Mid-Morning Look: May 03, 2023

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Mid-Morning Look

Wednesday, May 03, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks open higher, holding early gains after yesterday’s sharp pullback as investors eagerly await this afternoons Federal Reserve policy meeting and press conference from Chairman Jerome Powell. Market expectations for today’s policy meeting is for the Fed to follow through with another 25-basis-point hike to 5.25% — marking the terminal rate for this cycle. Signs of some recent softening economic data (not in today’s strong ADP jobs data however) and tightening credit could likely drive a consensus on the committee that rates are sufficiently restrictive – hinting at a bias to pause at the next meeting – which remains consensus on Wall Street. Any deviations from these views could catch stock, bond, currency, and commodity markets by surprise. Another big round of earnings results for investors to digest (details of some of the biggest movers below), but the downdraft in oil as it approaches 2021 lows, and the Fed meeting grabbing all the attention today. Small caps leading early with the Russell 2000 up about 1% given rebound in financial stocks.


Economic Data

·     ADP Private Payroll employment data for April came in a much stronger than expected 9-month high of 296K jobs, well above the 148K estimate and last month’s revised 142K figure. Annual pay increased 6.7% Y/Y, down from the 6.9% pace in March and from 7.2% in February.

·     ISM non-manufacturing PMI for April 51.9 vs. est. 51.8 and prior month 51.2; business activity index 52.0 in April vs 55.4 in March, prices paid index 59.6 in April vs 59.5 in March, new orders index 56.1 in April vs 52.2 in March, employment index 50.8 in April vs 51.3 in March.







WTI Crude















10-Year Note





Sector Movers Today

·     In restaurants: an M&A deal in the space as DRI acquires RUTH for $21.50 per share in a deal valued at $715M; SBUX reported a Q2 beat helped by a surprise same-store sales gain in China (+3%), continued solid demand in the U.S. (comps +12%) and higher prices, but only reaffirmed guidance for the year despite the beat; EAT top and bottom line Q3 results just beat ests.; both YUM and YUMC reported quarterly results; WING rises after strong Q1 total domestic stores comp sales growth +20.1%, topping estimate +8.57% on EPS and revenue beat.

·     In REITs: EXR Q1 miss driven by lower than expected revenue growth and higher operating expense growth; APLE 1Q23 Beat; 2023 Guidance Affirmed; AKR reported a 1Q23 FFO beat (+$0.05/share), and management increased the midpoint of its FY23 guidance by 0.8% by lifting the low end of the range by $0.02/share; LSI beat consensus and underlying fundamentals were stronger than expected; PECO 1Q23 beat (+$0.01/share vs. consensus) and management affirmed its FY23 Core FFO guidance; WELL 1Q23 normalized FFO beat consensus by $0.03/share and management increased 2023 normalized FFO guidance by nearly1% at the midpoint

·     In aerospace suppliers: MRCY Q3 EPS and sales topped expectations but lowered its guidance for the year to $990M-$1.01B from prior $1.01B-$1.05B and EPS loss (34c-20c) vs. prior profit (24c-44c). SPR shares fall; the aero parts supplier reported a much wider-than-expected Q1 loss and revenue that came up short and said a quality issue on components used in Boeing’s 737 planes hurt results (Q1 revs $1.43B missed $1.52B estimate).



·     GNRC +10%; reported Q1 EPS $0.63 topping the $0.49 estimate on better-than-expected net sales of $888M vs estimates of $841M, though did slide -22% y/y; posted a 30% increase in commercial & industrial product sales.

·     IMGN +140%; after saying its experimental drug Elahere, to treat a type of ovarian cancer helped extend the lives of patients in a late-stage trial with the disease without it getting worse.

·     KHC +4%; guides FY adj EPS $2.83-$2.91, above prior $2.67-$2.75 after Q1 adj EPS of $0.68 tops analysts’ estimates of $0.60; guidance boost citing price hikes.

·     LLY +4%; after its Alzheimer’s treatment donanemab slowed disease progression in clinical trial; drug slowed the disease by 35% over a year and a half in a trial of 1,182 patients with early-stage Alzheimer’s.

·     LTHM +12%; raises FY23 revenue view to $1.025B-$1.125B from $1.0B-$1.1B and boosted its FY23 adjusted EBITDA view to $530M-$600M from $510M-$580M.

·     OMCL +10%; posted a strong top- and bottom-line beat, with revenues topping consensus by 4.5% and adjusted EBITDA handily beating consensus by ~130% (though lower Q2 guide).

·     RUTH +33%; to be acquired by DRI for $21.50 per share in a deal valued at $715M https://on.mktw.net/44n6RJi

·     SMCI +20%; shares rebound as FQ3 sales of $1.28B were in-line with pre-announced revenue estimates (guided lower just 2-weeks ago) while margins dipped as sales (and server volumes) came in below expectations but remained optimistic about Q4 guidance.

·     WU +10%; adjusted EPS of $0.43 notably above the Street’s $0.34 forecast, primarily driven by margin upside associated with earlier expense cuts and raised its outlook.



·     AMD -7%; posted in-line results despite weakness in data center products and guided a modestly softer JunQ $5.30B (est. $5.57B); mixed analyst comments today as some upgraded on pullback (Hallum) while Bank America downgraded shares to Neutral.

·     CVS -2%; cut its full-year profit forecast citing increased costs related to its acquisitions of Signify Health and Oak Street Health.

·     EL -20%; after cuttings FY23 adjusted EPS view to $3.29-$3.39 from $4.87-$5.02 and sees FY23 sales to decrease between 12%-10% y/y vs. prior view of a decrease between 7%-5%.

·     IEP -16%; continues slide, breaking below the Covid lows ($34) to lowest levels since Jan 2011 following negative commentary from Hindenburg Research the day prior.

·     MRCY -16%; Q3 EPS and sales topped expectations but lowered its guidance for the year to $990M-$1.01B from prior $1.01B-$1.05B and EPS loss (34c-20c) vs. prior profit (24c-44c).

·     NRDS -17%; better-than-expected revenue growth and adjusted EBITDA margin in Q1 but is pulling back on planned marketing spending for FY23 despite the good result” as the company is seeing increased credit tightness (downgraded at Citigroup).

·     SBUX -7%; as left guidance for FY23 unchanged despite posting strong Q2 sales/EPS beats.

·     SPT -16%; shares stumbled as Q1 new ARR disappointed the Street, resulting in ARR growth dipping below 30% for the first time since 3Q20; Q1 modest upside across revenue, margins, and cash flows, but bookings and ARR were light.

·     SPWR -4%; posted unexpected Q1 EPS loss and margins fell to 14.5% from 20.6% y/y; affirmed 2023 guidance of $2,450–$2,900 Adjusted EBITDA per customer before platform investment and 90,000–110,000 incremental customers.


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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