Stocks Tumble on Disappointing Earnings and a Slide in U.S. Consumer Confidence

What you need to know…

The S&P 500 Index ($SPX) (SPY) today is down -0.81%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.37%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.89%.

U.S. stock indexes this morning are moderately lower, with the S&P 500 and Nasdaq 100 falling to 1-1/2 week lows.  Weakness in regional bank stocks is weighing on the overall market after First Republic Bank reported smaller-than-expected Q1 deposits.  Also, cybersecurity stocks are falling after Tenable Holdings cut its full-year revenue forecast.  Finally, stock indexes extended their losses after a gauge of U.S. Apr consumer confidence fell more than expected to a 9-month low. 

Lower T-note yields this morning are providing underlying support to stocks.  The markets are showing an 84% chance of a 25 bp rate hike by the Federal Reserve at the May 2-3 FOMC meeting and have fully priced in a 25 bp rate hike by the ECB at its May 4 ECB meeting.

The U.S. Feb S&P CoreLogic composite-20 home price index unexpectedly rose +0.36% y/y versus expectations for a -0.05% y/y decline.

U.S. Mar new home sales unexpectedly rose +9.6% m/m to a 1-year high of 683,000, stronger than expectations of a decline to 632,000.

The Conference Board U.S. Apr consumer confidence index fell -2.7 to a 9-month low of 101.3, weaker than expectations of 104.0.

The U.S. Apr Richmond Fed manufacturing survey fell -5 to -10, weaker than expectations of -8.

On the bearish side for stocks, regional bank stocks are falling in pre-market trading, with First Republic Bank down more than -26% after reporting smaller-than-expected deposits at the end of Q1.  Also, cybersecurity stocks are under pressure after Tenable Holdings dropped more than -21% when it cut its full-year revenue forecast.  In addition, United Parcel Service is down more than -9% after reporting weaker-than-expected Q1 revenue and forecasting full-year revenue below consensus.

On the positive side, Brown & Brown is up more than +3% after reporting Q1 revenue above consensus.  Also, Moody’s and Centene are up more than +3% after reporting better-than-expected Q1 adjusted EPS.  In addition, Fiserv is up more than +2% after raising its full-year organic revenue forecast.

Global bond yields are lower.  The 10-year T-note yield fell to a 1-week low of 3.394% and is down -8.3 bp at 3.407%.  The 10-year German bund yield dropped to a week low of 2.358% and is down -13.2 bp at 2.377%.  The 10-year UK gilt yield fell to a 1-week low of 3.663% and is down -10.1 bp at 3.679%.

Overseas stock markets are mixed.  The Euro Stoxx 50 is down -0.72%.  China’s Shanghai Composite closed down -0.32%, and Japan’s Nikkei Stock Index closed up +0.09%. 

Today’s stock movers…

First Republic Bank (FRC) is down more than +27% to lead losers in the S&P 500 after reporting deposits at the end of Q1 were $104.47 billion, well below the consensus of $136.67 billion.

Northern Trust (NTRS) is down more than -9% after reporting Q1 EPS of $1.51, weaker than the consensus of $1.52.

GE Healthcare (GEHC) is down more than -8% after forecasting full-year adjusted EPS of $3.60-$3.75, the midpoint below the consensus of $3.72. 

United Parcel Service (UPS) is down more than -8% after reporting Q1 revenue of $22.9 billion, below the consensus of $23.0 billion and forecasting full-year revenue in the lower end of $97.0 billion to $99.4 billion, weaker than the consensus of $98.08 billion.

Cadence Design Systems (CDNS) is down more than -5% to lead losers in the Nasdaq 100 after forecasting Q2 adjusted EPS of $1.15-$1.19, weaker than the consensus of $1.25.

Danaher (DHR) is down more than -4% after cutting guidance on full-year non-GAAP base business core revenue growth to up mid-single digits year-over-year from a prior forecast of core revenue up high-single digits. 

Dow Inc (DOW) is down more than -3% to lead losers in the Dow Jones Industrials after reporting Q1 net sales fell -22% y/y to $11.85 billion and saying net sales contraction reflects declines in all operating segments driven by slower global macroeconomic activity.

