Market Review: October 31, 2023

Auto PostDaily Market Report

Closing Recap

Tuesday, October 31, 2023





DJ Industrials




S&P 500








Russell 2000













U.S. stocks “melted” higher this afternoon, posting solid gains on the final trading day of October ahead of another big round of earnings tonight/tomorrow, the ADP private payrolls/JOLTS job data Wednesday morning and of course the FOMC meeting tomorrow afternoon. The U.S. dollar jumped, mostly due to a 1.5% decline in the yen after the Bank of Japan removed the 1% cap on 10-year JGB yields saying that it was only a “reference” while raising its inflation forecast for FY23-FY25. In China, October PMI data missed for both Manufacturing (49.5 vs. 50.2 est., contraction) and non-manufacturing (50.6 vs. 52 est.) ahead of more data tonight. NYSE market breadth was strong as advancers 2.2:1 lead over decliners and all eleven S&P sectors finished higher. Smallcaps bounced (+1%) outperformed large caps. Bespoke invest noted: "Speculator positioning went net long on S&P 500 futures for the first time in 70 weeks according to the latest CFTC release, ending the longest streak of weekly net short readings in the history of the data. For the month, the S&P 500 fell 2.2%, the Dow fell 1.4% and the Nasdaq fell 2.8%. All eyes on the Fed tomorrow!


Stocks still closed lower for a 3rd straight month for the S&P 500, Nasdaq, and Dow Jones Industrials Average. BTIG’s Jonathan Krinsky notes "If the SPX closes below 4288 on Tuesday, it will be its third consecutive monthly decline. It hasn’t been down four straight months since 2011 and hasn’t been down four straight months ending in November since 1946:" Bespoke invest tweets: "You may be surprised by this given how much the Nasdaq has outperformed this year, but the index has now been down on a rolling 2-year basis for a full year, which is the fourth longest streak in its history. At the moment, it’s 2-year change is -17%." Mixed signs for broader stock markets heading into November!


Economic Data

·     Chicago PMI inched down to 44 in October from 44.1 in the prior month, and below consensus of 45.3, in contraction territory for a 14 straight month in October.

·     The Consumer Confidence index falls to 102.6 from Sept revised 104.3, but above the 100 est. as the present situation index 143.1 in Oct vs Sept revised 146.2 and the expectations index 75.6 in Oct vs Sept revised 76.4 (previous 73.7). US jobs hard-to-get index 13.1 in Oct vs Sept 14.2.

·     Q3 employment cost index +1.1% (consensus +1.0%) vs Q2 +1.0% (prev +1.0%); U.S. Q3 wages/salaries +1.2% vs Q2 +1.0% (prev +1.0%) and U.S. Q3 benefit costs +0.9% vs Q2 +0.9%. The index has been rising 1.0% or more for 9 consecutive quarters, with the 1.4% surge in Q1 2022 the historic high. Wages and benefits were up 1.2% versus 1.0% in Q2 and 1.2% in Q1.

·     The FHFA House Price Index for August rose +0.6% vs. +0.5% consensus and +0.8% in July and on a y/y basis, home prices rose 5.6%, outpacing the 4.6% climb in the prior month. For the nine census divisions, seasonally adjusted monthly price changes ranged from -0.2% in the South Atlantic division to +1.1% in the Pacific and East North Central divisions.

·     The S&P CoreLogic Case-Shiller Home Price Index showed that house prices continued their upward trend in August. The HPI composite for 20 cities, seasonally adjusted increased 1.0% M/M, exceeding the +0.7% expected and 0.9% rise in July.

·     Asia posted monthly declines as the NIKKEI 225 Index was down 998.77 points or 3.14% this month to 30,858.85 (largest 1-month point and percentage decline since Dec. 2022 and now down for four consecutive months), while the Shanghai Composite Index was down 91.70 points or 2.95% this month to 3018.77, now down for three consecutive months (and 5 of last 6).



·     Gold prices fell -$11.30, or -0.56% to settle at $1,994.30 an ounce, falling from earlier highs of $2,017.70 an ounce as the dollar surged on the day. Oil prices reversed to the downside, with WTI crude falling U.S. crude oil futures settle at $81.02/bbl, down $1.29, 1.57% on higher-than-expected output after the EIA said U.S. field production of crude oil rose to a new monthly record in August at 13.05 million barrels per day as output rose 0.7% in August from the month prior. Natural Gas for Dec. delivery gained 22.30c, or 6.65% to $3.5750 per million British thermal units today, the largest one-day dollar gains since Thursday, May 18, 2023, and ends the month +22%. Oil prices lost 10.8% for the month and settled at their lowest since Aug. 28.


