Stocks Push Higher on Economic Optimism

The S&P 500 Index ($SPX) (SPY) today is up +0.28%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.25%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.36%. 

Stock indexes today are slightly higher, buoyed by some positive corporate news.  Seagate Technology Holdings is up more than +10% after Morgan Stanley upgraded the stock to overweight from equal weight.  Also, McCormick is up more than +9% after reporting better-than-expected Q1 adjusted EPS.  In addition, Tesla is up more than +5% after the Italian newspaper Il Sole 24 Ore reported Italy’s Industry Ministry contacted the company about the potential production of electric trucks. 

Stock indexes fell back from their best levels as today’s US capital goods orders and home price reports showed signs of strength in the economy that was hawkish for Fed policy and pushed T-note yields higher.  Also, an unexpected decline in the US Mar consumer confidence index was negative for stocks. 

US Feb capital goods new orders nondefense ex-aircraft and parts, a proxy for corporate capital goods spending, rose +0.7% m/m, stronger than expectations of +0.1% m/m.

The US Jan S&P Core Logic composite-20 home price index rose +6.03% y/y, the largest increase in 14 months.

The Conference Board US Mar consumer confidence index unexpectedly fell -0.1 to a 4-month low of 104.7, weaker than expectations of an increase to 107.0.

The US Mar Richmond Fed manufacturing survey unexpectedly fell by -6 to -11, weaker than expectations of no change at -5.

The markets are discounting the chances for a -25 bp rate cut at 13% for the next FOMC meeting on April 30-May 1 and 76% for the following meeting on June 11-12.

Overseas stock markets today are mixed.  The Euro Stoxx 50 climbed to a 23-year high and is up +0.40%. China's Shanghai Composite recovered from a 3-week low and closed up +0.17%.  Japan's Nikkei Stock Index closed down -0.04%.

Interest Rates

June 10-year T-notes (ZNM24) this morning are down -2 ticks.  The 10-year T-note yield is up +1.2 bp at 4.257%. June T-note prices this morning gave up early gains and turned lower on the stronger-than-expected US capital goods report.  Supply pressures are also weighing on T-notes as the Treasury will auction $67 billion of 5-year T-notes later today as part of this week’s $161 billion auction package of T-notes and floating rate notes.  T-notes recovered from their worst levels after the Conference Board’s US Mar consumer confidence index unexpectedly declined.

European government bond yields today are lower.  The 10-year German bund yield is down -1.5 bp at 2.358%. The 10-year UK gilt yield is down -1.4 bp at 3.974%.

The German Apr GfK consumer confidence index rose +1.4 to -27.4, stronger than expectations of -28.0.

ECB Governing Council member Muller said data over the coming weeks may be sufficient to confirm the slowdown in inflation by the time ECB policymakers set borrowing costs in June.

US Stock Movers

Seagate Technology Holdings (STX) is up more than +10% to lead gainers in the S&P 500 after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $115. 

McCormick (MKC) is up more than +9% after reporting Q1 adjusted EPS of 63 cents, stronger than the consensus of 57 cents. 

Tesla (TSLA) is up more than +5% to lead gainers in the Nasdaq 100 after the Italian newspaper Il Sole 24 Ore reported Italy’s Industry Ministry contacted the company about the potential production of electric trucks. 

Super Micro Computer (SMCI) is up more than +2%, adding to Monday’s +7% gain, after JPMorgan Chase initiated a recommendation of overweight on the stock with a price target of $1,150, saying the company is at the “forefront of the AI revolution.”

Nasdaq (NDAQ) is up more than +2% after Goldman Sachs upgraded the exchange’s stock to buy from neutral with a price target of $73.

Krispy Kreme (DNUT) is up more than +28% after announcing its doughnuts would be sold at McDonald’s restaurants across the US. 

Viking Therapeutics (VKTX) is up more than +25% after announcing that results from its Phase 1 trial of an oral tablet formulation of VK2735 for obesity showed weight loss after 28 days.   

Chipotle Mexican Grill (CMG) is up more than +2% after Bernstein raised its price target on the stock to $3,200 from $2,800.

United Parcel Service (UPS) is down more than -3% to lead losers in the S&P 500 after it forecasted 2026 revenue that underwhelmed analysts, with Bank of America saying the company’s prior investor day meetings had set revenue targets that were higher than realized results.

3M Co (MMM) is down more than -1% to lead losers in the Dow Jones Industrials after the company’s agreement to pay service members with hearing loss $6 billion has garnered more than 99% participation by claimants who used 3M combat earplugs, surpassing the 98% threshold for finalizing the deal. 

Zoetis (ZTS) is down more than -1% as the company faces an EU antitrust probe into concerns that it thwarted the market entry of a dog pain-relief treatment that could have rivaled its own. 

Rexford Industrial Realty (REXR) is down more than -2% after announcing an offering of $840 million of shares via Bank of America and announcing plans to sell $500 million exchangeable senior notes due 2027 and $500 million exchangeable senior notes due 2029. 

Matador Resources (MTDR) is down more than -4% after announcing it intends to offer $800 million of senior unsecured notes due 2032 in a private placement. 

Stellantis NV (STLA) is down more than -1% after Berenberg downgraded the stock to hold from buy. 

CSX (CSX) is down more than -1% after a container ship crashed into the Francis Scott Key Bridge in Baltimore, causing it to collapse and closing Consol Energy’s Baltimore Marine Terminal that CSX serves. 

Earnings Reports (3/26/2024)

Concentrix Corp (CNXC), GameStop Corp (GME), McCormick & Co Inc/MD (MKC), nCino Inc (NCNO), and TD SYNNEX Corp (SNX).

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