After Hours Report

The stock market started the session with a positive bias as participants waited for the 2:00 p.m. ET release of the FOMC decision. The early upside moves were supported by falling oil prices and market rates. The Nasdaq had a modest loss in the early going, due to lagging mega caps, but the A-D line was positive and the other major indices were in the green.

Both the stock and bond market experienced volatile price action following the September FOMC Statement. As expected, the FOMC voted unanimously to leave the target range for the fed funds rate unchanged at 5.25-5.50%. There were few changes to the directive itself, but the market was focused on the Summary of Economic Projections and dot plot, which conveyed two key takeaways: (1) Policy rates are anticipated to remain higher for longer and (2) Fed officials are not expecting to cut rates in 2024 as much as they were anticipating when they updated their forecasts in June.

The median fed funds rate estimate for 2023 was unchanged at 5.6%, but the median estimate for 2024 was 5.1%, versus 4.6% in June. The former estimate suggests officials are still leaning in favor of one more rate hike this year, whereas the latter revision connotes an expectation that rates will come down by only 50 basis points in 2024, as opposed to 100 basis points when estimates were provided in June. Meanwhile, the median estimate for 2025 was 3.9% versus 3.4% in June, and a median estimate of 2.9% was introduced for 2026. The longer-run fed funds rate estimate was maintained at 2.5%, leaving one to infer that the Fed is going to stay committed to its 2.0% inflation target.

The turbulent price action continued as Fed Chair Powell gave his press conference. Mr. Powell said several times that the Fed is going to "proceed carefully" when thinking about making a policy move, but said it's plausible that the neutral rate is higher than the longer run rate (2.5%), which he said is part of the explanation for why the economy has been more resilient than expected.

The wrinkle for the market wasn't that the Fed is decidedly hawkish at this point, it was that the Fed is still not dovish.

Stock settled into a steady decline in the late afternoon, led by the mega caps, that left the S&P 500 just above the 4,400 level. The Vanguard Mega Cap Growth ETF (MGK) fell 1.6% versus a 0.9% decline in the market-cap weighted S&P 500. 

Most of the S&P 500 sectors closed in the red with communication services (-1.9%) and information technology (-1.8%) logging the biggest declines. The consumer staples sector (+0.2%) led the outperformers. 

Klaviyo (KVYO 32.76, +2.76, +9.2%), which priced its IPO at $30, traded as high as $37 before pulling back with the rest of the market in the afternoon trade.

Treasury yields settled the session mixed compared yesterday, but well off their lows for the day. The 2-yr note yield, at 5.05% just before 2:00 p.m. ET, settled at 5.13%. The 10-yr note yield, at 4.32% just before 2:00 p.m. ET, settled at 4.35%. 

• Nasdaq Composite: +28.7% YTD
• S&P 500: +14.7% YTD
• S&P Midcap 400: +4.7% YTD
• Dow Jones Industrial Average: +3.9% YTD
• Russell 2000: +2.8% YTD

Reviewing today's economic data:

• The weekly MBA Mortgage Applications Index rose 5.4% with refinance applications jumping 13.0% and purchase applications increasing 2.0%.
• The weekly EIA crude oil inventories showed a draw of 2.14 million barrels versus last week's build of 3.96 million barrels.

Looking ahead, Thursday's economic calendar features:

• 8:30 ET: Weekly Initial Claims (Briefing.com consensus 225,00; prior 220,000), Continuing Claims (prior 1.688 mln), Q2 Current Account Balance (Briefing.com consensus -$222.0 bln; prior -$219.3 bln), and September Philadelphia Fed Survey (Briefing.com consensus -2.0; prior 12.0)
• 10:00 ET: August Existing Home Sales (Briefing.com consensus 4.10 mln; prior 4.07 mln) and August Leading Indicators (Briefing.com consensus -0.4%; prior -0.4%)
• 10:30 ET: Weekly natural gas inventories (prior +57 bcf)

Overseas:

• Europe: DAX +0.8%, FTSE +0.9%, CAC +0.7%
• Asia: Nikkei -0.7%, Hang Seng -0.5%, Shanghai -0.5%

Commodities:

• Crude Oil -0.74 @ 89.75
• Nat Gas -0.11 @ 2.73
• Gold +16.10 @ 1968.50
• Silver +0.40 @ 23.86
• Copper +0.02 @ 3.77

After-Hours Spotlight:

