What you need to know…
The S&P 500 Index ($SPX) (SPY) today is down -0.50%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.03%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.88%.
The broader market is under pressure today as weakness in chip stocks drags the technology sector lower. Nvidia is down more than -5% to lead technology stocks lower ahead of its Q4 earnings results on Wednesday. Corporate news today was mixed for the overall market.
On the negative side, Expeditors International of Washington is down more than -6% after reporting below-consensus Q4 EPS. Also, Nvidia is down more than -5% ahead of its fiscal Q4 earnings results due on Wednesday. Tesla is down more than -3% after Phillip Securities downgraded the stock to neutral from accumulate.
On the positive side, Walmart is up more than +5% to keep the Dow Jones Industrials in positive territory after reporting above-consensus Q4 total U.S. comparable sales ex-gasoline. Also, Discover Financial Services is up more than +13% after Capital One Financial acquired the company in an all-stock transaction valued at $35 billion. GlobalFoundries is up more than +2% as the U.S. plans to award $1.5 billion to the company under the Chips Act grant.
M&A activity is supportive of stocks. Capital One Financial acquired Discover Financial Services in an all-stock transaction valued at $35 billion. Also, Walmart announced that it will buy Vizio Holding for about $2.3 billion or $11.50 per share in cash.
Increased stimulus from China may boost its growth and is positive for the global economy after Chinese lenders cut the five-year loan prime rate by 25 bp to 3.95%, a bigger cut than expectations of 10 bp to 4.10%.
The markets are discounting the chances for a -25 bp rate cut at 11% for the March 19-20 FOMC meeting and 42% for the following meeting on April 30-May 1.
U.S. and European government bond yields today are lower. The 10-year T-note yield is down -2.9 bp at 4.250%. The 10-year German bund yield is down -4.1 bp at 2.371%. The 10-year UK gilt yield is down -6.3 bp at 4.045%.
Overseas stock markets are mixed. The Euro Stoxx 50 is down -0.01%. China’s Shanghai Composite closed up +0.42%. Japan’s Nikkei Stock Index closed down -0.28%.
Today’s stock movers…
Chip stocks are under pressure today to weigh on the overall market, led by a -5% fall in Nvidia (NVDA) ahead of its quarterly earnings results on Wednesday. Also, Advanced Micro Devices (AMD) and Applied Materials (AMAT) are down more than -5%. In addition, Marvell Technology (MRVL) is down more than -3%, and Lam Research (LRCX), ASML Holding NV (ASML), Broadcom (AVGO), and ON Semiconductor Corp (ON) are down more than -2%.
Expeditors International of Washington (EXPD) is down more than -6% after reporting Q4 EPS of $1.09, weaker than the consensus of $1.22.
Tesla (TSLA) is down more than -3% after Phillip Securities downgraded the stock to neutral from accumulate.
Airbnb (ABNB) is down more than -3% after Phillip Securities downgraded the stock to neutral from buy.
Caterpillar (CAT) is down more than -1% to lead losers in the Dow Jones Industrials after Evercore ISI downgraded the stock to inline fork outperform.
Global Payments (GPN) is down more than -1% after announcing it intends to offer $1.75 billion in convertible senior notes due 2031.
BorgWarner (BWA) is down more than -1% after BNP Paribas Exane downgraded the stock to neutral from outperform.
Discover Financial Services (DFS) is up more than +13% to lead gainers in the S&P 500 after Capital One Financial acquired the company in an all-stock transaction valued at $35 billion.
Walmart (WMT) is up more than +4% to lead gainers in the Dow Jones Industrials after reporting Q4 total U.S. comparable sales ex-gasoline rose +3.9%, stronger than the consensus of +3.2%.
Conagra Brands (CAG) is up more than +3% after the company touted its healthy frozen meals and said it was well positioned from consumers increasingly using GLP-1 drugs for weight loss.
GlobalFoundries (GFS) is up more than +2% to lead gainers in the Nasdaq 100 as the U.S. plans to award $1.5 billion to the company under the Chips Act grant.
Southwest Airlines (LUV) is up more than +2% after Deutsche Bank upgraded the stock to buy from neutral with a price target of $42.
Intel (INTC) is up more than +1% after Bloomberg reported the company is in talks with the U.S. government for more than $10 billion in subsidies from the Chips and Science Act.
Vizio Holding (VZIO) is up more than +14% after Walmart announced it will buy the company for about $2 billion or $11.50 per share in cash.
Across the markets…
March 10-year T-notes (ZNH24) this morning are up +11 ticks, and the 10-year T-note yield is down -2.9 bp at 4.250%. Mar T-note prices are moderately higher this morning, garnering safe-haven support from weakness in stocks. Also, a rally in Canadian government bonds today is providing carryover support to T-notes after a softer-than-expected Canada Jan CPI report. Gains in T-notes are limited by supply pressures as nearly $50 billion of corporate bonds are expected to price this week, prompting bond dealers to short 10-year T-note futures to hedge against the upcoming supply.
The dollar index (DXY00) this morning is down by -0.39% and posted a 2-week low. Strength in the euro today is undercutting the dollar as strong Eurozone economic news pushed EUR/USD up to a 2-week high. The dollar extended its losses after U.S. Jan leading indicators fell more than expected.
EUR/USD (^EURUSD) this morning is up by +0.40% at a 2-week high. The euro found support today on a sign of economic strength after Eurozone Jan new car registrations increased and Eurozone Dec construction output rose by the most in 10 months.
Eurozone Dec construction output rose +0.8% m/m, the largest increase in 10 months.
Eurozone Jan new car registrations rose +12.1% y/y to 852,000 units.
Swaps are pricing in the chances for a -25 bp rate cut by the ECB at 6% for its next meeting on March 7 and at 45% for the following meeting on April 11.
USD/JPY (^USDJPY) this morning is down by -0.21%. The yen is climbing against the dollar due to a decline in T-note yields. The yen is also seeing support from ideas that the Japanese government may intervene to support the yen after Finance Minister Suzuki said the government will continue to monitor the currency market with a high sense of urgency.
Swaps are pricing in the chances for a +10 bp BOJ rate hike at 32% for its next meeting on March 19 and at 62% for the following meeting on April 26.
April gold (GCJ24) is up +14.7 (+0.73%), and Mar silver (SIH24) is down -0.340 (-1.45%). Gold and silver prices this morning are mixed. Today’s decline in the dollar index to a 2-week low is bullish for metals. Also, lower global bond yields today are supportive of precious metals.
On the negative side, precious metals have some negative carryover from last week after the stronger-than-expected U.S. Jan PPI and CPI reports dampened expectations for Fed rate cuts. Also, gold remains under pressure from the ongoing long liquidation of gold by funds after long gold holdings in ETFs fell to a 4-year low last Friday.
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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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