Mid-Morning Look: September 05, 2023

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Mid-Morning Look

Tuesday, September 05, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks kicking off the new trading week with early (modest) losses after solid gains last week, as most S&P sectors are lower, led by weakness in Industrials (XLI), Materials (XLB), and Utilities (XLU), (down over 1%) while Energy (XLE) outperforms behind headlines. Oil prices jumped, extending gains from last week after Saudi Arabia to extend cut of 1 mln b/d for 3 months until December and Russia said to extend 300k b/d oil export cuts through December, sending Brent crude prices above $90 per barrel for the first time since November 2022. In less than 3 months, oil prices have gained a massive ~31%. However, downbeat data on services activity in China and a jump in Treasury yields and the dollar are weighing on broader market segments (growth, housing, transports weaker). The yield on the 10-year Treasury notes climbed to 4.25%, while two-year yield rose to 4.928% in the run-up to more economic data this week. Smallcaps are broadly lower, with the Russell 2000 down -1.5%. Several data points, research conferences, and Fed speakers this week to keep an eye on.


Economic Data

·     July factory orders fell a smaller-than-expected (-2.1%) vs. est. (-2.5%) and vs June +2.3% as July factory orders ex-transportation +0.8% vs June +0.3% and July factory orders ex-defense -2.2% vs June +3.0%. U.S. July Durables orders unrevised at -5.2%.

·     U.S. July nondurables orders +1.1% vs June +0.4%; U.S. July total manufacturing inventories +0.1% vs June -0.2%; U.S. July inventories/shipments ratio 1.48 months’ worth vs June 1.48 months.







WTI Crude















10-Year Note





Sector Movers Today

·     Homebuilders (DHI, BZH, TOL, LEN, MTH, KBH) and others were broadly lower following another spike in both the US dollar and Treasury yields, pushing mortgage rates even higher and making it harder for housing. In Home Improvement retail: LOW was upgraded to Outperform at Bernstein and raised tgt to $282 from $252 saying they believe LOW will continue to deliver modest op margin expansion over the next 24 months.

·     In Chemicals: OLN upgraded from Sector Weight to Overweight at KeyBanc as views recent underperformance unwarranted after announced that CEO Scott Sutton will be departing the Company in 1H24, which resulted in a sharp selloff (-10.4% vs SPX +0.2%). UBS upgraded CTVA from Neutral to Buy and is increasing its 2024/25 EBITDA estimates ~3%/~5% as believes the market is now too negative earnings growth while downgraded FMC to Neutral from Buy and reduce EBITDA ests 6-7% in 2024-2025 saying the speed of June quarter volume declines caught FMC, the industry, and them off guard.

·     In Media: Last week, DIS pulled its access to ABC, ESPN, other channels from CHTR after failing to reach an agreement over new carriage terms. This morning, Disney urged customers of CHTR’s Spectrum cable service to consider switching to a live television option from Hulu as the media companies remain at odds over a new distribution deal. (Disney-owned channels have been blacked out on Charter’s service since Thursday). WBD cuts FY 2023 adjusted EBITDA forecast to $10.5B-$11B range from prior $11B-$11.5B citing earnings negatively impacted by strikes while raises FY free-cash flow expectations to at least $5B and expects to exceed $1.7B FCF for Q3.



·     ABNB +6%; as will replace NWL in the S&P 500 and Newell Brands will replace UVE in the S&P SmallCap 600.

·     BRC +11%; after reports Q4 results above analysts’ expectations ($1.04 vs. est. $0.90 on better revs $345.9M vs. $331.8M) and guides FY24 adj EPS $3.85-$4.10 topping the consensus est. $3.84 and approved a $100 million stock buyback program.

·     BX +3%; shares jumped as will replace LNC in the S&P 500, and Lincoln National will replace QURE in the S&P SmallCap 600.

·     HAL +2%; among leaders in the S&P dominated by strength in energy stocks on oil spike.

·     MTN +7%; after Stifel upgraded to buy from Hold with $268 tgt, moving above its 200-day MA today of $241.75 and 50-day MA $235.75.

·     NTAP +2%; upgraded to Positive from Neutral at Susquehanna and raise tgt to $100 from $62 saying Quarterly Product revenue has bottomed out and is poised to show Q/Q improvement.

·     NXGN +5%; after Bloomberg reported Thoma Bravo nears a deal for the company and could be announced as soon as this week while noting NextGen had attracted interest from other private equity firms http://tinyurl.com/58pkjyes

·     ORCL +1%; upgraded to Overweight from Equal Weight at Barclays and raised tgt to $150 saying sees a multi-year opportunity for solid growth at high margins driven by an ongoing positive mix effect of better SaaS and OCI outweighing the lower growth parts of the business.



·     CRMT -13%; after saying current Board President Doug Campbell to take over as CEO, effective Oct. 1, succeeding Jeff Williams while noting Q1 EPS declines to $0.65 from $2.07 y/y.

·     HE -9%; after being removed from the S&P MidCap 400 (replaced by RBC).

·     MANU -10%; after a report in the Mail that said the Glazer family is going to take the club off the market after failing to receive offers that match their asking price. http://tinyurl.com/25kj64tt

·     MGM -3% (WYNN, LVS); casinos declined after report Japan’s Osaka prefecture to postpone casino project opening and after casinos were temporarily shuttered overnight on Friday as a precaution due to the Typhoon Saola, which made landfall in Chinese province of Guangdong.

·     PHM -5%; Homebuilders (DHI, BZH, TOL, LEN, MTH, KBH) were broadly lower following another spike in both the US dollar and Treasury yields, pushing mortgage rates even higher

·     TSE -20%; after being removed from the S&P Smallcap 600 index.


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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