CAPIS Morning Note – 09/07/23: Interest Rate Rise Weighs On Stocks, Where Good News is Bad News. Stocks Lower.

Overnight Summary: The S&P 500 closed Wednesday lower by -0.70%  at 4465.48 from Tuesday lower by -0.42% at 4496.83. Overnight ranges saw the high hit at 4471.75 at 8:20 p.m. EDT while the low was hit at 4452.50 at 4:30 a.m. EDT. The range overnight was 19 points. The 10-day average of the overnight range is…

Overnight Summary: The S&P 500 closed Wednesday lower by -0.70%  at 4465.48 from Tuesday lower by -0.42% at 4496.83. Overnight ranges saw the high hit at 4471.75 at 8:20 p.m. EDT while the low was hit at 4452.50 at 4:30 a.m. EDT. The range overnight was 19 points. The 10-day average of the overnight range is at 19.50 from 20.30 down from a peak of 31.50 on 8/15.  The average for May-August average was 21.10 from 18.81 in May through July and the August average was 26.21. Currently, the S&P 500 is lower by -16 points which is -0.36% at 7:25 a.m. EDT.

Earnings Out After The Close: 

  • Beats: GME +0.11, CVGW +0.10, AEO +0.09, AI +0.08, CXM +0.05, PATH +0.05, BASE +0.05, INTA +0.03, PHR +0.03 of note.
  • Flat: YEXT of note.
  • Misses: CHPT (0.22), SPWH (0.11), VRNT (0.09), CURV (0.05), PLAY (0.01), DSGX (0.01) 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:
    • Solowin Holdings (SWIN) Announces Pricing of Initial Public Offering.
  • New SPACs launched/News:
    • InterPrivate III Financial Partners Inc. (IPVF) Announces Extension of Deadline to Complete Initial Business Combination.
  • Secondaries Priced:
    • AMKR: Prices secondary offering of 10 million shares of common stock at $24.00 per share by the Kim Family.
    • CRGY: Prices offering of 11 million shares of common stock at $12.25 per share.
    • LZ: Prices secondary offering of 14 million shares of common stock at $10.00 per share.
    • NTRA: Pricing of $250 Million Follow-On Offering @$55. (MS, GS, TD and Piper bookmanager)
    • ROL: Prices secondary offering of 38,724,100 shares of its common stock at $35.00 per share: Offering of Exchangeable Senior Unsecured Notes.
  • Notes Priced of note:
    • CSGS: Prices offering of $375.0 million of 3.875% Convertible Senior Notes due 2028.
    • LSXMA: Priced and agreed to sell to initial purchasers in a private offering $1.0 billion aggregate original principal amount of its 2.375% exchangeable senior debentures due 2053.
    • MMC: Pricing of $1.6 Billion Senior Notes Offering.
    • PR: Pricing of $500.0 Million Private Placement of 7.000% Senior Notes Due 2032.
  • Common Stock filings/Notes:
    • BROS: Proposed Public Offering of Class A Common Stock.. $300 million of shares. (BAC, JPM and Jefferies bookmanager) (see Mixed Shelf too)
    • CRGY: Public Offering of Class A Common Stock — 10 Million shares. (WFC, KKR, Evercore and RJ Bookmanagers)
    • LZ: Secondary Offering of Shares of Common Stock and Concurrent Stock Repurchase. 13 Million shares. (JPM Bookmanager) (see Selling shareholder too)
    • NTRA: Launches Proposed Follow-On Offering.. $250,000,000 of shares. (MS, GS, TD and Piper bookmanager)
    • PROF: To issue and sell from time to time up to US$30,000,000 of common shares in the capital of the Company.
    • ROL: Announces Launch of Secondary Public Offering of Common Stock.
    • TRNO: Equity distribution agreements for up $500 Million.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • AMKR: Announces Secondary Offering of 10 million Shares of Common Stock by the Kim Family.
    • GRBK: Announces Launch of Secondary Offering of Shares of Common Stock by Selling Stockholder.
    • LZ: Filed Form S-3ASR.. 38,012,988 Shares of Common Stock Offered, from time to time, by the Selling Stockholder.
    • PET: Up to 29,554,343 Shares of Common Stock Up to 3,695,564 Warrants to Purchase Common Stock Offered by Selling Securityholders. (see Mixed Shelf too)
  • Private Placement of Public Entity (PIPE):
    • ADTX: Closing of $10.0 Million Private Placement Priced At-The-Market under Nasdaq Rules.
  • Mixed Shelf Offerings:
    • BROS: Filed Form S-3ASR Mixed Shelf.
    • PET: Filed Form S-3.. $50 Million Mixed Shelf.
    • RDW: Filed Form S-3.. $400,000,000 Mixed Shelf.
  • Debt/Credit Filing and Notes:
    • AEIS: Announces Proposed Offering of $500 Million Convertible Senior Notes.
    • OFC: Proposed Private Placement of $300 Million of Exchangeable Senior Notes.
    • VSH: Proposed Offering of $600 Million of Convertible Senior Notes.
  • Tender Offer: None of note.
  • Convertible Offering & Notes Filed: None of note.

