Mid-Morning Look: May 12, 2022

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Mid-Morning Look

Thursday, May 12, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks volatile again, trying to bounce after tumbling sharply the first few days of the week (and last week), with the S&P 500 down roughly 5% this week, Russell 2000 down -7%, and Nasdaq down over 6%. The Dow Jones Industrial Average down 5-straight days coming into the day and is on track for its 7th straight losing week, a mark it hasn’t seen in over 20 years as per CNBC. The Nasdaq Composite has fallen 4 of the last 5 days trading at its lowest levels since November 2020 election. Fears of a recession amid surging inflation impacts, supply chain issues, and an expected surge in interest rates as the Fed looks to slow inflation has had a dramatic impact on stock markets and sentiment. Quarterly earnings have begun to slow, with most companies reporting okay quarters, but outlooks/commentary have been somber citing all sorts of issues including rising costs, commodity prices, China, and Ukraine/Russia impact to name a few. For the last 2-weeks, markets have sold the rip…will today’s early bounce hold? Bitcoin prices fall, following stablecoins lower, with Bitcoin hitting lows of $25,402 before paring losses/turns green (down over 20% the past week), while Ethereum (ETH) falls over 10% below $1,900 before paring its losses, dragging shares of Bitcoin leveraged names lower (COIN, MSTR, RIOT, MARA). Stablecoin Tether, traded as low as 95 cents on the dollar early Thursday, settling around 98 cents. Oil prices slide along with many base metals, with Treasury yields lower. DIS drops initially after weaker quarterly results but seeing an early bounce. Commodity and energy the top sector laggards so far along with weakness in utilities and select healthcare. Early squeeze on several of the heavily beaten-up stock names thus far…but will it hold?


Economic Data

·     Producer Price Index (PPI) M/M for April rises +0.5%, in-line with est. +0.5% while Producer Price Index (PPI) Y/Y for April rises +11.0% vs. est. +10.7%; on a core basis, PPI Ex: Food & Energy M/M for April rises +0.4% vs. est. +0.6% and core Y/Y for April jumps +8.8% vs. est. +8.9%

·     Weekly jobless claims rose to 203K in latest week from 202K prior week and above estimates 195K; 4-week moving average rose to 192,750 from 188,500 prior week; continuing claims fell to 1.343 mln from 1.387 mln prior week (est. 1.38M) and the U.S. insured unemployment rate unchanged at 1.0%







WTI Crude















10-Year Note





Sector Movers Today

·     Retailers; TPR qtr beat across the board and lowered next qtr guide given China exposure and also authorized a new $1.5B buyback (had $350m left) – sees fy22 operating margin down over 70bp vs year ago – sees fy22 gross margin below year ago; DDS an outperformer post earnings results; DTC qtrly sales in line but DTC missed and was offset by wholesale as margins missed at 59.4% v est. 64.1% and guidance maintained $540-570MM sales; COOK posts Q1 Sales/EPS beat – helped primarily by a sales pull-forward from Q2, while sales trends into Q2 remain mixed

·     Auto sector; Ford (F) and GM both downgraded to underweight (double downgrade) as they are concerned 2022 could be the peak profits as Co’s will be forced to absorb battery-electric-vehicle (BEV) losses to meet high 2026 US regulatory hurdles; RIVN reported a softer MarQ at $95M vs. $131M consensus, as R1 preorders were 90k+ (as of 5/9), with the last ~10k preorders seeing stronger ASPs of ~ $93k/vehicle, almost 20% ABOVE current ASP estimates at ~$77k.

·     Semiconductors; STM issued targets for the 2025-27 period ahead of the start of its capital markets day; expects to reach a goal of revenue of more than $20 billion sometime in the period which compares with revenue expectations of $14.8 billion to $15.3 billion for 2022; ON upgraded to OW from EW and up tgt to $65 from $58 at Wells Fargo saying there is an opportunity for WOLF and ON and become top suppliers of SiC power devices to the electric vehicle market; early outperformance in equipment stocks KLAC



·     APP +32%; following the company’s Q1 report and raised its FY22 Software segment revenue view by about $200M to $1.2B

·     BBIO +9%; after signs exclusive license agreement with BMY to develop and commercialize experimental cancer drug BBP-398/eligible to receive up to $905M, including upfront payment of $90M and remaining in additional milestone payments and royalties

·     BMBL +30%; quarter was strong across the board with Revenue, ARPPU, and Adj. EBITDA margin beating the Street by 1%, 2% and ~50 bps, respectively. Total Paying Users missed but the core Bumble App Users

·     COOK +6%; posts Q1 Sales/EPS beat – helped primarily by a sales pull-forward from Q2, while sales trends into Q2 remain mixed

·     RIVN +24%; despite Q1 loss slightly wider and revs missing ests as more than 1,000 Rivian trucks were produced but undelivered to customers

·     SQSP +41%; raised year rev view to $867M-$879M from prior $862M-$878M after better Q1 revs

·     TPR +13%; qtr beat across the board and lowered next qtr guide given China exposure and also authorized a new $1.5B buyback (had $350m left) – sees fy22 operating margin down over 70bp vs year ago – sees fy22 gross margin below year ago

·     UTZ +11%; beat on Sales & EBITDA with in-line gross margin, but better sales drives beat and raised sales guide to 10-13% (prior 7-10%) – with org raise of 8-10% (prior 4-6%)



·     AA -3%; broad weakness in commodity prices across the board with aluminum, copper, among biggest decliners, taking stocks lower with them FCX, CENX etc.

·     ABC -7%; as WBA sells 6Mm shares at $150 per share and sees proceeds of $900m being used primarily for debt paydown; no change to ongoing collaboration and l-t strategic partnership

·     BROS -35%; after the drive-thru coffee chain’s guidance lagged estimates, Q1 EPS ($0.02) vs consensus $0.01, says Q2 comps will be flat to neg, and blaming gas prices from the spike in mid-March and FY SSS/EBITDA guide lowered meaningfully

·     BYND -2%; Q1 EPS loss (-$1.58) vs. est. loss (-$1.01); Q1 revs rose 1.2% to $109.5M vs. est. $112.3M; sees FY revs $560M-$620M vs. est. $588M; says operating environment continues to be affected by near-term uncertainty related to macroeconomic issues

·     DIS -1%; mixed results as Q2 adj EPS $1.08 below $1.17 consensus and revs $19.25B vs $20.03B on better Disney+ subscribers 137.7m vs 134.4m est. as Theme Parks upside were offset by lower OI in DTC and Content licensing

·     F -4%; both double downgraded to underweight from Overweight at Wells Fargo amid concern 2022 could be the peak profits as the 2 co’s will be forced to absorb BEV losses to meet high 2026 US regulatory hurdles

·     ZM -; downgraded to neutral from Overweight and cut tgt to $96 from $157 at Piper as see limited upside to paid video with adjacent products like Phone, CCaaS, and Rooms having a limited impact


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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