CAPIS Morning Note – 10/26/23: Stocks Lower As Q3 GDP Up Shortly, Expected To Be Strong.

Overnight Summary: The S&P 500 closed Wednesday lower by  -1.43% at 4186.77 from Tuesday higher by 0.73% at 4247.68. The overnight high was hit at 4223.25 at 4:20 p.m. EDT while the low was hit at 4171 at 3:30 a.m. EDT. The range overnight was 52 points as of 7:25 a.m. EDT. The 10-day average of…

Overnight Summary: The S&P 500 closed Wednesday lower by  -1.43% at 4186.77 from Tuesday higher by 0.73% at 4247.68. The overnight high was hit at 4223.25 at 4:20 p.m. EDT while the low was hit at 4171 at 3:30 a.m. EDT. The range overnight was 52 points as of 7:25 a.m. EDT. The 10-day average of the overnight range is at 30 from 25.90 down from a peak of 31.50 on 8/15.  The average for May-September average was 20.96 from 21.10 in May through August and the September average was 19.87. Currently, the S&P 500 is lower by  – points which is  -0.% at 7:25 a.m. EDT.

Earnings Out After The Close: 

  • Beats: EG +4.38, WHR +1.18, CCS +0.94, META +0.75, TNET +0.52, URI +0.50, VKTX +0.45, PEGA +0.43, CHE +0.42, WFG +0.41, EQT +0.39, EQIX +0.38, VMI +0.37, KLAC +0.37, NOW +0.36, ORLY +0.31, NXT +0.29, NTGR +0.27, IEX +0.23, MAT +0.22, PLXS +0.18, UHS +0.18, MOH +0.17, GSHD +0.16, STC +0.15, ASGN +0.12, CASH +0.11, FLEX +0.10, PI +0.10, FBIN +0.10, EPR +0.09, SUI +0.09, IBM +0.08, AMP +0.08, FIBK +0.08, CNMD +0.07, WH +0.07, MEOH +0.07, FLS +0.07, GL +0.06, OII +0.06, CLS +0.05, KRC +0.05, BHE +0.05, VLTO +0.04, WU +0.04, AVB +0.03, ROL +0.03, GGG +0.03, CHDN +0.03, WCN +0.03, ESI +0.03, ICLR +0.03, AGI +0.02, AEM +0.02, LC +0.02, AR +0.02, QS +0.02, BKR +0.02, CVBF +0.02, MAA +0.01, AM +0.01, VICI +0.01, CP +0.01, ALSN +0.01 of note.
  • Flat: LXFR +0.00, SLP +0.00, EW +0.00, WSBC +0.00, SEIC +0.00, LSTR +0.00 of note.
  • Misses: ATR (0.33), SLM (0.28), NOVA (0.21), CACI (0.19), CYH (0.17), RJF (0.14), TROX (0.13), AGR (0.13), ALGN (0.12), FTAI (0.09), ETD (0.09), UCTT (0.06), KALU (0.04), MYRG (0.02), MXL (0.02), INVH (0.01), EIG (0.01) of note.

Capital Raises:

  • IPOs Priced or News: None of note.
  • New SPACs launched/News:
    • Coliseum Acquisition Corp. (MITA) Announces Fifth Extension of Deadline to Complete Initial Business Combination.
  • Secondaries Priced: None of note.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • NTST: Form 8K.. entered into an equity offering sales agreement with Wells Fargo Securities.
    • THTX: Announces Proposed Public Offering of Common Shares and Concurrent Private Placement.
    • TKNO: Filed Form S-1.. 11,299,993 Shares of Common Stock.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • SLB: Files prospectus supplement; relates to resale of up to 5,057,706 shares of common stock by selling shareholders.
  • Private Placement of Public Entity (PIPE):
    • LIPO: Announces Closing of $2 Million Private Placement Priced At-The-Market Under Nasdaq Rules.
  • Mixed Shelf Offerings:
    • CBUS: Files $200 mln mixed shelf securities offering.
    • EARN: Filed Form S-3.. $500,000,000 Mixed Shelf.
    • OC: Filed Form S-3AR .. Mixed Shelf.
    • SELB: Files $200 mln mixed shelf securities offering.
  • Debt/Credit Filing and Notes: None of note.
  • 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 :

