CAPIS Morning Note – 05/17/23: Stocks Rebound as Rollercoaster Action Continues Over Debt Ceiling Talks

Overnight Summary: The S&P 500 closed Tuesday at 4109.60 lower by -0.64% from  Monday at 4136.28 up 0.30%. The overnight high of 4140 was hit at 7:15 a.m. EDT. The low was hit at 4122 at 3:55 a.m. EDT, a range of ~18 points high to low which is a low-vol night.  At 7:15 a.m….

Overnight Summary: The S&P 500 closed Tuesday at 4109.60 lower by -0.64% from  Monday at 4136.28 up 0.30%. The overnight high of 4140 was hit at 7:15 a.m. EDT. The low was hit at 4122 at 3:55 a.m. EDT, a range of ~18 points high to low which is a low-vol night.  At 7:15 a.m. EDT, the current price was 4140 which is 0.41% and 17 points. The 10-day average of the overnight range is 24.2.

Earnings Out After The Close: 

  • Beats: KEYS +0.17, AGYS +0.04, DOCS +0.03, NXGN +0.02 of note
  • Flat: None of note.
  • Misses: KD (2.80) of note.

Unusual Options Activity:

Daily Screen in Erlanger Chartroom that highlights unusual Call and Put Options activity in the S&P 500.  It looks for volume outliers relative to the Open interest in Calls or puts.  Usually, the stock price activity reflects the outlier situation (earnings/buyout/announcement), but once in a while, you can uncover stocks prior to a pop or drop.

 

Capital Raises:

  • IPOs Priced or News: None of note.
  • New SPACs launched/News:
    • Graf Acquisition Corp. IV (GFOR) Currently Has Proxies from More Than 65% of its Stockholders to Approve Extension.
  • Secondaries Priced:
    • AKRO: Prices offering of 5,238,500 shares of common stock at $42.00 per share.
    • AZEK: Announces pricing offering of 14 million shares of Class A common stock by an entity affiliated with Ares Management Corporation and Ontario Teachers’ Pension Plan Board and concurrent share repurchase.
    • CISO: Announces Pricing of $4.0 Million Registered Direct Offering.
    • CWD: Announces Pricing of Upsized Initial Public Offering.
    • HESM: Prices secondary offering of 11.1 million Class A shares at $27.00 per Class A share.
    • OSW: Prices secondary offering of 9.0 million shares of common stock at $10.00 per share.
    • RE: Prices offering of 3.6 million shares of common stock at $360.00 per share.
  • Notes Priced of note:
    • PFE: Prices $31,000,000,000 Debt Offering.
    • VECO: Announces Pricing of Private Offering of $205 Million of 2.875% Convertible Senior Notes.
  • Common Stock filings/Notes:
    • ANIP: Closing of Public Offering of Common Stock Including Full Exercise of Underwriters’ Option to Purchase Additional Shares.
    • AZEK: Announces Secondary Public Offering of Class A Common Stock and Concurrent Share Repurchase.
    • EVGO: Announces Offering of $125.0 million of shares of common stock.
    • GTES: Announces secondary offering of 22,500,000 ordinary shares.
    • HESM: Announces Secondary Public Offering of Class A Shares.
    • INTA: Announces Proposed Public Offering of Common Stock to sell 2.0 million shares.
    • MAXN: Announces Public Offering of Ordinary Shares of an aggregate of 6.8 million ordinary shares.
    • NYCB: FDIC Receiver announces secondary offering of 39.03 million shares. (MarketWatch)
    • OSW: Announces offering of 8 million common shares.
    • RE: Announces Public Offering of 3,000,000 Common Shares.
    • SEAT: Secondary Offering of Class A Common Stock.. 16,000,000 shares. (Citi and MS Bookmanagers)
    • SLRX: Closing of $6 Million Private Placement Priced At-the-Market Under Nasdaq Rules.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • INTA: Files for 47,816,280 shares of its common stock by selling shareholders.
    • MPLN: Files for 21,588,652 shares of common stock by selling shareholders.
    • TGLS: Announces Proposed Secondary Offering of Ordinary Shares by Energy Holding Corporation.
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings:
    • INTA: Filed Form S-3ASR.. Mixed Shelf.
    • MAXN: Filed Form F-3ASR.. Mixed Shelf.
    • MDGS: Filed Form F-3.. $30 Million Mixed Shelf.
    • TGLS: Files mixed shelf securities offering
  • Debt/Credit Filing and Notes: None of note.
  • Tender Offer: None of note.
  • Convertible Offering & Notes Filed:
    • INFN: Announces the Repurchase of Approximately $83.9 million of Convertible Senior Notes Due 2024 using Proceeds from the Reopening of Convertible Senior Notes Due 2028.
    • VECO: Proposed Private Offering of $200 Million of Convertible Senior Notes.

