Morning Preview: September 21, 2023

Early Look

Thursday, September 21, 2023









S&P 500










U.S. stock futures are pointing to a lower open, adding to yesterday weakness as markets closed at the lows Wednesday following central bank action. U.S. stocks finished lower on Wednesday, hitting the lowest closing levels of September after the Federal Reserve signaled it would likely keep interest rates higher for longer. The central bank left its policy rate on hold as expected at 5.25%-5.5% but signaled another hike could come later this year. The Fed’s dot-plot of rate-path projections suggested its policy rate target would remain above 5% through the end of 2024 (so only 2 rate cuts vs. 4 the markets had been anticipating). The US stock weakness carried over to foreign markets as Asian equities slide after the Fed’s higher-for-longer rates narrative takes hold with the Nikkei Index declining -452 points or 1.37% to 32,571, the Shanghai Index dropped -23 points to 3,084, and the Hang Seng Index slipped -23 0 points to 17,655. In Europe, the German DAX is down -1% at 15,614, and the FTSE 100 is down -0.6%.


In stock news, Fed-Ex (FDX) shares rise overnight after quarterly beat and raised guidance helped by cost cutting measures, while recent IPOs CART and ARM both extend losses post their better debuts (CART broke deal price last night). Semiconductor chip stocks active on several stories (see below on AVGO weakness, MRVL strength), while media stocks (PARA, WBD) edge higher on CNBC report that the Hollywood writers strike is nearing a deal.


After the FOMC issued a pause in rates Wednesday (though with a hawkish outlook) and the Swiss National Bank also snapped a string of 5-straight meeting rate hikes (stays at 1.75%), there are many other central bank meetings today. The Bank of England (BOE) is expected to raise its policy rate by 25bps to 5.5%, though the softer-than-expected August CPI data on Wednesday brought some uncertainty. Other central bank action overnight includes: the Philippines (rates stay steady), Indonesia (rates held steady), Taiwan (rates held steady), Riksbank (raised by 25-bps to 4%) and Norges Bank (raised by 25-bps to 4.25%). Tomorrow the Bank of Japan (BOJ) is expected end its negative interest rate policy next year. The ten-year Treasury yields rise to fresh 16-year highs of 4.45% after hawkish Fed projections and 2-yr at 5.15%.


Market Closing Prices Yesterday

·     The S&P 500 Index dropped -41.70 points, or 0.94%, to 4,402.25.

·     The Dow Jones Industrial Average fell -76.85 points, or 0.22%, to 34,440.88.

·     The Nasdaq Composite tumbled -209.06 points, or 1.53%, to 13,469.13.

·     The Russell 2000 Index declined -16.42 points, or 0.90% to 1,810.10.


Economic Calendar for Today

·     8:30 AM ET                  Weekly Jobless Claims…est. 225K

·     8:30 AM ET                  Continuing Claims…est. 1.695M

·     8:30 AM ET                  Philly Fed Business Index for September…est. -0.7 (prior +12.0)

·     8:30 AM ET                  Current Account Balance for Q2…est. (-$221B)

·     10:00 AM ET                Existing Home Sales M/M for August…est. 4.1M

·     10:00 AM ET                Leading Index M/M for August…est. (-0.5%)

·     10:30 AM ET                Weekly EIA Natural Gas Inventory Data


Earnings Calendar:

·     Earnings Before the Open: DRI FDS

·     Earnings After the Close: FLUX


Other Key Events:

·     DA Davidson Annual Diversified Industrials & Services Conference, 9/20-9/22, in Nashville, TN

·     Oracle Cloud World 2023, 9/18-9/21

·     Sidoti September Small-Cap Conference (virtual), 9/20-9/21

·     Truist West Coast Bus Tour (In Person – San Francisco), 9/19-9/21





















10-Year Note





World News

·     The Swiss National Bank (SNB) ended its run of five consecutive interest rate increases since it began lifting rates out of negative territory in June 2022, and keeps its main policy rate to 1.75%. The SNB noted that inflation has ebbed lower but said a further tightening cannot be ruled out.

·     The China’s yuan slipped to a more than one-week low against a strengthening dollar and breached a key threshold on Thursday, pressured by a higher-for-longer signal on interest rates by the U.S. Federal Reserve.

·     Gold and base metals prices slip after the U.S. dollar jumps following the Federal Reserve’s meeting. Oil prices also dropped after Federal Reserve officials signaled they were considering raising rates once more this year and leaving them higher for longer.

·     U.S. House Speaker Kevin McCarthy will try to restart his stalled Republican spending agenda on Thursday, with a procedural vote on a fiscal 2024 defense appropriations bill that Republicans have already twice failed to advance. A vote to open debate on the $886 billion measure is expected in the House of Representatives, aimed at finding common ground on legislation to avert a government shutdown in barely a week and half.


