Stocks Slide on Chip Stocks and Hawkish Economic News

What you need to know…

The S&P 500 Index ($SPX) (SPY) today is down -1.72%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -1.44%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -2.60%.  

Stocks this morning are sharply lower, with the Nasdaq 100 falling to a 6-week low.  Weakness in technology stocks today is weighing on the overall market.  Micron Technology is down more than -3% to lead semiconductor stocks lower after it reported lower-than-expected Q1 adjusted revenue and forecasted that Q2 revenue would be below consensus.  Also, CarMax is down more than -8% after reporting weaker-than-expected Q3 earnings.

Stock indexes extended their losses on this morning’s stronger-than-expected jobless claim and Q3 GDP reports, which were hawkish for Fed policy. 

On the positive side, defensive healthcare stocks are moving higher on today’s slump in the broader market.  Also, bond yields gave up early gains and turned lower, with the 10-year T-note yield down -0.8 bp at 3.654%.

U.S. weekly initial unemployment claims rose +2,000 to 216,000, showing a stronger labor market than expectations of an increase to 222,000.

U.S. Q3 GDP was revised upward by +0.3 to 3.2% (q/q annualized), stronger than expectations of unchanged at 2.9%, as Q3 personal consumption was revised upward by +0.6 percentage points to 2.3% from 1.7%. Also, the Q3 core PCE deflator was revised upward to 4.7% from 4.6%.

U.S. Nov leading indicators fell -1.0% m/m, weaker than expectations of -0.5% m/m and the largest decline in 2-1/2 years.

Today’s stock movers…

CarMax (KMX) is down more than -8% to lead losers in the S&P 500 after reporting Q3 EPS of 24 cents, well below the consensus of 65 cents.

Chip stocks are under pressure today after Micron Technology reported Q1 adjusted revenue of $4.09 billion, below the consensus of $4.13 billion, and forecasted Q2 adjusted revenue of $3.6 billion-$4.0 billion, the midpoint below the consensus of $3.88 billion.  As a result, Lam Research (LRCX) is down more than -7% to lead losers in the Nasdaq 100.  Also, Applied Materials (AMAT) and Advanced Micro Devices (AMD) are down more than -5%. In addition, Nvidia (NVDA) is down more than -4%, and Marvell Technology (MRVL), Micron Technology (MU), Qualcomm (QCOM), Microchip Technology (MCHP), ASML Holding NV (ASML), and NXP Semiconductor NV (NXPI) are down more than -3%.  Finally, Intel (INTC) is down more than -2% to lead losers in the Dow Jones Industrials.

Microsoft (MSFT) is down more than -2% after it was fined 60 million euros ($64 million) by France’s data protection authority over the way it manages cookies on its bing.com search engine and ordered to make the cookies more customer friendly. 

FedEx (FDX) is up more than +1% to lead gainers in the S&P 500 as it extends Wednesday’s +3% rally after it reported Q2 adjusted EPS of $3.18, stronger than the consensus of $2.80.

Crown Castle (CCI) is up +0.5% after Moody’s Investors Service raised its long-term rating outlook on the company to positive from stable.

Defensive healthcare stocks are finding support today from the selloff in the broader market.  Centene (CNC) and McKesson (MCK) are up +0.6%.  Also, Cardinal Health (CAH) is up +0.5%, and Humana (HUM) is up +0.4%.  In addition, UnitedHealth Group (UNH) and Molina Healthcare (MOH) are up +0.15%. 

Across the markets…

March 10-year T-notes (ZNH23) today are up +2 ticks, and the 10-year T-note yield is down -0.8 bp at 3.654%.  March T-notes recovered from early losses today and are slightly higher as a selloff in stocks boosts safe-haven demand for government debt.  T-notes today initially moved lower on the stronger-than-expected U.S. jobless claims and Q3 GDP reports.  Also, a jump in German bund yields weighed on T-note prices after the 10-year German bund yield climbed to a 2-month today of 2.385%. 

The dollar index (DXY00) today is up by +0.17%.  A slump in stocks today has boosted the liquidity demand for the dollar.  The dollar also saw support from today’s U.S. jobless claim and Q3 GDP reports.

EUR/USD (^EURUSD) today is down by -0.09%.  The euro today gave up an overnight advance and is slightly lower. A stronger dollar today is undercutting the euro.  EUR/US initially posted moderate gains in overnight trade on hawkish comments from ECB Vice President Guindos, who said, "increases of +50 bp by the ECB may become the new norm in the near term, and we should expect to raise interest rates at this pace for a period of time."

USD/JPY (^USDJPY) this morning is unchanged.  The yen today gave up overnight gains and turned lower after the BOJ boosted QE.  The BOJ today unexpectedly purchased 650 billion yen of 3-5 year securities and 675 billion yen of 5-10-year securities.  Higher T-note yields today are also undercutting the yen. 

February gold (GCG3) this morning is down -16.0 (-0.87%), and March silver (SIH23) is down -0.439 (-1.81%).  Precious metals prices this morning are moderately lower.  A stronger dollar today is weighing on metals prices.  Gold is also under pressure from higher global bond yields. Losses in metals are contained as today’s stock selloff has boosted the safe-haven demand for precious metals. 

• CarMax (KMX) May Be a Surprising Bet for Bullish Contrarians
• Markets Today: Stocks Fall on Weak Revenue Outlook from Micron
• 3 Bull Put Spread Ideas For This Thursday
• Pre-Market Brief: Stocks Mostly Lower Ahead of Key U.S. GDP Data