After Hours Report

The day started on an upbeat note as investors digested the Consumer Price Index (CPI) for March. The S&P 500 and Nasdaq logged gains of 0.6% and 0.9%, respectively, shortly after the open. 

Total CPI rose a smaller-than-expected 0.1% month-over-month (Briefing.com consensus 0.3%) and the year-over-year increase slowed to 5.0% from 6.0% in February. Core-CPI, which the Fed closely watches, was in line with month-over-month estimates and accelerated to 5.6% from 5.5% in February.

Early gains dissipated, though, as mega cap stocks rolled over and as Treasury yields also climbed off their post-CPI lows. The 2-yr Treasury note yield, at 4.06% before the CPI report, settled the session at 3.97%. The 10-yr note yield, at 3.44% before the report, settled at 3.42%.

There was a subsequent rebound effort that took root after the S&P 500 dipped below 4,100. The market was moving cautiously forward into the release of the FOMC Minutes from the March 21-22 meeting.

The Minutes revealed that participants agreed that inflation remains too high and that the banking problems increased economic uncertainty. Still, all participants agreed that it was appropriate to raise the target range for the fed funds rate even though the staff economic outlook included a mild recession starting later this year given the potential economic effects of recent banking-sector developments.

Things rolled over again in the late afternoon with mega cap stocks leading that slide. The Vanguard Mega Cap Growth ETF (MGK) declined 0.6% today.

The selling interest was likely also driven more by valuation concerns rather than a negative reaction to the Fed forecasting a mild recession. The cyclical S&P 500 sectors pulled back along with the rest of the market, but still finished the day in a position of relative strength. The industrials (+0.3%), energy (+0.1%), and materials (+0.1%) sectors led the outperformers. The consumer discretionary (-1.5%), communication services (-0.9%), and information technology (-0.6%) sectors were the top laggards, weighed down by mega cap weakness.

Investors may have also been inclined to take some money off the table ahead of Q1 earnings reporting season, which is expected to produce its share of conservative-sounding guidance. The major indices all finished near their worst levels of the day.

• Nasdaq Composite: +14.0% YTD
• S&P 500: +6.6% YTD
• S&P Midcap 400: +2.3% YTD
• Dow Jones Industrial Average: +1.5% YTD
• Russell 2000: +0.7% YTD

Reviewing today's economic data:

• The weekly MBA Mortgage Applications Index rose 5.3% with purchase applications jumping 8.0% while refinance applications were flat. 
• Total CPI was up 0.1% month-over-month (Briefing.com consensus +0.3%) following a 0.4% increase in February. Core-CPI, which excludes food and energy, increased 0.4%, as expected, following a 0.5% increase in February. Services inflation was up 0.3% month-over-month, versus up 0.5% in February, and up 7.3% year-over-year versus up 7.6% in February. Excluding shelter, services inflation was flat, compared to a 0.1% increase in February, and up 6.1% year-over-year versus up 6.9% in February. On a year-over-year basis, total CPI was up 5.0%, versus up 6.0% in February. That is the smallest 12-month increase since May 2021. Core-CPI was up 5.6% year-over-year, versus up 5.5% in February.
  • The key takeaway from the report is the disinflation seen in March. That trend doesn't necessarily take a rate hike at the May FOMC meeting off the table, especially with core-CPI tipping slightly higher, but it is fostering a belief that a rate hike in May could be the last hike in the Fed's tightening cycle.
• The weekly EIA Crude Oil Inventories showed a build of 0.597 million barrels versus last week's draw of 3.74 million barrels. 