Currencies & Treasuries

·     The dollar rallied and Treasury yields edge higher into the FOMC policy decision tomorrow. The Japanese yen weakened against U.S. dollar to fresh 1-year low with the dollar/yen JPY last up 1.6% at 151.54. The move comes after the Bank of Japan news last night. Treasury yields fell early Tuesday amid several possible factors but ended near the highs of the day around 4.89% for the 10-year into tomorrow’s FOMC meeting. as a trio of factors were seen boosting the attraction of U.S. government debt. The 10-year Treasury yield moved to the bottom of a 20-basis point range between roughly 4.82% and 5.02% within which it fluctuated for about two weeks.






WTI Crude















10-Year Note





Sector News Breakdown



·     In Auto dealers: JP Morgan upgraded ABG to Overweight, AN upgraded to Neutral, downgraded LAD to Neutral, and SAH downgraded to Underweight in US franchise auto dealerships saying estimates remain below consensus, driven by an assumption of faster GPU normalization, and JPMC remains selective in its stock picks, considering several factors. JP Morgan said it remains OW on GPI and Underweight on PAG.


Retailers, Consumer Staples & Restaurants:

·     In Restaurants: DENN Q3 EPS exceeded expectations helped by taxes and adjusted EBITDA was largely in line with expectations due to lower-than-expected G&A expense; Q3 comp sales growth missed consensus forecasts as trends decelerated through the quarter; lowers year.

·     In Beverages: BUD slight beat and reit guide and announced a $1B buyback; reported better-than-expected Q3 organic sales growth (+5% vs. est. +4.7%) though volumes worse than expected (fell -3.4% vs. est. -2.7% decline); Revenue in the U.S. -13.5% as Bud Light still struggles.

·     In Retail: CHWY upgraded from Equal Weight to Overweight at Morgan Stanley, noting shares have recently declined >50% on TAM saturation concerns and believes the move is overdone as discrete macro headwinds have played an underappreciated role. PETS suspends dividend and reports net loss vs. net income $2.6M last qtr, sending shares lower. VFC posted softer-than-expected gross margin, which offset a top-line beat for a bottom-line miss while management withdrew FY guidance/reduced FCF guidance and cut its dividend 70%.


Homebuilders, Building Products, Home Furnishing:

·     In Building products: TREX reported adjusted EPS ahead of consensus and raised full year revenue guidance to $1.09B (vs. previous $1.04B-$1.06B) and raised its full year EBITDA margin guidance to 29.0%-29.5% (vs. prior 28%-29%). Bank America downgrades FERG to Underperform from Neutral with a PO revised to $138 from $160), saying US residential demand, which accounts for more than 1/2 of group sales, could be at risk of a double dip next year.



·     According to Reuters survey: OPEC October oil output rises by 180,000 bpd from September to 27.90 million bpd, led by Nigeria, Angola, Iran, and Iraq.

·     In Majors: BP Q3 earnings were below consensus forecasts despite producing more oil and gas, seeing higher realized refining margins and strong oil sales, and couldn’t meet market expectations of $4.01 billion for underlying replacement cost profit.

·     In Refiners: MPC beats Q3 profit estimates as it benefits from strong demand for sustained fuel and refined products amid tight supplies (EPS $8.14 vs ests of $7.75); said crude capacity utilization was 94%, resulting in a total throughput of 3M barrels per day; PSX upgraded from Peer Perform to Outperform at Wolfe Research saying within a very complex macro, PSX put forth a relatively simple plan where shareholder returns will accelerate in coming quarters.

·     In E&P and Drilling: RIG Q3 adj EPS loss (-$0.36) vs. est. loss (-$0.23); Q3 revs $713M vs. est. $722.56M; said increased its backlog for the 6th straight quarter, ending Q3 at $9.4B; CRK provides uneventful print and mixed guidance update.

·     In MLPS: EPD said forecasts crude oil production in the Permian Basin is on track to increase by over 700,000 [barrels per day] in 2023 and to grow by approximately 1.5 million BPD for the three-year period ending 2025; Post 2025, the company expects crude oil production from the basin to increase by up to another 15%, or greater than 1.0 million BPD.



·     In Asset Managers: BEN Q4 EPS $0.84 beats $0.59 and Average AUM rose 3% to $1.42 trillion in the quarter; in research, TROW upgraded to Neutral at Citigroup on balanced risk/reward saying the stock has been under consistent pressure in recent months as outflows have weighed. Citi expects a moderation in flow pressure in 2024, particularly if relative performance can continue to improve and it has a reasonable equity market backdrop.

