Market Review: April 27, 2023

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Closing Recap

Thursday, April 27, 2023





DJ Industrials




S&P 500








Russell 2000













Up, up, and away all day, as U.S. stocks were on cruise control with all eleven S&P sectors rising on the busiest day for the S&P this earnings period, led by Communications rising over 5% following Facebook parent META earnings results (shares rose 14%) and Consumer Discretionary (AMZN +4% into earnings tonight), while Energy and Healthcare declined. Earnings season is nearly half-way through as CNBC’s Bob Pisani noted 234 SPX companies have reported earnings through this morning: 80% EPS beat rate, 6.7% average beat, 32% raising guidance, $218 forecasted ’23 EPS. @charliebilello notes that “with 44% of companies reported, S&P 500 Q1 GAAP earnings are down 1% year-over-year, the 4th consecutive quarter of negative YoY growth.” So despite a few sectors that disappointed (transports been weak, healthcare), overall results have come in way better than feared as companies have been able to pass off high costs to consumers, despite expenses holding higher. Today saw new all-time highs today for MCD, LLY, HSY. Today was a slow, steady climb with the S&P 500 reclaiming the 4,100 level and snapping its streak of 6-straight days making lower lows. Crude oil rose 1% to above $75 per barrel, Treasury yields climbed as the 10-year Treasury note surged 8 bps to 3.51% and the dollar edged higher. Another heavy dose of earnings tonight highlighted by AMZN, as well as MDLZ, FSLR, COF, AMGN, GILD, X, INTC, TMUS, SNAP and PINS. More inflation data tomorrow with PCE and ECI as well an income and spending data points after softer GDP, higher prices, and declining jobless claims today.


Economic Data

·     The U.S. Q1 GDP QoQ rose +1.1% vs +2.0% est. and slower than the 2.6% growth in 4Q (but note Atlanta GDPNow recently took estimate down to 1.1% so not a total shock for mkts); GDP Price Index QoQ for Q1 +4.0% vs +3.7% expected and +3.9% prior; real consumer spending Q1 +3.7% vs. 1.0% prior; core PCE prices for Q1 rises +4.9% vs. +4.7% est.

·     Weekly Jobless Claims fell to 230K from 246K prior week and below estimates 248K; the 4-week moving average fell to 236K from 240K; Continued Claims fell to 1.858M from 1.861M prior week and below ests and U.S. Insured Unemployment Rate unchanged at 1.3%.

·     March Pending Home sales index (-5.2%) vs. est. +0.5%; March Pending Home sales -23.2% y/y.


Commodities, Currencies & Treasuries

·     Oil prices rose with WTI crude +0.46 or 0.62% to settle at $74.76 per barrel, while Brent crude $0.68 or 0.88% to settle at $78.37 per barrel. Gold prices rose $3.00 to settle at $1,999 an ounce. Treasury prices dropped, pushing yields higher following the latest U.S. gross domestic product data. GDP decelerated to an annualized growth rate of 1.1% in Q1, below last quarter 2.6% and estimates of 2.-%. The 10-year Treasury’s yield was 8-bps at 3.51%, and the 2-yr yield was up 13 bps at 4.05% on data. The market will be paying close attention to the release of the latest Personal Consumption Expenditures, or PCE, data on Friday. The U.S. Treasury sold $35 bln in 7-year notes at high yield 3.563% vs. 3.55% when issued prior with bid-to-cover ratio 2.41, primary dealers take 14.81% of U.S. 7-year notes sale, direct 21.08% and indirect 64.11%.






WTI Crude















10-Year Note





Sector News Breakdown



·     In tires: GT said Americas sales are expected to be negatively impacted by $110 million to $130 million in the second quarter of 2023, primarily due to the shut-down and subsequent ramp-up of the Tupelo tire manufacturing facility.

·     In autos: TM said it produced 9.13 million vehicles in the 12 months through March 31, a fraction ahead of its target, but above the previous year output of 8.57 million; global sales for the 12 months ended March rose to 9.61 million vehicles from 9.51 million in the prior year.