Looking ahead to Thursday, market participants will receive the following economic data:

• 8:30 a.m. ET: March Producer Price Index (Briefing.com consensus +0.1%; prior -0.1%) and core Producer Price Index (Briefing.com consensus +0.2%; prior 0.0%)
• 8:30 a.m. ET: Weekly initial jobless claims (Briefing.com consensus 236,000; prior 228,000) and continuing claims (prior 1.823 million)
• 10:30 a.m. ET: Weekly EIA Natural Gas Inventories (prior -23 bcf)

• Europe: DAX +0.3%, FTSE +0.5%, CAC +0.1%
• Asia: Nikkei +0.6%, Hang Seng -0.9%, Shanghai +0.4%

Commodities: 

• Crude Oil +1.69 @ 83.22
• Nat Gas -0.11 @ 2.09
• Gold +4.80 @ 2024.80
• Silver +0.27 @ 25.48
• Copper +0.06 @ 4.09

After-Hours Spotlight:

• Alibaba (BABA): SoftBank moves to sell down most of its Alibaba stake, according to FT... BABA down 3.8%
• BigBear.ai (BBAI) files mixed shelf securities offering... BBAI down 6.8%
• Harley-Davidson (HOG) announces that Gina Goetter will step down as CFO at the end of April 2023, David Viney to serve as Interim CFO... HOG down 3.6%
• Rent the Runway (RENT) beats by $0.11, beats on revs; guides Q1 and FY23 revs below consensus; co names new CFO... RENT down 6.4%
• SiriusPoint (SPNT) acknowledges indication of interest from Third Point LLC disclosed earlier today to explore potential acquisition of the company... SPNT up 1.9%
• Sportsman's Warehouse (SPWH) beats by $0.04, reports revs in-line; guides Q1 EPS below consensus, revs in-line; CEO to retire; Chairman appointed Interim CEO... SPWH down 16.3%
• SunPower (SPWR) secures financing commitments of over $450 mln for its residential solar and storage loan program from HASI (HASI)... SPWR up 2.1%

Fair Value for Thursday, April 13:

• S&P 500: 4,118
• Nasdaq 100: 12,948
• DJIA: 33,811

For a full rundown of today's market and after hours developments, see Live In Play