• Central Garden (CENT) CEO Tim Cofer to step down; reaffirms FY23 EPS guidance... CENT down 2.0%
• FedEx (FDX) beats by $0.84, reports revs in-line; guides FY24 EPS in-line, expects flat yr/yr revs; to repurchase additional $1.5 bln of stock during FY24... FDX up 5.4%
• Inventiva (IVA) signs exclusive licensing agreement to develop and commercialize lanifibranor in Japan and South Korea... IVA up 11.2%
• KB Home (KBH) beats by $0.37, beats on revs, deliveries decreased 7%, housing gross profit margin decreased 520 bps; Raises FY23 housing revenue guidance... KBH down 3.0%
• Keurig Dr Pepper (KDP) appoints Tim Cofer as COO, will join on November 6; to transition to CEO in 2Q24, succeeding Robert Gamgort who will thereafter serve as Executive Chairman... KDP down 0.3%

Fair Value for Thursday, September 21:

•  S&P 500: 4,448
• Nasdaq 100: 15,149
• DJIA: 34,740

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

• Earnings/Guidance (Full Earnings Calendar):
  • Boston Scientific (BSX) provides 2023 and longer term guidance at Investor Day
  • Coty (COTY) raises FY24 outlook
  • Douglas Dynamics (PLOW) reiterates FY23 guidance in presentation slides
  • General Mills (GIS) beats by $0.06, reports revs in-line; reaffirms FY24 EPS guidance
  • Intl Flavors (IFF) reaffirms FY23 gudiance for sales and adjusted operating EBITDA; continues to pursue sale of its Cosmetic Ingredients business
  • Pinterest (PINS) discloses Q3 expectations for rev growth to be at high end of HSD; guidance implies an acceleration in yr/yr Q3 growth rate relative to Q
  • STAAR Surgical (STAA) clarifies presentation slide; CapEx Expected to be approximately $20-30 mln annually resulting in 2026E Free Cash Flow of approximately $75-110 mln
  • Steelcase (SCS) beats by $0.11, beats on revs; guides Q3 EPS above consensus, revs below consensus; guides FY24 EPS above consensus, expects modest organic revenue decline yr/yr
• General News
  • Impeachment inquiry hearing for President Biden expected next week, according to Reuters
  • UK Government unveils new Board of Trade with UK’s top CEOs
  • UK Prime Minister Sunak discusses new approach to net zero plans - says easing the transition to electric vehicles
  • UK details commitments in global finance to achieve sustainable development goals
  • Bank of Canada's Summary of Governing Council deliberations: Fixed announcement date of September 6, 2023
  • Fed releases updated projections from September meeting; sees 2023 PCE median inflation of 3.3% from 3.2% prior forecast; sees 2023 fed funds rate between 5.4-5.6%, unchanged from June; sees 2024 fed funds rate between 4.6% and 5.4% from 4.4-5.1% in June
  • FOMC leaves target range for fed funds rate unchanged at 5.25-5.50%, as expected; vote was unanimous
  • AbCellera Biologics (ABCL) has expanded its existing multi-target collaboration with Regeneron (REGN) to discover therapeutic antibodies for up to eight targets selected by Regeneron, increased from the original four
  • Abbott Labs (ABT): Biden administration to resume offering free at-home COVID tests, according to CNBC
  • Advanced Health Intelligence (AHI) entered a Letter of Intent with UK-based Unisure Group to design, develop and deploy the AHI Biometric Health Assessment
  • Akamai Tech (AKAM) amends by-laws, effective immediately
  • Allbirds (BIRD) completes previously announced agreements with distributor partners in Canada and South Korea
  • Alvotech (ALVO) provides U.S. regulatory update on AVT02
  • Amazon (AMZN) expands use of cashierless RFID tags for stores, according to Bloomberg
  • Amazon (AMZN) announces bevy of items at Devices & Services 2023 event
  • Amazon (AMZN): FTC discloses new details of its lawsuit against AMZN, names executives who were involved in Prime subscriber scheme, according to WSJ
  • American Software's (AMSWA) subsidiary Logility acquires AI forecasting pioneer Garvis; financial terms were not disclosed
  • Apple (AAPL) employees in France planning strike for iPhone launch day, according to Bloomberg
  • Apple (AAPL): UBS comments on iPhone demand; data suggests initial iPhone 15 demand is mixed at best
  • Apple (AAPL) and Goldman Sachs (GS) were planning a stock-trading feature on the iPhone; plans were put on pause given last year's market slump, according to CNBC
  • Argan (AGX) increases quarterly dividend by 20% from $0.25/share to $0.30/share
  • ARS Pharmaceuticals (SPRY) receives Complete Response Letter from FDA for neffy NDA
