What you need to know…
The S&P 500 Index ($SPX) (SPY) today is down -0.16%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.09%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.36%. Stock indexes this morning are mixed, with the Dow Jones Industrials at a 2-3/4 month high.
Higher T-note yields this morning are weighing on technology stocks and the Nasdaq 100. The 10-year T-note yield is up +3.1 bp at 3.886% after Fed Governor Waller said, "we've still got a ways to go" before the Fed stops raising interest rates, despite good news last week on consumer prices.
U.S. stock indexes are seeing underlying support from hopes that U.S.-China geopolitical risks may ease after U.S. President Biden met with Chinese President Xi Jinping today at the G-20 summit in Indonesia and the White House said Secretary of State Blinkin would travel to China to meet with Chinese officials for additional talks. Also, China, over the weekend, released a rescue plan for its property sector.
Bitcoin is down more than -1% this morning on concerns about crypto-contagion from the liquidity crisis that forced FTX.com to file for Chapter 11 bankruptcy last Friday. However, Bitcoin recovered from its worst levels today after Binance Holding announced plans to set up a recovery fund to help stabilize the cryptocurrency industry when Binance Holding CEO Zhao said the goal was to “reduce further cascading negative effects” of the FTX.com bankruptcy and assist strong crypto projects facing a liquidity squeeze.
Today’s stock movers…
Technology stocks are under pressure today from higher T-note yields and the prediction from Goldman Sachs that in the current interest rate environment, mega-cap tech stocks are collectively expensive relative to bonds and will lag the S&P 500 in Q4. As a result, Align Technology (ALGN) and Intuit (INTU) are down more than -3%. Also, Microsoft (MSFT) is down more than -2% to lead losers in the Dow Jones Industrials. In addition, Amazon.com (AMZN), Tesla (TSLA), and Marvell Technology (MRVL) are down more than -2%.
Hasbro (HAS) is down more than -5% today to lead losers in the S&P 500 after Bank of America downgraded the stock by two notches to underperform from buy.
Dentsply Sirona (XRAY) is down more than -2% after reporting Q3 adjusted net sales of $947 million, weaker than the consensus of $1.03 million, and then cutting its full-year net sales forecast to $3.85 billion-$3.88 billion from a previous forecast of $4.1 billion-$4.2 billion, below the consensus of $4.06 billion.
Biogen (BIIB) is up more than +4% to lead gainers in the S&P 500 and Nasdaq 100 after Roche’s Alzheimer’s drug, a potential competitor to Biogen’s, failed a pair of large studies.
Moderna (MRNA) is up more than +3% on hopes of increased demand for its bivalent vaccine after data showed the company’s booster shot of its bivalent vaccine sharply increased antibody levels against recent Covid strains when compared to a fourth dose of its original immunization.
Merck & Co (MRK) is up more than +2% to lead gainers in the Dow Jones Industrials after Europe’s Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion recommending approval of the Lynparza drug in combination with abiraterone and prednisone for the treatment of metastatic castration-resistant prostate cancer in adult patients.
Advanced Micro Devices (AMD) is up more than +1% after Baird upgraded the stock to buy from outperform with a price target of $95.
U.S.-listed Chinese stocks are climbing today after China put forward a sweeping package to rescue its ailing property sector. JD.com (JD) is up more than +4% to lead gainers in the Nasdaq 100. Also, Alibaba Group Holding (BABA) is up more than +2%. In addition, Baidu (BIDU) and NetEase (NTES) are up more than +1%.
Across the markets…
Dec 10-year T-notes (ZNZ22) this morning are down by -10 ticks, and the 10-year T-note yield is up +7.3 bp at 3.886%. T-notes prices are under pressure his morning on hawkish comments from Fed Governor Waller said, "we've still got a ways to go" before the Fed stops raising interest rates. However, T-notes recovered from their worst levels on strength in European government bond prices, with the 10-year German bund yield down -5.3 bp at 2.104%.
The dollar index (DXY00) this morning is up by +0.68%. The dollar this morning is moving higher as U.S. Treasury yields rose on hawkish comments from Fed Governor Waller, which strengthened the dollar’s interest rate differentials. The dollar also garnered some support from today’s decline in stocks that boosts liquidity demand for the dollar.
EUR/USD (^EURUSD) today is down by -0.33%. EUR/USD today is moderately lower after dovish ECB comments weighed on European government bond yields and weakened the euro’s interest rate differentials. However, losses in EUR/USD were limited after today’s economic news showed Eurozone Sep industrial production rose more than expected.
ECB Executive Board member Panetta said, "aggressive tightening is not advisable," and monetary policy should aim to avoid protracted contraction.
Eurozone Sep industrial production rose +0.9% m/m, stronger than expectations of +0.5% m/m.
USD/JPY (^USDJPY) today is up sharply by +1.35%. The yen is under pressure today after hawkish Fed comments pushed T-note yields higher. Also, comments from BOJ Governor Kuroda weighed on the yen when he said Japan’s economy is still recovering from the pandemic and warrants support from monetary easing, signaling no immediate shift in monetary policy.
December gold (GCZ2) this morning is up +1.9 (+0.11%), and December silver (SIZ22) is up +0.158 (+0.73%). Precious metals prices this morning are slightly higher. Weakness in stocks today has boosted some safe-haven demand for precious metals. Gains in metals were limited today by a stronger dollar. Also, hawkish Fed comments boosted T-note yields and undercut gold prices. Gold continues to be undercut by fund liquidation as long positions in gold ETF’s dropped to a new 2-1/2 year low last Thursday.
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- Markets Today: Stocks Modestly Lower as Bond Yields Climb on Fed Comments
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