Stocks End Higher as a Jump in Jobless Claims Knocks Bond Yields Lower

What you need to know…

The S&P 500 Index ($SPX) (SPY) Thursday closed up +0.62%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.50%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.27%.

Stock indexes Thursday posted moderate gains, with the Dow Jones Industrials climbing to a 5-week high.  A jump in U.S. weekly initial unemployment claims to a 19-month high knocked T-note yields lower and fueled gains in technology stocks.  Market expectations for the Fed to raise the fed funds target range by +25 bp at next week’s FOMC meeting fell to 28% Thursday from 34% Wednesday. 

U.S. weekly initial unemployment claims rose +28,000 to a 19-month high of 261,000, showing a weaker labor market than expectations of 235,000.

Global bond yields on Thursday moved lower.  The 10-year T-note yield fell back from a 1-1/2 week high of 3.819% and finished down -8.1 bp at 3.714%.  The 10-year German bund yield fell back from a 1-1/2 week high of 2.482% and finished down -5.3 bp at 2.402%, and the UK 10-year gilt yield fell back from a 1-week high of 4.298% and finished down -1.8 bp at 4.233%.

On the bullish side of stocks, Warner Bros Discovery closed up more than +6% and added to Wednesday’s +8% surge after the Wall Street Journal reported a potential deal between Amazon.com, Warner Bros Discovery, and Paramount Global to add the ad-based tiers of Max and Paramount+ on Amazon Channels. Also, Adobe closed up more than +4% after it said it is launching subscriptions for new generative AI features that will include copyright protection.  In addition, Tesla closed up more than +4% after William O’Neil & Co reinstated coverage of the stock with a buy recommendation. 

On the bearish side, real estate investment trusts fell on concern about commercial real estate as financing freezes up with banks reluctant to lend to the sector. Also, Signet Jewelers closed down more than -10% after cutting its 2024 sales outlook.  In addition, Oxford Industries closed down more than -5% after cutting its full-year sales forecast.

Overseas stock markets Thursday settled mixed.  The Euro Stoxx 50 closed up +0.13%.  China’s Shanghai Composite closed up +0.49%, and Japan’s Nikkei Stock Index closed down -0.85%. 

Today’s stock movers…

Warner Bros Discovery (WBD) closed up more than +6% to lead gainers in the S&P 500 and Nasdaq 100 and added to Wednesday’s +8% surge after the Wall Street Journal reported a potential deal between Amazon.com, Warner Bros Discovery, and Paramount Global to add the ad-based tiers of Max and Paramount+ on Amazon Channels.

Adobe (ADBE) closed up more than +4% after it said it is launching subscriptions for new generative AI features, including copyright protection. 

Tesla (TSLA) closed up more than +4% after William O’Neil & Co reinstated coverage of Tesla with a buy recommendation. 

Cardinal Health (CAH) is up more than +3% after raising the lower end of its full-year adjusted EPS forecast to $5.65-$5.80 from a prior estimate of $5.60-$5.80 and approving a $3.5 billion share buyback authorization.

Amazon.com (AMZN) is up more than +3% after UBS raised its price target on the stock to $150 from $130, saying artificial intelligence will support the company’s cloud-computing division.

T-Mobile U.S. (TMUS) closed up more than +2% after Wolfe Research upgraded the stock to outperform from peer perform with a price target of $160.

International Game Technology (IGT) closed up more than +14% after its board said it is evaluating potential options for its Global Gaming and PlayDigital segments, including a sale, merger, or spin-off.

REV Group (REVG) closed up more than +9% after reporting Q2 net sales of $681.2 million, well above the consensus of $580.6 million, and raised its full-year sales forecast to $2.45 billion-$2.55 billion from a previous forecast of $2.30 billion-$2.50 billion, stronger than the consensus of $2.41 billion. 

Semtech (SMTC) closed up more than +4% after reporting Q1 net sales of $236.5 million, better than the consensus of $234.5 million, and forecasting Q2 net sales of $233 million-$243 million, the midpoint above the consensus of $237.4 million.

Aptiv Plc (APTV) closed up more than +1% after Wolfe Research upgraded the stock to outperform from peer perform. 

Real estate investment trusts fell on concern about commercial real estate as financing freezes up with banks reluctant to lend to the sector.  Simon Property Group (SPG) and Everest Re Group Ltd (RE) closed down more than -2%.  Also, Boston Properties (BXP), Healthpeak Properties (PEAK), Federal Realty Investment Trust (FRT), Mid-America Apartment Communities (MAA), and Alexandria Real Estate Equities (ARE) closed down more than -1%. 

GE Healthcare Technologies (GEHC) closed down more than -3% to lead losers in the Nasdaq 100 after holder Morgan Stanley offered 25 million shares of the stock. 

Smartsheet (SMAR) closed down more than -17% after forecasting 2024 revenue of $943 million-$948 million, the midpoint below the consensus of $945.9 million.

Signet Jewelers (SIG) closed down more than -10% after cutting its 2024 sales outlook to $7.10 billion-$7.30 billion from a previous forecast of $7.67 billion-$7.84 billion, well below the consensus of $7.72 billion.

Oxford Industries (OXM) closed down more than -5% after cutting its full-year sales forecast to $1.59 billion-$1.63 billion from a previous forecast of $1.62 billion-$1.66 billion, below the consensus of $1.64 billion.

Las Vegas Sands (LVS) closed down more than -1% after Jeffries downgraded the stock to hold from buy. 

Across the markets…

September 10-year T-notes (ZNU23) on Thursday closed up +16.5 ticks, and the 10-year T-note yield fell by -8.1 bp to 3.714%.  Sep T-notes Thursday recovered from a 1-week low and moved higher, and the 10-year T-note yield fell back from a 1-1/2 week high of 3.819% and moved lower after weekly U.S. jobless claims jumped to a 19-month high.  T-notes maintained their gains Thursday after crude oil prices fell more than -1%, reducing inflation expectations.  T-notes early Thursday initially moved lower on carryover weakness in European government bond markets. 

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