What you need to know…
The S&P 500 Index ($SPX) (SPY) today is down -0.04%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.21%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.22%. U.S. stock indexes gave up an early rally and turned lower on concern that today’s stronger-than-expected U.S. job openings and ISM reports will keep the pressure on the Fed to maintain its aggressive rate-hike regime.
U.S. stock indexes today initially opened higher with the S&P 500 posting a 1-1/2 month high and the Dow Jones Industrials posting a 2-month high on carry-over support from a jump of more than +2% in China’s Shanghai Composite. Chinese stocks soared today on speculation China is preparing to phase-out Covid Zero policies, even as China’s Foreign Ministry said it was unaware of such a plan.
M&A activity is supporting a rally in healthcare stocks today. Abiomed surged more than +50% after Johnson & Johnson said it purchased the company for about $17.3 billion. Also, Pfizer is up more than +2%, and IDEXX Laboratories is up more than +9% after raising their full-year revenue estimates.
The outlook for higher U.S. interest rates is a bearish factor for stocks. The market has priced in a 100% chance the Fed will raise the federal funds target range by +75 bp on Wednesday after the 2-day FOMC meeting concludes. The markets will also scour post-meeting comments from Fed Chair Powell for clues about the size of future rate hikes.
Today’s U.S. economic news was stronger than expected, which may keep the Fed hawkish. The Sep JOLTS job openings report unexpectedly rose +437,000 to 10.717 million, showing a stronger labor market than expectations of a decline to 9.750 million. Also, the Oct ISM manufacturing index fell -0.7 to a 2-1/2 year low of 50.2, but that was slightly stronger than expectations of 50.0. In addition, Sep construction spending unexpectedly rose +0.2% m/m, stronger than expectations of a -0.6% m/m decline.
An easing of inflation pressures is supportive for stocks after today’s Oct U.S. ISM prices-paid subindex unexpectedly fell -5.1 to a 2-1/2 year low of 46.6 versus expectations of an increase to 53.0.
Today’s stock movers…
Abiomed (ABMD) is up more than +50% today to lead gainers in the S&P 500 after Johnson & Johnson agreed to buy all of the outstanding shares of the company for an upfront payment of $380 per share in cash plus contingent payments of up to $35 if certain clinical and commercial milestones are achieved.
IDEXX Laboratories (IDXX) is up more than +9% today to lead gainers in the Nasdaq 100 after reporting Q3 revenue of $842 million, above the consensus of $830.9 million, and raising its full-year revenue estimate to $3.33 billion-$3.37 billion from a previous estimate of $3.31 billion-$3.39 billion.
Pfizer (PFE) is up more than +2% today after reporting Q3 revenue of $22.64 billion, stronger than the consensus of $21.12 billion. Also, Pfizer raised its full-year revenue forecast to $99.5 billion-$102.0 billion from a previous forecast of $98.0 billion-$102.0 billion, above the consensus of $99.73 billion.
U.S.-listed Chinese stocks are moving higher today, fueled by speculation China is preparing to phase-out Covid Zero policies. Baidu (BIDU), JD.com (JD), and Alibaba Group Holding (BABA) are up more than +6%. Also, NetEase (NTES) and Pinduoduo (PDD) are up more than +4%.
Tesla (TSLA) is up nearly +2% today after Reuters reported the company plans to start mass production of its Cybertruck at the end of 2023.
Hologic (HOLX) is up more than +6% today after reporting Q4 adjusted EPS of 82 cents, stronger than the consensus of 63 cents, and forecast full-year adjusted EPS of $3.30-$3.60, the midpoint above the consensus of $3.41.
U.S. casino stocks with exposure to Macau are climbing today on speculation China is preparing to phase-out Covid Zero policies, even as China’s Foreign Ministry said it was unaware of such a plan. As a result, Wynn Resorts (WYNN) is up more than +4%. Also, Las Vegas Sands (LVS) is up more than +3%, and MGM Resorts International (MGM) is up nearly +2%.
Catalent (CTLT) is down more than -23% today to lead losers in the S&P 500 after reporting Q1 net revenue of $1.02 billion, below the consensus of $1.09 billion, and cutting its full-year net revenue forecast to $4.63 billion-$4.88 billion from a prior estimate of $4.98 billion-$5.23 billion.
Zebra Technologies (ZBRA) is down more than -14% today after reporting Q3 net sales of $1.38 billion, weaker than the consensus of $1.48 billion, and forecasting Q4 adjusted EPS of $4.50-$4.80, well below the consensus of $5.16.
Molson Coors Beverage (TAP) is down more than -6% today after reporting Q3 Ebitda of $593.5 million, below the consensus of $637.9 million.
Sysco (SYY) is down more than -3% today after reporting Q1 adjusted EPS of 97 cents, weaker than the consensus of 99 cents.
Eli Lilly & Co (LLY) is down more than -4% today after cutting its full-year adjusted EPS forecast to $7.70-$7.85 from a prior view of $7.90-$8.05.
Across the markets…
Dec 10-year T-notes (ZNZ22) this morning are up by +7 ticks, and the 10-year T-note yield is down -0.8 bp at 4.040%. T-note prices are modestly higher today on positive carry-over from a rally in European government bonds. However, T-notes fell back from their best levels on stronger-than-expected U.S. job openings and ISM reports.
The dollar index (DXY00) this morning is down -0.20%. A sharp rally in stocks today has curbed liquidity demand for the dollar. Also, lower T-note yields today have weakened the dollar’s interest rate differentials. The dollar recovered from its worst levels on better-than-expected U.S. job openings and ISM reports.
EUR/USD (^EURUSD) today is up by +0.56%. Hawkish comments today from ECB President Lagarde were supportive of the euro.
ECB President Lagarde said, "inflation is still too high throughout the Eurozone," and interest rates have further to rise to ensure that inflation returns to the ECB's 2% target over the medium term.
The German Sep import price index unexpectedly fell -0.9% m/m, weaker than expectations of +0.6% m/m and the biggest decline in nearly 2-1/2 years.
USD/JPY (^USDJPY) today is down -0.96%. A fall in T-note yields today has sparked short-covering in the yen. The yen received support from news that Japan Oct vehicle sales rose +19.7% y/y, the most in 17 months.
December gold (GCZ2) this morning is up +15.1 (+0.92%), and December silver (SIZ22) is up +0.756 (+3.95%). Precious metals prices this morning are sharply higher, with silver climbing to a 3-week high. A weaker dollar today is bullish for metals prices. Also, lower global government bond yields are supportive of gold prices. Silver prices jumped today on speculation China would soon end its Covid Zero policy, which would benefit economic growth and industrial metals demand. Gold continues to be undercut by fund liquidation as long positions in gold ETF’s dropped to a 2-1/2 year low Monday.
More Stock Market News from Barchart
- Markets Today: Stocks Jump on Speculation China Will Soon End Covid Zero Policy
- Pre-Market Brief: Stocks Move Higher As Focus Shifts to Fed
- Stocks Tumble on Weakness in Chip Stocks and Higher Bond Yields
- Dollar Rallies on Stock Weakness and Higher T-note Yield
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