Morning Preview: September 26, 2022

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Early Look

Monday, September 26, 2022









S&P 500










U.S. futures are looking lower, adding to the prior two weeks losses as a surging dollar and rising Treasury yields coupled with higher interest rate expectations has sunk sentiment and put investors on the defensive. No bottom in sight thus far after stocks closed out a brutal week for financial markets last week as surging interest rates and foreign currency turmoil heightened fears of a global recession. The Dow fell 1.61%, the S&P 500 slid 1.72%, and the Nasdaq tumbled 1.80%. For the week, the S&P fell -4.64%, the Dow lost -3.99%, and the Nasdaq shed -5.07%. In Asian markets, The Nikkei Index plunged -722 points or 2.66% to 26,431, the Shanghai Index fell -37 points or 1.2% to 3,051, and the Hang Seng Index declined -78 points to 17,855. In Europe, the German DAX is down -0.25% to 12,256, while the FTSE 100 falls -0.8% to 6,960. Bitcoin rises +1.3% to 19,100.


Last week saw massive moves in Treasuries as the 2-yr yield rose 35.3bps to 4.212% this week, largest one week gain since June and up for eight consecutive weeks; highest yield since Friday, Oct. 12, 2007, and the yield is up 3.948 percentage points from its 52-week low of 0.264% hit Friday, Oct. 1, 2021. The 10-year yield rose 24.8bps this week to 3.695% this week, largest one week gain since April 8, 2022, and now up for eight consecutive weeks (longest win streak since May 2004 when rose 9-weeks) and the yield is up 2.353 percentage points from its 52-week low of 1.342% hit Friday, Dec. 3, 2021


In reaction to the Fed’s even more hawkish than expected outlook this past week, raising rates another 75-bps for a third straight meeting and guiding rates to above the 4%-4.5% level by end of year, Wharton professor Jeremy Siegel said Jerome Powell is making one of the biggest policy mistakes in the Fed’s 110-year history, and it could lead to a major recession. Goldman Sachs this weekend said, “our year-end S&P target is 3600, but “if investors price a recession, we expect 2023 EPS would decline by 11% and S&P 500 would fall to 3150.”


Meanwhile just absolute madness in the currency world as the US dollar as the Pound tumbled as much as 4.7% vs. the dollar to $1.0327 (but back around $1.07 now after talk of intervention) after falling 3.5% vs. the dollar to $1.085 on Friday, lowest level in over 35-years after UK tax plan news. Markets are now pricing in rate hikes of 175bps by November from the Bank of England. The euro fell to fresh 20-year lows after euro zone September composite PMI data Friday. Oil prices fell last week, dropping below levels seen prior to when Russian forces invaded Ukraine (7-months ago this past Saturday).

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -64.50 points, or 1.72%, to 3,693.49

·     The Dow Jones Industrial Average fell -483.83 points, or 1.61%, to 29,592.85

·     The Nasdaq Composite tumbled -198.88 points, or 1.80%, to 10,867.93

·     The Russell 2000 Index declined -42.72 points, or 2.48% to 1,679.59


Economic Calendar for Today

·     8:30 AM ET           National Activity index for Aug

·     10:00 AM ET         Boston Fed’s Susan Collins Speaks

·     10:30 AM ET         Dallas Fed Manufacturing Index for Sept

·     1:00 PM ET            US Treasury to sell $44B in 2-year notes

·     4:00 PM ET            Fed’s Mester Discusses Economic Outlook


Other Key Events:

·     Credit Suisse Education & Healthcare Conference, 9/26-9/30 in Brazil

·     Truist Energy Meeting Circuit, 9/26-9/27, in Houston, TX





















10-Year Note





Sector News Breakdown


·     Ford (F) mentioned positively in Barron’s this weekend saying even after its warning of parts shortages sent its shares tumbling this week, the stock is still worth owning, arguing the automaker stuck with its earlier full-year operating forecast

·     LI Auto (LI) now expects to deliver approximately 25,500 vehicles for the third quarter of 2022, revised from the previous vehicle delivery outlook of between 27,000 and 29,000 units; watch other Chinese auto EV makers NIO, XPEV on headlines

·     Lyft (LYFT) downgraded to Neutral from Buy at UBS and cut tgt to $16 from $50

·     Wynn Resorts (WYNN), Melco (MLCO) and Las Vegas Sands (LVS) shares jump after Macau aims to open to mainland Chinese tour groups in November for the first time in almost three years, the city’s chief executive, Ho Iat Seng, said on Saturday


Energy, Industrials and Materials

·     APA Corp. (APA), a globally diversified drilling company, trades at half the valuation of its peers but it could become hard to ignore given its bets in Suriname as well as a contract to sell LNG to European and Asian buyers, according to Barron’s.

·     EQT (EQT) and PG&E Corp. (PCG) will join the S&P 500 Index before trading opens on Oct. 3, according to S&P Dow Jones Indices. Duke Realty Corp. (DRE) and Citrix Systems Inc. (CTXS) will leave the index

·     L3Harris Technologies Inc. (LHX) won a $886.5 million US army satellite communications contract.

·     Diana Shipping (DSX) and Safe Bulkers (SB) downgraded to hold from buy at Jefferies and lowered dry bulk estimates to reflect the decline in dry bulk charter rates

·     U.S. oil and gas firms inch down premarket, tracking crude prices which fell for a second day on Monday as oil prices drop, Brent falls below $85 for first time since January



·     dLocal (DLO) downgraded to Underperform from Neutral at SMBC Nikko

·     Paymentus (PAY) downgraded to Neutral from Outperform at SMBC Nikko



·     Biogen Inc. (BIIB) and partner Eisai Co. (ESALY) are expected the announce trial results for their latest Alzheimer’s drug this fall, and success could bring a rapid turnabout for the drugmaker, whose shares have dropped 40% from their levels five years ago, said Barron’s. But a failure could increase pressure to sell off pieces of the company or pursue a more aggressive M&A strategy

·     Pfizer (PFE) and BioNTech (BNTX) submit application to U.S. FDA for emergency use authorization of omicron ba.4/ba.5-adapted bivalent vaccine booster in children 5 through 11 years of age


Technology, Media & Telecom

· Inc (AMZN) announced an expected sale for its loyalty-club shoppers, an event like its Prime Day summer marketing blitz that aims to boost holiday revenue and appeal to cost-conscious buyers facing economic turbulence

·     U.S. lawmakers and TikTok are hammering out a plan, under which the short-form video app would make changes to its data security and governance without requiring its parent firm, China’s ByteDance to sell it, the New York Times reported on Monday.

·     Adtran (ADTN) upgraded to Buy from Hold at Loop Capital


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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