Stocks Climb as T-Note Yields Fall

What you need to know…

The S&P 500 Index ($SPX) (SPY) today is up +0.64%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.98%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.82%. A jump of more than +6% in Amgen is lifting the Dow Jones Industrials Stock indexes this morning after Oppenheimer raised its price target on the stock. Also, a rally in chip stocks is leading gainers in technology stocks.  Finally, lower T-note yields are supporting stocks, with the 10-year T-note yield down -6.9 bp at 4.144%.  The markets are braced for the outcome of today’s U.S. Election Day.

ASML Holding NV is up more than +3% to lead gainers in chip stocks today after Morgan Stanley named the stock one of its top picks for European semiconductor stocks. Also, Welltower and Dupont de Nemours are up more than +7% after reporting better-than-expected Q3 earnings results.

On the negative side, Take-Two Interactive Software is down more than -12% after reporting Q2 net bookings of $1.50 billion, weaker than the consensus of $1.55 billion, and cutting its full-year bookings estimate.  Also, Tesla is down more than -4% after recalling 40,168 Model S and Model X vehicles from 2017-2021 due to a problem with their power steering assist systems. 

Today’s stock movers…

Cruise line operators are climbing today after Norwegian Cruise Line Holdings reported a Q3 adjusted loss of -64 cents per share, a smaller loss than the consensus of -70 cents.  As a result, Norwegian Cruise Line Holdings (NCLH) is up more than +6%. Also, Carnival (CCL) and Royal Caribbean Cruises (RCL) are up more than +2%.

Chip stocks are moving higher today to lead gainers in technology stocks after Morgan Stanley named ASML Holding NV one of its top picks for European semiconductor stocks.  ASML Holding NV (ASML) and Applied Materials (AMAT) are up more than +3%. Also, Qualcomm (QCOM), Microchip Technology (MCHP), Lam Research (LRCX), Analog Devices (ADI), and NXP Semiconductors (NXPI) are up more than +2%. 

Welltower (WELL) is up more than +8% after reporting Q3 revenue of $1.47 billion, better than the consensus of $1.45 billion. 

Dupont de Nemours (DD) is up more than +7% after reporting Q3 net sales of $3.32 billion, stronger than the consensus of $3.21 billion. 

Amgen (AMGN) is up more than +6% today to lead gainers in the Dow Jones Industrials and Nasdaq 100 after Oppenheimer raised its price target on the stock to $300 from $290.

Lumen Technologies (LUMN) is up more than +4% today on signs of insider buying after an SEC filing showed Chairmans Glenn bought $118,400 of his company’s stock last Friday. 

Take-Two Interactive Software (TTWO) is down more than -12% today to lead losers in the S&P 500 after reporting Q2 net bookings of $1.50 billion, weaker than the consensus of $1.55 billion, and cutting its full-year bookings estimate to $5.4 billion-$5.5 billion from a prior estimate of $5.8 billion-$5.9 billion, below the consensus of $5.91 billion. 

Medtronic Plc (MDT) is down more than -5% after a clinical trial of the company’s Symplicity Spyral Renal Denervation system for treating high blood pressure missed its primary efficacy endpoint.

Tesla (TSLA) is down more than -4% to lead losers in the Nasdaq 100 after it recalled 40,168 Model S and Model X vehicles from 2017-2021.  The recall was announced due to a problem with the power steering assist system that could cause the loss of power steering assist when driving on rough roads or after hitting a pothole, increasing the risk of a crash.

U.S.-listed Chinese stocks are weaker today on concern China will maintain or expand its pandemic lockdowns and restrictions after it reported 7,323 new Covid infections on Monday, the most in more than 6 months.  Alibaba Group Holding (BABA) is down more than -4%.  Also, Pinduoduo (PDD) is down more than -2%, and Baidu (BIDU) and NetEase (NTES) are down more than -1% 

Across the markets…

Dec 10-year T-notes (ZNZ22) this morning are up by +16.5 ticks, and the 10-year T-note yield is down -6.9 bp at 4.144%. Bond dealer short covering is boosting T-note prices this morning as dealers lift their short hedges in T-notes put on Monday after 15 U.S. companies sold $20.6 billion of corporate debt to raise capital in the U.S. investment-grade primary bond market.  However, supply pressures may limit gains in T-notes as the Treasury will auction $40 billion of 3-year T-notes later today as part of the week’s $96 billion November refunding package of T-notes and T-bonds.

The dollar index (DXY00) this morning is up by +0.15%.  Weakness in the yuan today is boosting the dollar. Chinese economic concerns are undercutting the yuan on concern China will have to maintain or expand pandemic lockdowns after new Covid infections in China climbed to a 6-month high on Monday. Gains in the dollar today are contained as strength in stocks has reduced the liquidity demand for the dollar. 

EUR/USD (^EURUSD) today is down by -0.15%.  The euro is under pressure today on a Bloomberg report that said Germany’s ruling coalition is planning to more than double net federal borrowing next year.  According to people familiar with the plan, the German government is targeting net borrowing of 45 billion euros in 2023, compared with an earlier estimate of 17.2 billion euros. 

Eurozone Sep retail sales rose +0.4% m/m, right on expectations.

ECB Governing Council member and Bundesbank President Nagel said the ECB needs to continue raising interest rates even if it weighs on the economy.

USD/JPY (^USDJPY) today is down -0.35%.  The yen today is moderately higher after Japan’s cabinet approved a 29.1 trillion yen ($198 billion) extra budget to fund an economic stimulus package.  Today’s Japanese economic news was mixed for the yen.

Japan Sep labor cash earnings rose +2.1% y/y, stronger than expectations of +1.7% y/y and the most in 3-1/4 years.

The Japan Sep leading index CI fell -2.9 to a 1-3/4 year low of 97.4, weaker than expectations of 97.8.

Japan Sep household spending rose +2.3% y/y, weaker than expectations of +2.6% y/y.

December gold (GCZ2) this morning is down -2.3 (-0.14%), and December silver (SIZ22) is up +0.026 (+0.12%).  Precious metals prices this morning are mixed.  A stronger dollar today is bearish for metals prices.  However, lower global bond yields today are limiting losses in gold. Also, rising Covid infections in China are boosting safe-haven demand for precious metals after China reported 7,323 new Covid infections on Monday, the most in more than 6 months.  Gold continues to be undercut by fund liquidation as long positions in gold ETF’s dropped to a new 2-1/2 year low Monday.

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