Sector News Breakdown


·     KB Homes (KBH) Q3 EPS $1.80 tops est. $1.43, while revs fall -14% y/y to $1.59B but above est. $1.48B; Q3 Homes delivered decreased 7% to 3,375 and the average selling price was $466,300, compared to $508,700; Q3 operating income margin was 11.3%, compared to 17.7%, housing gross profit margin of 21.5% decreased 520 bps; Q3 Net orders grew 52% to 3,097.

·     Detroit’s Big Three automakers (GM, Ford, Stellantis) and the United Auto Workers remained far apart in labor negotiations, less than 48 hours before the union’s deadline to make significant progress or escalate a strike with new work stoppages. The UAW has said it will announce strikes against more U.S. plants on Friday if no serious progress is made in talks by 12 p.m. EDT Friday.

·     JD Sports Fashion (JDPSY) rises after reported higher 1H revenue and said it was on track to hit full-year profit targets, lifting other U.K. retailers. Meanwhile, Next Plc (NXGPY) rose after reported higher sales and profit in the six months to July and raised full-year profit guidance.

·     Instacart (CART) shares broke below their IPO deal price of $30 after the bell last night and are currently trading below that level pre-mkt open.

·     Moody’s upgrades Carvana’s (CVNA) CFR to Caa3, senior unsecured notes affirmed at Ca.


Energy, Industrials and Materials

·     Fed-Ex (FDX) Q1 adj EPS $4.55 vs est. $3.73 on revs $21.7B vs est. $21.81B; guides FY revs approx flat y/y vs prior flat to +low-single % vs est. -0.3% and raises FY24 adj EPS to $17.00-18.50 vs prior $16.50-18.50 and est. $17.50; sees permanent cost reductions from drive transformation program of $1.8B; expect to repurchase additional $1.5B common stock during FY24.

·     Enovix (ENVX) said it is buying the Korean battery manufacturer Routejade for $16.5Mm in cash and 6.2M of its shares; said Routejade would also allow it to add an established lithium-ion battery business with factories in Korea.

·     Greenbrier Cos. Inc. (GBX) said it has won orders for 15,300 new railcars valued at $1.9 billion; said the orders came in Q4 from customers in various commercial sectors and spanned a range of railcar types.

·     Mosaic (MOS) and Nutrien (NTR) shares fell late Wednesday as RBC Capital noted the US ITC ordered by court to reconsider phosphate duties. The firm said it views this court ruling as potentially negative for domestic phosphate producers, especially Mosaic, as it brings uncertainty to future US pricing relative to global benchmarks.

·     Gulfport Energy (GPOR) expanded common stock repurchase authorization by 63% to $650M.

·     Maxeon Solar Technologies (MAXN) and Complete Solaria (CSLR) signed a definitive agreement for purchase of sales channel assets and shingled solar panel IP by Maxeon.



·     Raymond James Financial Inc (RJF) August 2023 private client group assets under administration increase 12% over August 2022.

·     Truist Financial (TFC) upgraded to Outperform from Market Perform at KBW Inc. with a price target of $36, down from $37 saying the stock is trading at a 5% discount to peers versus a historical 5% premium, driving 15% upside in base case scenario.


Technology, Media & Telecom

·     Broadcom (AVGO) shares fall after the Information reported that Google’s (GOOGL) executives have discussed dropping Broadcom as a supplier of artificial intelligence (AI) chips as early as 2027. In that scenario, Google would fully design the chips, known as tensor processing units, in-house, the person said

·     Marvell Technology (MRVL) bid higher after The Information article (link above in AVGO story) also noted “Google since last year has been working to replace Broadcom with Marvell Technology as the supplier for the networking interface chips that connect servers to ethernet switches in Google’s data centers, the person said. The move came after Broadcom raised prices as much as 30% for these chips in 2021 during a global chip shortage.”

·     Paramount (PARA) and Warner Bros Discovery (WBD) shares looking higher after CNBC reported last night that writers and producers are near an agreement to end the Writers Guild of America strike after meeting face to face on Wednesday. The two sides met and hope to finalize a deal Thursday, the sources said

·     Crowdstrike (CRWD) raised its target for subscription gross margins by 400 basis points and for operating margins by 900 basis points and free cash flow margin of 34%-38% of revenue, up 500bps from prior target at midpoint.

·     Arm Holdings (ARM) shares trading lower -3% pre mkt, holding just above its recent $51 IPO pricing and down from $69 high on Friday September 15th, the day after its market debut.

·     Toshiba (TOSYY) shareholders approve $13.5B deal to take company private. Toshiba in March agreed to a takeover proposal made by a consortium led by Tokyo-based private-equity firm Japan Industrial Partners


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.