Mid-Morning Look: November 21, 2022

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Mid-Morning Look

Monday, November 21, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks start the week on a down note, with energy, materials, discretionary and technology the biggest drags early after concerns that a rise in China’s Covid-19 infections over the weekend, prompting some strict measures in some regions, would slow reopening and delay a pickup in growth. Oil prices slide to lowest levels since January 2022, with energy the biggest drag in the S&P 500 index (down over 3%) after the WSJ reported Saudi Arabia and other OPEC oil producers are discussing an output increase, the group’s delegates said, a move that could help heal a rift with the Biden administration while Goldman Sachs cuts oil prices forecasts on China concerns cutting Brent’s oil forecast for the fourth quarter to $100/bbl from the prior projection of $110/bbl. Treasury yields tumble to lows; the 10-yr down -5 bps to 3.765% before paring losses and 2-yr down only 1 bps to 4.497% (inversion tops 73-bps) while the dollar index (DXY) early strength +0.7% to 107.74. Treasury yields retreat from early gains amid rising Covid cases in China, even as investors worry the Fed will extend its aggressive tightening. Fed Minutes from November meeting expected midweek. Atlanta Fed’s Bostic calls for slowing the pace of rate increases this weekend. A holiday shortened week still filled with a couple of big earnings results in tech and retail, a bevy of economic data points and minutes from the Fed November meeting.







WTI Crude















10-Year Note





Sector Movers Today

·     Casinos, Gaming, Lodging & Leisure sector: Macau related casino stocks WYNN, LVS, MGM, MLCO slide as hard-hit Beijing tightens entry rules amid rise in COVID infections in the city and nationally; in research, Morgan Stanley initiated US Gaming with an In-Line view as depressed valuation has started to reflect earnings risk from an eroding macro and are bullish sports betting with DKNG a top Pick and OW rating, and overweight on LVS ($49 tgt) and RRR ($52 tgt) while Underweight rated on BYD

·     Media, Internet: Dow component DIS shares rebound after it brought back former leader Bob Iger to replace his successor Bob Chapek as CEO, a surprise capitulation by the board after a string of disappointing results. Iger, 71, who spent more than four decades at Disney, including 15 years as its CEO, has agreed to serve for two years; PARA has decided not to support an appeal of a recent ruling that blocked the planned $2.18 billion sale of its Simon & Schuster book-publishing unit to rival Penguin Random House, WSJ reported; MTCH positive mention in Barron’s saying product fixes could help restore its former high growth rate, particularly if new features can entice users to buy higher-priced sub plans and make a la carte purchases; EVCM downgrade to Neutral, SQSP upgrade to Overweight at Piper saying if sequential $ growth remains flat for the next five quarters, LSPD as the most risk & GDDY, SQSP lowest risk

·     Semiconductors: TSM is planning to produce chips with advanced 3-nanometre technology at its new factory in the U.S. state of Arizona, but the plans are not completely finalized yet, the company’s founder Morris Chang said, Reuters reported; POWI downgrade from Outperform to Market Perform at Northland saying it has high exposure to the consumer market which is unlikely to be strong in CY23 and believe that cellphone fast charger revenue likely peaked; NVDA set to launch lower-spec AI GPU for sales to China; INTC reinstated Market Perform at Cowen saying a difficult 2023/24 lies ahead with further share loss in Datacenter and a declining PC market pressuring cash generation in a historic CAPEX cycle

·     Paper & Containerboard: for IP, PKG, WRK, Jefferies noted, citing containerboard prices fell $20-40 / ton in Nov with the industry working through a glut of inventory & weak demand. The magnitude of the first price cut is in-line with buy side expectations, but with the 5% capacity still to come online in Feb/Mar & softening macro backdrop, we wouldn’t be surprised if prices cumulatively fall by $50-100 / ton in 2023.



·     DIS +6%; shares rebound after it brought back former leader Bob Iger to replace his successor Bob Chapek as CEO, a surprise capitulation by the board

·     HSY +2%; defensive food stocks seeing some early strength

·     IMGO $105%; after MRK to acquire the company for $36 per share in deal valued at $1.35B

·     PBI +3%; Activist stake confirmed in 13D filing. Pitney Bowes gains as activist investor Hestia Capital, which owns a 6.9% stake, pushes for changes

·     SHC +43%; after late Friday, a jury ruled in favor of SHC in its second trial (Fornek vs. Sterigenics) as part of a broader Master Complaint in Cook County



·     COIN -3%; tracking crypto prices lower as Bitcoin falls -3.7% to $16K

·     CVNA -6%; downgraded to Sell at Argus, even after shares are down sharply from their 52-week highs, reflecting both the company’s recent results and weak industry trends

·     DWAC8%; loses steam after Donald Trump Twitter account was reinstated this weekend

·     FANG -6%; leading energy stocks lower as oil tumbles to lowest since January after reports Saudi Arabia and other OPEC oil producers are discussing an output increase

·     MDB -6%; was downgraded to EW from OW at Morgan Stanley saying a challenging spend environment will likely weigh on growth for the next few quarters resulting in FY24 cons expectations that may be too high

·     TEVA -2%; says CEO Kare Schultz will retire, names Richard Francis as new chief executive

·     TSLA -3%; new 52-week lows, down -3.2% (took out the 11/18 low of 176.55)


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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