Mid-Morning Look: April 12, 2023

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Mid-Morning Look

Wednesday, April 12, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks spike initially as Treasury yields decline following the latest consumer prices (CPI) inflation data which showed prices rose slower than economists anticipated in March. Excluding volatile food and energy prices, CPI inflation was 0.4% last month, in line with economists’ expectations and above the monthly rate of the Fed’s 2% annual inflation target. Headline U.S. inflation eased to 5% y/y in March to its lowest level in nearly two years, but underlying price pressures remained elevated. Little change in Fed Funds Rate expectations after the better-than-expected inflation report. Market still pricing in 1 more 25 bps rate hike in May (to 5.00-5.25%) followed by a rate cut in July (to 4.75-5.00%) and continued cuts throughout the remainder of the year and 2024. The two-year Treasury yield declined to 3.91%, from 4.056% on Tuesday and the benchmark 10-year yield declined to 3.355%, from 3.433% on Tuesday, before paring losses to 3.40%. Short-term Treasury yields are especially sensitive to investors’ expectations for how the Fed will set interest rates ahead of their May meeting. In early trading, ten of eleven S&P sectors are higher and NYSE breadth showing advancers outpacing decliners by 3:1 margin in broad market rally as inflation fears ebb. Next up, the producer price index (PPI) tomorrow morning along with jobless claims and then retail sales on Friday – then earnings season.


Economic Data

·     March headline CPI m/m reported at +0.1% vs. est. +0.2% (after +0.4% prior) and headline CPI y/y rises +5.0% vs. est. +5.2% (vs. prior +6%). On a core basis, or ex: food & Energy, CPI m/m rose an in-line +0.4% vs. est. +0.4% (vs. prior month +0.5%) and on a y/y basis rises +5.6%, in-line with est. +5.6% (vs. prior month +5.5%). Food at home prices fell in March q/q for the first time since Sept 2020, as proteins like meats, poultry and eggs saw price drops, with eggs leading the way with a sharp 10.9% drop over the month.







WTI Crude















10-Year Note





Sector Movers Today

·     In Chemicals: DOW, LYB, WLK and EMN all upgraded to Overweight from Neutral at Piper and raised CE, MEOH to Neutral from Underweight based on the earnings upside they see being generated by the reduced feedstock costs, lower utility costs and the improving operating rates generated, in part, by export opportunities. Said they expect the increasing overall product volume will also have the effect of raising margins through better fixed cost absorption – also raised tgts in space.

·     In trucking: Wells Fargo taking down ests, environment is challenging but likely more pain ahead as contract rates still need to normalize, remain biased to LTL w ODFL being our top idea; Bank America provides trucking preview for Q1 as they lower Truckload (TL) carrier 1Q23 EPS estimates 10% on average, as a rapid decline in trucking rates to $1.35/mile from $1.65/mile in mid-Feb reflects a softening demand backdrop, a lack of produce season, and weak freight levels at West Coast ports. Reiterate positive thesis on a late ’23 truckload inflection (KNX, JBHT, SNDR, WERN) as capacity is removed and demand begins to draw down high inventory levels.

·     In brokers, investment advisors: Morgan Stanley upgraded EVR to overweight (tgt raised to $131) and LAZ to Equal weight while downgraded JEF to Underweight saying the rebound pushed out to 2024 as M&A indicators & rising recession risk point to another weak year for capital markets. Rate cuts are not a good outcome if they come with a hard landing. Expect pressures on revenues, comp ratios & multiples. At UBS, they upgraded EVR to Buy from Sell at UBS saying the firm is executing better than expected despite the challenging M&A backdrop. UBS also upgraded GS to Buy from Neutral at UBS saying shares are attractively priced with de-risked outlook.



·     MDB +5%; upgraded from Equal Weight to Overweight at Morgan Stanley and raise tgt to $270 from $230 saying survey pointing to most optimizations already underway and cloud growth expectations reaccelerating in 2024.

·     NATI +9%; to be acquired by EMR for $60 per share, in $8.2B offer, beating out prior offer from FTV https://bit.ly/41kDapN

·     SHOP +6%; upgraded to Outperform at JMP Securities with $65 tgt after analyzing the OpEx structure across the website builders, assessing third-party website traffic data, and speaking to professional website developers across these platforms.

·     TESS +87%; to be acquired by entities affiliated with Lee equity partners & twin point capital for $9 per share https://on.mktw.net/43D892y

·     TRTN +31%; to be acquired by BIP for $85 per share, including $68.50 in cash and $16.50 in class A shares of Brookfield Infrastructure. https://bit.ly/3zULmRW

·     TWOU +3%; along with moves in COUR after the U.S. Dept of Education publishes blog post on proposed updates to 3rd -party servicer guidance.



·     AAL 8%; said it sees Q1 EPS to be in the range of $0.01-$0.05, below consensus estimates of $0.06 as expected earnings above previous estimates of about break-even.

·     CRUS -9%; shares tumbled after a report by TF Int’l Securities analyst Ming-Chi Kuo said two iPhone 15 Pro models’ removal of solid-state button design negatively affects Cirrus Logic and AAC – tweet by @mingchikuo.

·     CUTR -27%; terminates CEO David Mowry and Executive Chair Daniel Plants for cause in dispute over CEO succession plan.

·     KMX -5%; giving back some of yesterday’s Q4 EPS results.

·     NCLH -2%; along with CCL, RCL in cruise line; feeling effect of AAL lower guide in travel.


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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