What you need to know…
The S&P 500 Index ($SPX) (SPY) today is down -0.04%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.19%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.24%.
U.S. stocks this morning are moderately lower as higher U.S. bond yields weigh on technology stocks. Limiting losses in the overall market is an +8% jump in PacWest Bancorp, which eases U.S. banking concerns. Also, a rally of more than +2% in WTI crude prices today is boosting energy stocks.
Clarity regarding the U.S. debt ceiling is a bearish factor for stocks. Treasury Secretary Yellen said Sunday that there are “simply no good options” for solving the debt limit stalemate other than Congress lifting the debt ceiling cap. Yellen has said that the Treasury Department may run out of cash to pay its bills as soon as June 1 unless the debt ceiling is raised. President Biden is scheduled to meet House Speaker McCarthy and other congressional leaders Tuesday to discuss the debt ceiling.
Global bond yields are higher. The 10-year T-note yield is up +5.5 bp at 3.492%. The 10-year German bund yield is up +2.6 bp at 2.317%, and the UK 10-year gilt is not trading with markets closed today in the UK for the king’s coronation.
On the bullish side for stocks, PacWest Bancorp is up more than +8% after it said its business remains “sound” and that it was cutting its quarterly dividend to one cent to accelerate capital build plans. Also, energy stocks and energy service providers are climbing in pre-market trading as WTI crude prices rise more than +2%. In addition, Zscaler is up more than +21% after reporting preliminary Q3 revenue above consensus and raising its full-year revenue forecast.
On the bearish side for stocks, Catalent is down more than -26% after it said it expects to “significantly” reduce both fiscal 2023 net revenue and adjusted Ebitda guidance by over $400 million each, citing operational and productivity issues. Also, Tyson Foods is down more than -14% after reporting weaker-than-expected Q2 sales and cutting its full-year sales estimate. Lucid Group is down more than -5% after Bloomberg Intelligence said the company had delivered only 61% of the vehicles made in Q1, citing tepid demand, and that Saudi Arabia’s Public Investment Fund may be forced to step in with additional funding should the company’s financial situation deteriorate further.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.06%. China’s Shanghai Composite closed up +1.81%, and Japan’s Nikkei Stock Index closed down -0.71%.
Today’s stock movers…
Catalent (CTLT) is down more than -26% to lead losers in the S&P 500 after it said it expects to “significantly” reduce both fiscal 2023 net revenue and adjusted Ebitda guidance by over $400 million each, citing operational and productivity issues.
Tyson Foods (TSN) sank more than -14% after reporting Q2 sales of $13.13 billion, weaker than the consensus of $13.60 billion, and cutting its full-year sales estimate to $53 billion-$54 billion from a previous estimate of $55 billion-$57 billion.
Lucid Group (LCID) is down more than -5% to lead losers in the Nasdaq 100 after Bloomberg Intelligence said the company had delivered only 61% of the vehicles made in Q1, citing tepid demand, and that Saudi Arabia’s Public Investment Fund may be forced to step in with additional funding should the company’s financial situation deteriorate further.
AES Corp (AES) is down more than -4% after forecasting full-year adjusted EPS of $1.65-$1.72, the midpoint below the consensus of $1.72.
Epam Systems (EPAM) is down more than -2% after Susquehanna Financial cut its price target on the stock to $350 from $410.
Paramount Global (PARA) is down more than -3% after Showtime, owned by Paramount Global, showed a -27% drop in users launching its mobile app last week, the biggest weekly decline among video streaming companies, according to Apptopia.
Workday (WDAY) is down more than -3% after Stifel downgraded the stock to hold from buy.
American Airlines Group (AAL) is up more than +4% to lead gainers in the S&P 500 after JPMorgan Chase upgraded the stock to overweight from neutral.