  • After Hours: 
    • Trading Up: EDR +24%, PI +18%, NOVA +12%, FLEX +9%, EGBN +7%, FIBK +6%, FLS +5%, NOW +5%, CMPR +5%, CCS +5%, CBUS +5%, CNMD +4%, ETD +4%, TNET +4%, WFG +4%, ORLY +4% of note.
    • Trading Down: ALGN -23%, SLP -14%, MXL -11%, MEOH -9%, MAT -8%, EW -6%, CYH -6%, WHR -5%, ALSN -5%, OII -4%, VKTX -4%, MYRG -4%, AGR -4%, FTAI -4% of note.
  • News Items After the Close:
    • Stocks making the biggest moves after the bell: META, WHR, MAT, NOW, IBM, ALGN, EDR (CNBC)
    • META Reports Strong Earnings but Warns of Weak Ad Demand. (Barrons)
    • Whirlpool’s (WHR) stock drops more than 5% on lowered guidance. (MarketWatch)
    • Ford (F) and UAW finally get a deal done after nightmare 40 days. Good to have this done…now GM and Stellantis are the next dominoes to fall likely getting a deal done over the next week. The initial deal based on reports a more balanced deal for Ford vs original one on the table. (Dan Ives) (CNBC)
    • META CEO: “We had a good quarter for our community and business”
    • IBM CEO: “Clients are increasingly adopting our Watson AI & data platform along with our hybrid cloud solutions to unlock productivity and operational efficiency. This is helping drive solid growth in our software and consulting businesses” (CNBC)
    • Mattel (MAT) CEO: “Consumer demand for our product increased in the quarter, and we continued to outpace the industry….Our results benefited from the success of the Barbie movie” (MarketWatch)
    • UPS CEO: “While unfavorable macro-economic conditions negatively impacted global demand in the quarter, our U.S. labor contract was fully ratified in early September and volume that diverted during our labor negotiations is starting to return to our network.”
    • “.. Nasdaq had its worst day since Feb 21 as $GOOGL had its worst day since March 2020; and the index is now in correction territory, having fallen 10.7% from its July 19 highs. .. $SPX failed to hold its 200dma and that has triggered significant systematic selling.” (JPM desk Carl Q)
  • Exchange/Listing/Company Reorg and Personnel News:
    • Albemarle (ALB) names Neal Sheorey as CFO.
    • CenterPoint Energy (CNP)  appoints Jason Wells as CEO.
    • IDEX Corp (IEX) appoints Abhi Khandelwal as CFO.
    • Lennox Int’l (LII) announces that Executive Vice President and Chief Financial Officer Joe Reitmeier has elected to retire.
    • Morgan Stanley (MS) announces that Co-President Edward Pick will become CEO on January 1; James Gorman to become Executive Chairman. (WSJ)
    • NLS Pharmaceutics (NLSP) Announces Receipt of Nasdaq Minimum Bid Price Notification.
    • Solo Brands (DTC) CFO Somer Webb to pursue other opportunities.
    • Sonic Automotive (SAH) approves 3.4% increase to quarterly cash dividend.
    • Tronox (TROX) Announces Planned Retirement of Co-CEO Jean-François Turgeon; John D. Romano to be Appointed Sole CEO.
    • Unilever (UL) CFO to retire; names new CFO.
  • Buyback Announcements or News: 
    • ARR: Increased Stock Repurchase Authorization.
    • Kenvue (KVUE) authorizes share repurchase program for up to 27 million shares of common stock.
    • Marathon Petroleum Corp. (MPC) Announces $5 Billion Share Repurchase Authorization. (see Dividends)
  • Stock Splits or News:
    • Vivos Therapeutics (VVOS) Announces Reverse Stock Split1-for-25 reverse stock split to become effective as of the opening of trading tomorrow, October 27, 2023.
  • Dividends Announcements or News:
    • Amerisafe (AMSF) declares special dividend of $3.50/share and regular quarterly dividend.
    • Equinix (EQIX) increases quarterly cash dividend 25% to $4.26 per share share from $3.41 per share.
    • First Citizens BancShares (FCNCA) increases quarterly dividend to $1.64 from $0.75 per share.
    • LKQ declared a quarterly cash dividend of $0.30, a 9% increase.
    • Marathon Oil (MRO) increases quarterly cash dividend 10% to $0.11 per share.
    • Marathon Petroleum Corp. (MPC) Increases Quarterly Dividend by 10%.
    • S&T Bancorp (STBA) increased quarterly cash dividend to $0.33 per share, prior $0.32 per share.
    • Sirius XM (SIRI) increases quarterly cash dividend 10% to $0.0266 per share.
    • West Pharm (WST) approved a 5.3% dividend increase to $0.20 per share
  • Insider Sales Of Note: None of note.

