Stocks Settle Mixed as Tech Stock Rally Loses Steam

The S&P 500 Index ($SPX) (SPY) Friday closed up +0.03%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.16%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.37%.

Stock indexes on Friday settled mixed.  The S&P 500, Dow Jones Industrials, and Nasdaq 100 all posted new all-time highs on Friday.  However, profit-taking emerged in technology stocks after this week's sharp rally that dragged the Nasdaq 100 into negative territory.

A decline in global bond yields Friday supported stocks as dovish central bank comments knocked yields lower.  New York Fed President Williams said he expects consumer spending growth to slow this year and "at some point, it will be appropriate for the Fed to pull back on restrictive monetary policy, likely later this year."  Also, ECB President Lagarde said the latest Eurozone compensation numbers are “encouraging.”  In addition, ECB Governing Council member Centeno said the ECB must be ready for an interest rate cut in March, even if not likely, as downside risks to inflation and growth have materialized.

U.S. stocks have carryover support from strength in European equity markets as the Euro Stoxx 50 rose to a new 23-year high Friday.

The markets are discounting the chances for a -25 bp rate cut at 2% for the March 19-20 FOMC meeting and 21% for the following meeting on April 30-May 1.

Overseas stock markets on Friday settled mixed.  The Euro Stoxx 50 closed up +0.35%.  China’s Shanghai Composite closed up +0.55%.  Japan’s Nikkei Stock Index was closed for a holiday.

Interest Rates

March 10-year T-notes (ZNH24) on Friday closed up +12 ticks, and the 10-year T-note yield fell -6.5 bp to 4.256%.  March T-notes Friday recovered from a 2-3/4 month low and moved higher, and the 10-year T-note yield fell back from a 2-3/4 month high of 4.349%. 

A rally in European government bonds Friday sparked short covering in T-notes.  Gains in T-notes accelerated on dovish comments from New York Fed President Williams, who said rate cuts from the Fed are “likely later this year.” 

European government bond yields on Friday moved lower.  The 10-year German bund yield fell to a 1-week low of 2.358% and finished down -7.7 bp at 2.363%.  The 10-year UK gilt yield fell to a 1-week low of 4.029% and finished down -6.9 bp at 4.037%. 

U.S. Stock Movers

Recently beaten-down cybersecurity stocks rallied Friday on favorable valuations.  Palo Alto Networks (PANW) closed up more than +5% to lead gainers in the S&P 500 and Nasdaq 100.  Also, Zscaler (ZS) and SentinelOne (S) closed up more than +3%, and CyberArk Software (CYBR) closed up more than +2%.  In addition, Fortinet (FTNT) closed up +1%.

Henry Schein (HSIC) closed up more than +3% ahead of its quarterly earnings results, which will be released next Tuesday.

Carvana (CVNA) closed up more than +32% after reporting Q4 gross profit of $402 million, stronger than the consensus of $388.1 million.

Block Inc (SQ) closed up more than +16% after raising its 2024 adjusted Ebitda forecast to at least $2.63 billion from a prior forecast of $2.40 billion, above the consensus of $2.41 billion. 

Rocket Cos.  (RKT) closed up more than +5% after reporting Q4 adjusted revenue of $885 million, better than the consensus of $770.8 million. 

Live Nation Entertainment (LYV) closed up more than +2% after reporting Q4 revenue of $5.84 billion, well above the consensus of $4.73 billion.   

VICI Properties (VICI) closed up more than +1% after reporting Q4 FFO/share of 72 cents, above the consensus of 63 cents.

Edison International (EIX) closed up more than +1% after reporting Q4 core EPS of $1.28, better than the consensus of $1.16.

Booking Holdings (BKNG) closed down more than -10% to lead losers in the S&P 500 after forecasting full-year gross bookings to increase “slightly faster than 7%,” weaker than the consensus of 9.9%.

MercadoLibre (MELI) closed down more than -10% to lead losers in the Nasdaq 100 after reporting Q4 EPS of $3.25, well below the consensus of $7.17.

Warner Bros Discovery (WBD) closed down more than -9% after reporting Q4 revenue of $10.28 billion, weaker than the consensus of $10.46 billion. 

Insulet (PODD) closed down more than -6% after forecasting 2024 revenue growth of 12% to 17%, the midpoint weaker than the consensus of 16.6%. 

EOG Resources (EOG) closed down more than -3% after reporting Q4 adjusted EPS of $3.07, below the consensus of $3.11.

Penumbra (PEN) closed down more than -9% after forecasting full-year revenue of $1.230 billion-$1.270 billion, the midpoint below the consensus of $1.267 billion.

Airbnb (ABNB) closed down more than -1% on signs of insider selling after an SEC filing showed CFO Stephenson sold $1.14 million of shares on Tuesday.

Noble Corp (NE) closed down more than -1% after forecasting full-year adjusted Ebitda of $925 million-$1.03 billion, the midpoint below the consensus of $1.1 billion.   

Earnings Reports (2/26/2024)

AES Corp/The (AES), Domino's Pizza Inc (DPZ), Elanco Animal Health Inc (ELAN), Fidelity National Information (FIS), Freshpet Inc (FRPT), HEICO Corp (HEI), ONEOK Inc (OKE), Pilgrim's Pride Corp (PPC), Playtika Holding Corp (PLTK), Public Service Enterprise Grou (PEG), SBA Communications Corp (SBAC), Trex Co Inc (TREX), Unity Software Inc (U), Workday Inc (WDAY), Zoom Video Communications Inc (ZM).

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