Stocks Fluctuate in the Afternoon

What you need to know…

The S&P 500 Index ($SPX) (SPY) today is up +0.51%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.2%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.72%.

U.S. stock indexes are higher this afternoon led by strength in Nvidia after it gave a bullish revenue outlook.

Bond yields initially rose after this morning’s U.S. economic news showed that weekly jobless claims unexpectedly fell and that the Q4 core PCE deflator was revised higher. 

U.S. weekly initial unemployment claims unexpectedly fell -3,000 to 192,000, showing a stronger labor market than expectations of an increase to 200,000.  Also, weekly continuing unemployment claims fell -37,000 to 1.654 million, showing a stronger labor market than expectations of an increase to 1.700 million.

U.S. Q4 GDP was revised lower to +2.7% (q/q annualized) from the previously reported +2.9% as Q4 personal consumption was revised lower to +1.4% from +2.0%.  Also, the Q4 core PCE deflator was revised upward to show a +4.3% q/q increase from the previously reported +3.9% q/q increase.

The 10-year T-note yield is lower at 3.824%. 

Quanta Services is up more than +13% after reporting stronger-than-expected Q4 revenue, and Ansys is up more than +10% after reporting Q4 adjusted EPS above estimates. Also, Coterra Energy is up more than +6% after reporting better-than-expected Q4 operating revenue, and Iron Mountain is up more than +3% after forecasting 2023 revenue above the consensus.

On the bearish side, Domino’s Pizza is down more than -10% after reporting weaker-than-expected Q4 revenue.  Also, eBay is down more than -7% after reporting the seventh straight quarter of decline in active buyers and said it expects a “challenging” margin outlook this year.  In addition, Dollar General is down more than -4% after cutting its preliminary Q4 EPS estimate.

Hawkish comments Wednesday night from New York Fed President Williams were bearish for stocks when he said strong demand in the U.S. economy continues to exceed supply, pointing to persistent price pressures in the services sector.  He also said that the continued demand for goods and ongoing supply-chain issues in the global economy might keep prices from falling as quickly as some have expected. 

Overseas stock markets are mixed.  The Euro Stoxx 50 today is up +0.76%.  China’s Shanghai Composite stock index closed down -0.11%. The Japanese stock market was closed today for the Emperor’s Birthday holiday.

Today’s stock movers…

Nvidia (NVDA) is up more than +13% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q4 adjusted gross margin of 66.1%, better than the consensus of 65.8%, and forecasting Q1 adjusted gross margin of 66% to 67%, stronger than the consensus of 65.8%.  Other chip stocks also rallied on the news, with Advanced Micro Devices (AMD), Marvell Technology (MRVL), and Micron Technology (MU) up more than +3%.

Quanta Services (PWR) is up more than +13% after reporting Q4 revenue of $4.42 billion, better than the consensus of $4.27 billion. 

Ansys (ANSS) is up more than +10% after reporting Q4 adjusted EPS of $3.09, well above the consensus of $2.80, and forecasting 2023 adjusted EPS of $8.34-$8.85, the midpoint higher than the consensus of $8.41. 

Coterra Energy (CTRA) is up more than +6% after reporting Q4 operating revenue of $2.28 billion, better than the consensus of $2.09 billion. 

APA Corp (APA) is up more than +3% after reporting Q4 adjusted EPS of $1.48, stronger than the consensus of $1.34.

Iron Mountain (IRM) is up more than +3% after forecasting 2023 revenue of $5.50 billion to $5.60 billion, with the midpoint above the consensus of $5.52 billion. 

Genuine Parts (GPC) is up more than +2% after reporting Q4 net sales of $5.50 billion, above the consensus of $5.33 billion.

Domino’s Pizza (DPZ) is down more than -10% to lead losers in the S&P 500 after reporting Q4 revenue of $1.39 billion, weaker than the consensus of $1.43 billion.

Dollar General (DG) is down more than -4% after cutting its preliminary Q4 EPS estimate to $2.91-$2.96 from a prior view of $3.15-$3.30, weaker than the consensus of $3.26. 

Moderna (MRNA) is down more than -7% after reporting Q4 EPS of 3.62, well below the consensus of $4.67.

eBay (EBAY) is down more than -7% after reporting it had 134 million active buyers in Q4, down -9% y/y and the seventh straight quarter of decline, and said it expects a “challenging” margin outlook this year.

Lucid Group (LCID) is down more than -17% to lead losers in the Nasdaq 100 after reporting a Q4 adjusted Ebitda loss of -$626.6 million, wider than the consensus of -$579.9 million. 

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 3.908%.  Mar 10-year T-notes this morning recovered from a 3-1/2 month low, and the 10-year T-note yield fell back from a 3-1/2 month high of 3.974%. 

A rally in German bunds today sparked short-covering in T-notes.   T-note prices today initially opened lower on comments made Wednesday night by New York Fed President Williams, who said strong demand in the U.S. economy continues to exceed supply, pointing to persistent price pressures in the services sector.  T-note prices were also pressured by today’s jobless claims report and the upward revision in Q4 core PCE deflator.  T-notes are also being undercut by supply pressures as the Treasury will auction $35 billion of 7-year T-notes later today as part of this week’s $121 billion auction package of T-notes. 

The dollar index (DXY00) today is down by -0.11%, retreating from a 1-1/2 month high.  A decline in T-note yields from early highs today was bearish for the dollar.  Also, today’s downward revision in U.S. Q4 GDP was bearish for the dollar.  The dollar today initially moved higher on hawkish comments from New York Fed President Williams.

EUR/USD (^EURUSD) today is up by +0.06%.  The euro today recovered from a 1-1/2 month low and is slightly higher.  EUR/USD erased its losses and moved higher after the Eurozone Jan core CPI was revised upward to a record high, which is hawkish for ECB policy.

Eurozone Jan core CPI was revised upward by +0.1 to a record +5.3% y/y from the initially reported +5.2% y/y.

USD/JPY (^USDJPY) today is up by +0.04%.  The yen today tumbled to a 2-month low against the dollar.  The yen is seeing some downware pressure ahead of testimony on Friday from BOJ governor nominee Ueda before the Japanese Parliament. Forex movements in USD/JPY may be limited, with markets closed today in Japan for the Emperor’s birthday holiday.

April gold (GCJ3) this morning is down -7.7 (-0.42%), and March silver (SIH23) is down -0.087 (-0.40%).  Precious metals prices this morning are moderately lower, with gold falling to a 1-3/4 month low. A rally in the dollar index to a 1-1/2 month high today is bearish for metals.  Also, higher T-note yields are bearish for precious metals.  In addition, hawkish comments today from New York Fed President Williams weighed on metals.  Gold prices are still weighed down by the continued liquidation of gold holdings in ETFs after holdings of gold in ETFs fell to a new 2-3/4 year low Wednesday.

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