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

S&P 500 -30, Dow Jones -139,  NASDAQ -143, and Russell 2000 -7.  (as of 7:56 a.m. EDT).  Asia and Europe are lower this morning. VIX Futures are at 20.60 from 19.15 yesterday.  Gold, Silver and Copper higher this morning. WTI Crude Oil  and Brent Crude Oil are lower with Natural Gas lower as well. US 10-year Treasury sees yields at 4.95% from 4.85%  from yesterday. The U.S. Dollar is higher versus the Euro, higher versus the Pound and flat against the Yen. Bitcoin is at $34,435 from $34,233 yesterday, lower by -0.73%.

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

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

A steep drop in shares of Alphabet (GOOGL), Amazon.com (AMZN) and other technology companies dragged the Nasdaq Composite into correction territory Wednesday. The tech-heavy index slid 2.4% in a punishing session that pulled it down more than 10% from its recent high. Its losses accelerated in the afternoon, sending the gauge to one of its worst one-day declines of the year.  The S&P 500 fell 1.4%, closing at its lowest level since May. The Dow Jones Industrial Average shed 105 points, or 0.3%.   Shares of Google-parent Alphabet tumbled almost 10% after reporting quarterly results that showed disappointing growth in its cloud business. The company shed more than $166 billion in market value, its biggest one-day loss ever. Shares of Amazon.com and Nvidia (NVDA) also fell, lagging behind the broader market, while fintech company Affirm (AFRM) and payments company Block (SQ) dropped sharply.  (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: BFH +1.13, EME +0.90, ARCH +0.66, LII +0.62, FCN +0.50, BG +0.49, VC +0.43, RCL +0.39, NOC +0.37, AIT +0.30, WST +0.30, WEX +0.28, SAH +0.25, BMY +0.24, OSTK +0.22, MDC +0.20, TXT +0.20, WTW +0.19, TPH +0.19, RITM +0.19, MRK +0.18, BPMC +0.17, AMT +0.17, HSY +0.14, CMCSA +0.13, AOS +0.11, SAVE +0.11, FAF +0.09, CARR +0.09, MAS +0.09, CBZ +0.08, STM +0.08, NVCR +0.07, IP +0.06, CNP +0.05, UPS +0.05, SHYF +0.05, MBLY +0.05, LH +0.05, LIN +0.05, HON +0.04, ULCC +0.03, NYCB +0.03, EXLS +0.03, INSM +0.03, EXP +0.02, VLO +0.02, BSX +0.02, CMS +0.02, KEX +0.02, FTI +0.02, HTZ +0.02, HOG +0.02, KIM +0.01, KDP +0.01 of note.
  • Flat: AMBP +0.00, VLY +0.00, KVUE +0.00, LUV +0.00, TW +0.00, HEES +0.00, VMC +0.00, RS +0.00 of note.
  • Misses: BC (0.74), XPRO (0.29), PDS (0.28), SBSI (0.16), LKQ (0.10), HAS (0.08), LAZ (0.06), NEM (0.04), THRM (0.04), TSCO (0.04), HZO (0.03), FSV (0.02), MANU (0.02), PCG (0.01), MO (0.01) of note.
  • Still to Report: CRS, CTS, CFR, GWW, ITGR, MA, MPW, PATK, BTU, BPOP, STX, TRS of note.

Company Earnings Guidance:

  • Positive Guidance: ENSG, TNET, CACI, CASH, PI, ORLY, KRC, VLTO, OII, CLS, BG, TXT, LEA, CARR, WEX, NOC, AIT, RCL, LII, MAS, BMY, OPRA, FCN, EME  of note.
  • Negative Guidance: R, APH, DDD, ALGN, BHE, NTGR, ASGN, MXL, EW, FBIN, LSTR, VMI, IEX, EPR, SLP, LXFR, SUI, STM, THRM, UPS, LKQ, BC, CMS, HAS, RS, VC, TSCO, MANU, LH of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: EDR 23%, PI 18%, FLEX 10%, NOVA 9%, EGBN 8%, CNMD 7%, FIBK 6%, CCS 5%, CMPR 5%, CBUS 5%, NOW 5%, AGI 4%, SELB 4%, WFG 4%, ORLY 4%, FLS 4% of note.
  • Gap Down: ALGN -24%, MXL -20%, SLP -13%, MAT -10%, MEOH -8%, MYRG -7%, VKTX -6%, EW -6%, UCTT -5%, WHR -5%, OII -5%, CLS -4%, AGR -4%, FTAI -4%, TPH -4%, ALSN -4%, KALU -4% of note.

