Market Review: June 23, 2023

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Closing Recap

Friday, June 23, 2023





DJ Industrials




S&P 500








Russell 2000













Global stock markets dropped on Friday, snapping a strong of winning streaks for major averages as the U.S. dollar rose following comments from Federal Reserve officials that further interest rate hikes this year are likely, finally took its toll on sentiment. Nasdaq led losses on Wall Street, snapping its 8-week winning streak, while overall NYSE market breadth was firmly negative. The S&P snapped its 5-week winning streak, and the Dow broke its 3-week losing streak – but all still on track for big monthly advances with one week to go. Today all eleven S&P sectors declined, led by the year’s biggest winners Consumer Discretionary and Technology, as well weakness in Utilities and Energy. Rising inflation data points overseas weighed on European markets as well as concerns that interest rate hikes by central banks to lower inflation might harm global economic growth. The U.K., Switzerland, Norway, and Turkey on Thursday all boosted rates which followed rate rises in Canada and Australia in the past month.


Interesting notes: Total US short interest exceeded $1 trillion as of last Friday, S3 Partners data shows; top five shorts are mega-cap tech stocks Tesla, Apple, Microsoft, NVIDIA, and Amazon. According to data from S3 Partners, the amount spent by short sellers against US stocks hit $1.02 trillion, as of Friday – Business Insider . @KobeissiLetter noted today: The S&P 493, which EXCLUDES $NVDA $AAPL $TSLA $MSFT $GOOGL $META and $AMZN, is now FLAT YTD. These remaining 7 technology companies in an index are up ~55% YTD. During market pullbacks, these 7 stocks are also outperforming the S&P 493. In both good and bad times, the market is leaning on tech and AI.


Economic Data

·     S&P Global June flash composite U.S. PMI reported at 53.0 vs 54.3 in May, while the U.S. S&P Global June flash services PMI at 54.1 vs 54.9 in May. U.S. S&P Global June flash manufacturing PMI at 46.3 vs. 48.4 in May.


Commodities, Currencies & Treasuries

·     WTI crude oil slips -$0.35 or 0.5% to settle at $69.16 per barrel well off the morning lows of $67.35 per barrel, but still down sharply for the week. Oil dropped for a second day as economic growth concerns outweighed lower U.S. crude stocks this week after central banks hiked interest rates and the Fed Chair Powell suggested two more hikes this year is likely. Natural gas prices gained +4.6% to settle at a 16-week high at $2.729/MMBtu, up 3.7% this week after rising 13 of the last 16 sessions (comes despite bearish nat gas inventory data Thursday).

·     Gold prices rose $5.90 to settle at $1,929.60 an ounce, bouncing off 3-month lows but closed the week down about 2% (and now down more than $150 since topping the key $2,000 level in early May). A stronger dollar, a steady hawkish stance on rate hikes from Federal Reserve officials, and central banks around the world raising interest rates weighed on prices. Silver prices fell over 7% this week to $22.32 an ounce and copped slipped over 2%.

·     The dollar index (DXY) rose to a one-week peak against its rivals as currency markets dominated by the Fed which remains hawkish on future rate hike outlook. Bitcoin popped to its highest levels in about a year, surging as much as 4% to $31,300 highs. Grain prices were broadly lower on the day, with corn, wheat and soybeans all falling. Treasury yields dip on day and week as the 10-yr fell 3.1 bps on week to 3.73%, snapping its 2-week winning streak (down 49 bps from 52-week highs in Sept and up 113 bps from 52-week lows in August 2022).






WTI Crude















10-Year Note





Sector News Breakdown



·     In electric vehicles: FSR said it will begin 22 deliveries of the Fisker One Ocean SUVs to customers in the U.S. on Friday; Fisker Ocean One and Fisker Ocean Extreme have a 360-mile range, the longest range of any new electric SUV in its class 1.

·     In auto retail: KMX Q1 EPS $1.44 vs. est. $0.79; Q1 revs $7.7B vs. est. $7.53B; Q1 retail used unit sales declined 9.6%, and comparable store used unit sales declined 11.4%, each from the prior year’s first quarter; wholesale units declined 13.6% from the prior year’s first quarter. AZO shares dropped for a 5th straight day, falling below its 200-day moving average support $2,440.