·     In auto suppliers: LEA posted Q1 adj EPS beat by 22c and sales rose 12% y/y to $5.85B vs. est. $5.59B with negative FCF -$147.4M vs. est. for positive.

·     In Auto retail: ORLY reported 1Q23 comps +10.8%, vs. consensus estimates of /+6.8% and EPS of $8.28 beat consensus estimates of $7.98 driven by higher revenue (+$0.24), higher gross margin (+$0.12), lower SG&A (+$0.03), and higher other income (+$0.03).

·     In leisure/bikes: HOG posts Q1 revenue of $1.79B beating the $1.36B est.; quarterly net profit rises to $304 mln, or $2.04 vs. $222.5 mln, or $1.45, a year earlier; said sales from motorcycles and related products up 21% at $1.56B; reaffirms FY23 outlook for year.


Consumer Staples & Restaurants:

·     In food & beverages: PPC quarterly profit fell to $5M from $280M y/y amid higher costs for fuel, labor, and feed for their birds and said sales were down 2% y/y; UL reported a 10.5% rise in underlying Q1 sales to 14.8 billion euros ($16.4 billion), beating analysts’ average forecast for a 7.2% increase; included a 10.7% increase in prices and a 0.2% dip in volumes; TSN said it cutting 10% of its corporate staff and 15% of its senior leadership as part of a move to cut costs; DPZ Q1 comp sales +3.6% vs. est. +1.95% but total revs of $1.02B misses $1.04B estimate; HSY reported a Q1 top and bottom line beat while raising year sales view to upper end of prior (stock traded at new all-time highs following earnings).

·     In consumer products: CHD raised the lower end of both its full-year sales and adjusted EPS ests, citing first-quarter momentum and strong demand after Q1 EPS and sales beat; raised the lower end of its 2023 sales growth guidance to a range of 6% to 7%, from prior guidance of 5% to 7%. In tobacco, MO reported beats for Q1 and backed year outlook.



·     In toy retailers: MAT Q1 adj EPS loss (-$0.24) vs. est. loss (-$0.19); Q1 revs $814.6M vs. est. $740.73M; affirms 2023 adjusted EPS $1.10-$1.20 vs. est. $1.21; Q1 gross margins 40%; HAS beats Q1 revenue expectations helped by strong demand for its digital games as revs fell -14% y/y to $1.0B but above est. $885.3M as EPS of $0.01 just below ests (said saw 23% slump in revenue at its consumer products segment, the company’s largest business unit.)

·     Other retail: CROX earnings and sales beat for current quarter, but guidance for Q2 came in well below consensus and mid-point of year sales below views as well; HELE Q4 beat and FY24 of $8.50-$9 is ahead of $8.43 est. and said CEO is retiring; OSTK posts smaller than expected quarterly loss; TSCO Q1 revs $3.3B just below $3.32B estimate citing less favorable spring weather trends and weaker demand for its seasonal products


Leisure, Gaming & Lodging:

·     In boating: BC Q1 EPS and revs beat but issued softer Q2 profit outlook; HZO out with a big headline miss and guide down as inventories rise and lowers FY EPS view to $5.25 at the mid-point vs the Street at $7.25, but shares rebounded.

·     In casinos/gaming: DKNG is planning to launch a free, ad-supported streaming video service consisting of videos of sports podcasts and could debut in the coming weeks – Bloomberg; CHDN Revs $560M top ests and EBITDA $223M also beats.

·     In lodging: WH reported a small beat and raise for Q1 as EBITDA slightly better, and EPS beat by 6c. FY raised by beat, just a day after HLT reported better results and guidance. Though shares fell Wednesday as analyst cited cautiousness on conference call vs. general optimism, with several statements about a “slow-down”.



