Closing Recap

Thursday, February 23, 2023

Equity Market Recap

·     US equities faced another volatile session, with pre-market gains fueled by better NVDA earnings more than offset by stronger Core PCE and GDP Deflator data early. The swing of almost 1.5% to late morning lows seemed to find some support after Jamie Dimon commented there may still be hope for a soft landing and the S&P 500 survived a test of the 50dma. The bounce gained traction mid-afternoon and indices were modestly higher heading into the final hour.

·     Data-wise, @bespokeinvest revisits recent volatility, highlighting the 17 1% daily moves through the first 35 trading days of the year ties for 5^th most since 1953. As we move to the tail end of 4Q earnings, @DataTrekMB highlights analyst expectations for 1Q S&P profits to be 5.4% lower than yr-ago, with revenues just +1.9% and 2Q likely no better. @RyanDetrick notes we’ve been down four consecutive days on the S&P and haven’t seen a five-day losing streak since last October. It’s upper early in the year, but only 2014 and 2017 have survived without a five-day losing streak in the last fifteen years.

·     From a sector perspective, heading into the final hour of trading, after the mid-day rebound, Energy (XLE, +1.8%), Technology (XLK, +1.7%) and Real Estate (XLRE, +0.7%) paced the gainers. Industrials (XLI), Healthcare (XLV) and Financial (XLF) also advanced. Communications services (XLC, -0.3%) Utilities (XLU, -0.25%), and Materials (XLB, -0.10) paced the decliners. Breadth similarly favored advancers over decliners by about 1.7:1 and Growth outpaced Value, with Growth +0.7% and Value +0.15%.

Economic Data:

·     US Core PCE Prices Prelim actual +4.3% vs forecast +3.9% and previous +3.9%

·     US GDP QoQ 2nd Estimate actual +2.7% vs forecast +2.9% and previous +2.9%

·     US GDP Deflator Prelim actual +3.9% vs forecast +3.5% and previous +3.5%

·     US Initial Jobless Claims actual 192k vs forecast 200k and previous 194k

Commodities

·     April gold settled -$14.70, or -0.80%, at $1,826.80/oz. The move put gold futures at their lowest close of 2023 after yesterday’s Fed minutes reinforced a higher-for-longer rates expectation.

·     April WTI crude oil settled +$1.44, or +1.95%, at $75.39/bbl., while Brent crude April futures finished at $82.21/bbl, up $1.61, or 2%. The better close marked the first up day for WTI futures in the last seven sessions despite a crude inventory build that outpaced expectations.

Sector News Breakdown

Top movers

·     Semi’s get a boost from NVDA early after Q4 EPS, revs, margins beat with stronger Q1 rev guidance and said its AI software will now be available in several cloud-computing offerings; ON said it intends to offer $1.1 billion of convertible senior notes due 2029 in a private offering.

·     In EV sector, LCID Q4 sales of $257.7Mm vs est$302.6Mm, produced 3,493 vehicles in qtr, delivered 4,369 for FY; says over 28,000 reservations at of Feb. 21, representing potential sales of over $2.7B.

·     In Internet: EBAY Q4 sales and profit decline, though revenue and outlook beat estimates; ETSY posted higher-than-expected revenue in Q4 and provided guidance for the first quarter.

·     In software: Unity (U) guides 1q revs $470M-$480M below est. $514.8M and sees 2023 revs $2.05B-$2.20B vs. est. $2.21B.

·     In communication services: NFLX faded after confirming lowering prices in more than 100 territories.

·     In consumer: YETI issued disappointing guidance, but the stock rallied back to just down a couple percent after a pre-market slide of more than 10%,.

·     In energy: PXD and CTRA both reported Q4 earnings results that topped expectations, but mixed revenue and production results.

·     In Healthcare Services: TDOC Q4 EPS miss, while fiscal 2023 revenue estimate miss consensus; AMWL 2023 revenue guidance and Q4 EPS both missed estimates.

·     In restaurants: BROS slides after the co forecast full-year sales that were below expectations and said it currently had “no plans” to raise its prices this year; CAKE posted Q4 revs short of consensus. DPZ also posted a revenue miss and lowered guidance on 2-3-yr sales and unit growth.