Stocks Mixed as Debt Ceiling Talks Resume

What you need to know…

The S&P 500 Index ($SPX) (SPY) today is down -0.41%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.70%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.16%.

U.S. stocks this morning are mixed, with the Dow Jones Industrials falling t a 1-1/2 week low and the Nasdaq 100 climbing to an early 9-month high.  The broader market is under pressure, awaiting developments on the debt ceiling stalemate.  President Biden will meet with House Speaker McCarthy later today after staff-level talks were held over the weekend.

Strength in chip stocks today is supporting gains in the technology sector and is keeping the Nasdaq 100 in positive territory.  Mostly stronger-than-expected U.S. economic news today boosted bond yields, which was a negative factor for stocks. 

U.S. Apr retail sales rose +0.4% m/m, weaker than expectations of +0.8% m/m.  However, Apr retail sales ex-autos rose +0.4% m/m, right on expectations.

U.S. Apr manufacturing production rose +1.0% m/m, stronger than expectations of +0.1% m/m.

The U.S. May NAHB housing market index unexpectedly rose +5 to a 10-month high of 50, stronger than expectations of no change at 45.

Global bond yields are mixed.  The 10-year T-note yield jumped to a 2-week high of 3.560% and is up +5.3 bp at 3.555%.  The 10-year German bund yield is up +3.2 bp at 2.341%, and the UK 10-year gilt yield is down -0.9 bp at 3.808%.

On the bearish side for stocks, Home Depot is down more than -2% to lead consumer stocks lower after reporting below-consensus Q1 net sales and reducing guidance on its full-year comparable sales forecast. Also, Horizon Therapeutics is down more than -16% after Bloomberg reported that federal regulators would challenge the company’s sale to Amgen.  RH is down more than -6% after a 13F filing showed Berkshire Hathaway exited its position in the stock in Q1.

On the bullish side, semiconductor stocks are climbing today, led by a +4% advance in Advanced Micro Devices.  Also, Capital One Financial is up more than +2% after a 13F filing showed Berkshire Hathaway added the stock to its portfolio in Q1.  Amazon.com is up more than +1% after it said it plans to add ChatGPT-style product search to its web store.

Overseas stock markets are mixed.  The Euro Stoxx 50 is down -0.14%.  China’s Shanghai Composite closed down -0.60%, and Japan’s Nikkei Stock Index closed up +0.73%. 

Today’s stock movers…

Consumer stocks are under pressure today, with Home Depot (HD) down more than -2% after reporting Q1 net sales of $37.26 billion, below the consensus of $38.34 billion, and reducing guidance on its full-year comparable sales estimate to down -2% to -5% from a previous forecast of flat.  Also, Mohawk Industries (MHK), Masco (MAS), Stanley Black & Decker (SWK), and Whirlpool (WHR) are down more than -3% on the Home Depot news.

Seagen (SGEN) is down more than -5% to lead losers in the Nasdaq 100 on concern Pfizer’s deal to buy the company could be challenged after U.S. regulators challenged Amgen’s deal to acquire Horizon Therapeutics.

Horizon Therapeutics (HZNP) is down more than -16% after Bloomberg reported that federal regulators would challenge the company’s sale to Amgen.   

RH (RH) is down more than -6% in pre-market trading after a 13F filing showed Berkshire Hathaway exited its position in the stock in Q1.

Duocommun (DCO) is down more than -5% after offering 2 million shares via Goldman Sachs, Citigroup, RBC Capital Markets, and B. Riley Securities.

Rumble (RUM) is down more than -5% after reporting a Q1 loss per share of -14 cents versus a -2 cents loss per share last year. 

GE Healthcare Technologies (GEHC) is up more than +2% after Oppenheimer initiated coverage on the stock with an outperform rating and a price target of $97.

Semiconductor stocks are climbing today.  Advanced Micro Devices (AMD) is up more than +4% to lead gainers in the S&P 500 and Nasdaq 100.  Also, Nvidia (NVDA), Lam Research (LRCX), and KLA Corp (KLAC) are up more than +1%. 

Amazon.com (AMZN) is up more than +1% after it said it plans to add ChatGPT-style product search to its web store. 

Capital One Financial (COF) is up more than +2% after a 13F filing showed Berkshire Hathaway added the stock to its portfolio in Q1.

Novocure (NVCR) is up more than +3% after Wells Fargo Securities upgraded the stock to overweight from equal weight with a price target of $104. 

Amdocs Ltd (DOX) is up more than +2% after Barclays upgraded the stock to overweight from equal weight with a price target of $115.

Across the markets…

June 10-year T-notes (ZNM23) today are down -9 ticks, and the 10-year T-note yield is up +5.3 bp at 3.555%.  Jun T-notes this morning are moderately lower after this morning’s economic news showed U.S. Apr manufacturing production rose more than expected.  Also, supply pressures are prompting bond dealers to short T-note futures as a hedge against upcoming supply after Pfizer today announced an 8-part offering of between $25 billion and $30 billion.

The dollar index (DXY00) today is up +0.13%.  The dollar this morning is slightly higher.  Weakness in the yuan is supportive for the dollar after weaker-than-expected Chinese economic news knocked the yuan down to a 2-month low today against the dollar.  Also, stronger-than-expected U.S. manufacturing production and NAHB housing market reports pushed T-note yields higher and supported the dollar.  However, gains in the dollar are limited by the weaker-than-expected U.S. Apr retail sales report. 

EUR/USD (^EURUSD) today is down by -0.07%.   The euro today is slightly lower after the German May ZEW survey expectations of economic growth index fell more than expected to a 5-month low.  However, losses in EUR/USD are limited by hawkish comments from ECB Governing Council member Holzmann who said the ECB needs to raise its deposit rate above 4% to tackle inflation. 

The German May ZEW survey expectations of economic growth index fell -14.8 to a 5-month low of -10.7, weaker than expectations of -5.0.

ECB Governing Council member Holzmann said, "Given core inflation of around 6%, ECB policy is still expansive," and the ECB needs to raise its deposit rate above 4% to tackle inflation.

USD/JPY (^USDJPY) today is up by +0.32%.  The yen today added to Monday’s losses and posted a new 1-1/2 week low against the dollar.  Higher T-note yields today are weighing on the yen.  Also, today’s rally in the Nikkei Stock Index to a 1-1/2 year high has curbed the safe-haven demand for the yen.  Losses in the yen are limited as lingering concerns about U.S. regional banks and the debt ceiling dispute are boosting some safe-haven demand for the yen.

June gold (GCM3) this morning is down -16.6 (-0.82%), and July silver (SIN23) is down -0.321 (-1.32%).  Precious metals prices this morning are moderately lower, with gold falling to a 2-week low and silver dropping to a 6-week low.  Stronger-than-expected U.S. economic reports were hawkish for Fed policy and bearish for precious metals prices.  Silver prices are being weighed down by negative carryover from a slump in copper prices today to a 5-month low after weaker-than-expected Chinese industrial production activity bolstered concern about Chinese demand for industrial metals.  A supportive factor for precious metals is concern about the health of the U.S. banking system and the U.S. debt limit impasse that has boosted safe-haven demand for precious metals.

• Is Broadcom the Best Dividend Growth Stock in the S&P 500?
• Markets Today: Stocks Slip Ahead of U.S. Debt Ceiling Talks
• How To Increase The Yield On Bond Investments
• S&P Futures Tick Lower Ahead of Key U.S. Retail Sales Data, Debt-Ceiling Talks in Focus