Equities Slide on Weakness in Technology Stocks

The S&P 500 Index ($SPX) (SPY) this morning is down -0.87%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.56%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.77%.

Stock indexes this morning are moderately lower on weakness in technology stocks.  Some negative corporate news undercut tech stocks, with Apple down more than -2% after figures from Counterpoint Research showed iPhone sales in China fell by -24% in the first six weeks of this year.  Also, Advanced Micro Devices is down more than -2% after hitting a U.S. government roadblock in its plan to sell an artificial intelligence chip made for China.  In addition, Tesla is down more than -4%, adding to Monday’s -7% fall after Chinese vehicle shipments plunged. 

Stocks maintained their losses on today’s weaker-than-expected U.S. economic reports on Jan factory orders and Jan ISM services.  However, the weaker news knocked bond yields lower and bolstered expectations that the Fed is closer to cutting interest rates.

U.S. Jan factory orders fell -3.6% m/m, weaker than expectations of -2.9% m/m and the biggest decline in 3-3/4 years.

The U.S. Feb ISM services index fell -0.8 to 52.6, weaker than expectations of 53.0.

On the positive side for stocks are lower bond yields, as the 10-year T-note yield dropped to a 3-week low today.  Also, Target is up more than +11% after reporting stronger-than-expected Q4 adjusted EPS.

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

Overseas stock markets today are mixed.  The Euro Stoxx 50 is down -0.21%.  China’s Shanghai Composite closed up +0.28%.  Japan’s Nikkei Stock Index closed down -0.03%.

Interest Rates

June 10-year T-notes (ZNM24) this morning are up +17 ticks, and the 10-year T-note yield is down -7.4 bp to 4.139%.  Jun T-notes today climbed to a 3-week high, and the 10-year T-note yield fell to a 3-week low of 4.110%.   T-notes have carryover support today from strength in European government bond markets. Also, today’s weakness in stocks has boosted safe-haven demand for T-notes.  T-notes raced up to their highs on today’s weaker-than-expected U.S. economic reports on Jan factory orders and Jan ISM services.

European government bond yields today are lower.  The 10-year German bund yield fell to a 2-1/2 week low of 2.293% and is down -8.7 bp at 2.305%.  The 10-year UK gilt yield fell to a 2-1/2 week low of 3.990% and is down -11.9 bp at 3.998%.

The Eurozone Feb S&P composite PMI was revised upward by +0.3 to an 8-month high of 49.2 from the previously reported 48.9.

U.S. Stock Movers

Albemarle (ALB) is down more than -10% to lead losers in the S&P 500 after announcing that it plans to sell $1.75 billion in depositary shares (ADRs) in a public offering to help fund its capital spending. 

Apple (AAPL) is down more than -2% after Counterpoint Research said iPhone sales in China declined by -24% over the first six weeks of this year.  Apple suppliers are also falling on the news, with Broadcom (AVGO), Micron Technology (MU), Qualcomm (QCOM), and Qorvo (QRVO) down more than -1%. 

Tesla (TSLA) is down more than -4%, extending Monday’s -7% plunge after the China Passenger Car Association reported Tesla’s China Feb shipments fell -15.5% m/m to 60,365 units.

Software stocks are under pressure today and are leading technology stocks lower.  MongoDB (MDB) is down more than -7% to lead losers in the Nasdaq 100. Also, Atlassian (TEAM) and ServiceNow (NOW) are down more than -5%, and Adobe (ADBE) and Synopsys (SNPS) are down more than -4%.  In addition, Intuit (INTU) is down more than -3%, and Microsoft (MSFT) is down more than -2%. 

Advanced Micro Devices (AMD) is down more than -2% after U.S. officials told the company that an artificial intelligence chip it was making for sale in China was too powerful and it would need to obtain a license from the Commerce’s Bureau of Industry and Security to sell it.

Gitlab (GTLB) is down more than -17% after forecasting 2025 revenue of $725 million-$731 million, weaker than the consensus of $732.2 million. 

Ferguson (FERG) is down more than -5% after reporting Q2 revenue of $6.67 billion, below the consensus of $6.76 billion. 

GlobalFoundries (GFS) is down more than -2% after Susquehanna Financial downgraded the stock to neutral from positive.

Target (TGT) is up more than +11% to lead gainers in the S&P 500 after reporting Q4 adjusted EPS of $2.98, well above the consensus of $2.40. 

DaVita (DVA) is up more than +7% on its plans to expand in Brazil and Columbia and enter markets for kidney dialysis in Chile and Ecuador.

AeroVironment (AVAV) is up more than +21% after reporting Q3 adjusted EPS of 63 cents, stronger than the consensus of 33 cents, and raising its full-year adjusted EPS forecast to $2.69-$2.83 from a previous estimate of $2.46-$2.70, above the consensus of $2.74. 

Paymentus Holdings (PAY) is up more than +20% after reporting Q4 adjusted Ebitda of $19.9 million, better than the consensus of $13.4 million, and forecasting full-year adjusted Ebitda of $65 million-$75 million, stronger than the consensus of $65.3 million. 

Regional bank stocks are climbing today on a decline in bond yields.  Comerica (CMA) and Citizens Financial Group (CFG) are up more than +3%.  Also, Zions Bancorp (ZION), Synchrony Financial (SYF), Regions Financial (RF), M&T Bank (MTB), KeyCorp (KEY), and US Bancorp (USB) are up more than +2%.

AT&T (T) is up more than +2% after Wolfe Research upgraded the stock to outperform from peer perform with a price target of $21. 

Apogee Therapeutics (APGE) is up more than +38% after reporting its early-stage trial of its experimental treatment for atopic dermatitis exceeded objectives.

Earnings Reports (3/5/2024)

ChargePoint Holdings Inc (CHPT), Crowdstrike Holdings Inc (CRWD), Ferguson PLC (FERG), HashiCorp Inc (HCP), Nordstrom Inc (JWN), Ross Stores Inc (ROST), Target Corp (TGT).

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