Mid-Morning Look: September 18, 2023

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Mid-Morning Look

Monday, September 18, 2023





DJ Industrials




S&P 500








Russell 2000






U.S. stocks are choppy to start the new trading week, with market breadth weak, though major averages are up slightly overall into this week’s FOMC policy meeting on Wednesday, followed by a press conference with Fed Chairman Jerome Powell. No interest rate increase is expected this time around, but investors and analysts will look for language that indicates only one or two more hikes. In addition to the FOMC meeting midweek, markets also get the BOE, BOJ, SNB among other small central bank interest rate actions as well. Treasury yields edge higher with the 10-yr at 4.34% rise back to this year’s highs to start a week when the Fed is widely expected to keep rates unchanged and signal it remains dependent on data for its following moves. In the CME’s FedWatch tool, odds of a skip now reach 99%. Keeping rates steady again in November is priced at 69%. The Fed will also update its economic forecasts this week. Goldman Sachs economists said today they expect the median dots to keep indicating another hike. The 10-year yield trades at 4.337%, matching August’s settlement high, and the two-year is at 5.054%, back to March highs, while the dollar is flat and Bitcoin +2% above $27K. In data, U.S. builder-confidence index falls to five-month lows.


Economic Data

·     September NAHB Housing market index 45 (lowest since March) below consensus 50 and vs. 50 in August as index of current single-family home sales 51 versus 57 in August (previous 57) and index of home sales over next six months 49 versus 55 in August (previous 55).






WTI Crude















10-Year Note





Sector Movers Today

·     In Aerospace & Defense: JOBY said it plans to locate the co’s first scaled aircraft production facility in Dayton, Ohio as plans to invest up to $500 mln into development of facility, creating up to 2,000 jobs with plans to start hiring in coming months. LHX was upgraded to Overweight from Equal Weight at Wells Fargo and the firm upgraded LMT to Equal Weight saying thinks LHX numbers can start to move higher on AJRD accretion, with upside to its estimates if EACs recover. Also says government shutdown fears could provide an attractive entry point near-term for defense stocks. MRCY mentioned positively in Barron’s saying the defense contractor is suffering through growing pains, but new mgmt. has the chance to help the electronics maker mature.

·     Deutsche bank provides Q3 earnings preview for transport sector saying they expect this to be an ugly quarter on a headline basis as estimates 80% of the companies it previews to miss 3Q consensus expectations. DBAB projects a median miss of about 8% (CSX, NSC, UNP), with Rails and UPS missing by the most relative to prior expectations. The firm said the only two companies they project to beat are SAIA (+6% vs consensus) and ODFL (+2% vs consensus), which reflects the volume surge following Yellow’s bankruptcy.

·     In REITs: Shopping center REITs: Mizuho said they continue to see BRX as an attractive GARP story, upgrade KIM to Buy and as it sees more relative growth via the recently acquired RPT portfolio and opportunistic Albertsons capital and downgraded FRT to Neutral given what it sees as a less attractive GARP profile into FY24 with more debt refinancing and office lease-up headwinds. Overall, Mizuho said it is increasingly constructive on the Shopping Center REITs on what it sees as an incrementally more favorable risk adjusted GARP for the subsector into FY24. In Mortgage REITs: AGNC upgraded from Neutral to Buy at UBS and raised tgt to $11.50 saying as a pure-play Agency MBS REIT, AGNC should benefit from favorable market dynamics for the asset class over the medium to long term. NLY was also upgraded from Neutral to Buy at UBS with $24 tgt up from $21 saying as the largest Agency MBS focused mREIT, it should benefit as market dynamics for the asset class improve over the coming quarters.



·     AYX +3%; was upgraded to overweight from equal weight at Morgan Stanley saying the current valuation undervalues its growth and profit potential.

·     CVNA +5%; was upgraded to Neutral at Wedbush and raised price tgt to $48 from $40 as the recently completed debt exchange and improving profitability could drive upside in 3Q/4Q

·     DASH +3%; was upgraded to Buy from Neutral at Mizuho and raise tgt to $105 from $90 after running deep dive across all key metrics and said it feels confident that Gross-Order-Value (GOV) growth rate should outperform guidance and Street expectations in 2H23.

·     MU +1%; upgraded to Buy at Deutsche Bank with $85 tgt saying DRAM prices started to improve at least one quarter ahead of their expectation on the recent demand strength for AI servers, fueling the growth of HBM and DDR5.

·     RL +2%; was upgraded to Buy from Neutral at Guggenheim with $166 tgt.

·     VLO +2%; a top gainer in the S&P after authorized share repurchase of up to $2.5 bln late Friday and in general refiner strength (MPC also higher).



·     ARM -6%; after Bernstein initiated at Underperform and $48 tgt saying its carrying a premium on hopes that it will be a beneficiary of rising artificial intelligence adoption, but it is too soon to declare the company an AI winner.

·     CGC -12%; after reporting a private placement of as much as $50Mm w/certain institutional investors.

·     CLX -1%; said a cyberattack that was disclosed last month is disrupting operations and hurting the availability of the bleach and cleaning wipe maker’s products.

·     DCGO -9%; named COO Lee Bienstock as CEO on Friday after Anthony Capone resigned.

·     INCY -4%; after the FDA approved a GSK blood-cancer treatment, Ojjaara, late Friday that will compete with Incyte’s Jakafi.

·     MSGE -4%; after files to sell 7.15M shares of Class A common stock for holders.

·     NTAP -2%; downgraded to Market Perform from Outperform at William Blair citing doubts over NTAP’s ability to achieve sustained high-single-digit revenue growth and are increasingly questioning the company’s ability to execute in the (cloud) space.

·     NVO -3%; after reports that U.S. drug regulators had recently issued a report detailing quality control lapses at the group’s Clayton, North Carolina plant https://tinyurl.com/2s3jymu5

·     PTCT -6%; extended last week declines, downgraded to Neutral from Buy at Citigroup following the CHMP’s negative opinion on Translarna, as sees limited opportunities to drive upside n-t.

·     VFC -4%; downgraded to Neutral from Overweight at Piper Sandler and cut tgt to $20 from $28 as now believes the Vans turnaround will take longer than originally anticipated.


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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