Mid-Morning Look: May 13, 2022

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Mid-Morning Look

Friday, May 13, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks surging to start the day, as investors jump on board after a massive drop to start the year but remains on track for losses this week as rising rates, a more aggressive Fed, broken technicals, plunging crypto/Bitcoin, China lockdowns and weaker company outlooks citing supply chain issues/rising costs have taken a massive toll on sentiment. A “rip-fest” early for major averages with every sector much higher as investors hoping yesterday low marked the bottom (Nasdaq above 3%, S&P +2%). Still, the Dow Jones Industrial Average remains on track for its 7th losing week, while the S&P 500 and Nasdaq are on pace for their 6th straight losing weeks, Bitcoin down for its 7th straight week. Treasury yields are rising for the first time in 4-days, with the 10-year back above 2.9% (off weekly highs above 3.2%), while the U.S. dollar is flat after another strong week at fresh 20-year highs. So far this morning a massive “risk-on” bet with several beaten-up stocks seeing large bounces. The so called “fear called” CBOE Volatility index (VIX) has barely budged over the last week despite the rout in global markets, and dips below the key 30 level this morning as stock rally. The S&P 500 index briefly came within points of its 20% down market from all-time highs yesterday, and the rebound has been strong thus far since. Market breadth favors advancers to decliners by more than 5-1 margin to start the day.


Economic Data

·     April import prices unchanged vs. est. +0.6% and down from March +2.9%, while April export prices rose +0.6% vs. est. +0.7% and below March +4.1%; April year-over-year import prices +12.0%, export prices +18.0%; April non-petroleum import prices +0.4% M/M and 7.8% Y/Y

·     University of Michigan sentiment for May prelim down at 59.1, well below consensus 64.0 and the final April 65.2 and at its lowest reading since August 2011); expectations index prelim May 56.3 vs. consensus 63.0 and final April 62.5 and the current conditions index prelim May 63.6 below consensus 70.5 and final April 69.4.







WTI Crude















10-Year Note





Sector Movers Today

·     Industrial & Machinery; in research in the waste sector, WM upgraded to Neutral from Underperform (tgt to $165 from $155) and RSG to Buy from Neutral (tgt to $150 from $140) at Bank America; Bank America upgraded TEX to buy as sees the stock with a multi-year transformation under CEO Jon Garrison, while downgraded OSK to Underperform and cut tgt to $92 from $103 noting outperformance vs. peer TEX; also at Bofa, downgrade commercial vehicle producer PTRA to underperform with top Machinery pick URI as structurally gaining share, low balance sheet leverage, domestic exposure levered to Infrastructure; Top Underperform is IPGP: wide tail risks given China & Russia exposure, cycle over cycle margin degradation; Bloomberg reported CD&R is said to near $3 billion deal for a unit of ROP

·     Auto sector; TSLA shares outperform after CEO Elon muck tweet earlier this morning saying his $44 billion takeover of TWTR is “temporarily on hold” pending details supporting calculation that spam/fake accounts; China’s passenger vehicle retail sales drop 21% Y/Y in the first week of May according to a Bloomberg report (LI, XPEV, NIO); Ford (F) upgraded to Equal Weight from Underweight at Morgan Stanley; CVNA downgrade from Buy to Hold at Jefferies and slash tgt to $40 from $150 as believe upside could be capped until liquidity concerns subside (notes stock plunged from $377 in August 2021 to just $37 today); HMC Q4 net profit fell 41% Y/Y to 124.90 billion yen, beating the estimate of Y110.49B; ZEV guided Q2 revs $6M-$8M vs. est. $10.2M after Q1 revs $5.4M vs. est. $5.5M; expects Q2 vehicle and powertrain sales in range of 55-75 units

·     Internet, Media & Telecom: TWTR volatile all day after Elon Musk tweeted that his $44 billion takeover of Twitter is “temporarily on hold” as he awaits data on its proportion of fake accounts; DUOL strong beat and raise quarter with accelerating growth across nearly all metrics including MAUs, DAUs, and subscribers as bookings and revenue came in 9% and 5% above consensus, respectively; SQSP upgraded to Outperform from Neutral and raising PT to $34 from $25 at Wedbush as reported better than expected 1Q22 results, with 2Q guidance in-line; AVYA downgraded at Cowen and cut tgt to $6 from $26 saying weak results and a worse near-term outlook cast doubt on a successful transition to a recurring revenue model.



·     AFRM +22%; quarterly results beat and issued FY rev guidance above views, Q3 revs $354.8M vs. est. $343.64M; active merchants on platform grew from 12,000 to 207,000 Y/Y, and active consumers increased 137% to 12.7M

·     BABA +8%; big bounce in U.S. listed China stocks (KWEB, FXI) as Shanghai authorities said aiming for Zero-Covid at community level by “mid-May” as they aim to open, ease traffic restrictions and open shops in an orderly manner, considers resuming production larger scale

·     DUOL +32%; reported a strong beat and raise quarter with the company accelerating growth across nearly all metrics including MAUs, DAUs, and subscribers

·     DVAX +21%; to replace EPAY in S&P 600 at open on 5/17

·     FSLR +7%; upgraded to Overweight from Neutral at Piper and up tgt to $90 from $80 saying recent bookings momentum provides strong volume and pricing visibility into 2024

·     HOOD +22%; after Emergent Fidelity Technologies and Sam Bankman-Fried, CEO of FTX Trading, report 7.6% stake in HOOD, saying the shares represent attractive investment; said they intend to hold the shares as an investment, according to the filing

·     PAYO +32%; reported strong 1Q22 results (both revenue/EBITDA above consensus) and raised its CY22 guidance, saying it believes it can retain ~50% of the previously excluded ~$46M Russia/Ukraine revenue impact

·     TSLA +6%; after CEO Elon muck tweet earlier this morning saying his $44 billion takeover of TWTR is “temporarily on hold”



·     FIGS -23%; reported worse than expected Q1 results and lowered its 2022 revs guidance to $510M-$530M from prior $550M-$560M citing macro factors and supply chain challenges

·     NEWR -2%; reported disappointing F4Q22 results and lowered the FY23 outlook, as revs growth decelerated back to <20% and FY23 guide no longer implies acceleration

·     TWTR -10%; as Elon Musk tweeted that his $44 billion takeover of TWTR is “temporarily on hold” pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users, but he is still committed to acquisition

·     UPS downgraded to Neutral from overweight at JPMorgan after pressure continues mounting on the U.S. consumer and e-comm growth decelerates – says they previously flagged these risks to parcel pricing in early March and April


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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