Market Review: March 23, 2023

Auto PostDaily Market Report

Closing Recap

Thursday, March 23, 2023





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Market volatility remains extreme, with massive swings on comments from Fed Chair Powell yesterday and Treasury Secretary Yellen both today and yesterday, as traders and markets continue to chop-up. Despite the big swings again, the S&P 500 (SPX) 200-day moving average support level (3,933) once again held, a major battleground area. Stocks rolled mid-afternoon, with the S&P trading below yesterday’s lows despite topping 4,000 again earlier and the tech heavy Nasdaq, which has outperformed, fell more than 200-points off its morning highs in another late day slide for major averages. The Smallcap Russell 2000 led decliners, dropping to its lowest levels since last October as a midday plunge in mid and Smallcap banks weighed heavily on the index. However, stocks recovered off the lows as Treasury Secretary Yellen said at 3:00 PM the U.S. prepared is to act on deposits “if warranted. Yesterday, Yellen said they were no longer considering backing all deposits. Two days ago, Yellen said they were considering backing all deposits. The headlines continue to make traders heads spin. The market’s reaction to yesterday’s Fed meeting continues to show that a rate “pivot” is expected. Despite the Fed saying no rate cuts this year, at least 2 are expected by markets. The Dollar is down, stocks are rising, and bonds are rallying. Markets are not believing the Fed.

·     Banks led the late day slide in the S&P and the Dow, as regional banks CMA, ZION, FRC tumbled. Oil prices settled lower, with U.S. benchmark prices falling back below $70 a barrel just a day after topping that level for the first time in a week. The drop in oil came as banks rolled late afternoon to lows, creating more mkt panic in the financial sector. Tech and Communications held up the best.

·     Stock market strength the last two weeks, especially in technology/communications remain astounding given the confluence of red flags for economy including the SIVB and SBNY collapse (and fears of contagion in other banks), Fed officials warning about tightening credit and capital conditions/raising rates and saying no rate cuts are in their baseline case at this time (Powell ystdy), as well as ongoing job losses in tech (now expected banks), and weaker economic data and lower earnings outlooks. Is it end of month and quarter window dressing helping markets, with portfolio managers forced to chase performance of major averages? Is the liquidity thrown into the financial system over the last week by central banks putting more QE into market and is that all investors and traders are focused on?

·     Central banks: The Fed raised rates 25bps Wednesday. The Bank of England (BoE) policymakers today vote 7-2 to raise rates to 4.25% from 4.0% (in-line with expectations) and repeats key phrase: "if there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required." The Swiss National Bank (SNB) raised its benchmark lending rate Thursday for a fourth consecutive time, taking it 50 basis points higher to 1.5%, and cautioned that further hikes could be needed to address "elevated" inflation levels. The Norwegian krone rose after a hawkish 25bps hike from the Norges Bank last night.

·     Wall Street view on futures rate hikes from the Fed: 1) Morgan Stanley said “we continue to look for a final 25bp increase in May, bringing peak range to 5.00% to 5.25%. Thereafter, we expect the Fed to remain on hold before making the first 25bp cut in March 2024.” 2) Citigroup said, “while we also expect a drag on growth from tightening credit conditions, inflation data over the next few months should remain uncomfortably strong, making it difficult for the Fed to pause rate hikes. We continue to expect a terminal rate of 5.50-5.75%, although like the Fed will remain highly data dependent.” 3) Bank America said we no longer expect a 25bp rate hike in June and now foresee a terminal Target funds rate of 5.0-5.25% reached in May.


Economic Data:

·     Weekly Jobless Claims fell to 191K from 192K last week and below expectations of 197K; the 4-week moving average fell to 196,250 from 196,500 prior week; continued claims rose to 1.694M in latest week from 1.684M prior (est. 1.684M).

·     U.S. current account deficit narrowed $12.2B to -$206.8B in Q4, after the $18.2 B increase to -$219.0 (was -$217.1B) in Q3 from -$237.2B (was -$238.7B) in Q2. The balance on goods and services edged up to -$205.0B from -$207.0 (was -$210.6B).