·     J.D. Power and Global Data said total U.S. new-vehicle sales for June projected to reach 1.4 mln units, up 22.6%; U.S. new-vehicle total sales in Q2 projected to reach 4.1 mln units, up 18.2%; U.S. new-vehicle total sales in 1H projected to reach 7.7 mln units, up 13.6%.


Retailers, Consumer Staples & Restaurants:

·     In apparel: LULU fails to find buyer for failing Mirror fitness gadget; Lululemon paid $500M for the gadget during the height of the pandemic-induced exercise craze in 2020, but NY Post noted aa recent filing showed the company wrote down Mirror’s value to just $58 million. UAA was downgraded to EW from OW at Wells Fargo and cut tgt to $8 from $12.

·     In guns & ammo: SWBI 4Q adj EPS $0.32 vs est. $0.27 on revs $144.8Mm vs est. $138.38Mm, gross mgn 29%, adj EBITDA $30.3Mm vs est. $25.63Mm; raises quarterly dividend by 20% to $0.12; said for FY24, expect consumer demand to resemble demand in FY23.

·     In Home retail: Wayfair (W) upgraded at MoffettNathanson to market perform from underperform and raised tgt to $44 from $33 based on recent web traffic data analysis.

·     In Food: Stephens initiates food processing names with Overweight ratings on HAIN ($17 tgt), SOVO ($23 tgt and named best idea), STKL ($10 tgt) and CLH ($180 tgt), with an equal weight on COCO ($30 tgt).

Leisure, Gaming & Lodging:

·     In Cruise lines: CCL tgt raised to $15 from $10 at Deutsche Bank saying they maintain Hold ahead of earnings and investor day; RCL tgt raised to $120 from $100 at Stifel and raise ests as see upside to shares, says senses bookings/demand have remained incredibly strong not only for the remainder of 2023, but also for 2024.

·     In lodging: PEB provided an operating update today saying Q2 RevPAR and total RevPAR are expected to fall slightly below expectations while Q2 hotel ebitda, adjusted ebitda, and adjusted FFO remain in line with or above the company’s prior expectations.

·     Online travel (BKNG, EXPE): Wedbush said its read of demand trends in May and MTD in June is mixed for its travel and mobility coverage as Y/Y growth rates continue to broadly decelerate/stabilize with some pockets of slowing growth relative to 2019.  Wedbush remains cautious on the outlook for the alternative lodging category (particularly in N.A.) through 2H23.


Energy, Industrials and Materials

·     In Energy: Weekly Baker Hughes (BKR) report that showed the US oil rig-count fell by a hefty six rigs in the latest week, marking the seventh decline in eight weeks. NTOIY upgraded from Underperform to Market Perform at TD Cowen but cut tgt to $20 from $21 saying now sees a more balanced risk/reward with NESTE stock falling after a disappointing Analyst Day with limited new updates. Siemens Energy (SMNEY) withdrew its FY profit guidance and said it could cost upward of 1B euros, equivalent to around $1.1B, to fix issues related to wind-turbine component failures in its Siemens Gamesa subsidiary.

·     In solar: group started the day sharply lower, continuing recent weakness but pared losses after SMA Solar Technology (SMTGY) raised its guidance for the year following a strong Q2; said Q2 sales should reach 400M-420M Euros, up from EUR251M y/y and OEBITA should range between EUR60M-EU70M vs. just EU1M last year; shares of SEDG, ENPH were among upside movers.

·     In Industrials: MMM shares rallied after saying it would pay $10.3 billion to settle claims it was responsible for so-called “forever chemicals” in drinking water; said it will take a charge for the amount in the second quarter.

·     In Aerospace & Defense; SPCE shares slid after saying it would raise up to $400 million through the sale of common shares to fund development of its spaceship fleet. Bloomberg reported late Friday that Elon Musk’s SpaceX is offering to sell insider shares at a price that would raise the company’s valuation to about $150 billion.



Banks, Brokers, Asset Managers:

·     In banks: Bank stocks were down for a 5th straight day amid talk of higher interest rates and increased capital requirements by regulators to strengthen the banking system. Regional banks (KRE) were a drag on the Russell 2000 on Thursday, which carried over into Friday weakness while large cap banks (XLF, BKX) weighed in the S&P; GS said they are likely to take a large write-down for acquisition of fintech lender GreenSky, CNBC reported. The KBW regional bank index (KRE) caps worst week since May 5, down 7.4%.