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

News After The Close and Over the Holiday:

  • After Hours: 
    • Trading Up: WRK +11%,CVGW +11%, CRVS +10%, GME +6%, AGX +5%, PATH +5%, BKCC +5% of note.
    • Trading Down: SPWH -21%, VRNT -13%, YEXT -13%, CHPT -11%, PHR -10%, LZ -9%, CURV -9%, AMKR -8%, BB -8%, CRGY -7%, AI -6%, BROS -5%, , ROL -5%, AEIS -4%, INTA -4% of note.
  • News Items After the Close:
    • Stocks making the biggest moves after hours: GME, AEO, CHPT, AI, VRNT, BROS (CNBC)
    • Paper Companies Near Big Merger Deal. [WRK and SMFKY] (WSJ)
    • UiPath (PATH) stock rises as earnings beat and buyback outweigh conservative outlook. (MarketWatch)
    • ChargePoint’s (CHPT) stock slumps on escalating quarterly loss. (MarketWatch)
    • Instacart Prepares to Set IPO Price Range as Early as Monday. (Bloomberg)
    • C3.ai’s (AI) stock falls 8% despite solid quarter and guidance. (MarketWatch)
    • Texas reports 30,873 new COVID cases this week, an increase of 14% from last week.
    • AT&T (T) Reports Confident In Full-year Guidance, Including Free Cash Flow Of Better Than $16B And Adjusted EBITDA Growth Of 3+ Percent – Says Remains On Track With All Of Its 5G And Fiber Network Expansion Commitments.
    • IBM notifies Janssen CarePath customers and users of an incident involving unauthorized access to personal info.
    • White House confirms it is canceling all remaining oil and gas leases issued under the previous administration in the Arctic Refuge. (Release)
    • DEUTSCHE: “.. a permanent end to Charter’s (CHTR) distribution of Disney’s (DIS) channels would be a more negative outcome for DIS than for CHTR.. We expect Disney to concede its (aggressive) demand for increased carriage minimums and potentially its demand for a longer duration agreement.” (Carl Q)
  • Exchange/Listing/Company Reorg and Personnel News:
    • Alignment Healthcare (ALHC) announces return of Dr. Hyong (Ken) Kim as its Chief Medical Officer.
    • Bit Brother Limited (BTB) Announces Nasdaq Ticker Symbol Change to “BETS”.
    • DRTT to Voluntarily Delist from Nasdaq Exchange; Public Trading on Toronto Stock Exchange Will Continue.
    • Envirotech Vehicles (EVTV) Announces Nasdaq Acceptance of its Request for an Extension to File its Delinquent Filings.
    • Farmer Brothers (FARM) announces transition of chief executive officerDeverl Maserang to depart upon appointment of successor.
    • International Paper (IP) Announces CEO Succession Plan.
    • Mid-America Aptmt (MAA) announces that CFO Albert Campbell will retire.
    • Motus GI (MOTS) Appoints Medical Device Industry Veteran Scott Durbin to its Board of Directors– David Hochman and Darren Sherman resign from Motus Board of Directors to focus on their executive obligations.
    • Semtech (SMTC) to delay 10-Q filing.
    • Trinity Capital (TRIN) names Kyle Brown as CEO.
  • Buyback Announcements or News:
    • DuPont (DD) Completes $3.25 Billion Accelerated Share Repurchase Transaction; Launches New $2 Billion Accelerated Share Repurchase Transaction.
    • PATH: Announces $500 million stock repurchase program.
    • PLAY: Company Increases Remaining Share Repurchase Program Authorization to $200 Million.
  • Stock Splits or News:
    • GROM trading reverse split price.
    • RVYL trading reverse split price.
    • Vacasa (VCSA) Announces Reverse Stock Split.
  • Dividends Announcements or News:  
    • NAC Re Corp (NRC) declares a special dividend of $1.00/share
  • Insider Sales Of Note: None of note.

