Stocks Slightly Higher Ahead of This Week’s U.S. Economic Reports

The S&P 500 Index ($SPX) (SPY) this morning is up +0.08%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.25%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.16%.

Stock indexes this morning are slightly higher as they consolidate below last week’s record highs. The markets are looking ahead to this week’s U.S. economic news, including Jan new home sales today, Feb consumer confidence on Tuesday, revised Q4 GDP Wednesday, and the Jan core personal consumption expenditures price index, the Fed’s preferred inflation gauge, on Thursday. 

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

Overseas stock markets are mixed.  The Euro Stoxx 50 is down -0.19%.  China’s Shanghai Composite closed down -0.93%.  Japan’s Nikkei Stock Index closed up +0.35%.

Interest Rates

March 10-year T-notes (ZNH24) this morning are down -2 ticks, and the 10-year T-note yield is up +1.2 bp at 4.260%.  March T-notes this morning are slightly lower, and the 10-year T-note yield recovered from a 1-week low of 4.215% and is modestly higher.  T-notes are being undercut today by supply pressures as the Treasury later today will auction $63 billion 2-year T-notes and $64 billion 5-year T-notes as part of this week’s auction schedule of $169 billion of T-notes.  Also, about $60 billion of corporate debt is expected to be issued this week, prompting bond dealers to sell T-notes as a hedge against the incoming supply. 

Losses in T-notes are limited in anticipation of month-end rebalancing of bond indexes, which may spur the buying of longer-dated Treasuries by bond fund managers who need to balance the duration of their portfolios. 

European government bond yields this morning are higher.  The 10-year German bund yield rebounded from fell to a 1-week low of 2.346% and is up +4.5 bp at 2.408%.  The 10-year UK gilt yield is up +8.3 bp at 4.120%.   

U.S. Stock Movers

Moderna (MRNA) is down more than -4% to lead losers in the S&P 500 after HSBC downgraded the stock to reduce from hold. 

PDD Holdings (PDD) is down more than -4% to lead losers in the Nasdaq 100 after The Information reported that U.S. lawmakers are demanding a Temu shipment ban due to forced labor concerns.

Newmont Corp (NEM) is down more than -3% after Argus Research downgraded the stock to hold from buy. 

Mining stocks are on the defensive today after iron ore prices fell more than -3% to a 4-month low on concerns about Chinese demand.  As a result, Freeport McMoRan (FCX) is down more than -2%, and ArcelorMittal (MT) is down more than -1%. 

Alcoa (AA) is down more than -5% after making a $2.2 billion offer to acquire Alumina Ltd. 

International Paper (IP) is down more than -1% after Argus Research downgraded the stock to hold from buy.

Domino’s Pizza (DPZ) is up more than +8% to lead gainers in the S&P 500 after reporting Q4 total domestic store comparable sales growth rose +2.8%, stronger than the consensus of $2.2%. 

Micron Technology (MU) is up more than +3% after announcing it began volume production of its HBN3E Solution chip for AI applications.

Berkshire Hathaway (BRK/B) is up more than +3% after reporting Q2 operating income of $8.48 billion, stronger than the consensus of $7.89 billion. 

Illumina (ILMN) is up more than +3% on signs of insider buying after an SEC filing showed CEO Thaysen bought $991,672 of shares last Thursday.

Salesforce (CRM) is up more than +2% to lead gainers in the Dow Jones Industrials after Citigroup raised its price target on the stock to $325 from $265.

HashiCorp (HCP) is up more than +11% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $30. 

The Gap (GPS) is up more than +2% after JPMorgan Chase upgraded the stock to neutral from underweight. 

Amer Sports (AS) is up more than +1% after Goldman Sachs initiated coverage of the stock with a buy recommendation and a price target of $21. 

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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