·     In Payments: GPN boosted its FY23 EPS forecast to $10.39-$10.45 from prior $10.35-$10.44 after a Q3 EPS beat as Merchant solutions segment revenue in Q3 rises 19%; said customer spending remains resilient, backed by strong wage growth and a tight labor market.

·     In Lending: TREE shares pushed higher after Q3 EPS topped consensus, helped by stronger margins in its consumer and insurance units (boost low end of year Ebitda view but cut its FY23 revenue outlook by $10M on bottom end and $20M on top end). ZG, RMAX and RDFN tumbled after Missouri jury finds NAR, brokerages guilty of conspiring to inflate commissions. The ruling awards $1.8 billion in damages to victims of the class action lawsuit.



·     BRX reported in-line 3Q23 FFO of $0.50/share and management raised guidance ~0.75% at the midpoint to be in line with consensus, results in the quarter were better than anticipated.

·     KRG reported a $0.03/share high-quality beat in the quarter driven by a combination of higher minimum rent growth, favorable net tenant recovery income, higher overage rent, and lower bad debt expense in the quarter. Management increased its FY23 FFO guidance by 1.5% at midpoint.

·     PSA 3Q beat (+$0.13/share vs. consensus) that drove a 0.7% increase in the FY23 FFO guidance midpoint. NOI growth continues to decelerate (1.9% y/y in 3Q, compared to 6.2% in 2Q23).

·     RWT posted Q3 lower-than-expected earnings available for distribution (EAD), a slight decline in book value, yet a substantial sequential rise in residential mortgage banking lock volumes.

·     SPG posts Q3 FFO/share beat, Q3 FFO/share of $3.20 tops est. $2.97, says mall/premium outlets occupancy was 95.2% at end-Sept compared to 94.5% in same period last year; base minimum rent per square foot was $56.41 at end-Sept, up from $54.80 last year; raises year guide.

·     WELL reported normalized FFO beat (+3%) and its fifth and largest increase to 2023 normalized FFO guidance (+1.5% at the midpoint). Roughly half of the guidance increase was driven by a 100 bps increase to SSNOI growth, which was led by the SHO segment (+200 bps).

·     In Research: Piper upgraded AVB to OW (from Neutral), MAA downgraded to Neutral (from OW) – and downgraded CPT, UDR to Underweight from Neutral. For AVB, believes its developments, underwritten during COVID and delivering >7% yields, provide a competitive earnings enhancement; MAA downgraded given the supply pressure looks to be a longer impact than it anticipated, which weighs on new rents; and downgrading CPT, UDR given the potential for further earnings pressure from bad debt and competitive supply lease-ups.

·     Bank America downgraded CPT and MAA to Underperform from Neutral and UDR to Neutral from Buy as believes rental price growth will become a compounding issue for the industry as peak deliveries of new supply are still several months away and interest rates are on the rise.



Biotech & Pharma:

·     SRPT said that its gene therapy for Duchenne muscular dystrophy (DMD) failed to improve muscle function compared to a placebo in a large clinical trial missing its primary endpoint. The company said all patients in the study improved and that secondary measurements indicated the drug was having an effect. Shares of CTLT, which does the manufacturing for SRPT’s gene therapy, also fell.

·     AMGN raises its full-year revenue guidance after closing the purchase of drugmaker Horizon Therapeutics earlier this month; sees FY revs $28B-$28.4B vs. est. $27.55B

·     GSK will pay JNJ about $1 billion for exclusive rights to further develop and commercialize its hepatitis B therapy; JNJ-3989 was initially developed by ARWR and licensed to Janssen in 2018.

·     LLY is buying rights from BEAM to develop and commercialize treatments for heart disease that make use of an experimental gene-editing technology; BEAM will receive a $200M upfront payment, $50M equity investment and eligible for up to $350M in milestone payments.

·     PFE reports Q3 adjusted EPS loss (-$0.17) vs. est. loss (-$0.32); Q3 revs $13.23B vs. est. $13.34B; launched enterprise-wide cost realignment program and reaffirms full-year 2023 non-covid operational revenue growth expectation of 6% to 8% vs. 2022.

·     CRSP shares halted early as a group of FDA advisers will spend today debating the merits of the first CRISPR medicine up for U.S. approval, a treatment for sickle cell disease from Vertex Pharmaceuticals and CRISPR Therapeutics.

·     INCY Q3 Jakafi revenue 5% below expectations at $636M vs $673M est., guidance largely unchanged; reaffirms FY R&D expenses $1.61B to $1.65B.