·     New home sales data for February rose +1.1% M/M to 640K vs. 650K consensus and 633K prior (revised from 670K); the median sales price of new houses sold during February was $438.2K, higher than $427.5K in January; Feb new home supply 8.2 months’ worth at current pace vs Jan 8.3 months.


Commodities, Currencies and Treasuries

·     Oil prices reversed earlier gains as WTI crude settled at $69.96 per barrel, down -$0.94 or 1.33% while Brent crude fell -$0.78 or 1.02% to settle at $75.91 per barrel. Gold prices rise $46.30 or 2.4% to settle at $1,995.90 an ounce after breaching the $2,000 this week as the dollar slides, yields tumble, and investors look for haven related hedges. The U.S. dollar fell for its 6th straight session, its longest losing streak in 2-1/2 years after the Federal Reserve sounded close to calling time on interest rate hikes at yesterday’s meeting (euro hit 7-week high of 1.093 before fading to 108.68). U.S. Treasury yields dipped on Thursday, a day after the Federal Reserve hiked rates by 25 basis points but indicated that it is on the verge of pausing further increases after the recent collapse of two U.S. banks. Treasury 2-year yield falls 12 basis points on day to 3.82% late day and the 10-yr to 3.43%. Fed funds futures traders are pricing in a roughly equal chance that the Fed will hike rates by an additional 25-bps in May or leave the rate unchanged at 4.75% to 5.0%…but also see the Fed cutting rates to 4.13% by December.






WTI Crude















10-Year Note





Sector News Breakdown



·     CVNA erased early gains, a day after rising as 1Q23 preliminary results were well above consensus expectations, as Wedbush noted much of the improvements was driven by a sudden turn in the market against an inventory base that had been marked down in 4Q.

·     Ford (F) said expects EV business unit to lose $3B this year, hit profitability in 2026. Meanwhile, its commercial and traditional internal combustion engine business units, were profitable enough to offset losses incurred by making and selling electric vehicles.

·     In auto parts, GPC shares stumbled early after issuing yearly guidance.

·     PTRA, LEV, and XOS top picks in EVs at DA Davidson but says few companies are without substantial risk at this point. Firm said it’s becoming a precarious moment for EV Commercial Vehicle makers, as 4Q:22 balance sheets show declining cash reserves and near-term funding needs amid a tough equity market.


Consumer Staples & Restaurants:

·     In restaurants: DRI Q3 EPS $2.34 tops estimates of $2.25 on better revs $2.8B (est. $2.73B) as Q3 blended same-restaurant sales increase of 11.7%; raised the lower end of its year EPS view to $7.85-$8.00 from $7.60-$8.00 and revs to $10.45B-$10.5B from $10.3B-$10.45B (est. $10.31); sees year same-restaurant sales growth of 6.5%- 7% from 5%-6,5%.

·     In food: GIS raises FY23 adjusted EPS view to up 8%-9% from up 7%-8% and FY23 organic net sales view to up 10%-11% from up 10% after Q3 results top views ($0.97/$5.13B vs. $0.92/$4.97B)



·     CHWY issued softer-than-expected FY23 guidance (revs $11.1B0$11.3B vs. est. $11.14B), with plans for international expansion likely to pressure margins; 4Q results also showed declining customer numbers (shares downgraded to Hold from Buy at Deutsche Bank).

·     MOV Q4 adjusted EPS $1.03 vs. $1.32 last year and revs $194.3M vs. $206M last year.

·     In office furniture: MLKN 3Q adj EPS $0.54 vs est. $0.42 on sales $984.7Mm vs est. $997.4Mm; guides 4Q net sales $930-970Mm vs est. $1.03B and adj EPS $0.37-0.43 vs est. $0.59. SCS shares jump as 4Q adj EPS $0.19 vs est. $0.11 on sales $801.7Mm vs est. $751.4Mm, adj EBIT $38.6Mm vs est. $33.3Mm; guides 1Q revs $710-735Mm vs est. $693.8Mm.


Leisure, Gaming & Lodging:

·     In casinos (BYD, CZR, LVS, MGM, WYNN): Based upon filings with the Division of Gaming Enforcement, casino win for the nine casino hotel properties was $215M for February, reflecting a 1.2% increase compared to $212.4M for February 2022. Year-to-date casino win for the nine casino hotel properties was $426.6M, reflecting growth of 7.7% compared to $396.1M for the prior period. For the month of February, internet gaming win reported by casinos and their partners was $142.6M, reflecting growth of 9.7% compared to $130M for the prior period.


