Mid-Morning Look: October 27, 2023

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Mid-Morning Look

Friday, October 27, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks are mixed as large cap tech rebounds nearly 1% following better earnings/guidance from AMZN, INTC, boosting the Nasdaq (which was down -3% on the week into today), while the S&P edges slightly higher and Smallcap Russell 2000 underperforms again. Note the S&P 500 is up 7% YTD while the Russell 2000 is down about -6% YTD. Earnings were the big story this week (along with Middle East headlines), with several earnings disappointments weighing on markets (S&P and Nasdaq each hit 5-month lows). A barrage of economic data at the tail end of the week shows the economy remains strong ahead of next week’s FOMC rate decision, though no changes are expected in rates. Yesterday saw strong GDP with the economy rising 4.9% while today, Personal Spending data was strong, though the savings rate slowed. Inflation data points were mixed to down slightly below forecasts. Oil prices rise after US forces attacked two facilities in eastern Syria it believes were used by Iran’s Islamic Revolutionary Guard Corps and affiliated groups to strike American troops in the region. As of today, about half of the S&P 500 has reported earnings with another 30% expected next week.


Economic Data

·     Sept personal income rose +0.3% below consensus +0.4% and vs. Aug +0.4% while the Personal Spending rose +0.7% vs. consensus +0.5%; Sept personal saving rate fell to 3.4%; real consumer spending rose +0.4% vs Aug +0.1%.

·     Inflation portion of data: Sept overall PCE price index +0.4% vs. est. +0.3% and vs. Aug +0.4%; Sept core PCE price index +0.3% (+0.3%) vs Aug +0.1%; Sept y/y PCE price index +3.4% vs Aug +3.4% (prev +3.5%); core +3.7% (consensus +3.7%) vs Aug +3.8% (prev +3.9%).

·     University of Michigan Sentiment Oct-Final University of Michigan surveys of consumers sentiment final Oct 63.8 vs. consensus 63.0 and vs. Sept-F 68.1; current conditions index final Oct 70.6 vs prelim Oct 66.7 and final sept 71.4; Consumers expectations index final Oct 59.3.

·     UoM Inflation expectations rise: University of Michigan surveys of consumers 1-year inflation outlook final oct 4.2% vs prelim 3.8% and final sept 3.2% while University of Michigan surveys of consumers 5-year inflation outlook final oct 3.0% vs prelim 3.0% and final sept 2.8%.







WTI Crude















10-Year Note





Sector Movers Today

·     In Banks: RF downgraded from Overweight to Neutral at JP Morgan to reflect the impact of faster catch-up in deposit betas. OBK upgraded to Outperform at Raymond James following 3Q results that exceeded their forecast and consensus on both a core EPS and PPNR basis. EGP upgraded to Outperform at Raymond James following another strong quarter which has them to increase their estimates. NWG shares tumble after the British bank cut its guidance and admitted “serious failings” in its treatment of Brexit campaigner Nigel Farage. One M&A deal as ONB said it is buying CSTR, accelerating its presence in Tennessee by bringing in $3.3 billion in total assets, $2.3 billion in total loans, and $2.8 billion in deposits as of Sept. 30.

·     In Food & Beverage: HSY tgt cut to $200 at TDCowen and downgrade to Market Perform citing too many headwinds noting mgmt warned of volume pressure from a major customer reducing merchandising space to improve the shop-ability of its aisle plus cocoa costs are higher. SAM declines as Q3 revs fell -0.9% to $601.6M vs. est. $594M, depletions fell 6%, due to decreases in some company’s brands and cut its EPS guidance range to $6.04-$8.04 compared with prior guidance of $6.00-$10.00 and expects depletions down (5%-7%) more than prior.



·     AMZN +7%; Q3 revs of $143.1M topped consensus of $141.41B, but its cloud unit AWS brought in revenue of $23.1B up 12% y/y, mostly in-line with estimates while guided Q4 sales $160B-$167B vs. est. $166.6B; said advertising business racked up sales of $12.1B, up from $9.6B y/y.

·     CMG +6%; Q3 tops market expectations for quarterly sales, posting a 100 bps increase in quarterly operating margin and comp sales of 5% a touch above the 4.6% estimate while guides Q4 comp sales growth in the mid to high-single-digit range vs. est. 5.3%.

·     COF +10%; 3Q EPS was $4.45 vs consensus $3.24, helped by better expenses as operating efficiency was 41.5% in the quarter, Net interest income climbed 6% to $7.42B, credit card loans increased 3% to $146.8B, while consumer banking loans fell 1% to $76.8B.

·     DECK +15%; beat 2Q consensus EPS by $2.39 as UGG grew 28% y/y, HOKA grew 27% y/y, and operating margin expanded 597 bps to 20.6%. DTC sales grew 39% y/y, outpacing wholesale growth of 19%, guides year EPS $22.90-23.25 vs est. $22.64.

·     DXCM +15%; after raising its FY revenue forecast and beats Q3 estimates on strong demand for its continuous glucose monitoring devices; guides year revs $3.58B-$3.6B from prior $3.5B-$3.55B after Q3 sales rose 27% y/y to $975M topping $939M est. (shares PODD, TNDM rise in reaction)

·     INTC +10%; forecast Q4 revenue about $14.6B-$15.6B vs. est. $14.35B; overall delivered beat/raise results as 3Q sales/EPS $14.2B/$0.41 bested consensus by 4%/85%.

·     MASI +9%; as a U.S. federal trade agency found that Apple violated the patent of the MedTech company in a ruling that could lead to an import ban for certain models of the AAPL smartwatch.



·     CHTR -5%; on Q3 results as revs almost flat y/y to $13.58B below est. $13.63B while free cash flow drops -27% y/y to $1.1B citing network expansion expenses and only added 63K Internet users in Q3, below consensus around 77K.

·     CVX -5%; Q3 adj EPS $3.05 vs. est. $3.33; Q3 revs $54.08B vs. est. $47.79B; said it had net income of $6.526B, or $3.48 a share, down from $11.231B, or $5.81 a share y/y.

·     ENPH -17%; is the latest in solar with a bleak outlook (follows recent guidance from SPWR, SEDG that crushed the sector) as ENPH guided Q4 revenue $300M-$350M below consensus of $577M after slightly missing Q3 results.

·     F -8%; after missing earnings and revenues for Q3 and withdrew its full-year 2023 results forecast due to the pending ratification of its deal with the United Auto Workers (UAW) union.

·     NWG -11%; after the British bank cut its guidance and admitted “serious failings” in its treatment of Brexit campaigner Nigel Farage following the closure of his account with its private banking subsidiary, Coutts.

·     NWL -5%; after cutting year sales view to $8.02B-$8.09B from prior $8.2B-$8.34B and lowered its profit outlook citing slowing demand for its food containers/appliances amid rising cost of living expenses; also posted Q3 sales miss while EPS beat.

·     PTCT -16%; shares fell after posted lower-than-expected revenue in Q3, falling -9.5% y/y to $196.6M missing the $201M estimate alongside a wider EPS loss of (-$1.76); was downgraded to Sell at Citigroup post results and pipeline update.

·     SNY -16%; after saying it plans to separate its consumer-healthcare business to focus more on innovative medicines; reported Q3 sales of 11.96 billion euros ($12.63 billion), down 4.1% on the same period last year but up 3.2% at constant exchange rates vs. est. EU12.06B


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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