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

S&P 500 -18, Dow Jones -30 ,  NASDAQ -107 , and Russell 2000 -5 .  (as of 7:57 a.m. EDT).  Asia is lower while Europe is higher this morning ex Germany. VIX Futures are at 15.63 from 15.07 yesterday.  Gold higher while Silver and Copper are lower this morning. WTI Crude Oil and Brent Crude Oil lower with Natural Gas higher. US 10-year Treasury sees yields at 4.276% from 4.244% yesterday. The U.S. Dollar is higher versus the Euro, higher versus the Pound and lower against the Yen. Bitcoin is at $25,703 from $25,750 yesterday, higher by 0.15%.

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

  • Daily Positive Sectors: None of note.
  • Daily Negative Sectors: Technology, Consumer Cyclical, Communication Services, Industrials, Basic Materials, Healthcare of note.
  • One Month Winners: Energy, Communication Services, and Technology of note.
  • Three Month Winners: Energy, Consumer Cyclical, Industrials of note.
  • Six Month Winners: Communication Services, Technology, Consumer Cyclical of note.
  • Twelve Month Winners: Technology, Communication Services, Industrials,  of note.
  • Year to Date Winners:  Technology, Communication Services, Consumer Cyclical of note.

Stocks slumped on Wednesday after investors received a fresh sign that the U.S. economy could be revving up, fanning inflation fears.  Major indexes all fell, led by the tech-focused Nasdaq Composite’s 1.1% slide. Some of the year’s best performers suffered the most: Shares of Nvidia (NVDA) and Apple (AAPL) both dropped more than 3%. The losses, however, were broad-based, with everything from shares of real-estate companies to manufacturers and banks falling. Nine of the S&P 500’s sectors finished in the red, dragging the benchmark index down 0.7%. The Dow industrials lost 0.6%, or 199 points. (WSJ – edited by QPI)

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

  • Thursday After the Close: 

  • Friday Before the Open:

Earnings of Note This Morning:

  • Beats: SAIC +0.42, GIII +0.38, DOOO +0.19, DBI +0.15, KFY +0.08 of note.
  • Flat: None of note.
  • Misses: ABM (0.10) of note.
  • Still to Report: TTC of note.

Guidance:

  • Positive Guidance: CXM, YEXT, INTA, SAIC of note.
  • Negative Guidance: BASE, VRNT, SPWH, CURV, CHPT, BB, DOOO, ABM of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: KOD +15%, WRK +11%, CVGW +10%, GME +6%, AMRX +5%, PATH +5%, BASE +4%, BKCC +4%, HCI +4% of note.
  • Gap Down: SPWH -24%, VRNT -17%, YEXT -15%, CURV -12%, BB -11%, AMKR -11%, CHPT -10%, AI -10%, LZ -9%, CRGY -8%, PHR -8%, PLAY -7%, ROL -5%, BROS -5%, SMTC -4%, NTRA -4%, AEIS -4% of note.

Insider Action: PCB sees Insider buying with dumb short selling.   No stock 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.

  • Stocks making the biggest moves premarket: AAPL, WRK, MCD, BROS, PLAY, CHPT, AI, ROKU, VRNT (CNBC)
  • 5 Things to Know Before the Stock Market Opens. (CNBC)
  • 5 Things You Need to Know to Start Your Day. (Bloomberg)
  • Bloomberg Lead Story:  China’s Credit Wreck Exposes Governance Failings to the World. (Bloomberg)
  • Bloomberg Most Shared Story: Texas Teeters on Edge of Blackouts as Demand Squeezes Grid. (Bloomberg)
  • S&P 500 futures fall as Wall Street shifts focus back to path of interest rates. (CNBC)
  • U.S. and EU to announce new steel tariffs against China. (Bloomberg)
  • Covid hospitalizations spike with new variant as school returns, U.S. readies vaccine. (CNBC)
  • Senate confirms Lisa Cook to 14 year term at the Federal Reserve as a Governor. (Bloomberg)
  • Apple (AAPL) expected to increase the price of premium phones by $100. (WSJ)
  • Hurricane Lee expected to become a Category 4 storm by the weekend. (Weather)
  • Stellantis (STLA) planning to make a counteroffer to the UAW this week. (Reuters)
  • NPR Morning Marketplace: A strong Dollar spells trouble for other economies. (Podcast)
  • BBC Global News: Israel scientists grow human-like artificial embryo. (Podcast) 
  • NY Times The Daily: Why one drug company held back a better drug. (Podcast)
  • Bloomberg: Odd Lots: Self-driving cars might finally be for real this time. (Podcast)
  • Wealthion: Bad news for the bears? Market technicals are Very Bullish. (Podcast)

Moving Average Update:

  • Score goes down to 51% from 68%..