·     In E&P: PXD delivered a 1Q23 beat, raised the base dividend 14% to $5/share annually, repurchased $500mm of stock and announced Rich Dealy succeeds Scott Sheffield as CEO at YE23; EQT among early leaders in the S&P following quarterly results which featured upbeat volumes and natural gas pricing at lower operating costs; AR reported 7% EBITDA miss vs. est. partially offset by a strong quarter in the field as volumes were slightly ahead of expectations.

·     Oil & Gas Equipment: NOV EBITDA -4% vs the Street due to lighter than expected C&P and Wellbore results; PTEN EBITDA beat by 11% on better drilling cash margins with inline pumping results; OII 1Q EBITDA of $55MM vs the Street’s $50MM due to strong Manufactured Products results that came in above guidance; HP shares slide as posted 2Q beat, but fiscal 3Q EBITDA will head ~15% – 20% lower than the Street est. CAPEX is also being cut this year to $400M-$450M from $425MM-$475MM.

·     In solar & Utilities: NOVA reported 1Q customer additions and PF EBITDA plus P&I ahead of expectations. FY23 customer addition guidance was increased by 10k at the midpoint, and while full-year EBITDA guidance was reiterated; ETR reported a 1Q miss vs. consensus on weather and timing of O&M; CMS Q1 EPS $0.70 beats, while revs fell -3.8% y/y to $2.28B missing $2.33B.



·     In banks/brokers: JEF shares rise on reports Sumitomo Mitsui Banking Corp. plans to triple its stake in Jefferies Financial Group Inc., the Financial Times reported; said plans to raise its ownership to as much as 15% by buying shares on the open market. RJF Q2 EPS of $2.03, falling short of consensus of $2.23 and revs $2.87B came in 1.8% below, while the comp ratio of 62.8% was slightly better and non-compensation costs of $485M came in above; BCS beats profit expectations on U.S. credit card boom.

·     In payments: MA Q1 EPS and revs top views as gross dollar volume up 15% and purchase volume up 17%, on a local currency basis; said April MTD transaction volume +17% y/y, guides Q2 adj Rev growth ”high-end of low-double-digits" y/y and guides FY23 Rev ‘low-teens’ growth y/y (vs. prior ‘high-end of low-double digits’ growth y/y)

·     In lending: LC 1Q23 EPS beat consensus by 80%, driven by 3% better revenues and 8% lower operating expenses, offset somewhat by 23% higher credit provisions. PPNR beat consensus by 29% while 2Q23 guidance points to slowing trends q/q. SLM 1Q23 EPS beat consensus by 38%, driven by 13% better PPNR and credit provisions 9% below consensus. The PPNR beat was driven by Net Interest Income 7% above consensus. 2023 guidance was unchanged despite Q1 beat.

·     In Insurance/services: ACGL reported Q1 operating EPS of $1.73 beating consensus of $1.45 which reflects better reserve releases, investment income, and insurance underlying results.



Biotech & Pharma:

·     Huge morning of earnings in large cap Pharma with ABBV, AZN, BMY, LLY, MRK, SNY all out with results:

·     ABBV in-line Q1 EPS of 42.46 and revs $12.23B slightly better and raises year EPS to $10.72-$11.12, from prior $10.62-$11.02 vs. estimate $10.96; notes Q1 R&D expenses rose 12% y/y; shares slide as some specific drug sales missed estimates.

·     AZN posted a higher 1Q profit which beat analysts’ expectations, backed its guidance for the full year, saying that it expects total revenue to increase by a low-to-mid single-digit percentage; Net profit for the quarter came in at $1.80B, beating ests $1.52B but said sales fell y/y.

·     BMY announced CEO to retire; Q1 adjusted EPS $2.05 tops consensus $1.97 but revs of $11.3B, misses the consensus $11.49B, while backs its year profit and revenue outlook.

·     LLY Q1 EPS of $1.62 missed the $1.73 estimate on in-line revs $6.9B but raises FY23 adjusted EPS view to $8.65-$8.85 from $8.35-$8.55 (est. $8.45) and raises FY23 revenue view to $31.2B-$31.7B from $30.3B-$30.8B (est. $30.64B) – also positive late-stage data for obesity drug.

