Mid-Morning Look: November 23, 2022

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Mid-Morning Look

Wednesday, November 23, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks in rally mode ahead of the Thanksgiving Day holiday, rising on light volume as stocks “squeeze” higher with the S&P 500 at more than 2-month highs. Shares of industrial stocks rally behind better earnings and guidance from Deere (DE) hitting all-time highs. Technology shares outperform as well with the Nasdaq up over 1% on semi strength (AMD, NXPI, ON, NVDA). Consumer Discretionary names rally behind a good week of earnings in the retail space. Energy the only laggard early given a drop in oil prices and rotation out of 2022 winners and into weaker sectors. The dollar falls as the British Pound hits 3-month highs above 1.20 vs. buck with the dollar index (DXY) slides -0.6% to 106.50. Treasury yields are lower following a generally mixed bag of economic data with jobless claims, manufacturing data weaker, while housing, sentiment and Durable Goods came in above economist estimates. A good continuation for US stocks with the S&P 500 200-day moving average about 30-points higher after the Dow, Russell and Transports all topped their respective levels in recent weeks.


Economic Data

·     University of Michigan surveys of consumers 1-year inflation outlook final November 4.9% vs preliminary 5.1% and final October 5.0%; University of Michigan surveys of consumers 5-year inflation outlook final November 3.0% vs preliminary 3.0% and final October 2.9%

·     University of Michigan Consumer sentiment final Nov 56.8 (consensus 55.0) vs preliminary Nov 54.7 and final oct 59.9; current conditions index final Nov 58.8 vs prelim Nov 57.8 and expectations index final Nov 55.6 vs prelim Nov 52.7

·     New Home Sales for Oct rose 7.5% y/y to 632K annual rate vs. est. 570K; and 588K prior; Oct home sales northeast +45.7%, Midwest -34.2%, south +16.0%, and West -0.8%; Oct new home supply 8.9 months’ worth at current pace vs sept 9.4 months

·     Weekly jobless claims rose to 240K from 223K prior and above ests 225K; the 4-week moving average rose to 226,750 from 221,250 prior week; continued claims rose to 1.551M from 1.503M in the prior week and the US insured unemployment rate rose to 1.1% from 1%

·     Durables Goods Orders for Oct rose +1% vs. est. +0.4% and vs. Sept +0.3%; Oct Durables ex-transportation orders +0.5% vs. consensus unchanged and Sept (-0.9%); Oct Machinery orders +1.5%, electrical equipment +0.4%, defense aircraft/parts +21.7%

·     U.S. S&P global November flash composite PMI at 46.3 (vs 48.2 in October); S&P global November flash services PMI at 46.1 (vs 47.8 in October)







WTI Crude















10-Year Note





Sector Movers Today

·     Metals & Materials: US steel scrap prices may be at a floor following 8 months of declines. Relative pricing supports a floor with US scrap ~$50-100/t cheaper than billets for Turkish processors and ~$150/t cheaper than imported pig iron said Citigroup; in research, VALE upgraded from Hold to Buy at Deutsche Bank and instate Vale as our top pick from the iron ore majors after the 30% pull back from the YTD high; in copper, SCCO downgraded from Hold to Sell at Deutsche Bank as shares have outperformed over the last one month (up 23% vs peers up 14%) driven by a rally in copper prices and the relatively in-line Q3/22; GLNCY was upgraded to Outperform at Bernstein saying thermal coal prices are driven by natural gas prices and believes Glencore is best positioned under coverage to take advantage of this

·     Utilities & Solar: Scotia said DTE, NEE, CMS, WEC, and AEP remain top picks in utilities; among discounted names, we recommend D and BKH and remain bullish on U.S. utilities as believe that near-term headwinds are manageable, the long-term outlook is extremely attractive, and valuations are reasonable relative to the S&P 500, particularly given macro uncertainty; UGI was downgraded to Underperform at Bank America and reduce estimates as propane volumes hold steady to FY22 performance; EVRG downgraded from Neutral to Underperform at Bank America saying it has one of the riskier setups from a regulatory perspective as the company faces rate proceedings in both Missouri and Kansas next year against a backdrop of high inflation and commissions that are increasingly focused on utility revenues

·     Auto sector: TSLA upgraded to Neutral from Sell with $176 tgt at Citigroup as believe the YTD pullback has balanced out the NT risk/reward and feel that some of the prior baked-in expectations that they didn’t agree with are out of the stock; Morgan Stanley said they believe OW-rated RIVN could emerge as a short-term beneficiary of any potential commercial disruption/eroding customer loyalty at Tesla; MGA downgraded to Neutral from Buy at Citigroup in auto suppliers w $62 tgt



·     AMD +3%; semiconductors outperform broader tech with NXPI, ON among leaders

·     BMRN +8%; after saying the FDA does not plan to hold a meeting of outside experts for co’s gene therapy application, which could mean a shorter review period; remains on track to host scheduled manufacturing inspections by the health regulator in the coming weeks

·     CVNA +9%; after insider purchases last night – Chief Product Officer Daniel J. Gill bought $1.01 million of shares, according to an SEC filing

·     DE +6%; all-time highs as reported top and bottom line beat as Q4 EPS $7.44 above est. $7.09 as sales rose 37% y/y to $15.54B vs. est. $13.38B with all business segments beating expectations and guides FY23 production and precision agriculture sales above estimates

·     MANU +13%; announced that the company’s Board of Directors is commencing a process to explore strategic alternatives for the club

·     TSLA +5%; upgraded to Neutral from Sell with $176 tgt at Citigroup as believe the YTD pullback has balanced out the NT risk/reward and feel that some of the prior baked-in expectations that they didn’t agree with are out of the stock



·     ADSK -10%; missed consensus revenue (by $1M) and matched consensus EPS expectations, while narrowing its full-year revenue guidance range (and lowering the midpoint) and lowering its full-year billings guidance (both in constant-currency terms)

·     CS -5%; after warning it will lose about $1.6 billion in Q4 after its clients withdrew deposits and funds – said had outflows of some 6% of its $1.5 trillion of assets between Sept. 30 and Nov. 11. that is equivalent to about $88 billion

·     GES -7%; reported Q3 EPS miss ($0.44 vs. est. $0.55) but better revs of $633.4M as inventories +19.3% y/y, but shares fall on guidance as sees Q4 EPS $1.32 vs. est. $1.48 and FY EPS $2.35 vs prior $2.65 but better revenue growth +2.0% vs prior +1.5%

·     HPQ -1%; announced a restructuring program (alongside earnings) that will result in savings of at least $1.4B by the end of 2025; the restructuring will involve cutting ~4-6K jobs

·     JWN -6%; Q3 EPS $0.20 tops ests. $0.15 but revs $3.43B miss $3.49B as EBITDA $207M vs consensus $215.4M – Sales from Nordstrom’s banner stores were down 3.4%, compared with a 14.7% increase in Q2r, while Nordstrom Rack sales decreased 1.9% vs a 6.3% increase

·     PAGS -15%; after earnings and guidance

·     SLB -3%; rotation out of energy winners and into other sectors with MRO, BKR, OXY, APA among top decliners in the S&P early


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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