Geopolitical: 

  • President’s Public Schedule:
    • The President departs the White House en route to Joint Base Andrews, 4:45 p.m. EDT
    • The President departs Joint Base Andrews en route to Ramstein, Germany, 5:05 p.m. EDT

Economic: 

  • Jobless Claims 8:30 a.m. EDT
  • Productivity and Costs 8:30 a.m. EDT
  • EIA Natural Gas Report 10:30 a.m. EDT
  • EIA Petroleum Report 11:00 a.m. EDT

Federal Reserve / Treasury Speakers:

  • Federal Reserve Philadelphia President Patrick Harker 10:00 a.m. EDT
  • Federal Reserve New York President John Williams 3:30 p.m. EDT
  • Federal Reserve Atlanta President Raphael Bostic 3:45 p.m. EDT
  • Federal Reserve Board of Governors Michelle Bowman 4:55 p.m. EDT

M&A Activity and News: 

  • Precision Drilling (PDS) Announces Acquisition of CWC Energy Services.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • BAC Gaming and Lodging Conference
    • Bank of America Securities Sustainability & Circular Materials Virtual Conference 2023
    • Benchmark Consumer Investor Conference
    • CIBC Renewables & Clean Energy Conference
    • Evercore ISI Real Estate Conference 2023 (09/07/23-09/08/23)
    • Gabelli Aerospace & Defense Symposium
    • J.P. Morgan Restaurant, Leisure & Lifestyles Forum 2023
    • Needham Crypto Conference
    • RBC Global Engineering, Construction & Infrastructure Solutions Conference 2023
    • Stifel London Industrials Summit
      • Previously posted and ongoing conferences:
        • Barclays CEO Energy-Power Conference (09/05/23-09/07/23)
        • Barclays Global Consumer Staples Conference (09/05/23-09/07/23)
        • Citi Biopharma Conference (09/05/23-09/07/23)
        • Citigroup Global Technology Conference (09/05/23-09/08/23)
        • Deutsche Bank 13th Annual Aircraft Finance & Leasing Conference and Airline One on One Day 2023 (09/05/23-09/07/23)
        • Goldman Sachs Communacopia & Technology Conf (09/05/23-09/07/23)
        • Goldman Sachs 20th Annual European Medtech and Healthcare Services Conference 2023 (09/05/23-09/07/23)
        • ING Benelux Conference 2023 (09/05/23-09/07/23)
        • UBS Business Services, Leisure and Transport Conference 2023 (09/05/23-09/07/23)
        • Citi GEM Conference 2023 (09/06/23-09/07/23)
        • Evercore ISI Semiconductor & Semiconductor Conf (09/06/23-09/08/23)
        • Jefferies Industrials Conference (09/06/23-09/07/23)
        • Jefferies Asia Forum 2023 (09/06/23-09/08/23)
        • KBW Keefe, Bruyette & Woods Insurance Conference 2023 (09/06/23-09/07/23)
        • Morgan Stanley Industrials CEO’s Unplugged (09/06/23-09/07/23)
        • Raymond James U.S. Bank and Banking on Tech Conferences (09/06/23-09/07/23)
        • Scotiabank Financials Summit (09/06/23-09/07/23)
        • TD Cowen Global Transportation Conference (09/06/23-09/07/23)
        • Wolfe Research TMT Conference (09/06/23-09/07/23)
  • Top Shareholder Meetings: CPTN
  • Fireside Chat: UBER (w/ Goldman Sachs)
  • Investor/Analyst Day/Calls: BIVI, CBAY, CCSI, CWAN, DOX, FRSH, FSLR, GH, SYNA, TREX
  • Update: None of note.
  • R&D Day: None of note.
  • Company Event: None of note.
  • Industry Meetings:
    • MUFG Oil and Gas Conference
    • American Heart Association (AHA) Hypertension Scientific Sessions 2023 (09/07/23-09/10/23)
      • Previously posted and ongoing conferences:
        • Commercial Unmanned Aerial Vehicle (CUAV) Expo (09/05/23-09/07/23)
        • European Public Real Estate Association (EPRA) Annual Conference 2023 (09/05/23-09/07/23)
        • 50th Society of Petroleum Engineers (SPE) Offshore Europe Conference 2023 (09/05/23-09/08/23)
        • MSPO: The International Defense Industry Exhibition 2023 (09/05/23-09/08/23)
        • eCap West Healthcare Conference (09/05/23-09/07/23)
        • World Molecular Imaging Congress (09/05/23-09/09/23)
        • Scoliosis Research Society Annual Meeting 2023 (09/06/23-09/09/23)
        • Society of Hematologic Oncology Annual Meeting (09/06/23-09/09/23)
        • SEMICON Taiwan 2023 (09/06/23-09/08/23)
        • PAINWeek Conference (09/05/23-09/08/23)
        • SPE Offshore Europe Conference

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 is 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: