Mid-Morning Look: December 20, 2022

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Mid-Morning Look

Tuesday, December 20, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks trying to snap their 4-day losing streak, bouncing off overnight lows following an unexpected move by the Bank of Japan. The yen strengthened vs. the dollar by 3.5% to its best level in over 3-months after the BOJ raised its cap on benchmark 10-year yields to around 0.5% from 0.25%. Precious metals (gold and silver) rally given the pullback in the dollar after the Bank of Japan move. Trading volatile to start as investors look to buy beaten up stocks on this holiday shortened trading week, but major averages still on track to post big yearly declines on rising interest rates and recession fears. Treasury yields spike after the Bank of Japan surprise shift sparked a global sell-off in bonds. Lots of end of year research analyst calls and 2023 outlooks for some sectors moving names early. Earnings tonight for NKE in retail and FDX in transports being closely watched tonight for temperature of economy. Another day another weak housing report as Housing Starts and Building Permits for Nov miss forecasts.


Economic Data

·     More weak housing data as November Housing Starts fell (-0.5%) M/M to 1.427M vs. 1.400M expected and 1.434M prior (revised from 1.425M). Building permits a much wider miss, falling (-11.2%) M/M to 1.342M vs. 1.495M expected and 1.526M prior (unchanged). November single-family starts (-4.1%) to 828,000-unit rate while multifamily +4.9% to 599,000-unit rate. Recall that on Monday, homebuilder confidence fell in December for the 12th straight month.

·     Philadelphia Fed non-manufacturing regional business activity index -17.1 in Dec vs -13.6 in Nov; non-manufacturing firm-level business activity index 3.4 in Dec vs -2.6 in Nov; new orders index -6.1 in dec vs -6.3 in Nov and full-time employment index 3.4 in Dec vs 10.0 in Nov







WTI Crude















10-Year Note





Sector Movers Today

·     Hardware, Components & Services: JPMorgan said for tech communication sector 2023 outlook they see downside risks from macro which leads them to choose resilience; as recommend JNPR, APH, KEYS, ANET, CDW, FN – said for sector could see a scenario of 2H23 growth appearing to be robust helped by macro recovery and easier comps; hence, we are choosing to take a shorter-term 6-month view on stock recommendations. The firm upgraded FN and CIEN to Overweight from Neutral and downgraded NTAP to Neutral from OW

·     Auto sector: TSLA hits 2-year lows as downside momentum continued early; LCID shares rally as completed its previously announced “at-the-market” equity offering program, selling more than 56.2M shares of its common stock for gross proceeds of approximately $600M; RIVN was initiated at Overweight and $30 tgt at Cantor as believe RIVN benefits from a differentiated product offering, a strong backing from Amazon and a proprietary charging network; MGA agreed to pay $1.525 billion in cash for the Veoneer Active Safety business from seller SSW Partners, a New York-based investment partnership; U.S. auto safety regulators said on Tuesday they are investigating if HTZ rented unrepaired recalled vehicles to customers.

·     Housing & Building Products: J.P. Morgan downgrades construction materials OC to underweight from neutral and home appliances maker WHR to neutral from OW while cutting targets as sees macroeconomic headwinds including softening housing market, exposure to European markets and cost inflation to persist for the next 6-9 months – upgraded JELD to Neutral. Another downbeat housing economic data report as Building Permits and Housing Starts for November fell more than expected (homebuilders – TOL, LEN, PHM, MTH, KBH)

·     Retailers: Dow component NKE expected to report earnings tonight – big for retail space; Credit Suisse initiates & assumes coverage of the sector, while most of the assumptions aren’t changed from previous coverage, assumed coverage of BJ with downgrades to Neutral from Outperform and lowers tgts on HD to $335 from $390, on TGT to $160 from $165 and lowers PT on BJ to $75 from $80; Cowen said they are positive RVLV, and cautious FTCH – as RVLV continues to report strong online traffic trends as traffic holds at 30%+ Y/Y, while FTCH decelerates to -12% from -11%. Beauty (ELF, ULTA) continue to outperform along with accessories (CPRI, TPR), while essentials (TGT, WMT) see Y/Y declines; SCS Q3 adj EPS $0.10 vs. est. $0.18; Q3 revs $826.9M vs. est. $836.4M; sees Q4 revs $740M-$765M vs. est. $790.3M



·     HAL +2%; as energy among early leaders in the S&P

·     LCID +4%; as completed its previously announced “at-the-market” equity offering program, selling more than 56.2M shares of its common stock for gross proceeds of approximately $600M

·     NEM +4%; strength in gold and silver miners as dollar tumbles on Bank of Japan actions

·     SCS +11%; following quarterly results and guidance

·     SMCI +8%; to replace $STLD in S&P 400 at open on 12/22

·     VRNA +39%; as achieved positive results in the Phase 3 ENHANCE-1 trial evaluating nebulized ensifentrine for the maintenance treatment of chronic obstructive pulmonary disease



·     GIS -4%; Q2 adj EPS $1.10 vs. est. $1.07; Q2 sales rose 4% to $5.2B y/y vs. est. $5.19B; and raises full-year fiscal 2023 rev outlook, but notes weaker pet sales segment (WOOF, FRPT lower)

·     MMM -1%; said it will exit manufacturing of per- and polyfluoroalkyl substances (PFAS), also known as forever chemicals and cease its use across its products by 2025-end and expects pre-tax charges between $1.3B-$2.3B, including $700M-$1.0B in Q4

·     NFLX -1%; after new ad-supported plan was the least popular tier of its service in November, the first month in which the streaming giant offered it, according to subscription analytics firm Antenna – WSJ reported https://on.wsj.com/3BOOAIb

·     RCUS -30%; along with weakness in GILD (down -5%) after they reported mid-stage data that showed their combo cancer therapy helped shrink or destroy tumors in 41% of patients, which analysts say missed investor expectations

·     TSLA -2%; shares hit 2-year lows as selling momentum continues

·     WHR -2%; J.P. Morgan downgrades construction materials OC to underweight from neutral and home appliances maker WHR to neutral from OW


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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