Mid-Morning Look: October 26, 2022

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Mid-Morning Look

Wednesday, October 26, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks are mixed as weakness in large cap tech following disappointing earnings/guidance results from MSFT, GOOGL, TXN is weighing on the Nasdaq (ahead of META earnings tonight and AAPL, AMZN tomorrow night), but Smallcaps outperform with the Russell 2000 index higher, and the Dow rises +0.5%, helped by a further slide in Treasury yields and the dollar. The S&P 500 meanwhile again tries but fails to top its 50-day moving average resistance (roughly 3,860 on the SPX). After hitting more than 15-year highs last week above 4.3%, the 10-year is down at 4% while the dollar index (DXY) is down over 400bps from its recent 2-decade highs of 114.78 last week as well. Microsoft guidance and slowing Azur sales growth weighs on software names early, TXN lower guide and comments of industry’s slump spreading beyond PCs and smartphones hitting semiconductors and GOOGL slowing ad spending revs weighs on Internet overall. Stocks got a boost slightly after the open after the Bank of Canada delivers smaller-than-expected 50 bps rate hike – raising hopes other Central banks will follow suit. Early strength in Healthcare, Financials, Energy, Materials, and Industrials. Macro news was relatively sparse as earnings take center stage. New British Prime Minister Rishi Sunak told his cabinet of ministers on Wednesday the government will delay a fiscal event until Nov. 17 because it is important to get difficult decisions right and consult on them.


Economic Data

·     September International Trade in Goods (Advance) -$92.22B vs. -$87.8B consensus and -$87.28B in August. Wholesale inventories 0.8%, vs. est. 1.0%; retail inventories 0.4% vs. est. 1.2%

·     September New Home Sales fell -10.9% M/M to 603K vs. 585K consensus and 677K prior (revised from 685K); -17.6% from September 2021. The median sales price of new homes sold was $470.6K, up from $436.8K in August. The average sales price was $517.7K vs. $521.8K in August.







WTI Crude















10-Year Note





Sector Movers Today

·     E&P and Majors: NEX Q3 adj EPS $0.52 vs. est. $0.47; Q3 revs $896M vs. est. $924.63M; sees Q4 revenue down 2%-4% sequentially; MTDR Q3 adj EPS $2.68 vs. est. $2.49; Q3 revs $840.9M vs. est. $765.75M; HLX was upgraded to Buy at BTIG; RRC was upgraded to Positive from Neutral at Susquehanna after the co generated another record quarter of FCF, tripled its buyback authorization to $1.5B, and initiated a base dividend; CHX 3Q EBITDA of $166MM vs the Street’s $154MM and guidance of $148M-$156MM. FCF was $167M vs the Street’s $96M; revs were $1.02B vs guidance of $925MM; WFRD 3Q EBITDA of $214M vs the Street’s $197M, and FCF was very strong at $133M as North America led the way w/ 11% q/q growth; HES posts higher Q3 profit as crude prices remain high and reported two new discoveries with partner XOM at the Sailfin-1 and Yarrow-1 wells in the Stabroek block offshore Guyana

·     Semiconductors: TXN posted Q3 EPS and revs beat, but shares slipped overnight as guides 4Q EPS $1.83-2.11 vs est. $2.21 and revs $4.4-4.8B vs est. $4.9B – analysts noted the co now seeing weakness in Personal Electronics spreading into Industrial and other applications (ex-Auto), spreading beyond PCs and smartphones; MBLY priced its 41M share IPO at $21.00 per share; MXL delivered beat and raise, with 3Q revs ~in-line with expectations (despite a tough quarter in Broadband) and 4Q revs guided +3%; TER beat and raise for qtr/guidance; SK Hynix guided for ~50% YoY CAPEX cuts for 2023, substantially more aggressive than the earlier 20-30% indication; STX said reducing worldwide headcount by about 3,000 employees, announces restructuring plan, reported Q1 rev miss of $2.04B vs. est. $2.11B and said it was warned by the U.S. government that the company may have violated export control laws

