Stocks Slightly Lower Ahead of FOMC Meeting Results and Powell

The S&P 500 Index ($SPX) (SPY) this morning is down -0.09%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.07%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.08%. 

Stocks this morning are slightly lower as the markets are in a holding pattern ahead of the results of today’s FOMC meeting and comments from Fed Chair Powell.

The markets are focused on the results of the 2-day FOMC meeting later this afternoon.  The markets expect the Fed to leave its 5.25%-5.50% federal funds target range unchanged, and they will look to newly updated Fed projections (dot-plot) for the outlook for interest rate cuts.  The markets will also scour comments from Fed Chair Powell’s press conference after Wednesday's conclusion of the FOMC meeting for the future direction of Fed policy. 

On the negative side for stocks, Signet Jewelers Ltd is down more than -10% after reporting Q4 sales below consensus and forecasting weaker-than-expected 2025 total sales. Also, after Hindenburg Research said it had shorted Equinix, real estate investment trust stocks are sliding today.

On the positive side, Chipotle Mexican Grill is up more than +6% after its board approved a 50-for-1 stock split.  Also, General Mills is up more than +2% after reporting stronger-than-expected Q3 net sales. 

US weekly MBA mortgage applications fell -1.6% in the week ended March 15.  The purchase mortgage sub-index fell -1.2%, and the refinancing sub-index fell -2.5%.  The average 30-year fixed rate mortgage rose +13 bp to 6.97% from 6.84% in the prior week.

The markets are discounting the chances for a -25 bp rate cut at 1% at today’s FOMC meeting, 11% for the following meeting on April 30-May 1, and 68% for the meeting after that on June 11-12.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is down -0.14%.  China's Shanghai Composite closed up +0.55%.  Japan's Nikkei Stock Index was closed for the Vernal Equinox Day holiday.

Interest Rates

June 10-year T-notes (ZNM24) this morning are up +3 ticks.  The 10-year T-note yield is down -1.0 bp to 4.283%. June T-notes this morning are modestly higher, underpinned by strength in European government bonds.  Also, some mild short-covering is boosting T-notes ahead of the Fed rate decision and Fed Chair Powell’s comments later this afternoon. 

European government bond yields today are lower.  The 10-year German bund yield is down -2.3 bp to 2.427%. The 10-year UK gilt yield is down -3.2 bp to 4.026%.

German Feb PPI fell -0.4% m/m and -4.1% y/y, weaker than expectations of -0.1% m/m and -3.8% y/y.

ECB President Lagarde said the ECB can't commit to further reductions in borrowing costs after a likely first rate cut in June, and "even after the first rate cut, we cannot pre-commit to a particular rate path."

US Stock Movers

Moderna (MRNA) is down more than -4% to lead losers in the S&P 500 and Nasdaq 100 on signs of insider selling after an SEC filing showed company president Hoge sold $1.55 million shares last Friday. 

Super Micro Computer (SMCI) is down more than -4% after offering 2 million shares of its stock at $875 via Goldman Sachs. 

Equinix (EQIX) is down more than -2% after Hindenburg Research said it is short the stock.  Other real estate trust stocks also moved lower on the news, with VICI Properties (VICI), Digital Realty Trust (DLR), and Crown Castle (CCI) down more than -1%. 

Nasdaq (NDAQ) is down more than -2% after holder Borse Dubai Ltd offered 27 million shares of the stock between $58 and $60 a share. 

Caterpillar (CAT) is down more than -1% to lead losers in the Dow Jones Industrials after Senate Democrats demanded new details about how former Attorney General Barr was among high-level DOJ officials who interceded to protect Caterpillar from a $2.3 billion tax-and-penalty bill. 

Signet Jewelers Ltd (SIG) is down more than -10% after reporting Q4 sales of $2.50 billion, below the consensus of $2.55 billion, and forecasting 2025 total sales of $6.66 billion-$7.02 billion, weaker than the consensus of $7.17 billion.

Amcor Plc (AMCR) is down more than -2% after CEO Delia said he is retiring on April 15 for health reasons. 

Chipotle Mexican Grill (CMG) is up more than +6% to lead gainers in the S&P 500 after its board approved a 50-for-1 stock split. 

General Mills (GIS) is up more than +3% after reporting Q3 net sales of $5.10 billion, stronger than the consensus of $4.99 billion. 

International Paper (IP) is up more than +3% after Citigroup upgraded the stock to buy from hold with a price target of $46.

FMC Corp (FMC) is up more than +2% after UBS upgraded the stock to buy from neutral with a price target of $84. 

Intel (INTC) is up nearly +1% to lead gainers in the Dow Jones Industrials after winning nearly $20 billion in federal grants and loans to help fund an expansion of its semiconductor factories in the US. 

Mobileye (MBLY) is up more than +4% on news that Volkswagen is deepening its partnership with the company to develop automated driving functions.

PDD Holdings (PDD) is up more than +6% to lead gainers in the Nasdaq 100 after reporting Q4 revenue of 88.9 billion yuan ($12.4 billion), well above the consensus of 79.9 billion yuan. 

CarMax (KMX) is up more than +2% after Needham upgraded the stock to buy from hold with a price target of $99.

Earnings Reports (3/20/2024)

Five Below Inc (FIVE), General Mills Inc (GIS), Micron Technology Inc (MU), NET Lease Office Properties (NLOP), and Ollie's Bargain Outlet Holding (OLLI).

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