What you need to know…
The S&P 500 Index ($SPX) (SPY) Tuesday closed down -1.58%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -1.02%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -1.89%.
Stock indexes Tuesday sold off, with the S&P 500 and Dow Jones Industrials falling to 2-week lows and the Nasdaq 100 dropping to a 3-1/2 week low. A slump in regional bank stocks weighed on the overall market and bolstered concerns that the banking crisis has not run its course. First Republic Bank plunged more than -49% to a record low after reporting greater-than-expected withdrawals in Q1. Losses in First Republic accelerated Tuesday afternoon when Bloomberg reported the bank was exploring divesting up to $100 billion of long-dated mortgages and securities as part of a broader rescue plan.
Stocks were also undercut by concern about the risk of a Treasury default if Washington cannot agree on a debt limit increase by this summer. Republican House leaders plan to hold a vote this week on their proposed debt limit legislation, drawing market attention to the Washington impasse.
Cybersecurity stocks retreated Tuesday 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 Tuesday were a supportive factor for stocks. The markets are showing a 75% 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, MSCI Inc closed down more than -13% after reporting Q1 operating revenue below consensus. Also, United Parcel Service closed down more than -9% after reporting weaker-than-expected Q1 revenue and forecasting full-year revenue below consensus. In addition, Danaher closed down more than -8% after cutting guidance on full-year non-GAAP base business core revenue growth.
On the positive side, Brown & Brown closed up more than +3% after reporting Q1 revenue above consensus. Also, Centene closed up more than +2% after reporting better-than-expected Q1 adjusted EPS. In addition, Fiserv closed up more than +2% after raising its full-year organic revenue forecast.
Global bond yields moved lower. The 10-year T-note yield fell to a 1-1/2 week low of 3.377% and finished down -9.4 bp at 3.396%. The 10-year German bund yield dropped to a 1-week low of 2.358% and finished down -12.4 bp at 2.384%. The 10-year UK gilt yield fell to a 1-week low of 3.663% and finished down -8.6 bp at 3.695%.
Overseas stock markets Tuesday settled mixed. The Euro Stoxx 50 closed down -0.54%. 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) closed down more than -49% 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. Losses accelerated after Bloomberg reported the bank was exploring divesting up to $100 billion of long-dated mortgages and securities as part of a broader rescue plan.
MSCI Inc (MSCI) closed down more than -13% after reporting Q1 operating revenue of $592.2 million, weaker than the consensus of $594.4 million.
United Parcel Service (UPS) closed down more than -9% 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.
Northern Trust (NTRS) closed down more than -9% after reporting Q1 EPS of $1.51, weaker than the consensus of $1.52. Other regional bank stocks moved lower as well, with KeyCorp (KEY), Zions Bancorp (ZION), and Fifth Third Bancorp (FITB) closing down more than -5%. Also, Comerica (CMA) and Truist Financial (TFC) closed down more than -4%.
Danaher (DHR) closed down more than -8% 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.
GE Healthcare (GEHC) closed down more than -8% after forecasting full-year adjusted EPS of $3.60-$3.75, the midpoint below the consensus of $3.72.
Dow Inc (DOW) closed down more than -5% 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 sold off Tuesday, with Tenable Holdings (TENB) plunging more than -19% 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) closed down more than -8% to lead losers in the Nasdaq 100. Also, CyberArk Software (CYBR) closed down more than -10%, and Crowdstrike Holdings (CRWD) closed down more than -6%. In addition, SentinelOne (S) closed down by more than -5%, and Palo Alto Networks (PANW), Fortinet (FTNT), and Okta (OKTA) closed down by more than -4%.
Brown & Brown (BRO) closed 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.
Centene (CNC) closed up more than +2% 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) closed 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) closed 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.
Moody’s (MCO) closed up more than +1% after reporting Q1 adjusted EPS of $2.99, well above the consensus of $2.24.
Kimberly Clark (KMB) closed up more than +1% after reporting Q1 organic sales rose +5.0%, stronger than the consensus of +3.8%.
Across the markets…
June 10-year T-notes (ZNM23) on Tuesday closed up +29.5 ticks, and the 10-year T-note yield fell by -9.4 bp to 3.396%. June T-notes Tuesday rallied to a 1-1/2 week high, and the 10-year T-note yield fell to a 1-1/2 week low of 3.377%. A slump in stocks Tuesday boosted the safe-haven demand for T-notes. Also, a decline in inflation expectations was bullish for T-notes after the 10-year breakeven inflation rate dropped to a 1-1/2 week low Tuesday at 3.225%.
T-notes raced to their highs Tuesday afternoon on strong demand for the Treasury’s $42 billion 2-year T-note auction with a bid-to-cover ratio of 2.68, above the 10-auction average of 2.59.
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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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