Zscaler (ZS) is up more than +21% to lead gainers in the Nasdaq 100 after reporting preliminary Q3 revenue of $415 million-$419 million, stronger than the consensus of $398.6 million, and raising its full-year revenue forecast to $1.59 billion from a prior estimate of $.156 billion.
Energy stocks and energy service providers are climbing today, with WTI crude prices up more than +2%. ConocoPhillips (COP), Devon Energy (DVN), Marathon Oil (MRO), Haliburton (HAL), Hess Corp (HES), Marathon Petroleum (MPC), Phillips 66 (PSX), and Valero Energy (VLO) are up more than +1%.
Boston Scientific (BSX) is up more than +3% after Street Insider reported that talks have broken down on the company’s attempts to acquire Shockwave Medical.
Viatris (VTRS) is up more than +3% after reporting Q1 adjusted Ebitda of $1.34 billion, better than the consensus of $1.23 billion.
Albemarle (ALB) is up more than +3% after Bank of America Global Research upgraded the stock to neutral from underperform with a price target of $200.
Across the markets…
June 10-year T-notes (ZNM23) today are down -11 ticks, and the 10-year T-note yield is up +5.5 bp at 3.492%. Jun T-notes this morning are weighed down by negative carryover from last Friday’s stronger-than-expected U.S. Apr payroll report, which bolsters the outlook for the Fed to keep interest rates higher for longer. Also, supply pressures are weighing on T-notes, with multiple companies issuing debt this week totaling between $30 billion and $35 billion, including Apple, which announced a five-part debt offering. In addition, bond dealers are preparing for this week’s May quarterly refunding, where the Treasury will auction $96 billion of T-notes and T-bonds, beginning with Tuesday’s $40 billion auction of 3-year T-notes.
The dollar index (DXY00) today is down by -0.09%. The dollar today is slightly lower and is awaiting the Federal Reserve’s quarterly loan officers’ survey later today, which may shed light on credit growth amid the ongoing banking turmoil. Strength in the British pound is also weighing on the dollar as expectations for the BOE to raise interest rates by +25 bp on Thursday have pushed the pound to an 11-month high against the dollar today.
EUR/USD (^EURUSD) today is up by +0.18%. Weakness in the dollar today is boosting the euro. Also, hawkish comments today from ECB Governing Council member Knot were bullish for EUR/USD when he said the ECB needs to continue raising interest rates amid a "too high" underlying inflation rate. However, limiting the upside in the euro today was weaker-than-expected Eurozone economic news.
The Eurozone May Sentix investor confidence unexpectedly fell -4.4 to a 4-month low of -13.1, weaker than expectations of an increase to -7.5.
German Mar industrial production fell -3.4% m/m, weaker than expectations of -1.5% m/m and the biggest decline in a year.
USD/JPY (^USDJPY) today is up by +0.07%. The yen today is being weighed down by rising T-note yields and dollar strength. Also, an easing of U.S. banking concerns has sparked a rally in regional bank stocks today and curbed safe-haven demand for the yen. Losses in the yen were contained after today’s decline in the Nikkei Stock Index to a 1-week low boosted safe-haven demand for the yen.
June gold (GCM3) this morning is up +3.7 (+0.18%), and July silver (SIN23) is down -0.050 (-0.19%). Precious metals prices this morning are mixed. A weaker dollar today is supportive of precious metals prices. However, higher global government bond yields limited the upside in precious metals. Also, a rally in U.S. regional bank stocks today eased U.S. banking concerns and reduced the safe-haven demand for precious metals. In addition, industrial metals demand concerns knocked silver prices into negative territory after Eurozone economic news today showed German Mar industrial production fell more than expected by the most in a year.
More Stock Market News from Barchart
- Markets Today: Stocks Moderately Lower to Kick Off the Week
- Option Volatility And Earnings Report For May 8 - 12
- Stocks Set to Open Mixed as Investors Await U.S. Inflation Data, Debt Worries Remain
- Banking, CPI and Other Key Things to Watch This Week
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.