·     MRK Q1 adj EPS $1.40 vs consensus $1.32; Q1 sales $14.49B tops est. $13.79B; said KEYTRUDA sales grew 20% to $5.8B; narrows FY23 revenue view to $57.7B-$58.9B from $57.2B-$58.7B.

·     SNY backed its yearly guidance and reported higher sales for Q1 (EU10.22B from EU9.67B y/y) but below views (EU10.52B), driven by its specialty care and vaccine businesses; Net income came in flat on year at EUR2B, but business net income grew to EUR2.70B from EUR2.42B y/y

·     Other earnings & news:

·     BAX Q1 EPS and revs both above consensus and now sees FY sales +1 to 2%.

·     BMRN Q1 rev. of $594MM was above consensus ($574MM). Voxzogo beat ($88MM vs $73MM) and its FY23 guidance was raised. No patients were dosed with Roctavian in Germany, and its FY23 guidance was cut.

·     MCRB received FDA approval for its therapeutics Vowst to prevent the recurrence of C. difficile Infection (CDI) in adults.

·     Cannabis sector (MSOS, TLRY, CGC, GTBIF, CURLF) rises early following last night’s news from DC: Bipartisan U.S. House And Senate Lawmakers Reintroduce Marijuana Banking Bill, the Secure and Fair Enforcement (SAFE) Banking Act. The legislation, which has been slightly revised since last session, would protect banks that work with state-legal cannabis businesses from being penalized by federal regulators.


Healthcare Services & MedTech movers:

·     Managed Care: ELV upgraded to Overweight at Morgan Stanley as see strong potential for LT earnings growth upside from fully scaling BioPlus and capturing the Humira Biosimilar tailwind. MOH Q1 EPS of $5.81 exceeded consensus of $5.19 and the company raised 2023 EPS guidance by ~2.5% to >$20.25 from >$19.75 prior.

·     In Medical Technology: ALGN shares fell as 1Q23 revenue/EPS came in solidly ahead of Street estimates and 2Q23 revenue guidance above but 1Q23 case volumes of 575K was slightly below Stifel’s recently increased 585KE (from 575KE).


Industrials & Materials

·     In industrials: CAT shares fell despite a top and bottom-line Q1 beat as higher prices and strong demand continued to offset inflated manufacturing costs; HON Q1 adj EPS $2.07 vs. est. $1.93; Q1 revs $8.86B vs. est. $8.52B and raises FY23 revs and EPS outlook; GWW shares rise following upbeat forecast; ROK big jump initially after earnings, but shares pulled back; TXT hit 6-month lows after results; URI posted 1Q23 results, beating consensus expectations on sales and adj. EBITDA by 2.4% and 4%, respectively as net sales of $3.29B and adj. EBITDA of $1.5B also beat.

·     In transports: in truckers, earnings misses continue to pile up after CHRW missed expectations for quarterly sales and profit citing softening freight demand; LSTR reports Q1 beat but guides lower for Q2; (follows recent misses from JBHT, KNX, ODFL, TFII); Q1 EPS $0.96 vs. est. $0.99 and revs fell -32% y/y to $4.6B vs. est. $4.82B; In airlines: LUV posted slightly wider-than-expected Q1 EPS loss as revs just miss ests as sees Q2 RASM down 8%-11% and Q2 ASMs up 14%; AAL Adj EPS: beat of $0.05 on in-line revs $1.2B and guides Q2 and year EPS above views.

·     In containers and packaging: SLGN upgraded to Buy at Citigroup with a $56 target following 1Q earnings after shares sold off -9% despite in-line 1Q results and a reiterated FY view; IP top and bottom line Q1 results above consensus.



Internet, Media & Telecom

·     In Internet, strength in social media after META Q1 EPS and revs beat (EPS $2.20 vs est. $2.03 on revs rose 2.7% to $28.645B vs est. $27.655B, and guides Q2 revs above views ($29.5-32B vs est. $28.8B) – Q1 net income declined 24% to $5.7 billion as costs increased 10% and operating margins fell to 25% from 31% in Q1; EBAY projected revenue in the current quarter that exceeded analysts’ estimates, suggesting efforts to boost sales.

