Stocks Climb as Q1 Earnings Roll In

The S&P 500 Index ($SPX) (SPY) this morning is up +0.87%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.67%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.02%. 

US stock indexes this morning are moving higher on some better-than-expected Q1 earnings results.  General Electric is up more than +4% after raising its GE Aerospace full-year operating profit estimate.  Also, General Motors is up more than +4% after reporting stronger than expected Q1 adjusted EPS and raising its full year adjusted EPS estimate. In addition, PulteGroup is up more than +4% after reporting better than expected Q1 revenue.

On the negative side, Sherwin-Williams is down more than -6% after reporting weaker-than-expected Q1 adjusted EPS and forecasting full-year adjusted EPS below consensus.  Also, Cadence Design Systems is down more than -5% after forecasting Q2 adjusted EPS below consensus.

Q1 corporate earnings takes center stage for stocks with 180 S&P 500 companies, or more than 40% of total capitalization, scheduled to report earnings this week, including four of the “Magnificent Seven” megacap technology companies. Tesla will report after the close today, Meta Platforms will report Wednesday, and Alphabet and Microsoft will report Thursday. 

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 14% for the following meeting on June 11-12.

Overseas stock markets today are mixed.  The Euro Stoxx 50 rose to a 1-week high and is up +0.79%. China's Shanghai Composite closed down -0.74%.  Japan's Nikkei Stock Index closed up +0.30%.

Interest Rates

June 10-year T-notes (ZNM24) this morning are down -5 ticks.  The 10-year T-note yield is up +2.9 bp at 4.638%.  T-notes prices are being undercut today by stronger stocks.  Also, supply pressures are negative for T-note prices as the Treasury will auction $69 billion of 2-year T-notes later today as part of this week’s $183 billion of T-note auctions. 

European government bond yields today are moving higher.  The 10-year German bund yield is up +2.7 bp at 2.513%.  The 10-year UK gilt yield is up +6.0 bp to 4.265%.

The Eurozone Apr S&P manufacturing PMI unexpectedly fell -0.5 to 45.6, weaker than expectations of an increase to 46.5.  However, the Apr composite PMI rose +1.1 to 51.4, stronger than expectations of 50.7 and the strongest pace of expansion in 11 months.

ECB Vice President de Guindos said, "If things move in the same direction as they have in recent weeks, the ECB will loosen its restrictive monetary policy stance in June.”

ECB Governing Council member and Bundesbank President Nagel said, "If the favorable inflation outlook from March is confirmed in the June forecast and the incoming data supports the forecast, the ECB can consider lowering interest rates."

US Stock Movers

General Electric (GE) is up more than +4% after raising its GE Aerospace full-year operating profit estimate to $6.2 billion-$6.6 billion from a previous estimate of $6.0 billion-$6.5 billion. 

General Motors (GM) is up more than +4% after reporting Q1 adjusted EPS of $2.62, stronger than the consensus of $2.12, and raising its full-year adjusted EPS estimate to $9.00-$10.00 from a previous estimate of $8.50-$9.50.

PulteGroup (PHM) is up more than +4% after reporting Q1 revenue of $3.95 billion, better than the consensus of $3.60 billion. 

Hibbett (HIBB) is up more than +18% after JD Sports agreed to buy the company for about $1.1 billion, or about $87.50 per share.

Danaher (DHR) is up more than +8% after reporting Q1 sales of $5.80 billion, stronger than the consensus of $5.62 billion. 

Kimberly-Clark (KMB) is up more than +4% after reporting Q1 net sales of $5.15 billion, above the consensus of $5.08 billion, and raised its full-year organic set sales growth forecast to mid-single digits versus previous expectations of low-to mid-single-digit growth. 

Fiserv (FISV) is up more than +4% after reporting Q1 adjusted EPS of $1.88, better than the consensus of $1.79. 

Sherwin-Williams (SHW) is down more than -6% after reporting Q1 adjusted EPS of $2.17, weaker than the consensus of $2.2, and forecasting full-year adjusted EPS of $10.85-$11.35, below the consensus of $11.45. 

Cadence Design Systems (CDNS) is down more than -5% after forecasting Q2 adjusted EPS of $1.20-$1.24, weaker than the consensus of $1.43. 

Nucor (NUE) is down more than -6% after reporting Q1 EPS of $3.46, below the consensus of $3.60.

MSCI Inc (MSCI) is down more than -3% after reporting Q1 operating revenue of $680.0 million, below the consensus of $685.2 million. 

Cleveland-Cliffs (CLF) is down more than -2% after reporting Q1 revenue of $5.20 billion, weaker than the consensus of $5.32 billion.

Warner Bros Discovery (WBD) is down more than -2% after Wolfe Research downgraded the stock to underperform from peer perform with a price target of $7. 

Earnings Reports (4/23/2024)

Baker Hughes Co (BKR), Chubb Ltd (CB), CoStar Group Inc (CSGP), Danaher Corp (DHR), Enphase Energy Inc (ENPH), EQT Corp (EQT), Equity Residential (EQR), Fiserv Inc (FI), Freeport-McMoRan Inc (FCX), General Electric Co (GE), General Motors Co (GM), Halliburton Co (HAL), IDEX Corp (IEX), Invesco Ltd (IVZ), Kimberly-Clark Corp (KMB), LKQ Corp (LKQ), Lockheed Martin Corp (LMT), MSCI Inc (MSCI), NextEra Energy Inc (NEE), NVR Inc (NVR), Pentair PLC (PNR), PepsiCo Inc (PEP), Philip Morris International In (PM), PulteGroup Inc (PHM), Quest Diagnostics Inc (DGX), RTX Corp (RTX), Seagate Technology Holdings PL (STX), Sherwin-Williams Co/The (SHW), Steel Dynamics Inc (STLD), Tesla Inc (TSLA), Texas Instruments Inc (TXN), United Parcel Service Inc (UPS), Veralto Corp (VLTO), Visa Inc (V), W R Berkley Corp (WRB).

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