Stocks Track Fluctuations in Tech Stocks and Mixed U.S. Economic News

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 -0.32%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.04%.

Stocks this morning are mixed.  Tech stocks are supporting the broader market ahead of quarterly earnings results from Nvidia on Wednesday.  However, after climbing by more than +2% today to a record high, shares of Nvidia are down more than -1% on profit-taking and long liquidation. U.S. economic news today was mixed for stocks after July existing home sales fell more than expected to a 6-month low, but the Aug Richmond Fed manufacturing survey unexpectedly rose to a 7-month high.

Global equity markets have some positive carryover from a late surge in Chinese stocks after the Shanghai Composite Stock Index recovered from a 7-1/2 month low in the last hour of trade today and settled higher, which boosted market sentiment. 

U.S. Jul existing home sales fell -2.2% to a 6-month low of 4.07 million, weaker than expectations of 4.15 million.

The U.S. Aug Richmond Fed manufacturing survey unexpectedly rose +2 to a 7-month high of -7, stronger than expectations of a decline to -10.

The markets are discounting the odds at 16% for a +25 bp rate hike at the September 20 FOMC meeting and 49% for that +25 bp rate hike at the November 1 FOMC meeting. 

Global bond yields are mixed.  The 10-year T-note yield rose to a nearly 16-year high of 4.362% and is up +0.6 bp at 4.344%.  The 10-year German bund yield is down -4.3 bp at 2.660%.  The 10-year UK gilt yield is down -5.6 bp at 4.673%. 

Overseas stock markets are higher.  The Euro Stoxx 50 is up +0.80%.  China’s Shanghai Composite Index today closed up +0.88%.  Japan’s Nikkei Stock Index closed up +0.92%.

Today’s stock movers…

Hasbro (HAS) is up more than +7% to lead gainers in the S&P 500 after Bank of America raised its price target on the stock to $90 from $85, citing the success of the company’s two latest digital game launches, Monopoly Go and Baldur’s Gate 3.

Lowe’s (LOW) is up more than +3% after reporting Q2 comparable sales fell -1.6%, a smaller decline than the consensus of -2.57%. 

Moderna (MRNA) is up more than +2% to lead gainers in the Nasdaq 100 as the company said its updated Covid-19 vaccine provides protection to new Covid mutations that have led to an increase in Covid hospitalizations in the U.S.  The updated vaccine is under FDA review and will be available within weeks if approved.

Medtronic Plc (MDT) is up more than +2% after raising its full-year adjusted EPS estimate to $5.08-$5.16 from a previous estimate of $5.00-$5.10, stronger than the consensus of $5.05.

Iron Mountain (IRM) is up more than +2% after RBC Capital Markets upgraded the stock to outperform from sector perform with a price target of $68.

Tesla (TSLA) is up more than +2% amid optimism around the company’s Cybertruck and an upgraded Model 3 vehicle in China.

AppLovin (APP) is up more than +1% after Jeffries upgraded the stock to buy from hold with a price target of $50.

Zoom Video Communications (ZM) gave up an early advance and is down more than -4% to lead losers in the Nasdaq 100 despite reporting better-than-expected Q2 results as several analysts noted some concerns about longer-term growth visibility. 

Target (TGT) is down more than -3% after Daiwa Securities downgraded the stock to neutral from outperform.

Zimmer Biomet Holdings (ZBH) is down more than -3% after it promoted COO Tornos to President and CEO, replacing Bryan Hanson.

Comerica (CMA) and KeyCorp (KEY) are down more than -2% after S&P Global Ratings lowered the regional banks’ long-term ratings to BBB from BBB+, saying a "decline in deposits has squeezed liquidity."

Dick’s Sporting Goods (DKS) is down more than -23% after reporting Q2 adjusted EPS of $2.82, weaker than the consensus of $3.81, and lowered its 2024 adjusted EPS forecast to $11.50-$12.30 from a prior forecast of $12.90-$13.80, well below the consensus of $13.47. 

Macy’s (M) is down more than -9% after forecasting Q3 adjusted EPS of a loss of -2 cents to a gain of +3 cents per share, well below the consensus of +27 cents per share. 

BJ’s Wholesale Club Holdings (BJ) is down more than -3% after reporting Q2 comparable club sales excluding gasoline rose +1.1%, weaker than the consensus of +2.17%, and cutting its 2024 comparable club sales forecast excluding gasoline to +2% from a prior view of +4% to +5%, below the consensus of +3.51%.

Across the markets…

September 10-year T-notes (ZNU23) today are down -2 ticks, and the 10-year T-note yield is up +0.6 bp at 4.344%.  Sep T-notes today posted a new 10-month nearest-futures low, and the 10-year T-note yield today rose to a nearly 16-year high of 4.362%.  Strength in stocks today has reduced the safe-haven demand for T-notes.  Also undercutting T-note prices is speculation that Fed Chair Powell will remain hawkish and say interest rates will need to stay higher for longer to combat inflation when he speaks Friday at the Fed’s annual symposium in Jackson Hole, Wyoming.  T-notes recovered from their worst levels after U.S. Jul existing home sales fell more than expected to a 6-month low.

The dollar index (DXY00) today is up by +0.28%.  The dollar today recovered from overnight losses and is moderately higher after the 10-year T-note yield rose to a nearly 16-year high, strengthening the dollar’s interest rate differentials.  Today’s rally in stocks is negative for the dollar as it reduces liquidity demand for the dollar. 

EUR/USD (^EURUSD) today is down by -0.39%.  The euro today gave up an overnight advance and turned moderately lower as a rebound in the dollar sparked long liquidation in EUR/USD.  Also, Eurozone economic concerns weighed on the euro after today’s economic news showed France’s retail sales volume in July fell for the fourteenth consecutive month. 

French Jul retail sales volume fell -2.1% y/y, the fourteenth consecutive month sales volume has declined.

USD/JPY (^USDJPY) is down by -0.14%.  The yen today is moderately higher against the dollar.  The yen is climbing today after the 10-year JGB government bond yield soared to a 9-year high today at 0.670%, strengthening the yen’s interest rate differentials.  The yen gave up most of its advance this morning after T-note yields rose.

October gold (GCV3) today is down -1.6 (-0.08%), and Sep silver (SIU23) is up +0.010 (+0.04%). Precious metals prices this morning are mixed, with silver posting a 2-week high.  Strength in the dollar today is bearish for metals.  Also, higher T-note yields today are weighing on precious metals prices.  In addition, ongoing fund liquidation in gold is bearish for gold prices after long gold holdings in ETFs fell to a 3-1/3 year low Monday.  Precious metals found some support today after S&P Global Ratings cut the credit ratings on a handful of regional banks, which boosted safe-haven demand for precious metals.

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