Mid-Morning Look: July 19, 2022

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Mid-Morning Look

Tuesday, July 19, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks bouncing after Monday’s midday pullback (and subsequent losses), getting a boost as the dollar eases and investors position ahead of big earnings results (NFLX tonight big in streaming/tech). Overnight, IBM shares slipped as quarterly results beat but margins were weak and cash flow guidance disappoints; HAL boosts energy stocks on its beat; LMT slips on miss and lower guidance in defense and Dow component JNJ reports mixed results. The dollar slipped from recent 20-year highs after reports the ECB may consider raising interest rates by double the quarter point it outlined just last month because of the worsening inflation backdrop 9oushed the euro above 1.02 after falling to parity vs. the buck last week). Treasury yields edge higher with the 10-yr back around 3% while oil rises. Fed speakers in “black-out” period ahead of FOMC policy decision next week where anywhere between 75-bps and 100-bps hike is expected (though now markets looking more towards low end of hike). Bitcoin prices back near 1-month highs above $22K and Ethereum above $1,500 as crypto levered names bounce. The S&P approaching near yesterday highs where markets failed just above the 3,900 level.


Economic Data

·     Housing Starts for June fell -2.0% to 1.559M, below consensus of +1.4% (or 1.58M) and vs May -11.9%; June single-family starts -8.1% to 982,000-unit rate; multifamily +10.3% to 577,000 unit rate; housing building permits fell -0.6% to 1.685M unit rate, above est. 1.650M vs. May 1.695 mln unit rate; single-family permits -8.0% to 967,000 unit rate; multifamily +11.5% to 718,000







WTI Crude















10-Year Note





Sector Movers Today

·     E&P and Majors; APA sees Q2 international adjusted production is forecast to be 105 Mboe/d, compared to guidance of 107 Mboe/d; OXY disclosed that its major shareholder Berkshire Hathaway bought another 1.9M shares of common stock in a total transaction size of $112.1M on July 1; XOM was upgraded to overweight from neutral at Piper saying that the setup for US energy stocks heading into 2Q earnings is looking increasingly attractive; Bank America downgraded PXD, CRC, DEN downgraded to Underperform from Neutral saying the risk/reward for the US oils has been reset by the market’s recognition of inflation and an oil curve that has largely retraced levels prior to the Ukraine crisis and upgraded SWN, CNQ, EOG, COP, OVV to Buy

·     Bank movers: JEF said it is spinning off oil-and-gas company Vitesse Energy to shareholders. Vitesse Energy will ultimately be listed on the NYSE. In addition, Jefferies is selling its Idaho Timber business, in two separate transactions, for $239M; in earnings, TFC slight EPS beat as NII & PPNR beat with higher core fees & EOP loan growth, and lower provisions; CFG with EPS beat on higher NII, higher Fee Income, better NIM, and lower provisions & expenses and added $1B to the buyback; MTB board authorized a new $3B repurchase authorization; FBK posts Q2 EPS miss of $0.64 vs. est. $0.78 on a higher provision, lower fees, higher expenses and higher taxes

·     Pharma movers; JNJ posts Q2 EPS and sales beat but cuts year sales view to $93.3B-$94.3B from prior $94.8B-$95.8B saying the stronger dollar impacted results; NVS reported Q2 core EPS beat on lower sales $12.78B vs. est. $12.83B; TAK was upgraded to Outperform at Cowen and raise tgt to $24 from $21 on what they believe is a very well-protected value; ACAD submits new drug application to the U.S. FDA for trofinetide for the treatment of Rett syndrome; APLS announces FDA acceptance and priority review of the NDA for pegcetacoplan for the treatment of geographic atrophy; STIM received FDA clearance for NeuroStar to treat anxious depression; VKTX said FDA lifts hold on metabolic disorder drug study

·     Metals & Materials; FM was upgraded to EW at Barclays and HBM to Overweight while reduce valuation multiples across all names, and downgrade FNV to Underweight (remain OW AEM, ERO, GOLD, KGC, and UW FCX) saying copper equities are reflecting better value at these levels; still see headwinds on both macro and fundamental levels, but are becoming less negative; STLD board of directors authorized the company to construct and operate a 650,000-ton low-carbon, recycled aluminum flat rolled mill, with two supporting satellite recycled aluminum slab centers; in Forest and Timber space, Reuters reported CVC, Kronospan in joint bid for West Fraser Timber (WFG) – WFG has roughly $8.2 bln market cap, per Refinitiv data https://bit.ly/3yRdpRp ; other timber names active: RYAM, CFX



·     APLS +26%; announces FDA acceptance and priority review of the NDA for pegcetacoplan for the treatment of geographic atrophy

·     BA +3%; after Private equity firm 777 Partners plans to buy up to 66 more BA 737 MAX jets

·     CNK +7%; upgraded to Overweight at Morgan Stanley with $22 tgt assuming the N. American box office rebounds to ~85% of 2019 levels in ’23 (or ~80% of attendance) and that it can maintain an ~14% market share, which assumes it gives back some of the market share gains

·     HAL +2%; gives oil services a boost after Q2 adj EPS $0.49 vs. est. $0.44; Q2 revs $5.1B vs. est. $4.7B and better guidance

·     NCR +11%; rises after the WSJ reported it is in exclusive talks to be sold to private-equity firm Veritas Capital, according to people familiar with the matter (notes NCR has a mkt cap of roughly $4B) https://bit.ly/3OcXNxi

·     SHO +8%; will replace Vonage (VG) in the S&P SmallCap 600 effective July 21 after market opens

·     SI +15%; qtrly results surpass expectations at $1.13, up from 80c y/y and topping the $0.84 est. on better revs of $78M saying its network handled $191.3B of U.S. dollar transfers in Q2 2022, a 34% increase from Q1, but down 20% q/q

·     WFG +10%; Reuters reported CVC, Kronospan in joint bid for West Fraser Timber (WFG) – WFG has roughly $8.2 bln market cap, per Refinitiv data https://bit.ly/3yRdpRp ; other timber names active: RYAM, CFX



·     ALLY -5%; after Q2 EPS of $1.76 missed the $1.86 estimate and was down from $2.03 last year on light revs ($2.08B vs. est. $2.19B) as net income attributable to common shareholders fell nearly 28% to $454M

·     IBM -6%; weak cash flow; mixed quarter as Q2 revs/EPS exceeded expectations as most of the upside was generated from the company’s Infrastructure/hardware segment (posting 25.4% C/C YoY growth vs. 0.3% in the prior quarter), offsetting growth moderation in the Software segment

·     LMT -1%; with a top and bottom line miss and lower guidance as Q2 EPS $6.32 missed the $6.39 est. and revs $15.4B short of $16.05B consensus while cuts FY22 EPS view to $21.55 from $26.70 (est. $26.85) on lower revs saying Q2 revenue affected by supply chain impacts

·     NVTA -11%; after the company lowered its revenue guidance for Q2 to about $136M (est. $142M) and said it would be shuffling its management amid a corporate restructuring.

·     RARE -18%; slips after giving an interim Phase 1/2 update on GTX-102 in the genetic disorder Angelman syndrome

·     SBNY -9%; beat top and bottom but falls on pre-tax pre provision revs miss, and expenses were up too

·     SQ -2%; downgraded from Outperform to Neutral and slash tgt to $64 from $140 saying the longer-term outlook intact but forecasting short-term pressure from consensus EBITDA downgrades


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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