Mid-Morning Look: July 19, 2023

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Mid-Morning Look

Wednesday, July 19, 2023

Index

Up/Down

%

Last

 

DJ Industrials

224.46

0.64%

35,178

S&P 500

17.93

0.39%

4,572

Nasdaq

35.27

0.25%

14,388

Russell 2000

12.79

0.65%

1,988

 

 

U.S. stocks open to the upside, adding to yesterday gains and trading at fresh 52-week highs as the Dow Jones Industrial looks to make it 8-straight days of gains. Managed care stocks leading again after ELV becomes the 2nd major HMO to beat earnings and raise guidance (UNH last week), boosting shares, while transports again outperformed despite earnings miss for JBHT in truckers. The British Pound dropped vs. the dollar after Total UK CPI inflation fell to 7.9% YoY in June from the prior 8.7%, which was 0.3% under expectations and a low rate since March last year. Core CPI fell to 6.9% YoY. WTI crude rises over 1.5% to highest levels since late April around $77 per barrel with investors staying in “risk-on” mode with stocks and commodities rising. Nine of 11 S&P sectors higher with defensive REITs, Utilities up over 1% along with Energy while Materials and tech down slightly.

 

Economic Data

·     Housing starts for June fell unexpectedly (-8.0%) to 1.434M vs. est. 1.48M and vs May +15.7%; said June single-family starts -7.0% to 935,000-unit rate; multifamily -9.9% to 499,000-unit rate; Housing Permits were 1.44M vs. est. 1.49M.

 

 

Macro

Up/Down

Last

 

WTI Crude

0.73

76.48

Brent

1.15

80.78

Gold

-3.40

1,977.40

EUR/USD

-0.0038

1.1188

JPY/USD

1.13

139.94

10-Year Note

-0.002

3.787%

 

 

Sector Movers Today

·     In Software: VMW shares rose after Britain’s competition regulator provisionally cleared AVGO’s $69 billion purchase of VMW, saying the deal would not weaken competition in the supply of critical computer server products. MSFT tgt raised by several analysts ahead of earnings, with Bank America up to $405, TD Cowen to $390, Mizuho to $420 saying AI workloads expected to drive solid Azure upside; ATVI and MSFT extend merger deadline to October 18. NOW price tgt raised to $650 at TD Cowen ahead of earnings and $700 at Bank America – Cowen survey showed some softer performance in the qtr w/ 60% of partners meeting/beating targets vs the 80% TTM avg. TOST shares fell after the company said will remove its $0.99 order processing fee from new version of digital ordering suite by end of this week.

·     In Oil Services: HAL Q2 revenue of $5.8B missed the $5.9B estimate as North America revs fell – 2% sequentially, primarily by decreased stimulation activity in U.S. land but posted better international and offshore activity, led by Latin America and Middle East; BKR Q2 adj EPS beat by $0.06 on in-line revs (rose 25% y/y) and boosted year revs, Ebitda outlooks. In E&P Sector: into earnings, TD Cowen remains cautious on ’24 gas pricing and see favorable 2Q prints for HES, OXY, FANG, SM, MTDR and OVV; CHRD downgraded from Overweight to Market Perform on valuation at TD Cowen saying prefers FANG and OXY; at Benchmark, shares of HP, PTEN, PDS were all upgraded to Buy from Hold in equipment and drillers.

·     Regional Banks: CBSH rises on earnings beat; CFG rises after $0.03 earnings beat driven by higher NII and lower provision, while NIM slightly better, NCOs were inline, but total deposits still rose 3% because they grew CDs; MTB Q2 EPS $5.12 vs. est. $4.16 and $1.08 a year ago; net interest income came in at $1.81 billion, up from $1.42 billion in the year-ago quarter; noninterest income rose 41% from a year ago to $803 million; HWC reported 2Q23 EPS results that were modestly above consensus forecast as a PPNR miss was offset by lower LLP expense (NII/ NIM headwinds largely responsible for the 2Q PPNR miss); FHN, USB, WAL also active on earnings.

 

Stock GAINERS

·     CVNA +21%; after saying has reached a debt restructuring deal and to extend maturities, cutting total debt outstanding by over $1.2B while sells 35M shares in offering, raising proceeds of at least $350M; also posted Q2 EBITDA of $155M, above earlier forecast of $50M.

·     ELV +6%; forecast full-year profit above estimates after beating quarterly earnings target on lower-than-expected medical costs in its health insurance business.

·     NTRS +12%; Q2 profit fell -17% amid lower fee-based income, down -4% to $1.1B partially offsetting a 12% increase in its net interest income. Total assets under custody or administration of Northern Trust increased 5% to $14.48 trillion.

·     STZ +3%; said it will appoint two new independent directors to its board and share more information with Elliott Investment Management as part of agreements struck between the alcoholic beverage company and the investment firm.

·     T +6%; said it doesn’t plan to replace its lead cables around Lake Tahoe as of now; also discloses that <10% of its national cable network is lead-clad in the filing and says it has "serious concerns" with reliability of testing methods discussed in recent media reporting.

·     VMW +5%; after Britain’s competition regulator provisionally cleared AVGO’s $69 billion purchase of VMW, saying the deal would not weaken competition in the supply of critical computer server products.

 

Stock LAGGARDS

·     BC ; guided Q2 EPS $2.30-$2.35 below est. $2.68 and guided Q2 sales $1.7B vs. est. $1.829B; also guided year EPS $9.50 vs. est. $10.26 (shares of HZO, MBUU were also active on guidance).

·     CNK -2%; downgraded to Neutral from Overweight at JP Morgan.

·     GS ; reported Q2 EPS of $3.08 or $1.07B, well below last year of $7.73 per share or $2.79B as revenue fell to $10.9B from $11.86B y/y but above est. $10.61B; Investment banking fees for the quarter fell 20% to $1.43B.

·     IBKR -2%; as 2Q results missed with adj EPS $1.32 vs est. $1.40 on revs $1.0B vs est. $1.06B.

·     JOBY -11%; downgraded from Neutral to Underweight at JP Morgan noting shares have rallied 60% during the last week of June on news.

·     OMC -10%; after Q2 revs $3.61B miss the est. $3.674B.

·     TOST -14%; after the company said will remove its $0.99 order processing fee from new version of digital ordering suite by end of this week.

_________________________________________________________________

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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