·     In media: ROKU Q1 revenues, active accounts and adj. EBITDA topped consensus expectations in 1Q23; active accounts reached 71.6 mil., up +1.6 mil. sequentially, aided by an impressive 43% Roku CTV OS penetration rate across U.S. TVs sold in the quarter, up from 38% in 4Q22’ guides Q2 revenues and adj. EBITDA above consensus, though media & entertainment ad spend, for which ROKU has outsized exposure, is expected to remain under pressure.

·     CMCSA Q1 total revenue fell 4.3% to $29.69 billion in the quarter but beat analysts’ average estimate of $29.30 billion; reported a 9.5% fall in revenue in the NBCUniversal unit to $10.26 billion in the first quarter; Revenue at Peacock rose over 45% compared with a year earlier. Paid subscribers increased by about 2 million q/q but adjusted losses from the ad-reliant platform widened to $704 million from $456 million a year-ago; Theme parks revenue climbed nearly 25%

·     In advertising: WPP reported a 2.9% rise in first-quarter net sales, putting it on course for full-year targets; said total revenue of 3.46 billion pounds ($4.32 billion) was up 4.9% on a like-for-like basis. IPG reported Q1 EPS and revs above views (38c/$2.51B vs. 34c/$2.2B) and says on track to achieve its 2023 organic revenue growth target of 2% – 4%.


Hardware & Software movers:

·     Software: NOW posted strong 1Q23 results with non-GAAP EPS of $2.37 (consensus $2.04) on revenue of $2.096B (consensus $2.090B), up 22% y/y as reported and 24.5% in constant currency (down from 25.5% in constant currency last quarter); subscription revenue of $2.024B (consensus $2.000B), up 24% y/y as reported and 27% in cc (down from 27.5% last quarter); DBX will cut 500 jobs, about 16% of its workforce, amid slowing growth and an industrywide push toward artificial intelligence.

·     In video gamers: EA downgraded to Market Perform from Outperform at BMO Capital with a revised target of $125 from $150 to account for a reduction in implied "takeout premium" owing to the UK Competition and Markets Authority’s (CMA) decision to block the MSFT deal.

·     In Communications & Networking: NTGR shares slide as guided Q2 revs $150M-$165M below estimates $205M after Q1 revs dropped to $180.9M from $210.6M y/y and missed estimates citing “unprecedented inventory reduction by our largest Service Provider partner.”



·     Rough day of news in semi space, with several lower guides in specific sub-sectors, but the broader Philly semi-index (SOX) rebounds off lows as markets push to highs.

·     PI shares plunged after disappointing guidance as sees Q2 EPS $0.28-$0.33 vs. est. $0.41 and revs $84M-$87M below consensus $88.3M (follows Q1 earnings miss).

·     MBLY tumbles as lowers FY23 revenue view to $2.07B-$2.11B from $2.19B-$2.28B (est. $2.25B), noting China EV market weakness driven by TSLA ‘s recent price cuts and citing overall China macro weakness, and reduction of China EV subsidies.

·     WOLF said the ramp at its critical Mohawk Valley facility was, again, delayed and mgmt blamed its ability to ramp 200mm substrate capacity in Durham, NC for FY24 revenue lowered guidance to $1.0-1.1B from the $1.6B guidance given at the company’s analyst day. STM also lower after results as Silicon Carbide semis (ON, WOLF, STM) disappoint.

·     In semi-equipment: KLAC gets a bump after Q3 adj EPS $5.49 vs. est. $5.32; Q3 revs $2.43B vs. est. $2.37B; sees Q4 adj EPS $4.23-$5.43 vs. est. $4.43; sees Q4 revenue $2.125B-$2.375B vs. est. $2.17B (LRCX, ASML moved higher in reaction). TER however declined following its results.


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.

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