• Earnings/Guidance (Full Earnings Calendar):
  • American Airlines (AAL) raises Q1 EPS guidance
  • American Public Education (APEI) corrects prior Q1 revenue guidance and guides it Q1 revenue towards high end of corrected guidance range (still below consensus)
  • Apogee Enterprises (APOG) beats by $0.01, reports revs in-line; guides FY24 EPS in-line
  • Chart Industries (GTLS) reaffirms FY23 adjusted EBITDA guidance of $1 bln; FY24 adjusted EBITDA guidance of $1.3 bln
  • ConocoPhillips (COP) details operating and financial plan that features durable returns and cash flow growth ahead of today's Investor Day
  • Eli Lilly (LLY) expects Q1 results to include acquired IPR&D charges of approximately $105 mln, representing a charge of $0.10 to GAAP and non-GAAP EPS
  • EOG Resources (EOG) anticipates Q1 net gain of $376 mln on the mark-to-market of its financial commodity derivative contracts
  • Greenbrier (GBX) says recurring revenue to more than double over the next five years; sees gross margin increasing to mid teens by 2026
  • Hagerty (HGTY) announced a workforce reduction of approx. 4% (83 employees); reaffirms 2023 outlook
  • InMode (INMD) sees Q1 EPS and revs above consensus
  • Mirum Pharmaceuticals (MIRM) sees Q1 revs above consensus
  • Natl Instruments (NATI): Emerson (EMR) confirms plans to acquire NI for $60 per share in cash at an equity value of $8.2 bln; reaffirms Q2 guidance
  • SkillSoft (SKIL) misses by $0.12, beats on revs; guides FY24 revs above consensus
• General News
  • Philadelphia Federal Reserve Bank President Patrick Harker (voting FOMC member) says rates should go to 5% and be held there, according to Reuters
  • The Biden administration confirms strongest-ever pollution standards for cars and trucks to accelerate transition to a clean-transportation future
  • European Central Bank policymaker Villeroy de Galhau said that ECB policy should move from a "sprint to a long-distance run" and that the central bank remains committed to reining in inflation
  • Warren Buffet says recent banking problems are not like 2008; some banks have been mismanaged; is willing to bet that no American depositor will lose money from a bank failure
  • Universal Music Group tells Apple (AAPL) and Spotify (SPOT) to limit AI generated music, according to FT
  • Bank of Canada held its target for the overnight rate at 4.5%
  • Treasury targets Russian financial facilitators and sanctions evaders around the world
  • Retailers on radar following LVMH (LVMUY) Q1 sales report
  • Chinese President Xi says he wants military to strengthen training towards "actual combat", according to France 24
  • Altria (MO): FDA’s proposed new requirements for tobacco product manufacturing practices
  • Altria (MO): Juul confirms settlement with seven state attorneys general
  • Amprius Technologies (AMPX) is preparing to supply commercial level shipments to AeroVironment (AVAV) in support of the company’s Switchblade 300 Block 20 loitering missile system
  • Atea Pharmaceuticals (AVIR) announces the presentation of the full results from the MORNINGSKY Phase 3 trial evaluating bemnifosbuvir for the treatment of COVID-19
  • BeiGene (BGNE): Enlivex Therapeutics (ENLV) announced a new clinical collaboration agreement with Beigene
  • Block (SQ): Square Launches Nearly 100 New Features to Help Sellers Diversify Revenue Streams and Automate Operations
  • Carlyle Group (CG) ends discussions to purchase stake in Cotiviti, according to Bloomberg
  • Cohen & Steers (CNS) reports March AUM 4% decline from Feb
  • Cutera (CUTR) CEO and Executive Chairman terminated for cause; appoints Sheila A. Hopkins as Interim CEO; withdraws 2023 outlook
  • Denali Therapeutics (DNLI) and Biogen (BIIB) announce that Biogen has exercised the option to license Denali’s Antibody Transport Vehicle:Amyloid beta program
  • Emerson Electric (EMR) is in discussions to acquire National Instruments (NATI), according to Reuters
  • Eos Energy (EOSE) has entered into a definitive agreement for the purchase and sale of an aggregate of 16,000,000 shares of the Company’s common stock at a purchase price of $2.50/share in a registered direct offering
