Market Review: August 12, 2022

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Closing Recap

Friday, August 12, 2022





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     U.S. stocks extended overnight gains throughout the day to finish near highs after import price data came in slightly better than expected. The University of Michigan consumer sentiment data briefly rattled the equity complex, sending the Dollar higher and gold lower, but wasn’t enough to dull the optimism created by better inflation readings earlier in the week. Investors continue to look for any sign the Fed can ease off the rate hike pace and/or trim rates into next year. No bad news is good news and today’s rise in both the S&P and NASDAQ marked their fourth consecutive weekly gains (the longest weekly streak since November 2021). Of note, Refinitiv Lipper data show U.S. equity funds notch biggest weekly inflows in seven weeks ($4.21B net purchases of U.S. equity funds), but BofA’s bull & bear indicator remains at “max bearish” for the 9th consecutive week. All S&P sectors finished in the green, with the Energy and Consumer Staples sectors as laggards and the XLE & XLP “only” about +0.70%. Technology (XLK) and Consumer Discretionary (XLY) paced the gainers at around +2%. As expected in a risk-on equity day, growth outperformed value but both enjoyed solid gains.


Economic Data:

·     US import prices declined 1.4% in July vs expected -1.0%. The decline marked the first time we’ve seen a monthly dip since December 2021. It was also the largest import price drop since April 2020’s -2.6% mark. Of note, fuel import prices dropped 7.5% for the month, also marking the first decline of the year. The nonfuel import price index dipped by 0.5%, the third consecutive monthly decrease.

·     US export prices slipped 3.3% in July vs expected -1.1%. The July move was a reversal from the +0.7% gain in June and marked the largest 1-month fall since April 2020’s -3.5%. Of note, the agricultural price index slipped by 3.0% in July after a modest -0.1% in June. The July agricultural index dip also marked the largest monthly fall since April 2020 (-3.5%). Nonagricultural industrial supplies and materials export prices slid by 7.0% in July, paced by a 12.3% slide in fuel prices.

·     University of Michigan August preliminary consumer sentiment 55.1 vs expected 52.5. Sentiment gains were driven by the expectations component climbing to 54.9 vs an expected 48.4, while the current conditions index came in at 55.5 vs expected 59.0. While not typically as relevant as the spread on consumer confidence, it is interesting to note the sentiment spread slipped to just +0.6 from +10.8 for the July final. Recessions tend to be accompanied by negative spreads.

·     University Michigan 1 Yr Inflation Prelim Actual 5.0% (Forecast 5.1%, Previous 5.2%)

·     University Michigan 5 Yr Inflation Prelim Actual 3.0% (Forecast 2.8%, Previous 2.9%)




·     December gold shrugged off an early dip on sentiment data to notch a gain of $8.30/oz, or 0.46%, and settle at $1,815.50. The gain closed a fourth consecutive up week and marked the longest string of active-contract weekly gains in seven months.

·     WTI crude oil felt pressure all day and settled -$2.25/bbl, or -2.38%, at $92.09. Brent also slipped, settling at $98.15/bbl, or -$1.45 (-1.46%). In opposition to the price weakness, Goldman yesterday continued to call for rising oil demand. They see limited supply of natural gas driving a switch to oil into winter as a demand driver in Europe and forecast $130/bbl for Brent crude by year-end. A reversion back toward peak oil demand in China would add another $15/bbl to the forecast.


Currencies & Treasuries

·     The US Dollar enjoyed a strong day, with the DXY finishing roughly +$0.55 to $105.65 after better economic data spurred a morning rally. Despite the daily gain, the DXY still looks to post a weekly decline.