Cybersecurity stocks are selling off today, with Tenable Holdings (TENB) plunging more than -21% after cutting its full-year revenue forecast to $775 million-$785 million from an earlier forecast of $800 million-$810 million, weaker than the consensus of $805.4 million.  As a result, Zscaler (ZS) is down more than -6% to lead losers in the Nasdaq 100.  Also, CyberArk Software (CYBR) is down more than -5%, and Crowdstrike Holdings (CRWD) and SentinelOne (S) are down more than -4%.  In addition, Palo Alto Networks (PANW) is down more than -3%, and Fortinet (FTNT) and Okta (OKTA) are down more than -2%. 

Brown & Brown (BRO) is up more than +3% to lead gainers in the S&P 500 after reporting Q1 revenue of $1.12 billion, stronger than the consensus of $1.07 billion.

Moody’s (MCO) is up more than +3% after reporting Q1 adjusted EPS of $2.99, well above the consensus of $2.24.

Centene (CNC) is up more than +3% after reporting Q1 adjusted EPS of $2.11, better than the consensus of $2.00, and raised guidance on full-year adjusted EPS to at least $6.40 from a prior view of $6.25 to $6.40.

Fiserv (FISV) is up more than +2% to lead gainers in the Nasdaq 100 after raising its full-year organic revenue forecast to +8% to +9% from +7% to +9%, stronger than the consensus of +7.8%.

PepsiCo (PEP) is up more than +2% after raising its full-year core EPS estimate to $7.27 from a prior estimate of $7.20, above the consensus of $7.24.

Kimberly Clark (KMB) is up more than +2% after reporting Q1 organic sales rose +5.0%, stronger than the consensus of +3.8%.

Across the markets…

June 10-year T-notes (ZNM23) today are up +25 ticks, and the 10-year T-note yield is down -8.3 bp at 3.407%.  Jun T-notes this morning climbed to a 1-week high, and the 10-year T-note yield fell to a 1-week low of 3.418%.  A slump in stocks today is boosting the safe-haven demand for T-notes.  Also, a decline in inflation expectations is bullish for T-notes after the 10-year breakeven inflation rate dropped to a 1-1/2 week low today at 3.254%.  However, additional gains in T-notes may be limited by supply pressures, with the Treasury scheduled to auction $42 billion auction of 2-year T-notes later today as part of this week's $144 billion auction package of T-notes and floating-rate notes.

The dollar index (DXY00) today is up by +0.48%.  The dollar this morning recovered from a 1-week low and is moderately higher.  Weakness in stocks today has boosted the liquidity demand for the dollar.  The dollar today initially posted moderate losses after T-note yields fell and on signs of reduced dollar demand after the central banks of the BOE, ECB, BOJ, and Fed announced in a joint announcement that the frequency of 7-day U.S. dollar liquidity-providing operations will revert from daily to once per week beginning May 1.  Central banks unveiled daily dollar operations last month to boost dollar liquidity after the run on Silicon Valley Bank and other lending institutions.

EUR/USD (^EURUSD) today is down by -0.42%h.  EUR/USD fell back from a 1-week high and is moderately lower as dollar strength sparked long liquidation in the euro.  EUR/USD today initially rallied to a 1-week high on hawkish comments from ECB Chief Economist Lane, who said, "The current data are indicating that the ECB should raise interest rates again" next week.   

USD/JPY (^USDJPY) today is down by -0.26%.  The yen today is strengthening against the dollar after the 10-year T-note yield fell to a 1-week low.  Also, a jump in Japanese government bond yields gave the yen a boost after the 10-year JGB bond yield rose to a 6-week high today at 0.491%.

June gold (GCM3) this morning is down -3.0 (-0.15%), and May silver (SIK23) is down -0.491 (-1.94%).  Precious metals prices this morning are moderately lower, with silver tumbling to a 3-week low. A stronger dollar today is weighing on metals prices.  Lower global bond yields today are limiting losses in gold prices.  However, silver is under pressure on negative carryover from a slump in iron ore prices today to a 4-month low and a drop in copper prices to a 3-week low.  Also, concerns about a slowdown in China’s industrial metals demand are weighing on silver prices after China’s Iron and Steel Association reported today that inventory levels at Chinese steel mills rose +1.2% to 18.5 MMT in mid-April compared with early April.   

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