  • Fisker (FSR) announces that the all-electric Fisker Ocean Extreme equipped with optional 22” wheels and tires achieved a combined WLTP range of up to 701 km/436 miles
  • Gladstone Investments (GAIN) will pay a supplemental distribution of $0.12 per share to holders of its common stock in June 2023; declared unchanged monthly dividends of $0.08/share for April, May, and June
  • Globant Ventures (GLOB) invests $4 million over a two-year period in Fivvy, a SaaS platform bringing personalized experience to banking customers
  • GSR II Meteora Acquisition Corp. (GSRM): Bitcoin Depot assumes Bitcoin ATM contract from another Bitcoin ATM operator for Jacksons Food Stores
  • GXO Logistics (GXO) has been selected by Sainsbury’s (JSAIY), the second largest chain of supermarkets in the United Kingdom, to be its dedicated warehouse partner for fresh and frozen food
  • Johnson & Johnson (JNJ) defends attempts to resolve talc lawsuits in bankruptcy, according to Reuters
  • KKR's (KKR) Envision Healthcare hires lawyer ahead of payment deadline on its unsecured bonds, according to WSJ
  • MSC Industrial (MSM) announced an agreement to be the exclusive e-commerce distributor of metalworking and MRO products to customers of MachiningCloud
  • National CineMedia (NCMI) filed a voluntary Chapter 11 petition in the United States Bankruptcy Court and has entered into a comprehensive Restructuring Support Agreement
  • Novo Nordisk (NVO) and Aspect Biosystems enter partnership to develop bioprinted tissue therapeutics for diabetes and obesity
  • Nova Vision Acquisition Corporation (NOVV) announces extension of combination period and additional contribution to trust account to extend combination period to May 10, 2023
  • Ouster (OUST) files patent infringement complaint with ITC against Hesai (HSAI) and seeks to bar the infringing products from the United States
  • Paramount Global (PARA): Warren Buffett (BRK.B) on CNBC says he hopes that PARA will be able to raise prices; streaming isn't a good business
  • Parsons (PSN) awarded 3-year $750 mln State Department humanitarian support contract
  • Pinterest (PINS) announces new teen safety tools
  • Pitney Bowes (PBI): Hestia Capital releases presentation detailing the urgent need for changes in leadership and strategy at Pitney Bowes
  • Planet Fitness (PLNT): FTC aiming to ban automatic renewals for fitness and other subscriptions, according to Sportico
  • Planet Labs (PL) President Kevin Weil tweets "We had a lot to announce—including some next-gen AI/GPT demos with Microsoft (MSFT)
  • Procter & Gamble (PG) increases quarterly dividend to $0.9407/share from $0.9133/share
  • ProFrac Holding (ACDC): The Wilks Family released the following open letter to shareholders of ProFrac Holdings Corp
  • Qualcomm (QCOM) increases quarterly cash dividend to $0.80/share from $0.75/share
  • S&P Global (SPGI) announced a distribution agreement with YouTube TV (GOOG/L) to add carriage of Tennis Channel, T2, CHARGE! and TBD to YouTube TV’s service offerings
  • Sinclair Broadcast (SBGI) and Nielsen announce a multi-year renewal agreement for Nielsen Local and National audience measurement services
  • SiriusPoint (SPNT): Third Point (Daniel Loeb) increases active stake to 9.34% (prior ~5.3%); believes company may be best positioned to execute on its turnaround strategy as a privately held company
  • Taiwan Semiconductor Manufacturing (TSM) will slow its plans for an expansion of its facility in Taiwan
  • Tesla (TSLA) aiming to introduce Powerwall 3, according to Electrek
  • Trean Insurance Group (TIG) provides announcement of recommendations by ISS and Glass Lewis that stockholders vote for the proposed merger
  • UPS (UPS): Teamsters to UPS "No national talks until supplemental contracts resolved"
  • U.S. Bancorp (USB) announces key leadership team changes; Kelligrew, Quinn to retire from positions; Dolan, Stern, Kedia, Philipson and Dominski take on broader roles
  • Vuzix (VUZI) received and shipped against a volume follow-on order for Vuzix smart glasses from Acuraflow
  • Warner Bros. Discovery (WBD) introduces "Max" streaming service that combines HBO and Discovery+, according to WSJ
  • Warner Bros. Discovery (WBD) confirmed May 23 Max launch in U.S.
  • Zscaler (ZS) loses spot in Gartner rating, according to The Information