Insider Action: OXY, AXP 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.

  • 5 Things To Know Before The Stock Market Opens. (CNBC)
  • 5 Things You Need to Know to Start Your Day. (Bloomberg)
  • Bloomberg Lead Story: Israel Latest: Army briefly raids Gaza as war fears jolt markets. (Bloomberg)
  • Bloomberg Second Most Shared Story: Private Equity wants a piece of your retirement savings. (Bloomberg)
  • Bloomberg Opinion: Is natural gas about to become a buyers market. (Bloomberg)
  • Turkey’s Central Bank raises interest rates to 35% and you thought we had it bad with high rates! (CNBC)
  • The economy probably showed gangbuster growth in Q3, but will it last? (CNBC)
  • Bristol Myers Squibb (BMY) tops estimates despite generic competition. (CNBC)
  • Comcast (CMCSA) tops revenues and earnings as Universal Park sales drive numbers. (CNBC)
  • NPR Morning Report Marketplace:  Is there a cure for the nurse shortage? (Podcast)
  • NY Times The Daily: The House finally has a speaker.(Podcast)
  • BBC Global News:  Netanyahu: Israel prepares for a ground invasion of Gaza. (Podcast) 
  • Bloomberg: The Big Take: House Republicans finally pick a speaker. (Podcast) 

Moving Average Update:

  • Score back down to 8% from 20%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing; the Vice President attends, 11:00 a.m. EDT
    • Press Briefing by Press Secretary Karine Jean-Pierre, National Economic Council Director Lael Brainard, and NSC Coordinator for Strategic Communications John Kirby, 1:00 p.m. EDT

Economic:

  • September Durable Orders are due out at 8:30 a.m. EDT and is estimated to come in at  1.50% after coming in last month at 0.2%.
  • Q3 GDP is due out at 8:30 a.m. EDT as well and is expected to rise to 4.0% from 2.1% in Q2.
  • Int. Trade in Goods 8:30 a.m. EDT
  • Initial Jobless Claims 8:30 a.m. EDT
  • Wholesale Inventories 8:30 a.m. EDT
  • The European Central Bank is out with its latest interest rate decision and will then hold a press conference, both before the open.
  • September Pending Home Sales are due out at 10:00 a.m. EDT and are estimated to come in at 0.5% from -7.10%.
  • The 7-Year Treasury Auction is held at 1:00 p.m. EDT.
  • EIA Petroleum Report 10:30 a.m. EDT

Federal Reserve / Treasury Speakers:  

  • Fed Blackout period until FOMC Announcement on November 1st 2023.

M&A Activity and News:

  • Core & Main (CNM) Signs Agreement to Acquire Enviroscape.
  • EDR: Silver Lake Considers Take-Private of Endeavor. (WSJ)
  • Nextracker (NXT) Announces Plan to Separate from Flex.
  • UPS: To Acquire Happy Returns, a Leader in Reverse Logistics.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • BAC Healthcare Trailblazers Private Company Conference
    • Jefferies Cannabis Summit
    • William Blair Benefit Technology Conference
      • Previously posted and ongoing conferences:
        • Fall Foliage MicroCap Rodeo Conference
  • Top Shareholder Meetings: None of note.
  • Fireside Chat: None of note.
  • Investor/Analyst Day/Calls: BCTX, BRFH, EW
  • Update: None of note.
  • R&D Day: None of note.
  • Company Event:
    • Cisco’s (CSCO) WebexOne Event
    • Itron (ITRI) Inspire 2023 (10/22/23-10/27/23)
  • Industry Meetings:
    • Women in Bio Conference
        • Previously posted and ongoing conferences:
          • CTAD Conference
          • ICS Cybersecurity Conference
          • Lightspeed Oxygen Summit

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: