What you need to know…
The S&P 500 Index ($SPX) (SPY) today is up +0.53%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.44%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.40%.
U.S. stock indexes this morning are moderately higher, with the S&P 50 at a 1-week high, the Dow Jones Industrials at a 1-1/2 week high, and the Nasdaq 100 at an 8-1/4 month high. Better-than-expected corporate earnings results are giving the overall market a boost. Also, bond yields fell as inflation concerns eased after the U.S. Mar PCE core deflator, the Fed's preferred inflation gauge, eased to +4.6% y/y, right on expectations.
The markets are showing an 88% 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.
Global bond yields are lower. The 10-year T-note yield is down -7.0 bp at 3.450%. The 10-year German bund yield is down -12.8 bp at 2.331%. The 10-year UK gilt yield is down -6.9 bp at 3.725%.
Federal Reserve data showed emergency loans outstanding to financial institutions through two backstop lending facilities rose to $155.2 billion in the week through April 26 from $143.9 billion the previous week.
U.S. Mar personal spending was unchanged m/m, stronger than expectations of -0.1% m/m. Mar personal income rose +0.3% m/m, stronger than expectations of +0.2% m/m.
The U.S. Q1 employment cost index rose +1.2% (q/q annualized), stronger than expectations of +1.1%
The U.S. Mar PCE core deflator, the Fed's preferred inflation gauge, eased to +4.6% y/y from +4.7% y/y in Mar, right on expectations.
The U.S. MNI Apr Chicago PMI unexpectedly rose +4.8 to an 8-month high of 48.6, stronger than expectations of a decline to 43.6.
The University of Michigan U.S. Apr consumer sentiment index was left unrevised at 63.5, right on expectations.
On the bullish side for stocks, Intel is up more than +4% in pre-market trading after reporting better-than-expected Q1 adjusted revenue and projecting a return to free cash flow in the second half of the year. Also, Charter Communications is up more than +6% after reporting Q1 adjusted Ebitda above consensus. Mondelez International, Eastman Chemical, and Mohawk Industries are up more than +5% after reporting better-than-expected Q1 adjusted EPS.
On the bearish side. Amazon.com gave up a +12% surge in pre-market trading and is down -3% after the company highlighted weakness in Amazon Web Services, its most profitable division. Also, AON Plc is down more than -3% after reporting Q1 adjusted EPS below consensus. In addition, Cloudflare is down more than -25% after cutting its full-year revenue forecast.
Overseas stock markets are mixed. The Euro Stoxx 50 is down -0.11%. China’s Shanghai Composite closed up +1.14%, and Japan’s Nikkei Stock Index closed up +1.40%.
Today’s stock movers…
Charter Communications (CHTR) is up more than +6% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q1 adjusted Ebitda of $5.40 billion, better than expectations of $5.36 billion.
Intel (INTC) is up more than +6% to lead gainers in the Dow Jones Industrials after reporting Q1 adjusted revenue of $11.72 billion, stronger than the consensus of $11.1 billion and projected a return to free cash flow in the second half of the year.
Mondelez International (MDLZ) is up more than +5% after reporting Q1 adjusted EPS of 89 cents, above the consensus of 80 cents.
ResMed (RMD) is up more than +5% after reporting Q3 adjusted EPS of $1.68, stronger than the consensus of $1.61.
Eastman Chemical (EMN) is up more than +5% after reporting Q1 adjusted EPS of $1.63, well above the consensus of $.125.
Mohawk Industries (MHK) is up more than +5% after reporting Q1 net sales of $2.80 billion, stronger than the consensus of $2.73 billion.
Royal Caribbean (RCL) is up more than +5% after JPMorgan Chase initiated coverage of the stock with a recommendation of overweight and a price target of $94.
Amazon.com (AMZN) is down more than -3% after the company highlighted weakness in Amazon Web Services, its most profitable division.
AON Plc (AON) is down more than -3% after reporting Q1 adjusted EPS of $5.17 billion, weaker than the consensus of $5.31.
T-Mobile US (TMUS) is down more than -3% to lead loser in the Nasdaq 100 after reporting Q1 revenue of $19.63 billion, weaker than the consensus of $19.84 billion.
Amgen (AMGN) is down more than -1% to lead losers in the Dow Jones Industrials despite boosting its full-year adjusted earnings forecast after it reported Q1 revenues for its Enbrel and Otezla drugs were below consensus.
Cloudflare (NET) is down more than 25% after cutting its full-year revenue forecast to $1.28 billion from $1.33 billion-$1.34 billion, below the consensus of $1.34 billion.
Snap (SNAP) is down more than -18% after reporting Q1 revenue of $988.6 million, weaker than the consensus of $1.01 billion.
Pinterest (PINS) is down more than -16% after reporting a Q1 net loss of -$209 million, wider than the consensus of -$131.1 million.
Across the markets…
June 10-year T-notes (ZNM23) today are up +16 ticks, and the 10-year T-note yield is down -7.0 bp at 3.450%. Jun T-notes this morning are moderately higher on carryover support from a rally in 10-year German bunds. T-notes also found support after the U.S. Mar PCE core deflator, the Fed's preferred inflation gauge, eased to +4.6% y/y, right on expectations. T-notes fell back from their best levels after the Apr MNI Chicago PMI unexpectedly rose to an 8-month high.
The dollar index (DXY00) today is up by +0.34% at a 1-week high. The dollar this morning is moving higher on weakness in stocks, which has boosted liquidity demand for the dollar. The dollar also found support on weakness in the yen, which dropped to a 7-week low against the dollar after the BOJ maintained its stimulus measure and said it would patiently continue with monetary easing.
EUR/USD (^EURUSD) today is down by -0.25%. Dollar strength today is weighing on the euro. The euro is also seeing downward pressure from today’s weaker-than-expected Eurozone Q1 GDP report. Losses in the euro were limited after French Apr consumer prices unexpectedly accelerated, which is hawkish for ECB policy.
Eurozone Q1 GDP rose +0.1% q/q and +1.3% y/y, slightly weaker than expectations of +0.2% m/m and +1.4% y/y.
Eurozone price news today was mixed for the euro. French Apr CPI (EU harmonized) unexpectedly strengthened to +6.9% y/y from +6.7% y/y in Mar. However, German Apr CPI (EU harmonized) eased to +7.6% y/y from +7.8% y/y in Mar, the weakest level in 13 months.
USD/JPY (^USDJPY) today is up by +1.67%. The yen today tumbled to a 7-week low against the dollar. The yen retreated today after the BOJ kept monetary policy unchanged and said it would “patiently” continue with monetary easing. Also, BOJ Governor Ueda said the Japanese economy faces a bigger risk from premature tightening than from a delay.
The BOJ voted 9-0 to maintain its policy balance rate at 0.1% and keep its 10-year JGB yield target at about 0%. The BOJ cut its 2023 Japan GDP estimate to 1.4% from a previous estimate of 1.7% and raised its 2023 core CPI estimate to 1.8% from 1.6%.
The BOJ scrapped its forward guidance on interest rates and said it would patiently continue with monetary easing.
Japan Mar industrial production fell -0.7% y/y, a smaller decline than expectations of -1.2% y/y.
Japan Mar retail sales rose +0.6% m/m, stronger than expectations of +0.3% m/m.
Japan Tokyo Apr CPI ex-fresh food and energy rose +3.8% y/y, stronger than expectations of +3.5% y/y and the biggest increase in 41 years.
The Japan Mar jobless rate unexpectedly rose +0.2 to a 16-month high of 2.8%, showing a weaker labor market than expectations of a decline to 2.5%.
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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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