Market Review: March 21, 2023

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Closing Recap

Tuesday, March 21, 2023





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Stocks jump for a second straight day into tomorrow’s FOMC policy meeting, closing just off the highs of the day, with major averages rising for the 6th time in seven days as added liquidity into the financial system following the collapse of two big banks last week help ease market concerns about future interest rate hikes from the Fed. Stocks found solid footing on reports that regulators are becoming more open to temporarily backstopping all deposits. Last night it was reported that the U.S. Treasury Department is looking into whether the federal regulators can insure banking deposits beyond the current $250K FDIC cap without having to get approval from Congress. Defensive and interest rate sensitive sectors saw the biggest pullbacks with Utilities, Staples and REITs falling while Energy, Financials, and Consumer Discretionary all rose over 2% on the day, helping propel the Russell 2000 index higher as Smallcaps topped large caps. Home prices posted their first y/y drop in more than a decade and a dip in mortgage rates snapped a yearlong streak of declining monthly home sales, showing the effects of the Federal Reserve’s campaign to raise interest rates. According to the CME FedWatch tool, markets are pricing in a 16.6% chance that the Fed will stand pause at its March meeting, with an 83.4% chance of a hike.

·     Bank America said in a note today: Last week, during which the S&P 500 was +1.4%, clients were net buyers of US equities ($3.0B) for the third consecutive week. Clients bought both single stocks & ETFs, with bigger inflows into stocks. Cumulative flows YTD have also suggested stock-picking over passive with a record spread between stock inflows vs. ETF outflows so far this year. Hedge funds led net buying (third-largest inflows by this group in history since ’08). Institutional and retail clients were sellers for the first time in a week and three weeks, respectively. Corp. buybacks accelerated but remained below typical season trends for the seventh straight week.


Economic Data:

·     Existing Home Sales for February rose 14.5% to 4.58 mln unit rate, easily topping consensus of 4.20 mln and above Jan 4.00 mln; the national median home price for existing homes $363,000, -0.2% y/y and inventory of homes for sale 980,000 units, 2.6 months’ worth.


Commodities, Currencies & Treasuries

·     Gold declined for a second day, falling -$41.70 or 2.1% to settle at $1,941.10 an ounce after hitting its highest levels since March 2022 this week (of $2,009 an ounce) as investors turned their attention from the banking crisis to the U.S. Federal Reserve’s interest rate decision. Gold prices had jumped over $100 after the collapse of U.S.-based Silicon Valley Bank over a week ago, as investors scrambled for the safe-haven. Precious metals showing some caution ahead of the Fed rate decision tomorrow.

·     Oil prices finish higher as WTI crude rises $1.69 or 2.5% to settle at $69.33 per barrel at 1-week highs, extending a recovery from a 15-month low hit the previous day, as the recent rescue of Credit Suisse eased worries about global banking sector risks that could hit economic growth and reduce fuel demand. Separately, Russia surpassed Saudi Arabia as China’s biggest oil supplier with refiners taking advantage of cheap barrels to feed rebounding demand in Asia’s largest economy following the end of Covid Zero, according to Bloomberg.

·     Treasuries continue to selloff as yields climb into tomorrow’s FOMC meeting, led by the front end of the curve as the markets price in a rate hike tomorrow, and the potential for a further increase in May. The improvement in risk appetite is also further unwinding the recent flight to safety. The 2-year yield is 23 bps higher at 4.16% and the 10-year is up 10 bps to 3.58%. Implied Fed funds futures are showing a 4.773% rate for March and a 4.916% rate for May. But rate cuts are still being priced in for later in the year.






WTI Crude















10-Year Note





Sector News Breakdown


Autos & Leisure:

·     BYD Group (BYDDF) has reduced shifts at two auto assembly plants in China, people with knowledge of the matter told Reuters, in a sign of how weaker demand in the world’s largest auto market is affecting its best-selling electric vehicle brand, Reuters reported.

·     HOG upgraded to Overweight from Equal Weight at Morgan Stanley on confidence in the Hardwire strategy, ‘containment’ of electrification risks and attractive valuation.

·     For Electric Vehicles, Morgan Stanley said they believe EV price cuts are not a fad, but a trend. While subject to volatility, investors should anticipate further price cuts in EVs with cost-leader TSLA setting the tone.



·     CTRN shares fell as reports a fall in Q4 revenue as consumers cut discretionary spending, while margins were weaker as well and guides full-year total sales in the range of negative low single-digits to positive low single-digits as compared to fiscal 2022.

·     ONON rises as reported extremely strong 4Q22 results, with revenues growing 92% (well above guidance of low-40’s growth) and adjusted EBITDA of $62M vs. guidance $44.5M) as grew across channels and geographies: DTC was up 76% with wholesale +104%.

·     FL received two analyst upgrades as Citigroup raised to Buy and upped tgt to $50 following a big 4Q beat, mgmt significantly lowered the bar for F23, guiding comps down 3.5-5.5%, laying the groundwork for beats/raises all year. Evercore/ISI upgraded to Outperform with $60 tgt.


Energy, Industrials and Materials

·     In solar: CSIQ Q4 EPS $1.11 vs. est. $0.76 and revs rose 29% y/y to $1.97B vs. est. $1.93B; reports 68% increase in solar module shipments year-over-year to 6.4 GW; sees Q1 revenue $1.6B-$1.8B vs. est. $1.95B; sees year revs $8.5B-$9.5B vs. est. $9.88B.

·     In metals: AG said it is taking action to reduce overall costs by reducing investments, suspending all mining activities temporarily, and reducing its workforce at Jerritt Canyon. Gold miners fall (AEM, NEM, GOLD) given broader stocks surging and rotation back out of haven assets with gold prices sliding.