  • AstraZeneca (AZN) unit Alexion completes Pfizer (PFE) gene therapy agreement
  • BAE Systems (BAESY) and Purisolve joint venture, Promoveo Solutions, awarded multiple award schedule contract to provide IT services to federal, state, and local governments
  • Biophytis SA (BPTS) provided an update yesterday on its early access programs for Sarconeos (BIO101) in the treatment of severe forms of COVID-19; exploring possibilities of launching early access programs in other key countries in Europe
  • Boeing (BA): Fast-growing China domestic air travel driving 20-year demand for 8,560 airplanes
  • Container Store (TCS) announces temporary 10% reduction to CEO Satish Malhotra salary for six months, effective October 1
  • Danimer Scientific (DNMR) is expanding its collaboration with Chevron (CVX) Phillips Chemical to explore development and commercialization of cast extrusion films, blown extrusion films, injection molded parts and rotational molded parts using Rinnovo™ polymers produced in a loop slurry reactor process
  • Embraer SA (ERJ): The Austrian Ministry of Defense announces the decision to select the C-390 Millennium aircraft as its new tactical transport solution
  • Enviva (EVA) disclosed that John K. Keppler resigned as Executive Chairman effective immediately, as he continues to focus on treatment and recovery from recent heart health challenges
  • Ericsson (ERIC) and Alphabet's (GOOG/L) Google Cloud expand on their partnership
  • Ethan Allen’s (ETD) manufacturing plant in Orleans, Vermont, resumes operations and continues to make progress following July flooding
  • Exscientia (EXAI) announces AI drug discovery collaboration with Merck KGaA (MKKGY)
  • Ford (F) of Canada and Unifor confirmed yesterday have reached tentative agreement on new national labor contract
  • Fresenius Medical's (FMS) majority-owned mAbxience confirmed partnership with Abbott (ABT) to commercialize several biosimilars
  • General Dynamics (GD) Electric Boat awarded $517 mln for Virginia-class submarine parts
  • General Motors (GM) to idle its Fairfax, Kansas plant citing ongoing UAW strike, according to Detroit News
  • General Motors (GM) and UAW remain far apart on deal, according to Bloomberg
  • HanesBrands (HBI) announces evaluation of strategic options for global Champion Business
  • Hanesbrands (HBI): Barington Capital comments on Hanesbrands’ review of strategic options for global Champion Business
  • Hertz (HTZ) and mayor Adams launch "Hertz Electrifies New York City"
  • Hess Midstream Partners (HESM) announces the execution of a definitive agreement providing for the repurchase of ~$100 mln of Class B units by its subsidiary, Hess Midstream Operations LP, from affiliates of Hess Corporation (HES) and Global Infrastructure Partners, Hess Midstream’s sponsors
  • Hewlett Packard Enterprise (HPE) announces changes to its organizational structure and executive leadership
  • HomeStreet (HMST): Blue Lion Capital updates shareholders on HomeStreet Bank
  • Ionis Pharma (IONS) treatment of hereditary angioedema granted orphan designation yesterday
  • JPMorgan Chase (JPM) increases quarterly dividend by 5% to $1.05/sh
  • Mercedes-Benz Group AG (MBGYY): UAW reported last night that local 2083 voted down ZF offer, rallied for strong contract
  • Merck (MRK) announces FDA granted priority review to Merck’s application for KEYTRUDA (pembrolizumab) plus concurrent chemoradiotherapy as treatment for patients with newly diagnosed high-risk locally advanced cervical cancer
  • Meta Platforms (META) announced that it is expanding Meta Verified to Businesses
  • Meta Platforms (META) launches WhatsApp business payment app in India, according to The Hindu
  • Microsoft (MSFT) Gaming CEO Phil Spencer on Twitter: will share real plans when ready regarding leaked documents surrounding video game business
  • Microsoft (MSFT) reported that "Starfield"has already surpassed 10 mln players
  • Nano Dimension (NNDM) receives approval from the Israeli court to resume its share repurchase plan immediately
  • New Found Gold Corp (NFGC) intercepts 17.8 g/t Au Over 8.3m at 421 Zone, Drills Mineralization 2.7km South of Keats at Grouse Zone
  • Oracle (ORCL) details several company updates for Oracle CloudWorld event
  • Oracle (ORCL) Adds AI Capabilities to Oracle Analytics Cloud
  • Oracle (ORCL) Announces Next-Generation Fusion Data Intelligence Platform
  • Oracle (ORCL) Announces New Application Development Capabilities for Oracle Cloud Infrastructure
