Mid-Morning Look: August 29, 2022

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Mid-Morning Look

Monday, August 29, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks slip after weakness overnight but manage a modest bounce off lows as investors snap up some beaten-up stocks following one of the worst trading days this year after Fed Chairman Powell talked tough on inflation at Jackson Hole. Powell said the job of bringing inflation back to the 2% objective is not finished, and the FOMC would see the job through to the end. Powell’s Friday speech at the Jackson Hole central banking symposium warned of the “pain” needed to tame the fastest inflation in more than forty years and signaled further (and possibly larger) rate hikes to come between now and the end of December. The comments pushed stocks lower into the weekend, with broad weakness carrying over to the new week. The Dow Jones Industrial Average is coming off its worst day since May 18th after falling over 1,000 points on Friday, the S&P coming off its worst day since June 13th (fell -3.4% Friday) and the Nasdaq Composite fell -3.9% Friday, its biggest one day drop since June 16th – as major averages at their worst levels in about a month. Still, the Dow is still 8% off its June lows, the S&P 500 over 10% and the Nasdaq 14% off its June lows (coming into today). Volumes are expected to be light in the final trading week of the summer, ahead of the Labor Day weekend. Retailers and tech again among the few earnings results expected this week. Treasury yields and the dollar slips off 20-year highs and oil prices bounce. Crypto assets fall with the “risk-off” market sentiment as Bitcoin dipped below $20K. NYSE breadth little more than 2-1 decliners leading advancers – Energy the bright spot as XLE +2.1%.







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10-Year Note





Sector Movers Today

·     Biotech & Pharma movers; BMY slides after saying its drug candidate for preventing ischemia strokes missed main goal of dose response in a mid-stage trial, but met secondary goal of showing relative risk reduction among patients; IDYA announces achievement of first milestone in ongoing collaboration with GSK for potential first-in-class pol theta helicase inhibitor development candidate; MRNA Gets Switzerland approval for omicron booster; AZN upgraded from Hold to Buy at Argus with $75 tgt noting the company has received a range of new product approvals in recent months, including for multiple oncology drugs and a treatment for myasthenia gravis; separately, Japan’s health ministry said its panel of experts had agreed to approve manufacturing and sales of AZN’s COVID-19 preventive treatment Evusheld; ACOR announced a license agreement with Chinese biotech Asieris Pharmaceuticals for the preclinical candidate, Nepicasta; CTLT slips after fiscal Q4 results as outlook disappoints (FY revs $4.975B-$5.225B vs. est. $5.28B)

·     Transports, Industrial & Machinery; MMM maintain underperform and $120 tgt at RBC Capital, and Wolfe maintained underperform and $120 tgt as well after the company was denied a stay in the combat arms process; 3M is now squarely back in the multidistrict litigation process where the company “faces a significant uptick in cases and legal costs,” said one of the analysts; RBA sells $54M+ of equipment in August Houston auction; NVEE announces $100M share repurchase program; in airlines (AAL, DAL, LUV, JBLU), Bank America said booking were down -23.6% vs. the level seen in 2019 for the week ending August 21 compared to the prior week’s level of -9.3%. System volume was down 23.5% vs. 2019 and pricing edged 0.1% lower vs. pre-pandemic level.

·     Metals & Materials; in chemicals, KeyBanc downgraded DOW, LYB and WLK from Sector Weight to Underweight as see short-term risk/reward for names with meaningful commodity and European exposure skewed to the downside – expect 4Q22 margins and earnings to approach “trough” or “recession” levels, while we move to sub-normalized 2023 estimates; in metals, AA mentioned positively in Barron’s saying the company is developing a technology that could rid the aluminum-smelting process of carbon emissions. That’s a potential “game changer”; CLF and the United Steelworkers union reached a tentative labor agreement that will provide improved wages and other benefits to 12,000 workers in six states


Stock Movers

·     BMY -5%; said drug candidate for preventing ischemia strokes missed main goal of dose response in a mid-stage trial, but met secondary goal of showing relative risk reduction among patients

·     BWAY +8%; said it received FDA approval for the expanded use of its Deep TMS H7 coil for depression in adults

·     CCJ +9%; uranium names extend gains from last week after headlines India’s largest power producer is looking to develop another massive nuclear project just weeks after announcing its entry into the sector. Also, WSJ noted gov’ts seek to stop reactors from shutting down and to restart idled ones in move to bolster energy supplies and meet climate targets

·     CTLT -7%; after fiscal Q4 results as outlook disappoints (FY revs $4.975B-$5.225B vs. est. $5.28B)

·     OXY +4%; among leaders in energy/oil sector with prices rising; FANG, MRO, XOM also +3%

·     PDD +19%; reported quarterly revenue above Street’s estimates as total revenue stood at 31.44B yuan ($4.55B) in the quarter ended June 30, compared with Street’s estimate of 23.68B yuan

·     SLQT -18%; Q4 revenue fell ~25% to $139.4M below the estimates of $199.2M and guided 2023 revs $850M-$950M vs. est. $906M


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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