(see Upgrades/Downgrades calendar for full list):

• Upgrades:
  • Arrowhead (ARWR) upgraded to Outperform from Market Perform at SVB Securities; tgt raised to $35
  • Celanese (CE) upgraded to Neutral from Underweight at Piper Sandler; tgt raised to $120
  • Dow (DOW) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $68
  • Eastman Chemical (EMN) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $99
  • LyondellBasell (LYB) upgraded to Overweight from Neutral at Piper Sandler; tgt $118
  • Methanex (MEOH) upgraded to Neutral from Underweight at Piper Sandler; tgt raised to $49
  • Westlake Corporation (WLK) upgraded to Overweight from Neutral at Piper Sandler; tgt $140
  • Becton Dickinson (BDX) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $304
  • Confluent (CFLT) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $30
  • Essex Property (ESS) upgraded to Sector Outperform from Sector Underperform at Scotiabank; tgt $240
  • Evercore (EVR) upgraded to Buy from Sell at UBS
  • Evercore (EVR) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $131
  • Raytheon Technologies (RTX) upgraded to Outperform from Peer Perform at Wolfe Research; tgt $117
  • Realty Income (O) upgraded to Sector Outperform from Sector Perform at Scotiabank; tgt $69
  • Shopify (SHOP) upgraded to Mkt Outperform from Mkt Perform at JMP Securities; tgt $65
• Downgrades:
  • ADS-TEC Energy GmbH (ADSE) downgraded to Neutral from Buy at DA Davidson; tgt lowered to $5
  • Audiocodes (AUDC) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $9.50
  • Insight Enterprises (NSIT) downgraded to Hold from Buy at Stifel; tgt $150
  • ADTRAN (ADTN) downgraded to Market Perform from Outperform at Northland Capital; tgt $13
  • Arconic (ARNC) downgraded to Peer Perform from Outperform at Wolfe Research
  • Bombardier (BDRBF) downgraded to Peer Perform from Outperform at Wolfe Research
  • Empire State Realty Trust (ESRT) downgraded to In-line from Outperform at Evercore ISI; tgt lowered to $7
  • Kaiser Alum (KALU) downgraded to Underperform from Peer Perform at Wolfe Research; tgt $67
  • Lockheed Martin (LMT) downgraded to Neutral from Outperform at Robert W. Baird; tgt $513
  • Mid-America Aptmt (MAA) downgraded to Sector Underperform from Sector Perform at Scotiabank; tgt $150
  • NETSTREIT (NTST) downgraded to Sector Perform from Sector Outperform at Scotiabank
  • Take-Two (TTWO) downgraded to Neutral from Outperform at Exane BNP Paribas; tgt $120
• Others:
  • Accolade (ACCD) initiated with an Overweight at Stephens; tgt $18
  • Apollo Medical (AMEH) initiated with a Neutral at BofA Securities; tgt $44
  • Certara (CERT) initiated with an Overweight at Stephens; tgt $28
  • Computer Programs (CPSI) initiated with an Equal-Weight at Stephens; tgt $30
  • DoubleVerify (DV) initiated with an Overweight at Piper Sandler; tgt $35
  • Globant (GLOB) initiated with a Buy at Needham; tgt $205
  • Lazydays Holdings (LAZY) initiated with a Neutral at DA Davidson; tgt $12
  • Phreesia (PHR) initiated with an Overweight at Stephens; tgt $37
  • Privia Health (PRVA) initiated with an Overweight at Stephens; tgt $33
  • R1 RCM (RCM) initiated with an Overweight at Stephens; tgt $18
  • Teladoc (TDOC) initiated with an Equal-Weight at Stephens; tgt $25
  • Veradigm (MDRX) initiated with an Equal-Weight at Stephens; tgt $13
  • Alerus Financial (ALRS) initiated with a Mkt Perform at Keefe Bruyette; tgt $18
  • Concentrix (CNXC) initiated with a Buy at Canaccord Genuity; tgt $150
  • FS KKR Capital (FSK) initiated with a Perform at Oppenheimer; tgt $21
  • Integral Ad Science (IAS) initiated with a Sector Weight at KeyBanc Capital Markets
  • Las Vegas Sands (LVS) initiated with a Buy at ROTH MKM; tgt $74
  • NextGen Healthcare (NXGN) initiated with an Overweight at Stephens; tgt $24
  • ZipRecruiter (ZIP) initiated with a Sector Weight at KeyBanc Capital Markets

• Econ data (Thursday):
  • 8:30 ET: March PPI (Briefing.com consensus 0.1%; prior -0.1%), Core PPI (Briefing.com consensus 0.2%; prior 0.0%), weekly Initial Claims (Briefing.com consensus 236,000; prior 228,000), and Continuing Claims (prior 1.823 mln)
  • 10:30 ET: Weekly natural gas inventories (prior -23 bcf)
• Earnings:
  • Monday (April 10)
    • Pre-Market:  GBX
    • After-Hours: PSMT TLRY
  • Tuesday (April 11)
    • Pre-Market:  ACI KMX
    • After-Hours: None
  • Wednesday (April 12)
    • Pre-Market: APOG
    • After-Hours: SPWH
  • Thursday (April 13)
    • Pre-Market: DAL FAST PGR
    • After-Hours:  WAFD
  • Friday (April 14)
    • Pre-Market: BLK C JPM PNC UNH WFC
    • After-Hours: None