Market Review: September 22, 2023

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Closing Recap

Friday, September 22, 2023





DJ Industrials




S&P 500








Russell 2000













Stocks weak to close out the day, closing near the lows for a third straight day in what was a rough week after the Fed’s midweek “higher-for-longer interest-rate message” disappointed markets and lifted both the dollar and Treasury yields. Stock prices opened positive on Friday, trying to pare weekly losses before comments from Fed speakers raised the caution flag once again for investors as the rally petered out. Stocks backed off mid-afternoon, trading back below intraday lows after Fed speakers again worried investors. Federal Reserve Governor Michelle Bowman said in a speech to Colorado bankers, “it will likely be appropriate” to raise interest rates further “because inflation is still too high.” Like other senior Fed officials, Bowman stressed the central bank plans to keep interest rates high for “some time” until inflation returns to its 2% goal. Also, San Francisco Federal Reserve Bank President Mary Daly was a little more cautious saying “we hold rates steady so we have more time to collect the information we need to see if more is necessary or if we can simply hold where we are.” Boston Federal Reserve President Susan Collins also weighed in today, more on the wait and see view. Stocks tumbled in the final minutes after a late afternoon rally stalled.


The S&P 500 ended the week with steep losses but remain up about 13% YTD led by technology (+32% YTD), communications (+37% YTD), and consumer discretionary (+26% YTD). On a YTD basis, Staples (-5% YTD), REITS -5% YTD), Utilities (-9% YTD), and Healthcare (-3.5% YTD) are the biggest drags. The S&P 500 and the technology-heavy Nasdaq Composite were down 2.9% and 3.6% this week, respectively, the third negative week in a row for both. Note US equities saw their largest weekly outflows ($17.9B) since December 2022 according to data compiled from Bank America. Notable stat shows the S&P 500 (SPX) has now erased $2.5 trillion in value since the Fed said they no longer expect a recession. On July 26th, the Fed said they were removing a recession from their forecast. Since then, the S&P 500 is down nearly 300 points and inflation has risen for 2 straight months. In a positive sign, RyanDetrick tweets: “the last three times the SPX was down at least 1% in both Aug and Sept? October was up 8.0% in ’22, 8.3% in ’15, and 10.8% in ’11. Higher 9 of the past 10 times going back to the late ’50s”.


Bond yields surged after the central bank forecast one more rate hike for 2023 and pared back hopes for healthy cuts in 2024 as the benchmark 10-year Treasury yield popped 15 bps to hit a high of 4.508% this week, its highest level since 2007 while the 2-year rate topped 5.2%, touching its highest level since 2006 (though finished at 4.43% and 5.10% respectively). Concern also grew around a government shutdown, which could dent consumer confidence and slow down the economy further. House Republican leaders sent the chamber into recess on Thursday.



·     Oil prices end the day and week higher, with WTI crude up $0.40 to settle at $90.03 per barrel, posting its 11th weekly gain in the last 13 (just barely rising +0.1% on the week). WTI crude prices closed lower than the previous three sessions amid a bout of profit-taking after a long-running rally, but the declines were small. Natural gas prices rose 2.7c, or 1.0%, to settle at $2.637 per million British thermal units. Gold prices rise $6.00 to settle at $1,945.60 an ounce, edging slightly lower from last week’s close. Benchmark 10-year

·     U.S. Treasury yields eased from 16-year highs after a dramatic jump this week led by more hawkish Federal Reserve rate guidance. Yields jumped after the Fed forecast fewer rate cuts in 2024 than previously expected and said it may hike rates this year one more time as it battles to bring inflation closer to its 2% annual target. Benchmark 10-year note yields hit highs above 4.5% before falling back to 4.43%.

·     Treasuries could also come under pressure next week as the U.S. Treasury Department sells $134 billion in coupon-bearing supply with $48 billion in two-year notes on Tuesday, $49 billion in five-year notes on Wednesday and $37 billion in seven-year notes on Thursday.

·     The U.S. dollar hits six-month high as markets accept new interest rate schedule. The dollar rose against the British Pound this week, which fell broadly after the Bank of England surprised by holding rates steady following recently softer inflation readings. Only a handful of currencies in the G10 space were stronger vs the buck: AUD, NOK, and CAD supported by higher oil prices.

·     The Bank of Japan rate decision – maintains interest rate at -0.1%, maintains 10Y JGB yield target around zero; maintains bands around 10Y JGB yield (+/- 50bps); maintains offer to buy 10Y JGB at 1% via daily fixed rate ops; will patiently continue monetary easing; decision on YCC was unanimous; will add to easing without hesitation if needed; no change to forward guidance.






WTI Crude















10-Year Note





Sector News Breakdown



·     The United Auto Workers expanded its strike to 38 GM and Stellantis (STLA) auto-parts distribution centers in 20 states, hobbling the two carmakers’ repair network. UAW President Shawn Fain said that the union has made “some real progress” in negotiations with Ford Motor Co. (F), which agreed to cost-of-living increases, some job protections, and other concessions, and it won’t be striking at additional Ford plants. Nearly 13,000 UAW members have been on strike since last Friday at a Missouri GM plant, an Ohio Stellantis plant and portions of a Michigan Ford plant making Broncos and Rangers.


Retail, Consumer Staples & Restaurants:

·     In Food: BYND price tgt cut to $3 from $6 saying they remain bearish as EBITDA margins remain pressured and sales growth momentum yet to materialize Noted it has both volume and price/ mix declines, and volumes have fallen since January 2022, driving distribution declines. HSY price tgt lowered from $285 to $240 saying remains well-positioned with continued momentum expected but see limited upside from here.

·     Wayfair (W) was upgraded from Underperform to Market Perform at Bernstein and raised tgt to $65 from $60 saying it’s more of a tactical call given improving revenue growth and margin commentary and sees further upside potential over the next few quarters.


Energy, Industrials and Materials

·     The Baker Hughes (BKR) weekly U.S. rig count is down -11 from last week to 630 (lowest since February 2022) as the oil rig count falls -8 to 507, gas rigs down -3 to 118 and miscellaneous rigs unchanged at 5.

·     Canada’s biggest steelmaker Stelco (STLC) is pursuing a bid for U.S. Steel Corp (X), adding to a growing list of suitors for steel producer, Bloomberg News reported on Thursday, citing people familiar with the matter. 

·     DE was downgraded to Hold from Buy at Canaccord and lowered its price tgt to $400 from $530 as industry data shows slowing unit growth for ag equipment.

·     WFG – West Fraser said it is selling two of its pulp mills located in the provinces of British Columbia and Alberta for $120M on as it doubles down on its wood building products focus.



·     In REITs: PEB warned that a couple of late-summer storms weighed on the REIT’s business in late August and early September saying some hotels in CA caused weather-related cancellations, early check-outs, reduced short-term pickup, and est. they lost $3.5 million in revenue as a result.

·     In Cards: Credit card companies (AXP, COF, DFS, SYF) are racking up losses at the fastest pace in almost 30 years – Losses currently stand at 3.63%, up 1.5 percentage points from the bottom, and Goldman sees them rising another 1.3 percentage points to 4.93% – CNBC reported.

·     The average homeowner’s insurance premium in Florida has more than tripled since 2019, moving from $1,988 to $6,000, per data from Charlie Bilello. (ALL, CB, PGR, TRV).

·     In Fintech: SQ shares decline an 8th straight down day; new 52-week lows (follows recent mgmt change this week – new CEO).



Biotech & Pharma:

·     AZN said trial results for its breast cancer drug Dato-DXd showed significant improvement for the primary endpoint of so-called progression-free survival in patients.

·     LLY said the FDA approves Jardiance sNDA for adults with chronic kidney disease.

·     MRK and Japanese partner ESAIY said that two late-stage trials of a treatment for a certain type of non-small lung cancer failed to meet their primary goals in a disappointing outcome but said they would continue to push ahead with their research. The companies said the LEAP-006 and LEAP-008 trials sought to evaluate Merck’s Keytruda in combo with Eisai’s Lenvima versus other options in treating adult patients with NSCLC.

·     SGEN and Astellas Pharma’s Padcev in combination with MRK’s Keytruda met main goals in a late-stage confirmatory trial for a type of bladder cancer; said the trial met overall survival (OS) and progression-free survival (PFS) measures, compared with chemotherapy.



·     AMZN is pushing into advertising for its Prime Video, joining the ranks of Netflix, Max (previously HBO Max), Disney+, Hulu, Universal’s Peacock, Paramount+ and others. The ad-free option will cost $2.99 a month extra. Ads in Prime Video content will be introduced in the U.S., U.K., Germany, and Canada in early 2024, then France, Italy, Spain, Mexico, and Australia later.

·     In social media: META 90-day positive catalyst watch opened at Citigroup saying with Reels ad loads reaching 19% QTD vs 17% in 2Q per CITI’s proprietary tracking, coupled with newer ad units, greater advertiser demand, and what it believes is an improving online advertising environment, it believes Meta is taking share. MTCH announced Tinder has rolled out an ultra-premium subscription tier to its dating app users, charging $499 per month.

·     In Cable/Telco: CHTR was upgraded to Overweight from Equal Weight at Wells Fargo and raised its price tgt to $550 from $450 saying they see mobile roll-to-pay, rural growth and video contributing to EBITDA acceleration; as a levered return, this should re-rate CHTR.

·     In Media: (NFLX, PARA, CMCSA, WBD) Hollywood studios and striking screenwriters were to resume talks today amid rising hopes for an end to the nearly five-month dispute that has brought many film and television productions to a halt, the Hollywood Reporter reported.

·     In Internet: BABA, BIDU, NTES, PDD, JD and other US listed Chinese stocks rallied early following a report China is considering relaxing foreign ownership rules in domestic publicly traded firms also aiding sentiment.

·     ATVI shares rise as MSFT’s $69B purchase ($95 per share) of the company gets closer after the UK’s competition regulator has given provisional approval to the revised deal that gives Ubisoft control of cloud gaming rights for Activision Blizzard games.

·     COHR shares rose midday after Reuters reported that the company has attracted interest from four Japanese conglomerates for an investment in its silicon carbide business at a valuation of as much as $5B. Denso (DNZOY), Hitachi (HTHIY), Mitsubishi Electric (MIELY), Sumitomo Electric (SMTOY) have held talks about taking a minority stake.


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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