·     OMGA presents new preclinical data demonstrating pre-transcriptional modulation of multiple CXCL genes by a single epigenomic controller.

·     XOMA earns $5M milestone upon FDA acceptance of DAWN Tovorafenib NDA for relapsed or progressive pediatric low-grade glioma.


Healthcare Services & MedTech movers:

·     In MedTech: AXNX Q3 top-line results 3.5% above Street estimates driven by a solid 3% beat in US SNM and an even stronger 6% beat in Bulkamid revenues; raised its 2023 guidance by $4mn, or slightly above the $3mn beat.

·     In Hospitals: THC 3Q for both the hospital segment and ASC business drove EBITDA upside of ~5% vs Street estimates while boosted FY23 EBITDA guidance $30M after the $54M beat; total company EBITDA guidance for 4Q of $836 – 936M captures Street ($921M).


Industrials & Materials


·     In Machinery: CAT reported big beat for Q3 EPS and sales but shares reverse pre mkt gains after inventories up, backlog down; said falling order backlogs are being driven by shorter lead times for filling orders and not an indication of deteriorating demand for machinery; the company said won’t offer specific guidance for 2024 until early February. AGCO better earnings and in-line Q3 revs while raises year profit outlook (reaffirms year sales view).

·     In Industrials: AME raises FY adj profit forecast and said would acquire Paragon Medical in $1.9B deal (raises year EPS view to $6.31-$6.33 from prior $6.18-$6.26; ETN reports Q3 adjusted EPS $2.47 vs. est. $2.34 and raises FY adjusted earnings per share guidance midpoint to $9.00.

·     In transports: airline JBLU forecast a wider-than-expected loss in the current quarter after Q3 missed expectations due to significant delays during the summer travel season (Q3 revs fell 8% to $2.35B missing the $2.38B est. and posted a loss of $153M vs. $57M profit y/y).


Materials, Metals & Mining

·     In Materials: in chemicals, FMC slides early Q3 adj EPS $0.44 vs. est. $0.45; Q3 revs $982M vs. est. $1.11B; said in qtr results were significantly below prior year driven by volume headwinds; guides FY revs $4.48B-$4.72B vs. est. $4.69B and reduces FY free cash flow outlook. Keybanc noted caustic soda prices fall -$35/ton in Oct; ahead of CMA’s forecast calling for a $25/ ton decline and marks the 11th straight m/m decline this cycle (OLN leveraged to data).



Internet, Media & Telecom

·     In social media: PINS beats estimate for Q3 revenue and profit with EPS $0.28 topping $0.20 estimate and revs $763.2M beating $743.5M estimate as growth and margin exceeding expectations; has reported accelerating revenue growth for three consecutive quarters.


Hardware & Software movers:

·     AAPL announced new PC chips, MacBook Pro laptops, and a new iMac model at a launch event on Monday. The new computers, including MacBook Pro and iMac models, go on sale next week, and have the same designs as last year’s models, only with new chips.

·     In Networking & Comm Equipment: ANET price tgt raised by several Wall Street analysts after Q3 results as revs rise 28% y/y to $1.51B topping vs. est. $1.48B and EPS beat while guided Q2 revs $1.5B-$1.55B above consensus of $1.47B. ANET upgraded to Overweight at Morgan Stanley.

·     In Software: DSP was upgraded to Outperform at Raymond James saying Viant has traded off significantly since its post-IPO heights, debuting on the markets at the peak of worries around cookie deprecation positioned as a native cookie less alternative.



·     Mixed reaction in semiconductor earnings: 1) LSCC reported in-line 3Q results and guided 4Q lower, attributing weakness in its outlook to softening demand in comm infra, industrial, and automotive end markets (sees Q4 revs $166-186M below the est. $192.1Mm); 2) WOLF shares outperform, after the silicon-carbide company forecast a slimmer-than-expected loss for its next quarter, better than recent peers ON and TXN which guided lower; 3) MPWR shares moved higher on better results and slightly better guidance and a $640M stock repurchase program; 4) AMKR Q4 guidance falls short of consensus (Q4 EPS 32c-49c and revs $1.625B-$1.725B, below consensus 63c/$1.87B respectively), shares open lower and rebounded. AMD expected to report earnings tonight after the close.

·     NVDA shares slipped early after the WSJ reported new U.S. export controls may compel artificial-intelligence giant Nvidia to cancel billions of dollars in next-year orders for its advanced chips to China, a move that could deprive Chinese tech companies of crucial AI resources.


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