·     Consumer Finance & Lending: Dow component Visa (V) posts better-than-expected Q4 profit helped by a jump in payment volumes, boosts quarterly dividend to 45c and authorized a new $12.0B share buyback; DFS upgrade from Equal Weight to Overweight at Morgan Stanley and raise tgt to $116; ALLY files mixed securities shelf; NAVI posts EPS miss due to lower revs and higher provisions, partially offset by higher other income – Private Student Loan originations were -74% YoY – Consumer Lending NIM beat

·     Media & Advertising: SPOT posted a better-than-expected rise in revenue and users for the latest quarter, 456 million monthly active users, up 20% from a year earlier and above the company’s guidance, but posted larger loss than last year; in advertising, WPP Q3 organic comp sales +3.8% vs. est. 5%, raises lower end of year comp sales view to 6.5%-7% and lowers FY op margin to up 30-50 bps from around 50 bps prior (OMC, IPG comps); DIS tgt cut to $143 from $154 at KeyBanc and lower media sector ests saying DIS remains only OW, believe FOXA’s core business is undervalued for relative outperformance, and we see risk for PARA



·     AMP +6%; EPS $6.43 vs. est. $5.85 on better Advice & Wealth Management +$0.30 on meaningful NII upside

·     BA +1%; recorded a $2.8 billion charge, leading to a larger and unexpected quarterly loss, but the U.S. plane maker stuck to its forecast of generating cash this year

·     BG +6%; beat and raise – Q3 adj EPS $3.45 vs. est. $2.43; Q3 revs $16.76B vs. est. $16.43B; raises FY22 adjusted EPS view to at least $13.50 from at least $12.00

·     ENPH +12%; Q3 net income rose to $114.8M from a year earlier and revs up 80% to $634.7M, helped by strong demand worldwide as EPS and revs topped estimates and guides Q4 revs $680M-$720M vs. $662.2M

·     HOG +6%; Q3 revenue $1.65B tops $1.37B estimate as motorcycle shipments rose 19% to 57,100, estimate 54,611 on better margins 34.1%

·     JNPR +3%; Piper noted post earnings the co grew at one of its highest rates in ~7 years, backlog relatively holding, GPMs showing stability, and profitability metrics having upside

·     UHS +10%; among top gainers in the S&P after Q3 adj EPS of $2.54 topped the $2.43 est. better than comp THC and HCA results last week

·     V +4%; posts better-than-expected Q4 profit helped by a jump in payment volumes, boosts quarterly dividend to 45c and authorized a new $12.0B share buyback

·     WING +14%; as 3Q EPS $0.45 vs est. $0.36 on revs $92.7Mm vs est. $89.7Mm, domestic comps +6.9%, domestic AUV $1.6Mm; guides FY $1.61-1.63 vs prior $1.55-1.57



·     AIZ -9%; preannounced a miss and lowered guide – 1.01 vs 2.42 Ex-cat operating earnings missed consensus by about 15% and lowered full-year AEBITDA guidance

·     GOOGL -7%; Q3 results came in below expectations across both revenue and profitability as core Search revenue growth slowed and YouTube revenue declined

·     MAS -5%; Q3 adj EPS and sales miss estimates an cuts year EPS view to $3.70-$3.80 from prior $4.15-$4.25 and estimate $4.15

·     MAT -2%; falls on mixed Q3 results (EPS beat, sales miss) and cuts FY22 EPS view to $1.32-$1.42 from $1.42-$1.48

·     MSFT -7%; posted a 1Q revenue and EPS beat despite a 5-point FX headwind, with 16% constant-currency revenue growth at the top of the guidance range but Azure growth decelerated 4 points to 42% in c/c and rev guidance implies Y/Y growth of 6-8% in constant currency, below estimates

·     SKX -4%; Supply-chain challenges put a damper on 3Q results with EPS missing guidance and the Street, driven by an incremental ~$50M from logistics in addition to FX headwinds

·     STX -7%; reducing worldwide headcount by about 3,000 employees, announces restructuring plan, reported Q1 rev miss of $2.04B vs. est. $2.11B and said it was warned by the U.S. government that the company may have violated export control laws

·     TXN -3%; drags semis lower early as Q4 outlook signaled that the semiconductor industry’s slump is spreading beyond PCs and smartphones


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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