Morning Preview: December 15, 2023

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Early Look

Friday, December 15, 2023









S&P 500










Global stocks markets/futures continue to push higher with 52-week highs for the S&P 500 (less than 2% from record high of 4,796.56 on 1/3/22), Nasdaq Composite, Russell 2000, and Dow Jones Industrials (record highs) as the S&P 500 has risen 3.3% this month thru Thursday’s close, which followed and 8.9% gain in November, its best month of 2023. What’s on tap today, well “triple witching” option expiration (options tied to single stocks, ETFs and indexes will expire, alongside index-tracking futures contracts), which ties in with the rebalancing of the S&P 500 and Nasdaq-100. The Fed “pivot” on interest rates to forecast substantial cuts in 2024 on Wednesday has changed the game thus far for U.S. stocks, boosting major averages further as the S&P is on track for its 7th straight week of gains and up about 23% YTD, while the Nasdaq leads up 41% YTD in what has been a monstrous year for technology and communications. More data points today and massive expiration of options today, but at what point does this overbought market take a breather? In Asian markets, The Nikkei Index rose 284 points to 32,970. the Shanghai Index fell -16 points to 2,942, and the Hang Seng Index jumped 390 points to 16,792. In Europe, the German DAX is up 60 points to 16,812, while the FTSE 100 -40 points to 7,609.


Some interesting data points: RyanDetrick tweets: “The S&P 500 will likely be up 7 consecutive weeks by the end of tomorrow. Since 1990, that has happened 10 other times. Also, bespoke invest tweets: “the small-cap Russell 2,000 made a new 52-week high today after hitting a 52-week low just 48 days ago. That’s the shortest turnaround time in the index’s history to go from 52-week low to 52-week high dating back to the 1970s!”


Market Closing Prices Yesterday

·     The S&P 500 Index jumped 12.46 points, or 0.26%, to 4,719.55.

·     The Dow Jones Industrial Average rose 158.11 points, or 0.43%, to 37,248.35.

·     The Nasdaq Composite gained 27.60 points, or 0.19%, to 14,761.56.

·     The Russell 2000 Index advanced 53.01 points, or 2.72% to 2,000.51.


Economic Calendar for Today

·     8:30 AM ET                  Empire Manufacturing for December…est. 2.0 (prior 9.1)

·     9:15 AM ET                  Industrial Production M/M for November…est. +0.3%

·     9:15 AM ET                  Capacity Utilization for November…est. 79.1%

·     9:45 AM ET                  S&P Global Manufacturing PMI, Dec-Flash…est. 49.3

·     9:45 AM ET                  S&P Global Services PMI, Dec-Flash…est. 50.6

·     1:00 PM ET                   Baker Hughes Weekly rig count data


Earnings Calendar:

·     Earnings Before the Open: DRI





















10-Year Note





World News

·     The People’s Bank of China offered commercial lenders a net 800 billion yuan ($113 billion) in one-year loans Friday—a record cash injection into the banking system through its one-year policy.

·     China retail sales rose 10.1% y/y in November, topping the 7.6% growth marked last month but below the 12.9% consensus estimate; China’s retail sales dropped from the previous month, recording a 0.06% contraction m/m.

·     China Industrial production climbed to 6.6% on year from 4.6% in October, topping the 5.9% increase expected.

·     UK consumer confidence rose two points to minus 22, its highest level since September.

·     The Eurozone Composite PMI Output Index fell to a 2-month low of 47.0 from 47.6 in November.


Sector News Breakdown


·     Costco (COST) announces a special cash dividend of $15 per share; Q1 adj EPS $3.58 vs. est. $3.42; Q1 US comp sales ex-gas, FX +2.6%, vs. est. +3.48%; Q1 total Co. comp sales incl gas, FX +3.8%, vs. est. +4.3%; Q1 revs $57.8B vs. est. $57.72B; Q1 sales rose 6.1% to $56.72B vs. est. $56.69B; Membership fees $1.08B, +8.2% y/y, vs. est. $1.09B.

·     Hershey (HSY) downgraded to Neutral from Buy at Bank America as sees limited upside potential in FY24.

·     Lennar Corp. (LEN) Q4 adj EPS $5.17 vs. est. $4.60; Q4 revs rose 7.8% to $10.97B vs. est. $10.34B; Q1 net new orders rose 32% y/y to 17,366 vs. est. 16,840 and sees Q1 new orders 17,500-18,000; Q1 Deliveries increased 19% to 23,795 homes; Gross margin on home sales of 24.2% vs. est. 24.4%.

·     Scholastic Corp. (SCHL) Q2 adj EPS $2.45 vs est. $2.65 on revs $562.6Mm vs est. $625.23Mm; guides FY revs in-line to slightly below prior year vs previous +3-5% and est. +3.82%, sees FY adj EBITDA $165-175Mm vs prior $190-200Mm and est. $196.91Mm.


Energy, Industrials and Materials

·     Air Lease Corporation (AL) announces delivery of one new Airbus a321-200neo and one new Airbus a330-900neo aircraft to SunClass airlines.

·     L3Harris Technologies (LHX) upgraded to Buy from Hold at Deutsche Bank.

·     Nucor (NUE) increases the cash dividend to $0.54 per share.

·     Quanex (NX) Q4 adj EPS $0.95 vs est. $0.70, adj EBITDA $50.8Mm vs est. $43.46Mm on sales $295.5Mm vs est. $291.01Mm; not providing FY24 guidance currently.

·     U.S. Steel (X) guides Q4 adj EPS $0.20-$0.25 vs. est. $0.19; sees Q4 adjusted EBITDA roughly $250M; says looking ahead, domestic steel markets are improving, customer demand is growing, and spot selling prices are increasing; Q4 mini mill segment’s adjusted EBITDA is expected to be lower than Q3.



·     Fed discount-window loans $2.17B in week ended Dec. 13 after $1.96B; Fed bank term funding loans $123.8B in week ended Dec. 13 after $121.7B

·     Capital One Financial (COF) said Nov domestic credit card net charge-offs rate 5.19% versus 5.08% in Oct; 30+ day performing delinquencies rate for domestic credit card 4.55% at Nov end versus 4.48% at Oct end; and 30+ day performing delinquencies rate for auto 6.12% at Nov end versus 6.06% at Oct end.

·     JP Morgan (JPM) credit card delinquency rate 0.99% at Nov end vs 0.98% at Oct end; and credit card charge-off rate 1.75% in Nov vs 1.65% in October.

·     Webster (WBS) said it will acquire Ametros for $350M in cash, subject to customary adjustments. The acquisition is anticipated to be over 2% accretive to FY25 consensus estimates, generate an IRR of over 25%, and has a five-year earn-back of tangible book value dilution.



·     AADI Biosciences (AADI) shares tumbled over -40% after saying its experimental cancer therapy in a mid-stage study showed a 26% overall response rate, the proportion of patients whose cancers disappeared or shrinks.

·     Verrica Pharmaceuticals (VRCA) said its development and commercialization partner, Torii Pharmaceutical, reported positive top-line results from its Phase 3 trial of its potential treatment for molluscum contagiosum in Japan.


Technology, Media & Telecom

·     AMD (AMD), Micron (MU) and Macom (MTSI) all upgraded to buy, and Intel (INTC) upgraded to Neutral in semiconductors at Bank America.

·     ATN International (ATNI) expands stock buyback to $25M, boosts dividend by 14%.

·     US listed China stocks (BABA, JD, PDD, etc.) higher after the People’s Bank of China offered commercial lenders a net 800 billion yuan ($113 billion) in one-year loans Friday.


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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