·     In Insurance: PFG upgraded to Hold and RGA downgraded to Hold at Jefferies saying they stay cautious into 2H’23. PFG upgraded on the view that its CRE exposure is more conservative than average and has negative sell-side sentiment. They downgrade RGA on limited 2024E EPS upside based on new guidance, expectations for some ongoing P/E discount due to near-term elevated mortality risk and positive sell-side sentiment.

·     Commercial Real Estate remains a market concern: Landlords facing persistently vacant office towers are suspending or cutting dividend payouts. Remote work has changed the office market, a sector with more than $700 billion in outstanding debt, Moody’s said. Vacancy rates, at 17.8% nationally, are 500 basis points higher than in pre-Covid times, and “are set to rise.” Moody’s last week downgraded three commercial real estate investment funds managed by Blackstone Group, Apollo Global Management and KKR

·     In REITs: Raymond James upgraded VTR to Strong Buy from Outperform and downgraded WELL to Outperform from Strong Buy as overall reiterates OW sector recommendation for Healthcare REITs and updating estimates for most of universe. Our healthcare real estate asset class preferences change slightly vs. our prior views: hospitals remain our top preference, followed by skilled nursing facilities (SNFs), then seniors housing, while we swap medical office buildings (MOBs) to #4 and life science to #5.



Biotech & Pharma:

·     ABCM announces review of strategic alternatives saying they will evaluate a broad range of options including a potential sale of company; said has received strategic inquiries from multiple parties over past few weeks.

·     AMLX said the European Medicines Agency’s Committee for Medicinal Products for Human Use has adopted a negative opinion of its application for the conditional marketing authorization of its ALS treatment AMX0035 under the trade name Albrioza.

·     GSK agreed to settle a Californian lawsuit over allegations that its heartburn treatment Zantac causes cancer.

·     HZNP – California, Minnesota, Wisconsin join FTC suit to stop Amgen’s $27.8 billion deal to buy Horizon Therapeutics (reported last night).

·     ICPT announces restructuring to strengthen focus on rare and serious liver diseases; said to discontinue all NASH-related investment; to reduce workforce by approximately one third; lowers 2023 Non-Gaap Adjusted Operating Expense Guidance To $350-$370M.

·     SRPT shares pressured with analysts mixed after FDA approval of its DMD drug Elevidys yesterday, as Evercore/ISI downgraded to Hold from Buy, skeptical that Sarepta can expand the treatment’s narrow label.


Healthcare Services & MedTech movers:

·     ABC, BSX, CAH, RDY, HCA, MCK among healthcare related names touching 52-week highs today (several of which drug distributors)

·     In Managed Care: HUM downgraded to Hold from Buy at Argus saying the company is facing margin pressure as a post-COVID recovery in procedural volume pushes medical costs higher.

·     In Medical Equipment: CFMS shares surge after announced an agreement to be acquired by Restor3d for a 96% premium, paying $2.27 per share in cash.

·     In Medical pet services: TRUP rebounds after two days of selling pressure after saying that California and New York approved double-digit rate increases, saying that the hikes were "necessary in today’s rising cost of veterinary care environment." California approved a rate increase of more than 12%, while New York approved a requested 18% rate increase.



Internet, Media & Telecom

·     In delivery content: Bank America noted FSLY Investor Day was positive as 2026 revenue/GM targets of $850mn/65% were above Street’s $800mn/62% and says revenue growth should be supported by simplified packaging, platform unification and investments in the channel Software.

·     In Media: WBD: as reported midday Thurs by the NY Post, Warner Bros could sell CNN in the coming year, and Jeff Zucker has emerged as a potential buyer. Separately, Variety reports WBD is negotiating a deal to sell a large chunk of its music-publishing assets for ~$500M. MSGE 5.3M share secondary for holder priced at $31 per share.


Semi’s Hardware & Software movers:

·     Semiconductors (SOX, SMH) were broadly lower, with likes of AVGO falling a 6th straight day, as profit taking ensued on week for one of the top sector gainers this year (SOX up over 40% YTD). MU is expected to report earnings next week which could move the needle.

·     IONQ announced a partnership with QuantumBasel, where IonQ will provide two quantum computing systems, raised its FY23 bookings expectations by +25%, and launched its Forte system for commercial use.


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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