est.; sees Q3 adjusted EPS $0.48-$0.54 vs. est. $0.48 and revs $224M-$234M vs. est. $220M.

·     Comcast (CMCA) said to launch a cable-like live-TV streaming service for $20 a month.

·     Shopify (SHOP) downgraded to Underperform from Neutral at Exane BNP Paribas.


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.