  • PDS Biotech (PDSB) announces PDS0202 elicits active neutralization of multiple influenza strains in preclinical studies
  • Pearson Plc (PSO) announces the appointment of Omar Abbosh as its new Chief Executive Officer and Executive Director, effective early 2024
  • Penske Auto (PAG) and Hedin Mobility Group AB proposal to acquire the entire issued and to be issued share capital of Pendragon rejected
  • Pinterest (PINS) authorizes $1 bln stock repurchase program
  • Puma Biotech's (PBYI) treatment of small cell lung cancer (alisertib) granted orphan designation yesterday
  • RE/MAX Holdings (RMAX) issues housing report for August; new listings rose 1.8% sequentially, bucking a typical seasonal decline trend
  • Roblox (RBLX) acquires voice moderation startup Speechly; financial terms were not disclosed
  • Seelos Therapeutics (SEEL) Announces Top Line Results from SLS-002 Phase II Study in Adults with Major Depressive Disorder at Imminent Risk of Suicide
  • Sempra Energy's (SRE) SoCalGas and ClearSign (CLIR) collaboration awarded U.S. Department of Energy grant to scale-up ultra-low-NOx hydrogen-powered industrial burner prototype
  • Shell plc (SHEL): Repsol (REPYY) files for arbitration in Venture Global LNG dispute, according to Reuters
  • SkillSoft (SKIL) approves 1-for-20 reverse stock split; stock will begin trading on a split-adjusted basis at open on October 2
  • Smith & Wesson Brands (SWBI) authorizes $50 million stock repurchase program through September 19, 2024
  • SomaLogic (SLGC) announces partnership with DNA Link to offer the 7,000 plex SomaScan platform to their customers
  • Spire Global (SPIR) was awarded a $2.8 million, 12-month contract by the National Oceanic and Atmospheric Administration for satellite weather data
  • Stellantis (STLA) to layoff 68 workers at Toledo, Ohio plant amid strike, according to CNBC's Phil LeBeau
  • STMicroelectronics (STM) announces that it has asked Jean-Marc Chery, President and CEO, to be available for a reappointment in his current role; Mr. Chery has accepted the proposal
  • Sylvamo (SLVM) increases quarterly cash dividend 20% to $0.30/share from $0.25/share and declares a special dividend of $0.30/share
  • Takeda Pharma (TAK) announces that the U.S. FDA has accepted for review its New Drug Application resubmission for TAK-721 which is being investigated for the short-term treatment of eosinophilic esophagitis
  • Taysha Gene Therapies (TSHA) Provides Update on TSHA-120 Program in Giant Axonal Neuropathy
  • Textron (TXT) and NetJets announced a record-breaking fleet agreement for the option for NetJets to purchase up to 1,500 additional Cessna Citation business jets over the next 15 years
  • The Beauty Health Company (SKIN) will initiate a stock repurchase program on September 26, 2023
  • Toro Corp. (TORO) announces the sale of the M/T Wonder Formosa and the M/T Wonder Vega for an aggregate $49.5 mln and aggregate expected net gain of $26.7 mln
  • TotalEnergies SE (TTE) to Invest in a New 1,050 MWac Renewable Portfolio JV, Equally Owned With Adani Green Energy Limited
  • TotalEnergies SE (TTE) signs a a 15-year renewable electricity supply agreement with Saint-Gobain (CODYY) for the purchase of solar power for 125 industrial sites in North America
  • TotalEnergies SE (TTE) to build new mechanical recycling unit for plastic waste at its Grandpuits site southeast of Paris
  • Treace (TMCI) Highlights New Product Innovations and Updated ALIGN3D™ Clinical Study Data at the American Orthopaedic Foot & Ankle Society Annual Meeting 2023
  • Tutor Perini (TPC) awarded $47 mln National Park Services project in Florida
  • Uber (UBER) could downsize in Europe if drivers are classified as employees, according to Financial Times
  • Unilever PLC (UL) is working with Morgan Stanley (MS) and Evercore (EVR) to gather bids for Elida Beauty, according to Reuters
  • Uxin (UXIN) announces RMB1.5 bln equity investment in its Hefei Subsidiary
  • Vir Biotechnology (VIR) announced that Johanna Friedl-Naderer, the Company’s Executive Vice President and Chief Operating Officer, will be leaving the Company on September 29, 2023
  • Vir Biotechnology (VIR) Announces First Participant Dosed in New Phase 1 Trial Evaluating VIR-1388, an Investigational T Cell Vaccine for the Prevention of HI
  • Vulcan Materials (VMC) names Tom Baker II as President; promotes Ronnie Pruitt to COO
  • Xylem (XYL) and LORENTZ announces that they will enter into a distribution agreement to expand the availability of solar-powered pumping systems, globally

