Morning Preview: October 10, 2022

Early Look

Monday, October 10, 2022









S&P 500










U.S. futures pointing to a lower open after barely snapping its 3-week losing streak last Friday, as world’s leading central banks continue to push their interest rates into restrictive territory, causing fears of overkill in financial markets. The Federal Reserve, European Central Bank and most of their peers are set to keep raising borrowing costs aggressively in coming weeks. For the week, the S&P rose 1.51%, the Dow added 1.99%, the Nasdaq gained 0.73% (but well-off gains of over 7% earlier last week). Tech continues an awful 2022 campaign with year-to-date losses of: AAPL -21%, MSFT -30%, GOOGL -32%, TSLA -42%, AMD -60%, and NVDA -60% among the large cap tech giants. The small saving grace (on a technical level) is that the S&P cash (SPX) managed to close above its June low of 3,636 on Friday (barely at 3,640) after settling below the prior week. Stocks fell on Friday as traders evaluated September’s jobs report, which showed the unemployment rate continuing to decline. Note the S&P 500 snapped its 3-week losing streak on Friday with +1.51% gain but is down 3-straight days and down 13 of the last 17 trading days – now down -24% from record close of 4,976.56 on Jan 3 of this year. The Nasdaq Composite remains -33.5% off its record high close of 16, 057.44 on Nov 19, 2021. In Asian markets, The Nikkei Index fell -195 points to 27,116, the Shanghai Index reopened after its Golden Week holiday to slide -1.66% or 50 points to 2,974, and the Hang Seng Index declined -523 points to 17,216. In Europe, the German DAX is up 55 points to 12,325, while the FTSE 100 falls -0.3% to 6,965. The 10-Year Treasury Yield is up for 10 consecutive weeks, it is the longest winning streak since at least November 1977 according to Dow Jones data, rising 8bps to 3.883% this week and up 254-bps from its 52-week lows of 1.342% last December. The 2-year yield rose 10-bps this week to 4.306%, up 9 of the last 10-weeks and up nearly 400-bps from its 52-week lows of 0.318% Oct 8 last year. Note Bond markets are closed today in observance of the Columbus Day holiday


While stronger jobs data crushed stocks on Friday (raising prospect of higher rates for longer by Fed), next up is key inflation data this week. On Wednesday 10/12, Sept Producer Price Index (PPI) expected to show rise of +0.2% m/m overall and +8.3% y/y while core PPI m/m est. to rise +0.3%. On Thursday 10/13, consumer prices (CPI) data expected with ests for +0.5% m/m (vs. prior +0.6%) and +6.5% y/y on headline (vs. prior +6.3%). On a core basis (ex food & energy), CPI m/m est. +0.2% (vs. +0.1% prior) and +8.1% y/y (vs. prior +8.3%). Even inflation for stamps as the US Post office announces new prices for 2023, as new rates include a three-cent increase in price of a first-class mail forever stamp to 63 cents. Also coming up this week, the unofficial start of earning season.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -104.68 points, or 2.80%, to 3,639.84

·     The Dow Jones Industrial Average fell -629.69 points, or 2.10%, to 29,297.25

·     The Nasdaq Composite tumbled -420.91 points, or 3.80%, to 10,652.41

·     The Russell 2000 Index declined -50.36 points, or 2.87% to 1,702.15


Economic Calendar for Today

·     9:00 AM ET         Fed’s Evans Speaks at NABE Conference in Chicago

·     1:00 PM ET         Fed’s Brainard Speaks at NABE Conference in Chicago





















10-Year Note

Closed for

holiday today



World News

·     The Bank of England announced on Monday new safety net measures including a doubling of the maximum size of its debt buy-backs. After finance minister Kwasi Kwarteng last month triggered a bond market rout with plans for unfunded tax cuts, the BoE said on Sept. 28 that it would temporarily buy up to 5 billion pounds ($5.53 billion) a day of gilts of at least 20 years duration.

·     South Korea said its military will strengthen security cooperation with the US and Japan, including the deployment of “US strategic assets,” after Kim Jong Un’s North Korea fired two short-range ballistic missiles Sunday

·     Explosions were reported across several Ukrainian cities on Monday morning including Kyiv, Lviv, Dnipro and Ternopil.