Homebuilders, Building Products, Home Furnishing:

·     In Homebuilders: KBH authorizes $500M buyback; 1Q EPS $1.45 vs est. $1.15 on revs $1.38B vs est. $1.27B, housing adj gr mgn 21.8%, homes delivered -3%, avg selling price +2%; guides FY housing revs $5.2-5.9B, avg selling price $480-490K, housing gr mgn 20.5-21.5%, SG&A 10.0-11.0%, homebuilding op mgn 10.0-11.0%. The sector seeing broad gains on the earnings results as well as recent tumble in Treasury yields, bringing mortgage rates lower.


Energy, Industrials and Metals

·     In the E&P sector: Citigroup upgraded PXD and MRO to Buy and downgrade OVV to Neutral as they recommend investors focus on catalysts and quality within E&P. Capital efficiency should improve for domestic E&Ps on lower service rates, while PXD should also experience rising well productivity in 2H’23. MRO offers catalysts given the re-frac opportunity in the Eagle Ford and improving international gas exposure, where Citi sees upside to the forward curve.

·     In oil services: Citigroup said while the economic outlook has become more clouded, their view toward positioning in OFS remains the same. The International investment upcycle should not be derailed at ~$70 Brent, and thus they see the recent pull-back as an opportunity to add to FTI, OII, BKR, SLB and CHX, which are trading at ~30% below normal on 2024E EBITDA on average.

·     In steel earnings: CMC better Q4 as EPS $1.51 tops consensus $1.44, as Q4 revenue of $2.02B topped the consensus estimate of $1.97B; WOR Q3 adj EPS $1.04 vs. est. $0.72; Q4 sales fell -20% y/y to $1.1B vs. et. $979.5M; Gross margin increased from the prior year quarter to $143.8M given higher earnings in Steel Processing via mix coupled with stronger pricing/margins; MT upgrades to Buy from Neutral at Bank America saying the recent share price decline means shares now trade at deep value = interesting entry point.

·     In defense, Bloomberg reported NOC’s $96 billion nuclear missile risks delays, the US Air Force Finds; engineer shortage, supply-chain problems cited as reasons.

·     In transports: Baltic Dry Index Rises 1.92% to 1,484 in London. The Index Has Risen 82% in the Past Month. Other dry cargo indexes, expressed in USD/day: Capesize +5.97% to $15,396; Panamax -1.48% to $12,924; Supramax 58k tons -0.24% to $14,668.



Banks, Brokers, Asset Managers:

·     Banks looked to rebound from yesterday’s losses following disappointment over comments from Treasury Secretary Janet Yellen over bank deposits but shares extended declines. Yellen late Wednesday had said that the Federal Deposit Insurance Corporation (FDIC) was not considering providing "blanket insurance" for banking deposits following the collapse of two prominent U.S. banks this month. 52-week lows today for BAC, CFR, MTB, in banking but even more in the REIT sector with VNO, SHO, SLG, HPP, ESS, DEA, BXP among them.

·     Crypto sector: Crypto exchange COIN shares fell after announcing the receipt of a Wells Notice from the SEC on March 22, 2023. Coinbase indicated the Wells Notice stated SEC staff has reached a preliminary determination to recommend that the SEC file enforcement action against Coinbase relating to federal securities law violations. No charges/enforcement action were presented against Coinbase connected to the Wells Notice as of March 22, 2023, though such notices generally precede future charges/enforcement action per our understanding.

·     In Fintech: negative “short” call on SQ by Hindenburg research sends shares tumbling. Report alleges that Block has wildly overstated its genuine user counts and has understated its customer acquisition costs. Despite its current rich multiples, Block is also facing threats from key competitors like Zelle, Venmo/PayPal and fast-growing payment solutions from smartphone powerhouses like Apple and Google.

·     In banking software: KeyBanc downgraded NCNO downgraded to Sector Weight from Overweight saying implications from the Swift changes in the banking sector remain very challenging to judge, and sense from recent mgmt team and VAR discussions suggests minimal changes to "in-flight" bank IT projects. Firm said they prefer ALKT.



