Stocks Push Higher Ahead of Megacap Tech Earnings

The S&P 500 Index ($SPX) (SPY) this morning is up +0.42%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.32%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.57%. 

US stock indexes are moderately higher today as geopolitical tensions ease from the absence of further escalation from Iran following Israel’s retaliatory strike last Friday.  Also, a rebound in technology stocks from last Friday’s selloff is lifting the overall market, with Nvidia and Amazon.com up more than +2%.

This week, the market is awaiting quarterly earnings results from four of the “Magnificent Seven” megacap technology stocks.  Also, market attention is on this Friday’s core PCE deflator, the Fed’s preferred inflation gauge, to assess when the Fed might begin cutting interest rates.

The US Mar Chicago Fed national activity index rose +0.06 to a 4-month high of 0.15, stronger than expectations of 0.07.   

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 19% for the following meeting on June 11-12.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is up +0.35%.  China's Shanghai Composite closed down -0.67%.  Japan's Nikkei Stock Index closed up +1.00%.

Interest Rates

June 10-year T-notes (ZNM24) this morning are down -7 ticks.  The 10-year T-note yield is up +1.7 bp at 4.637%.  June T-notes this morning are weighed down by negative carryover from a slide in 10-year German bund prices to a 4-3/4 month low.  Also, strength in stocks today has curbed safe-haven demand for T-notes.  In addition, supply pressures are negative for T-note prices as the Treasury will sell $183 billion of T-notes this week, beginning with Tuesday’s $69 billion auction of 2-year T-notes. 

European government bond yields today are moving higher.  The 10-year German bund yield rose to a 4-3/4 month high of 2.553% and is up +2.8 bp at 2.5281%.  The 10-year UK gilt yield is up +0.5 bp at 4.234%.

US Stock Movers

A rebound in megacap technology stocks from last Friday’s selloff is lifting the overall market.  Nvidia (NVDA) and Amazon.com (AMZN) are up more than +2%.  Also, Meta Platforms (META) and Alphabet (GOOGL) are up more than +1%. 

Salesforce (CRM) is up more than +2% to lead gainers in the Dow Jones Industrials after the Wall Street Journal reported that the company’s takeover talks to acquire Informatica have cooled, with both parties struggling to agree to terms. 

Vista Outdoor (VSTO) is up more than +4% after it advised MNC Capital to increase its offer price from $37.50 per share.

Verizon Communications (VZ) is up more than +1% after reporting Q1 adjusted EPS of $1.15, stronger than the consensus of $1.12. 

Cardinal Health (CAH) is down more than -4% to lead losers in the S&P 500 after saying its pharmaceutical distribution contracts with OptumRx will not be renewed.  Sales to OptumRx accounted for 16% of its consolidated revenue in fiscal 2023. 

Tesla (TSLA) is down more than -4% to lead losers in the Nasdaq 100 after cutting prices on the vehicles it sells in China in an attempt to stem the slide in sales. 

Informatica (INFA) is down more than -10% after the Wall Street Journal reported that talks for Salesforce to acquire it have cooled as both companies have failed to agree on price.

Newmont (NEM) is down more than -3% to lead mining stocks lower, with the price of gold down more than -2% to a 1-week low an silver down more than -5% to a 2-week low.

Earnings Reports (4/22/2024)

Alexandria Real Estate Equities (ARE), Ameriprise Financial Inc (AMP), Brown & Brown Inc (BRO), Cadence Design Systems Inc (CDNS), Globe Life Inc (GL), Nucor Corp (NUE), Packaging Corp of America (PKG), Truist Financial Corp (TFC), Verizon Communications Inc (VZ).

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