·     Germany will deliver the first of four IRIS-T SLM air defense systems to Ukraine within days, German Defense Minister Christine Lambrecht said on Monday.


Sector News Breakdown


·     Rivian Automotive Inc. (RIVN) said it will recall about 13,000 vehicles it delivered to customers after discovering a minor structural defect

·     Ford (F) downgraded to sell from neutral at UBS due to weak profit margin while General Motors (GM) downgraded to neutral from buy, with UBS seeing “demand destruction” for its EV segment after a strong start.

·     Kraft (KHC) upgraded to buy at Goldman Sachs and downgrades P&G (PG) to neutral, adding more food exposure within US consumer staples coverage.

·     The China Passenger Car Association (CPAC) said Tesla (TSLA) delivered 83,155 cars last month, an 8% increase from August that crushed the group’s previous best of just under 79,000 recorded in June

·     Freyr Battery (FREY) has entered into an agreement with Aleees, the Taiwan-based lithium-iron phosphate cathode battery material manufacturer

·     Citigroup cut its estimate of Macau’s gross gaming revenue in October to 5.5 billion patacas from 7 billion patacas, citing disappointing revenue during the first nine days of this month (watch shares of WYNN, LVS, MLCO, MGM)


Energy, Industrials and Materials

·     BAE Systems (BAESY) said it was considering restarting the production of M777 howitzer after the gun’s performance on Ukrainian battlefields – WSJ

·     Russian President Vladimir Putin signed a decree on Friday that establishes a new operator for the Exxon Mobil Corp (XOM) led Sakhalin-1 oil and gas project in Russia’s Far East.

·     The strikes that have hit French oil refineries and storage sites will continue on Monday, with workers at TotalEnergies (TTE) and ExxonMobil’s (XOM) Esso France sticking to their positions as petrol stations run dry throughout the country.



·     BlackRock (BLK) has lost over $1B in asset management business in U.S. Republican states due to the company’s green investing policies – Financial Times



·     Teva Pharmaceutical Industries Ltd. (TEVA) will continue to have challenges supplying the popular attention- deficit/hyperactivity disorder drug Adderall for the next two to three months, a spokesperson said

·     The European Union has informed Teva (TEVA) of its preliminary view that the company breached antitrust rules to shield its multiple sclerosis drug Copaxone from competition.

·     Merck (MRK) announces positive top-line results from pivotal phase 3 stellar trial evaluating sotatercept for the treatment of adults with pulmonary arterial hypertension (PAH)

·     Bristol-Myers (BMY) downgraded to Neutral from Buy at Guggenheim

·     Merck (MRK) upgraded to Buy from Neutral at Guggenheim

·     Illumina Inc. (ILMN)’s stock has lost 60% since mid-2021 but its newly announced gene sequencers could help stem the slump, Barron’s said

·     Heron Therapeutics (HRTX) files to sell 24.68M shares of common stock for holders

·     Jasper Therapeutics (JSPR) files $150M mixed securities shelf


Technology, Media & Telecom

·     Madison Square Garden Sports Corp. (MSGS), the owner of the New York Knicks and New York Rangers, is trading at a big discount to its teams, according to Barron’s. The stock has dropped 14% this year and is a cheap play on professional sports teams+

·     Spotify Technology SA (SPOT) union members said a decision by the company to put their shows exclusively on its own streaming service led to a drop in listeners and a subsequent decision to cancel programs and fire workers.

·     The Biden administration published a sweeping set of export controls, including a measure to cut China off from certain semiconductor chips made anywhere in the world with U.S. equipment. The rules build on restrictions sent in letters this year to top toolmakers KLA Corp (KLAC), Lam Research Corp (LRCX), and Applied Materials Inc (AMAT), effectively requiring them to halt shipments of equipment to wholly Chinese-owned factories producing advanced logic chips

·     JPMorgan recommended a mix of Japanese blue chips, including Suzuki Motor Corp. (7269 JP), Hitachi Ltd. (6501 JP), Concordia Financial Group Ltd. (7186 JP) and Seven & I Holdings Co. (3382 JP). Fund buyers can consider the iShares MSCI Japan ETF (EWJ) or the Vanguard FTSE Europe ETF (VGK), according to Barron’s.


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.