Biotech & Pharma:

·     Handful of 52-week lows in healthcare space: AMWL, CVS, JNJ, RAD

·     BIIB and IONS said the FDA AdCom supportive of tofersen accelerated approval (9-0 in favor) which was not a surprise. On the other hand, the AdCom voted 3-5-1 (one abstain) against the full approval given the placebo-controlled trial (VALOR) failed to hit the primary endpoint while results in the in open-label extension (OLE) showed likely clinical benefit. Nevertheless, the AdCom unanimously agreed that the overall benefit of tofersen treatment outweigh the risk given the high unmet need and aggressive nature of the disease.

·     REGN and partner SNY said their asthma drug Dupixent led to a 30% reduction in acute exacerbations of chronic obstructive pulmonary disease (COPD) in a late-stage study.

·     GBIO enters a strategic collaboration with MRNA to expand the application of each company’s platform by developing novel nucleic acid therapeutics to accelerate their respective pipelines of non-viral genetic medicines.


Healthcare Services & MedTech movers:

·     AMWL downgraded to Market Perform from OP at Cowen and lower tgt to $2.50 saying while they continue to believe AMWL is well-positioned for the future of virtual care, 2023 is not the inflection year post-Converge migration they anticipated.

·     HUM mentioned positively in Barron’s saying after outperforming through much of 2022 and peaking in early November, its shares have fallen 12% to a recent $498, which has created a buying opportunity.

·     PHR reported a solid beat with total revenues topping consensus by ~3% driven by continued strong growth in clients (36% y/y); adjusted EBITDA also beat consensus expectations with better cost controls; guides FY24 revenue $353M-$356M vs. est. $357.8M.



Internet, Media & Telecom

·     TikTok CEO grilled on Capitol Hill as platform faces potential US ban.

·     NFLX shares outperformed all day, trading up as much as 9% on no particular news.

·     SHOP deepened partnership with google to bring GOOGL’s cloud’s search, Discovery tooling to enterprise brands using commerce components by Co.

·     SNAP unveiled AR Enterprise Services, or ARES, a new enterprise solution to enable businesses to integrate Snap’s Augmented Reality, or AR, into their owned and operated channels.


Hardware & Software movers:

·     ACN Q2 adjusted EPS $2.69 vs. est. $2.50; Q2 revs $15.8B vs. est. $15.59B; sees revenue +8% to +10%, vs. prior view +8% to +11%; Sees operating cash flow $8.7B-$9.2B vs. prior $8.5B to $9.0B; raises FY23 EPS to $11.41-$11.63 from $11.20-$11.52; to cut 19,000 jobs, 2.5% of workforce.

·     IOT downgraded to equal weight at Morgan Stanley saying while we still see a long runway for IOT’s Connected Operations Cloud to support continued growth and improving efficiencies, IOT’s outperformance of >40% YTD balances the risk/reward from here.

·     RBLX reit Underweight w/ $26 PT at Morgan Stanley saying Epic Games said it will roll out a new way of paying content creators inside Fortnite, using a payout Pool of ~29% of Fortnite gross revs. Firm sees potential competition for RBLX, which paid 22% of bookings to developers in ’22.

·     TCEHY reported a return to revenue growth in Q4 as net profit rose 12% from a year earlier and revenue rose 0.5%, the company said Wednesday, beating analysts’ forecasts. Advertising revenue was the strongest segment, rising 15%.



·     Semiconductor index (SOX also a big part of Nasdaq gains YTD, up as much as 4% today with YTD totals above 22%. Just massive outperformance to start 2023 after big losses in 2022. Semis saw a slight pullback late day as stocks pared gains, but still good gains on the day.

·     Toshiba Corp. (TOSYY) said Thursday that it has agreed to a deal worth 2 trillion-yen, equivalent to $15 billion, to take the company private. Toshiba said the buyout would be led by Japan Industrial Partners Inc., a Tokyo-based investment fund. It said the buyers were offering Y4,620 a share, about 10% above the closing price of Y4,213 in Tokyo Stock Exchange trading Thursday. That values the company at about Y2 trillion.


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.

Live Trading

Open an Account

Paper Trading