(see Upgrades/Downgrades calendar for full list):

• Upgrades:
  • Azul S.A. (AZUL) upgraded to Buy from Neutral at Goldman; tgt raised to $18.30
  • Bausch Health (BHC) upgraded to Buy from Hold at Jefferies; tgt raised to $16
  • Cemig (CIG) upgraded to Buy from Neutral at BofA Securities
  • Goosehead Insurance (GSHD) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt raised to $90
  • Hudson Pacific Properties (HPP) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt raised to $10
  • Kimco Realty (KIM) upgraded to Equal Weight from Underweight at Wells Fargo; tgt $20
  • Louisiana-Pacific (LPX) upgraded to Buy from Hold at TD Securities; tgt $78
  • Pinterest (PINS) upgraded to Buy from Neutral at Citigroup; tgt raised to $36
  • Pinterest (PINS) upgraded to Buy from Neutral at DA Davidson; tgt raised to $35
  • Sabra Health Care REIT (SBRA) upgraded to Buy from Hold at Jefferies; tgt raised to $15
  • SITE Centers (SITC) upgraded to Overweight from Equal Weight at Wells Fargo; tgt $15
  • Western Digital (WDC) upgraded to Outperform from Neutral at Exane BNP Paribas; tgt $58
  • Wingstop (WING) upgraded to Outperform from Neutral at Wedbush; tgt raised to $200
• Downgrades:
  • ARS Pharmaceuticals (SPRY) downgraded to Mkt Perform from Outperform at William Blair
  • Chewy (CHWY) downgraded to Perform from Outperform at Oppenheimer
  • Dollar General (DG) downgraded to Underweight from Neutral at JP Morgan; tgt lowered to $116
  • nCino (NCNO) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt $24
  • Phillips Edison & Company (PECO) downgraded to Underweight from Equal Weight at Wells Fargo; tgt $35
  • P. T. Telekomunikasi (TLK) downgraded to Neutral from Buy at BofA Securities
  • Retail Opportunity Investments (ROIC) downgraded to Equal Weight from Overweight at Wells Fargo; tgt raised to $15
  • Skyworks (SWKS) downgraded to Neutral from Outperform at Exane BNP Paribas; tgt $110
  • WPP plc (WPP) downgraded to Neutral from Outperform at Exane BNP Paribas
  • Zebra Tech (ZBRA) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $220
• Others:
  • Build-A-Bear Workshop (BBW) initiated with a Buy at Jefferies; tgt $42
  • CareTrust REIT (CTRE) initiated with a Buy at Jefferies; tgt $23
  • CoStar Group (CSGP) resumed with a Mkt Outperform at JMP Securities; tgt $100
  • First Citizens BancShares (FCNCA) initiated with an Overweight at JP Morgan; tgt $1850
  • IBM (IBM) initiated with an Outperform at RBC Capital Mkts; tgt $188
  • LTC Properties (LTC) initiated with a Hold at Jefferies; tgt $29
  • Mirum Pharmaceuticals (MIRM) initiated with a Mkt Outperform at JMP Securities; tgt $70
  • National Health (NHI) initiated with a Hold at Jefferies; tgt $52
  • Reviva Pharmaceuticals (RVPH) initiated with a Buy at ROTH MKM; tgt $12
  • Sonos (SONO) initiated with a Buy at Rosenblatt; tgt $20

• Econ Data (Thursday):
  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 225,00; prior 220,000), Continuing Claims (prior 1.688 mln), Q2 Current Account Balance (Briefing.com consensus -$222.0 bln; prior -$219.3 bln), and September Philadelphia Fed Survey (Briefing.com consensus -2.0; prior 12.0)
  • 10:00 ET: August Existing Home Sales (Briefing.com consensus 4.10 mln; prior 4.07 mln) and August Leading Indicators (Briefing.com consensus -0.4%; prior -0.4%)
  • 10:30 ET: Weekly natural gas inventories (prior +57 bcf)
• Earnings:
  • Monday (Sept 18)
    • Pre-Market: None
      After-Hours: SFIX
  • Tuesday (Sept 19)
    • Pre-Market: APOG AZO DAVA
    • After-Hours: SCS
  • Wednesday (Sept 20)
    • Pre-Market: GIS
    • After-Hours: FDX KBH
  • Thursday (Sept 21)
    • Pre-Market: DRI FDS
    • After-Hours: None
  • Friday (Sept 22)
    • Pre-Market: None
    • After-Hours: None