Capital Raise Summary From The TradeXchange, bringing traders and investors real time news and Squawk Box, and other sources.

News After The Close:

  • After Hours: 
    • Trading Up: KEYS +8%, WAL +7%, PDLB +4%, XFOR +4% of note.
    • Trading Down: EVGO -13%, SEAT -10%, AGYS -10%, DOCS -8%, KD -7%, VECO -6%, OSW -6%, MAXN -4% of note.
  • News After The Close:
    • Tesla’s (TSLA) Elon Musk expects “a year of difficulty” for the global economy. (MarketWatch)
    • Musk Says He Has No Plans to Step Down as Tesla (TSLA) CEO.
    • President Biden, Speaker McCarthy Voice Cautious Optimism on Debt Deal After Talks. (Bloomberg)
    • NASDAQ is leading the Dow by the widest margin since 1991 as blue-chip gauge erases 2023 gain. Is that a good sign? (MarketWatch)
    • L3Harris (LHX) awarded $8.12 billion U.S. Air Force contract modification.
  • Exchange/Listing/Company Reorg and Personnel News:
    • NYSE to Suspend Trading Immediately in Audacy, Inc. (AUD) and Commence Delisting Proceedings.
    • Caravelle International Group (CACO) Announces Receipt of Nasdaq Deficiency Notice.
    • DocuSign (DOCU) appoints Blake Grayson as CFO.
    • Editas Medicine (EDIT) announces appointment of Erick Lucera as Executive Vice President and CFO.
    • LYFT: Names Erin Brewer As Chief Financial Officer. (MarketWatch)
    • Middlesex Water Company (MSEX) President and CEO Announces Retirement.
    • PulteGroup (PHM) names Matthew Koart as COO.
    • Spectrum Pharmaceuticals (SPPI) Regains Compliance with Nasdaq Minimum Bid Price Requirement.
    • Torrid (CURV) Announces Resignation of Chief Financial Officer/Chief Operating Officer.
    • WE Names David Tolley To Serve As Interim CEO. (MarketWatch)
    • WesBanco Inc (WSBC) announces that its CEO plans to retire.
  • Buyback Announcements or News:
    • AZEK (see Common Stock filings above)
    • Ponce Financial Group, Inc. (PDLB) Announces share repurchase program of up to 1,235,000 shares of common stock.
    • ProPetro (PUMP) Announces $100 Million Share Repurchase Program.
    • Stock Yards Bancorp (SYBT) announces that its Board of Directors has approved an extension of the Company’s Stock Repurchase Plan’s expiration date to May 22, 2025.
    • ServiceNow (NOW) Announces Plans to Initiate First-Ever Share Repurchase Program.
    • SONY Approves 25 million share repurchase program
    • Star Bulk Carriers Corp. (SBLK) Renews Share Repurchase Program of up to $50.0 Million.
  • Stock Splits or News:
    • AULT announced 1/300 rs.
  • Dividends Announcements or News: 
    • CMI Goes ex div tomorrow for $1.57.
    • Northrop Grumman (NOC) increases quarterly dividend 8% to $1.87 per share.
    • Star Bulk Carriers Corp. (SBLK) Declares Quarterly Dividend of $0.35 per Share.

What’s Happening This Morning: Futures value reflects the change with fair value.

S&P 500 +13, Dow Jones +124,  NASDAQ +37, and Russell 2000 +7. (as of 7:56 a.m. EDT).  Asia is higher ex the ASX 200 and Europe is lower ex Germany. VIX Futures are at 20.35 from 20.20 yesterday.  Gold and Silver higher with Copper lower. WTI Crude Oil and Brent Crude Oil higher with Natural Gas higher as well. US 10-year Treasury sees yields at 3.52% from 3.478% yesterday. The U.S. Dollar is higher versus the Euro, higher versus the Pound and higher against the Yen. Bitcoin is at $26,722 from $27,093 yesterday, lower by -0.96%.

Sector Action – (1/3/6/12/YTD Updated Weekly with Monday release):  

  • Daily Positive Sectors: Communication Services of note.
  • Daily Negative Sectors: Real Estate, Utilities, Energy, Basic Materials, Industrials, Financial, Consumer Defensive, Healthcare of note.
  • One Month Winners: Communication Services, Consumer Defensive, Technology of note.
  • Three Month Winners: Communication Services, Technology, Consumer Defensive of note.
  • Six Month Winners: Communication Services, Technology, Consumer Cyclical of note.
  • Twelve Month Winners: Technology, Industrials, Healthcare of note.
  • Year to Date Winners:  Communication Services, Technology, Consumer Cyclical of note.

U.S. stocks closed lower on Tuesday, with losses deepening into the closing bell and the Dow losing its grip on gains for the year, now down -0.41%. The Dow Jones Industrial Average closed about 336 points lower, or 1%, ending near 33,012. The S&P 500 shed -0.6% and the Nasdaq Composite Index closed 0.2% lower, with all three indexes ending near the session lows.  For the year, the Dow was down -0.41% through Tuesday, while the S&P 500 was still up 7% and the Nasdaq was 17.9%.  (MarketWatch – edited by QPI)

Upcoming Earnings Of Note: (From Chartroom Software – sorted by market cap, highest to lowest with most visible names)

  • Wednesday After the Close: 

  • Thursday Before the Open:

Earnings of Note This Morning:

  • Beats: WIX +0.75, TGT +0.29, TGI +0.15, DT +0.09, TJX +0.05, WKME +0.03 of note.
  • Flat: None of note.
  • Misses: RSKD (0.03) of note.
  • Still to Report: JACK of note.

Guidance:

  • Positive Guidance: KEYS, NXGN, WIX, LPG, DT of note.
  • Negative Guidance: DOCS, KD, TGT, WKME, TJX of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: WAL +10%, KEYS +7%, WIX +6%, AEG +5% of note.
  • Gap Down: DOCS -11%, OSW -8%, SEAT -8%, AGYS -7%, EVGO -6%, KD -6%, HESM -6%, TGLS -5%, MAXN -5%, INTA -5%, VECO -5% of note.

Insider Action: No stock sees Insider buying with dumb short selling.  CPE, HHC sees Insider buying with smart short sellers.

Rags & Mags: Repeated stories from prior days never listed, i.e. “rehashed news”. Sorted by Global, U.S. and stock specific.

  • 5 things to know before the stock market opens. (CNBC)
  • 5 Things You Need to Know to Start Your Day. (Bloomberg) 
  • Bloomberg Lead Story: Debt Limit Talks To Intensify As Biden Set To Depart For Japan. (Bloomberg)
  • Bloomberg  Most Shared Story: A 32 Year Old Nears Billionaire Status By Using AI to Broker Japan Mergers. (Bloomberg)
  • Hopes for debt breakthrough lift U.S. equity futures: Market Wrap. (Bloomberg)
  • Quad leaders to meet on sidelines during G-7 as Biden shortens Asia visit. (Bloomberg)
  • President Biden cuts short Asia trip, to return on Sunday to deal with Debt Ceiling negotiations. (NYT)
  • Western Alliance (WAL) deposit growth drive Regional Bank rally. (Reuters)
  • U.S. facing acute drug shortage on cancer and other diseases. (NYT)
  • Mortgage demand drops as interest rates hit a two month high. (CNBC)
  • UBS expects a $17 billion hit on Credit Suise deal due to “hasty due diligence”. (CNBC)
  • Target (TGT) posts first quarter beat but sees consumer tight with money. (Yahoo Finance)

