Slide in Technology Stocks Leads the Overall Market Lower

What you need to know…

The S&P 500 Index ($SPX) (SPY) today is down -0.52%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.05%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.23%.

U.S. stock indexes this morning are moderately lower, led by losses in technology stocks.  Tesla is down more than -4% after it cut its vehicle prices in the U.S. for the second time this year.  Also, Apple is down more than -2% after its personal computer shipments in Q1 plunged by -40.5% y/y.  Trading activity is light today, with markets across Europe, Australia, and Hong Kong closed for the Easter holiday.

Stock index futures are also under pressure today from last Friday’s stronger-than-expected U.S. payroll report that bolstered expectations for another Fed rate increase at the May 2-3 FOMC meeting. 

U.S. March nonfarm payrolls rose +236,000, stronger than expectations of +230,000.  The March unemployment rate unexpectedly fell -0.1 to 3.5%, showing a stronger labor market than expectations of unchanged at 3.6%.

U.S. March average hourly earnings eased to 4.2% y/y from 4.6% y/y in Feb, weaker than expectations of 4.3% and the weakest report in 1-3/4 years.

A quarterly report from the International Data Corporation (IDC) showed global shipments of personal computers (PCs) in Q1 fell -29% y/y to 56.9 million, below levels of early 2019 before the pandemic.   Apple led the losses, with its Q1 PC shipments plunging -40.5% y/y.

On the positive side for stocks, Western Digital is up more than +8%, and Micron Technology is up more than +7% after rival Samsung Electronics said last Friday it would cut memory chip production. Also,   Pioneer Natural Resources is up more than +7% after the Wall Street Journal reported that Exxon Mobil had held preliminary talks over a possible acquisition of the company.  In addition, Charles Schwab is up more than +3% after it reported that it took in $53 billion of net new client assets in March.

The 10-year T-note yield is up +11.6 bp at 3.421% (versus last Thursday’s close) due to last Friday’s stronger-than-expected U.S. March payroll report.

Overseas stock markets are mixed.  The Euro Stoxx 50 is closed today for the Easter Monday holiday.  China’s Shanghai Composite closed down -0.37%, and Japan’s Nikkei Stock Index closed up +0.42%. 

Today’s stock movers…

Tesla (TSLA) fell more than -4% to lead losers in the S&P 500 and Nasdaq 100 after it cut prices on all of its vehicles in the U.S. for the second time this year.

Apple (AAPL) is down more than -2% to lead losers in the Dow Jones Industrials after a report from the International Data Corporation (IDC) showed Apple’s Q1 PC shipments fell -40.5% y/y. 

Higher T-note yields today are weighing on mega-cap technology stocks.  Alphabet (GOOGL), Meta Platforms (META), and Microsoft (MSFT) are down more than -2%.  Also, Amazon.com (AMZN), Adobe (ADBE), Intel (INTC), and Oracle (ORCL) are down more than -1%.

First Republic Bank (FRC) is down more than -3% after it suspended the quarterly cash dividend on its seven series of noncumulative perpetual preferred stock.

Incyte (INCY) is down more than -2% after RBC Capital Markets downgraded the stock to sector perform from outperform. 

Western Digital (WDC) is up more than +8% to lead gainers in the S&P 500, and Micron Technology (MU) is up more than +7% to lead gainers in the Nasdaq 100 in after rival Samsung Electronics said last Friday it would cut memory chip production.

Pioneer Natural Resources (PXD) is up more than +7% after the Wall Street Journal reported that Exxon Mobil had held preliminary talks over a possible acquisition of the company.

CF Industries (CF) is up more than +4% after Scotiabank upgraded the stock to sector outperform from sector perform.  Mosaic (MOS) is also up more than +3% on the news.

Charles Schwab (SCHW) is up more than +3% after it reported that it took in $53 billion in net new client assets in March.

NetApp (NTAP) is up more than +3% after Stifel upgraded the stock to buy from hold with a price target of $75.

Across the markets…

June 10-year T-notes (ZNM23) today are down -9 ticks, and the 10-year T-note yield is up +11.6 bp at 3.389%.  June T-notes this morning are weighed down by negative carryover from last Friday’s stronger-than-expected U.S. Mar payrolls report.  Also, supply pressures are bearish for T-notes as the Treasury will auction $90 billion of T-notes and T-bonds this week, beginning with Tuesday’s $40 billion auction of 3-year T-notes. 

The dollar index (DXY00) today is up by +0.53%.  The dollar today is moderately higher on carryover support from last Friday’s stronger-than-expected U.S. March payroll report that bolstered the outlook for the Fed to keep tightening monetary policy. Also, a slump in stocks today has boosted the liquidity demand for the dollar. 

EUR/USD (^EURUSD) today is down by -0.47%.  Dollar strength today is weighing on the euro.  Trading activity in EUR/USD is muted today, with European markets closed for the Easter Monday holiday.  Losses in the euro are limited by hawkish comments from ECB Governing Council member Knot last Friday, who said, "We are certainly not done with interest rate hikes.”

Hawkish comments last Friday from ECB Governing Council member Knot were supportive of EUR/USD when he said, "We are certainly not done with interest rate hikes.  Core inflation in the Eurozone is now almost 6%, and you can't fight that with an interest rate of 3%.

USD/JPY (^USDJPY) today is up by +0.89%.  The yen is under pressure today on comments from BOJ Governor Ueda, who said it is “appropriate” for the BOJ to continue with its yield-curve control framework, which signals no shift in the central bank’s ultra-easy monetary policies.  Higher T-note yields today are also weighing on the yen.

Today’s Japanese economic news was bullish for the yen.  Japan’s March consumer confidence index rose +2.6 to a 13-month high of 33.9, stronger than expectations of 31.5.  Also, the March eco watchers outlook survey rose +3.1 to a 16-month high of 54.1, stronger than expectations of 50.9.

June gold (GCM3) this morning is down -22.6 (-1.12%), and May silver (SIK23) is down -0.143 (-0.57%).  Precious metals prices this morning are moderately lower.  Strength in the dollar today and higher T-note yields are weighing on metals prices.  Also, metals have some negative carryover from last Friday’s stronger-than-expected U.S. March payroll report that bolstered expectations for the Fed to keep raising interest rates.  Gold has support on strong demand from fund buying as gold holdings in exchange-traded funds (ETFs) rose to a 10-week high last Friday.  Also, the weakness in stocks today has sparked some safe-haven demand for precious metals.

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