What you need to know…
The S&P 500 Index ($SPX) (SPY) today is up +0.42%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.11%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.51%.
Stock indexes this morning are moderately higher, with the Nasdaq 100 climbing to a 3-1/2 week high. Optimism that Thursday’s U.S. Dec CPI report will show a further softening in price pressures is knocking bond yields lower and is giving stocks a boost.
An easing of inflation would bolster the case for less-aggressive Fed rate hikes. The market consensus is for Thursday’s U.S. Dec CPI to ease to 6.5% y/y from 7.1% y/y in Nov and for Dec CPI ex-food and energy to ease to 5.7% y/y from 6.0% y/y in Nov. Those reports would be down from the 40-year highs of +9.1% y/y (headline) and +6.6% y/y (core) seen in mid-2022.
Lower global bond yields this morning are bullish for stocks. The 10-year UK gilt yield dropped to a 3-week low of 3.366%. Also, the 10-year German bund yield is down -8.1 bp at 2.227%, and the 10-year T-note yield is down -4.1 bp at 3.578%.
Airline stocks recovered from early losses and are little changed as they resumed flights after a system outage in the pilot notification system forced the FAA to temporarily halt flights nationwide.
Overseas markets today are mixed. The Euro Stoxx 50 index is up +1.10%. The Shanghai Composite Stock index closed down by -0.24%, and Japan’s Nikkei Stock index closed up +1.03%.
Today’s stock movers…
Lower T-note yields today are boosting technology stocks and the overall market. Amazon.com (AMZN) is up more than +3%. Also, Alphabet (GOOGL), Crowdstrike Holdings (CRWD), and Datadog (DDOG) are up more than +2%. In addition, Microsoft (MSFT), Marvell Technology (MRVL), and Globalfoundries (GFS) are up more than +1%.
Laboratory stocks today are climbing for a second day on earnings optimism for the sector after Danaher Tuesday announced that preliminary Q4 adjusted core revenue growth was in the high-single-digit percent range, stronger than previous guidance of flat to low-single-digit percent decline. As a result, Bio-Rad Laboratories (BIO) is up more than +6% to lead gainers in the S&P 500. Also, Charles River Laboratories (CRL) is up more than +5%. In addition, Thermo Fisher Scientific (TMO), Danaher (DHR), and Laboratory Corp of America Holdings (LH) are up more than +2%.
Atlassian Corp (TEAM) is up more than +6% to lead gainers in the Nasdaq 100 after Mizuho Securities said the company “significantly” raised prices for some products.
Expedia Group (EXPE) is up more than +3% after Oppenheimer upgraded the stock to outperform from perform.
Autodesk (ADSK) is up more than +1% after Berenberg initiated coverage on the stock with a buy rating and a price target of $230.
Illumina (ILMN) is up more than +1% after HSBC initiated coverage on the stock with a buy rating and a price target of $300.
Medical technology product providers are under pressure today after Intuitive Surgical reported preliminary Q4 revenue of $1,66 billion, below the consensus of $1.69 billion. As a result, Teleflex (TFX) is down more than -5% to lead losers in the S&P 500. Also, Intuitive Surgical (ISRG) is down more than -4% to lead losers in the Nasdaq 100. In addition, Dexcom (DXM) and Stryker (SYK) are down more than -2%.
Levi Strauss (LEVI) is down more than -3% after Citigroup downgraded the stock to neutral from buy.
Verizon Communications (VZ) is down more than -1% to lead losers in the Dow Jones Industrials after Bloomberg data showed the Eaton Vance Tax-Managed Value Fund exited its position in Verizon.
Salesforce (CRM) is down more than -1% after Bernstein downgraded the stock to underperform from market perform.
Across the markets…
March 10-year T-notes (ZNH23) today are up +8 ticks, and the 10-year T-note yield is down -4.1 bp at 3.578%. Strength in European government bonds today is underpinning T-notes prices. The 10-year UK gilt yield fell to a 3-week low today of 3.388%, and the 10-year German bund yield is down -7.7 bp at 2.231%. Further gains in T-notes may be limited by supply pressures as the Treasury will auction $32 billion of 10-year T-notes this afternoon as part of this week’s $90 billion auction package of T-notes and T-bonds.
The dollar index (DXY00) today is up by +0.02%. The dollar today is slightly higher. Weakness in the yen today is supporting modest gains in the dollar as the yen weakened after the BOJ boosted QE. Strength in EUR/USD is limiting gains in the dollar after hawkish ECB comments boosted the euro to a 7-month high.
EUR/USD (^EURUSD) today is up by +0.30% and posted a 7-month high. Hawkish comments today from ECB Governing Council member Holzmann boosted the euro when he said only a slowdown in core inflation could alter the ECB's resolve to raise interest rates. Today’s better-than-expected Italian retail sales report was supportive for the euro.
ECB Governing Council member Holzmann said while there's hope that headline consumer-price gains have peaked, that's not the case for underlying inflation. Only a slowdown in core inflation can alter the ECB's resolve to raise interest rates.
Italy’s Nov retail sales unexpectedly rose +0.8% m/m, stronger than expectations of -0.3% m/m.
USD/JPY (^USDJPY) today is up by +0.22%. The yen today is moderately lower after the BOJ boosted QE when it announced unscheduled debt purchases. The BOJ offered to buy 500 billion yen of 1-to-10-year notes and 250 billion of debt due in more than 10 years. It also offered to buy unlimited quantities of 1-to-5-year securities at fixed yields. The BOJ has conducted a combination of additional unlimited and fixed-amount purchase operations every business day since Dec 28, except for Jan 5 and Jan 10.
Today’s Japanese economic news was bearish for the yen after the Nov leading index CI fell -1.0 to a 23-month low of 97.6, right on expectations.
February gold (GCG3) this morning is up +1.6 (+0.09%), and March silver (SIH23) is up +0.125 (+0.53%). Precious metals prices this morning are slightly higher, with gold climbing to an 8-month high. Lower global bond yields today are bullish for metals. Silver also has carry-over support today from a rally in copper prices to a 7-month high on hopes that the reopening of China’s economy will boost industrial metals demand. Gains in gold were limited ahead of Thursday’s U.S. Dec CPI report.
More Stock Market News from Barchart
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- Pre-Market Brief: Stocks Mostly Higher As Investors Await U.S. Inflation Data
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here
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