Moving Average Update:

  • Score throttles back to 48% from 77%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 8:00 a.m. EDT
    • The President honors 2021-2022 Medal of Valor recipients, 9:30 a.m. EDT
    • The President departs the White House en route to Joint Base Andrews, 11:25 a.m. EDT
    • The President departs Joint Base Andrews en route to Anchorage, Alaska, 11:45 a.m. EDT
    • The President arrives in Anchorage, Alaska (2:25 PM Local), 6:25 p.m. EDT
    • The President departs Anchorage, Alaska en route to Hiroshima, Japan (3:55 PM Local), 7:55 p.m. EDT

Economic:

  • MBA Mortgage Applications 7:00 a.m. EDT
    • U.S MBA 30-YEAR Mortgage Rate actual: 6.57% VS 6.48% previous
    • MBA Mortgage Applications: Composite: -5.7%, Purchase: -4.8%, ReFi: -7.7%
    • U.S MBA Mortgage Application (WOW) actual: -5.7% VS 6.3% previous
  • April Housing Starts are due out at 8:30 a.m. EDT and are expected to come in 1,405,000 from 1,420,000.
  • EIA Petroleum Report 10:30 a.m. EDT

Federal Reserve / Treasury Speakers: None of note.

M&A Activity: None of note.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • BAC Transportation Airlines and Industrials Conference
    • Barclays Emerging Payments and FinTech Forum (05/17/23-05/18/23)
    • BMO Global Farm to Market Conference (05/17/23-05/18/23)
    • Citi APAC Healthcare Conference 2023 (05/17/23-05/19/23)
    • Piper Sandler Spring Biopharma Symposium 2023 (05/17/23-05/18/23)
    • Jefferies HCM Conference
    • RBC Capital Markets Future of Water Conference 2023
    • Wells Fargo Financial Services Investor Conf
      •  Previously posted and ongoing conferences:
        • Bank of America Global Metals, Mining and Steel Conference. (05/15/23-05/19/23)
        • D.A. Davidson Annual Financial Institutions Conference (05/15/23-05/17/23)
        • Credit Suisse Renewables and Utilities Conference (05/16/23-05/17/23)
        • JP Morgan Homebuilding & Building Products Conference (05/16/23-05/17/23)
        • MoffettNathanson Technology Media and Telecom Conference (05/16/23-05/18/23)
        • Needham Technology & Media Conference (05/16/23-05/18/23)
        • RBC Global Healthcare Conference (05/16/23-05/17/23)
        • Goldman Sachs Global Consumer Conference 2023
  • Top Shareholder Meetings: ARW, CB, CLF, DB, EXPI, FL, FYBR, HAL, HES, HIG, HST, HTZ, INVH, KBR, LUV, MKL, MTRN, MVIS, NOC, PPL, RDN, ROST, TAP
  • Fireside Chat: REI
  • Investor/Analyst Day/Calls: AAON, BB, CPE, DAL, LNTH, NFLX, PAVM, PRPO, VLD
  • Update: None of note.
  • R&D Day: None of note.
  • Company Event: None of note.
  • Industry Meetings:
    • ASGCT
    • MicroCap Rodeo
    • Payroll Congress Convention
      • Previously posted and ongoing conferences:

Top Tier Sell-side Upgrades & Downgrades:

The recommendations listed below in this “Upgrade/Downgrade” section are compiled from what we believe are Tier I, II and III firms. Recommendations posted are taken from a variety of sources each day and we only post upgrades or significant initiations as well as downgrades to underweight or sell. The purpose of this posting it to make the reader aware of market moving recommendations. None of these recommendations should be interpreted as actual recommendations from CAPIS or its employees.

Today’s Upgrades and Downgrades:

Previous Day’s Upgrades and Downgrades: