Stocks Give Up Early Gains and are Now in the Red

The S&P 500 Index ($SPX) (SPY) is down -0.24%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.05%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.42%. 

US stock indexes are moderately lower.  Earlier this morning, better-than-expected US economic reports showed economic strength, bolstering the prospects for a soft landing, which pushed the market higher.  Also, today's better-than-expected quarterly earnings from Elevance Health and DR Horton boosted health insurance stocks and homebuilders, respectively. 

However, since then indexes have been pulled lower from weakness in chip stocks.  Stocks are also being undercut by rising T-note yields and hawkish comments from NY Fed President Williams. 

Geopolitical risks in the Middle East continue to be a negative factor for stocks on concern Israel will retaliate after Iran fired a barrage of missiles and drones into Israel this past weekend.

US weekly initial unemployment claims were unchanged at 212,000, showing a stronger labor market than expectations of an increase to 215,000.

The US Apr Philadelphia Fed business outlook survey unexpectedly rose +12.3 to a 2-year high of 15.5 versus expectations of a decline to 2.0.

US Mar existing home sales fell -4.3% m/m to 4.19 million, slightly weaker than expectations of 4.20 million.

US Mar leading indicators fell -0.3% m/m, weaker than expectations of -0.1% m/m.

NY Fed President Williams said there's "no urgency" to cut interest rates, and economic data will determine the timing of rate cuts.

The markets are discounting the chances for a -25 bp rate cut at 3% for the next FOMC meeting on April 30-May 1 and 16% for the following meeting on June 11-12.

Overseas stock markets today are higher.  The Euro Stoxx 50 is up +0.49%.  China's Shanghai Composite rose to a 6-month high and closed up +0.09%.  Japan's Nikkei Stock Index recovered from a 2-month low and closed up +0.31%.

Interest Rates

June 10-year T-notes (ZNM24) this morning are down -10 ticks.  The 10-year T-note yield is up +4.3 bp to 4.631%.  June T-notes came under pressure this morning from stronger-than-expected US jobless claims and Philadelphia Fed reports.  T-notes were also undercut after NY Fed President Williams said there's "no urgency" to cut interest rates.

European government bond yields today are mixed.  The 10-year German bund yield is up +2.8 bp at 2.493%. The 10-year UK gilt yield is down -0.8 bp at 4.253%.

In its monthly report, the Bundesbank updated its assessment of the German economy and said the German economy in Q1 may have seen a "slight increase" in growth, an improvement from March when they projected the economy contracted in Q1.

ECB Executive Board member de Guindos said if ECB officials have confidence in meeting the CPI target of 2%, then "it would be appropriate to reduce the current level of monetary policy restriction."

Eurozone Mar new car registrations fell -5.2% y/y, the biggest decline in 20 months.

Eurozone Feb construction output rose +1.8% m/m, the biggest increase in a year.

US Stock Movers

Genuine Parts Co (GPC) is up more than +11% to lead gainers in the S&P 500 after reporting Q1 adjusted EPS of $2.22, better than the consensus of $2.17, and raising its full-year adjusted EPS estimate to $9.80-$9.95 from a previous estimate of $9.70-$9.90, above the consensus of $9.78. 

Elevance Health (ELV) is up more than +5% after reporting Q1 adjusted EPS of $10.64, better than the consensus of $10.53, and raised its full-year adjusted EPS forecast to above $37.20 from a previous forecast of above $37.10, stronger than the consensus of $37.16.  Other health insurers rose on the news, with UnitedHealth Group (UNH) up more than +4% to lead gainers in the Dow Jones Industrials, and Centene (CNC) up more than +3%.

Homebuilders are climbing today after DR Horton reported Q2 revenue of $9.11 billion, stronger than the consensus of $8.28 billion.  DR Horton (DHI) is up more than +3%.  Also, Lennar (LEN), Builders FirstSource (BLDR), PulteGroup (PHM), and Toll Brothers (TOL) are up more than +2%.

Meta Platforms (META) is up more than +3% to lead gainers in the Nasdaq 100 after Moody’s Ratings upgraded the company’s senior unsecured debt rating to Aa3 from A1. 

Marsh & McLennan (MMC) is up more than +3% after reporting Q1 adjusted EPS of $2.89, stronger than the consensus of $2.80. 

Comerica (CMA) is up more than 3% after reporting Q1 average deposits of $65.31 billion, above the consensus of $63.85 billion. 

Zscaler (ZS) is up more than +2% after KeyBanc Capital Markets upgraded the stock to overweight from sector weight with a price target of $220. 

Las Vegas Sands (LVS) is down more than -6% to lead losers in the S&P 500 despite reporting Q1 EPS above expectations after results at its Macau locations broadly missed consensus estimates.

Snap-on Inc (SNA) is down more than -4% after reporting Q1 net sales of $1.18 billion, below the consensus of $1.20 billion.

Equifax (EFX) is down more than -3% after reporting Q1 operating revenue of $1.39 billion, weaker than the consensus of $1.41 billion, and forecast full-year revenue of $5.67 billion-$5.77 billion, below the consensus of $5.80 billion. 

Tesla (TSLA) is down more than -2% to lead losers in the Nasdaq 100 after Deutsche Banks downgraded the stock to hold from buy. 

Autodesk (ADSK) is down more than -2%, adding to Wednesday’s -5% plunge, after saying it won’t file its annual report within the 15-day extension period as it continues investigating free cash flow and non-GAAP operating margin practices. 

Chip stocks are under pressure for a second day and are weighing on technology stocks.  NXP Semiconductors NV (NXPI) is down more than -2%.  Also, ON Semiconductor (ON), Applied Materials (AMAT), Lam Research (LRCX), ASML Holding NV (ASML), and Texas Instruments (TXN) are down more than -1%. 

Earnings Reports (4/18/2024)

Blackstone Inc (BX), Comerica Inc (CMA), DR Horton Inc (DHI), Elevance Health Inc (ELV), Genuine Parts Co (GPC), Intuitive Surgical Inc (ISRG), KeyCorp (KEY), Marsh & McLennan Cos Inc (MMC), Netflix Inc (NFLX), PPG Industries Inc (PPG), Snap-on Inc (SNA).

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