·     On the rates side, the US 10-year yield slipped modestly to about 2.85%, but the 2-year climbed and further inverted the curve as investors continue to try to digest and find direction in the recent array of inflation data. Expectations for a +50bps hike in September slipped to about 56.5% after today’s economic data from 63.5% and the implied Fed Funds rate rose slightly to about 3.52% for December 2022, and 3.65% for March 2023, but continues to show some easing back to 3.57% by June 2023.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; POSH slides after a wider than expected Q2 loss and guided Q3 sales below views; MCW mixed Q2 with EPS miss and sales beat and cuts year EPS and revs outlook; XPOF reports mixed Q2 results as EPS missed consensus on better revs and Ebitda; REAL downgraded to market perform at Cowen and cut tgt to $3 as revenue growth volatility and labor pressures in 2H cloud visibility to longer term goals of 2024 profitability

·     Consumer Staples & Restaurants; PTLO 8M share Secondary priced at $23.75; SPB posts Q3 profit growth, but revenue missed estimates as the company took steps to aggressively cut back on costs amid a volatile economic outlook; ELF downgrades to Market Perform at Cowen, moving to the sidelines on valuation; SBH downgraded to Market Perform at Cowen saying decelerating trends and tough compares may keep stock range-bound

·     Casinos, Gaming, Lodging & Leisure sector; WYNN, LVS, MGM, CZR shares active after Las Vegas slammed with more flash floods as iconic strip, casinos under water again; SIX downgraded to Sector Weight at KeyBanc after indefensible Q2 results; in the auto sector, RIVN maintains production guidance but warns on near-term profit pressure and cuts FY22 adjusted EBITDA target to loss of $5.45B from $4.75B


Energy, Industrials and Materials

·     Energy stock movers: US listed China stocks lower after 5-US listed China stocks, including SNP and PTR said that they intend to delist their American depositary shares from the NYSE, as U.S. and Chinese regulators remain at loggerheads over audit requirements. In separate filings to the Hong Kong stock exchange, China Life Insurance Co. Ltd. (China), PetroChina Co., China Petroleum & Chemical Corp., Aluminum Corp. of China Ltd., and Sinopec Shanghai Petrochemical Co. said they would apply for the voluntary delisting of their ADSs from the NYSE



·     Bitcoin, FinTech & Payments; DAVE lowered its guidance for 2022 as now expects non-GAAP operating revenue of $200M-$215M, down from its previous range of $200M-$230M

·     Financial Services, Consumer Finance; PAYO guides FY revs $580-590Mm above est. $563.1Mm after quarterly beat; SMRT wider Q2 loss on revenue shortfall while guides Q3 revs below consensus and cuts FY22 revenue view to $155M-$180M from $220M-$250M; DBD downgraded from Neutral to Underweight at JPMorgan; LZ a mover on earnings



·     Pharma & Biotech movers; NVS said following 2 recent patient fatalities in Zolgensma gene therapy co will be updating labeling to specify fatal acute liver failure reported; PFE said it announces positive top-line results from phase 3 study of 20-valent pneumococcal conjugate vaccine in infants; INAB 5.39M share Secondary priced at $1.90; CERE 7.25M share Secondary priced at $35.00

·     MedTech Equipment; ILMN tumbles on top and bottom line Q2 miss, cuts FY22 adjusted EPS view to $2.75-$2.90 from $4.00-$4.20 and slashes FY22 revenue growth to 4%-5% from 14%-16%; CODX drops on unexpected Q2 EPS loss, revs miss and operating loss of $4.1 million compared to operating income of $11.8 million a year ago; RMD top and bottom line Q4 beat both at least two analysts downgraded the shares following the results; INSP 1M share Spot Secondary priced at $215.00


Technology, Media & Telecom

·     Semiconductors; PLXS downgraded from Neutral to Underweight w/ $85 PT at JPMorgan; IIVI downgraded from Overweight to Equal weight at Morgan Stanley and cut tgt to $59 from $75 given our view that valuation discount unlikely to close in near term given increasing smartphone exposure against weakening data points

·     Services, Hardware, & Software movers; TOST rises on boosted revenue and earnings outlook for the year after logging higher second-quarter sales ARR $787Mm, GPV $23.3B +62% and adj EBITDA ($33Mm) vs est. ($55.4Mm); LAW falls early as guides Q3 revs below views and cuts both FY22 revenue view to $132M-$136M from $149M-$153M and FY22 adj EBITDA view (shares downgraded by several analysts); CIEN upgraded to Overweight at Morgan Stanley saying the combo of strong cloud and service provider CAPEX through year end and no further deterioration of supply chain conditions set CIEN up well over the next couple of quarters


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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