·     In lithium sector: ALB, SQM, LTHM, LAC – Since November, the average price of battery-grade lithium carbonate in China has plunged from $84,500 per metric ton to $42,500, or about a 50% decline, according to Bloomberg data – resulting from a deceleration in electric vehicle sales and an increasing supply of the key ingredient used in battery packs.

·     In industrials: EMR upgraded to Overweight with a $96 PT saying the risk/reward is among the best under their coverage universe with the NATI resolution potentially being a win-win as management lands an accretive deal or establishes its discipline. In waste sector (RSG, GFL, CWST, WM), Stifel said Paper prices have a direct impact on all solid waste – says paper price flat is good for now. In transports, KNX agrees to acquire USX for $6.15 per share in deal valued at approximately $808M in trucking sector.

·     In aerospace & Defense: Cowen said RTX, BA, TDG, and HWM are their favorites in commercial aerospace saying aftermarket is entering a sweet spot, with potential for above-guide gains in 2023-24, largely driven by accelerating ASM increases, new aircraft delivery delays, strong pricing, and pent-up demand due to growing climate concerns and aging aircraft population.

·     Russia surpassed Saudi Arabia as China’s biggest oil supplier with refiners taking advantage of cheap barrels to feed rebounding demand in Asia’s largest economy following the end of Covid Zero. The Asian nation imported 7.69 million tons of crude from Russia last month, or 2 million barrels a day, according to Chinese customs data – Bloomberg.



Banks, Brokers, Asset Managers:

·     Bloomberg reported the U.S. Treasury Department is looking into whether the federal regulators can insure banking deposits beyond the current $250K FDIC cap.

·     FRC more volatility after reports late Monday showed JPM CEO Dimon in talks with CEO’s of other big banks about fresh efforts to stabilize FRC as talks have focused on how the industry could arrange for an investment that would boost the bank’s capital; A sale or outside capital injection are also among the options.

·     NYCB was upgraded to Buy by DA Davidson saying the acquisition of certain assets and liabilities of Signature Bridge Bank would accelerate its transformation to a more commercial bank. Says the deal also provides significant funding advantages, by lowering deposit costs with an increase in noninterest bearing deposits and significant cash ($25B).

·     Crypto movers: SI said that President Ben Reynolds was laid off in connection with the decision to wind down operations at its subsidiary, Silvergate Bank. COIN rises for 7th straight day of gains, up nearly 50% during that stretch and up 125% YTD, but down 77% from all-time highs November 2021.



·     VNO upgrade from Underweight to Neutral at Piper and trim tgt to $16 from $18 saying since REITs peaked in December 2021, office REITs are down 60% versus -30% for REITs and -20% for the S&P 500. Fortunately, bondholders and mortgage providers assess the cash flows of either the company or specific assets.

·     Net-lease REOTs: ADC downgraded to MP from OP; GTY remains favorite small-cap idea; Target rises to $39 (prior $37); Gaming operators dealt a winning hand; VICI and GLPI our preferred names in REITs at JMP Securities. Firm said they believe the net-lease REIT sector is attractive within the current highly volatile macro backdrop. While the threat of additional upward interest rate pressure seems to be mitigating, the collapse of several financial institutions has caused weariness within the market.  



Biotech & Pharma:

·     ALT shares tumbled after saying that its obesity drug helped reduce weight by 10.7% on average in a mid-stage trial but concerns over the safety of the drug pressured shares. Nausea and vomiting were the most common adverse events.

·     BIIBBank America said FDA briefing document suggests Tofersen approval is likely given the unmet needs and there’s a suggestive treatment effect. Their KOL believes Tofersen will be approved given his/colleagues’ clinical experience where some patients got better overtime

·     FUSN announces first patient dosed in phase 1 study of FPI-2059, a targeted alpha therapy (tat) for the treatment of solid tumors expressing ntsr1.

·     SELB and partner Swedish Orphan Biovitrum AB reported positive results from a pair of late-stage studies for their treatment candidate for the autoinflammatory disease gout.

·     SRPT shares rose Monday after a report that FDA officials say agency needs to start using accelerated approval for gene therapies, STAT News reported.



Internet, Media & Telecom

·     META upgraded to Overweight from Equal Weight at Morgan Stanley and tgt raised to $250 from $190 citing structural pivot focusing on efficiency and ROIC, improving revenue and engagements trends, surging Reels monetization and 3 further revenue call options.

·     GOOGL suspended PDD’s main Chinese shopping app Pinduoduo after discovering malware in unsanctioned versions of the software.

·     WIX upgraded to overweight from neutral at Piper saying it is now favoring growth software stocks over value ones, while downgraded GDDY to neutral from overweight.


Hardware & Software movers:

·     BB said it agreed to sell about 32,000 non-core patents and patent applications to Malikie Innovations Ltd., a newly formed subsidiary of Key Patent Innovations Ltd., for up to $900 million.

·     HLIT announced that CHTR has selected Harmonic as its strategic technology partner to deploy virtual CMTS technology for next-gen broadband services.



·     NVDA came into the day with 6-day win streak ahead of its annual conference for software developers that started today.

·     NVDA at its developer conference GTC, Nvidia unveiled CUDA Quantum, a platform for building quantum algorithms using popular classical computer coding languages C++ and python.

·     NVDA and SNPS set foundation for next-generation chip manufacturing.

·     NVDA and MSFT to bring the industrial metaverse and ai to hundreds of millions of enterprise users via azure cloud.

·     NVDA says has deals with SSTK, GETY, and ADBE to create image generation technology with licensed images.

·     MX enters full-scale mass production of PDFN56 dual packaging 40V MXT MOSFET for EVs.


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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