Strong Tech Earnings Lift Stocks

The S&P 500 Index ($SPX) (SPY) this morning is up +0.33%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.11%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.97%. 

US stock indexes are mixed, with the S&P 500 and Nasdaq 100 posting 1-week highs.  Strength in technology stocks is leading the broader market higher.  Tesla is up more than +12% despite reporting weaker-than-expected Q1 EPS after it said it will accelerate the launch of less-expensive models as soon as this year.  Also, semiconductor stocks are climbing after Texas Instruments reported stronger-than-expected Q1 revenue and forecasted Q2 revenue above consensus. In addition, Hilton Worldwide Holdings is up more than +4% after reporting better-than-expected Q1 adjusted Ebitda and raising its full-year adjusted Ebitda forecast.

On the negative side, Teledyne is down more than -7% after reporting weaker-than-expected Q1 net sales. Also, General Dynamics is down more than -4% after reporting Q1 EPS below consensus.  In addition, Fortive Corp is down more than -4% after reporting weaker-than-expected Q1 revenue.

Stock indexes fell back from their best levels on the increase in geopolitical risks after Israel today said it struck about 40 Hezbollah sites in South Lebanon, risking a further escalation of the Israel-Hamas conflict. 

Q1 corporate earnings take center stage for stocks with 180 of the 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.  Meta Platforms will report after the close today, and Alphabet and Microsoft will report on Thursday. 

US Mar capital goods new orders nondefense ex-aircraft and parts, a proxy for capital spending, rose +0.2% m/m, right on expectations.

US weekly MBA mortgage applications fell -2.7% in the week ended April 19.  The purchase mortgage sub-index fell -1.0% w/w, and the refinancing mortgage sub-index fell -5.6% w/w.  The average 30-year fixed mortgage rate rose +0.11 bp to a 5-month high of 7.24% from 7.13% in the prior week.

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 higher.  The Euro Stoxx 50 climbed to a 1-week high and is up +0.10%. China's Shanghai Composite closed up +0.76%.  Japan's Nikkei Stock Index closed up +2.42%.

Interest Rates

June 10-year T-notes (ZNM24) this morning are down -10 ticks.  The 10-year T-note yield is up +5.0 bp to 4.650%.  T-notes prices today are weighed down by negative carryover from a slide in 10-year German bund prices to a 4-3/4 month low. Also, supply pressures are negative for T-note prices as the Treasury will auction a record $70 billion of 5-year T-notes later this afternoon as part of this week’s $183 billion of T-note auctions.

European government bond yields today are higher.  The 10-year German bund yield rose to a 4-3/4 month high of 2.580% and is up +7.2 bp at 2.574%.  The 10-year UK gilt yield is up +7.5 bp at 4.316%.

The German Apr IFO business climate rose +1.5 to an 11-month high of 89.4, stronger than expectations of 88.8.

ECB Governing Council member and Bundesbank president Nagel said a June rate cut by the ECB "won't necessarily" start a series of rate cuts.

US Stock Movers

Tesla (TSLA) is up more than +12% to lead gainers in the Nasdaq 100 despite reporting weaker-than-expected Q1 EPS after it said it will accelerate the launch of less-expensive models as soon as this year. 

Hasbro (HAS) is up more than +11% to lead gainers in the S&P 500 after reporting Q1 adjusted EPS of 61 cents, well above the consensus of 27 cents.

Boston Scientific (BSX) is up more than +7% after reporting Q1 adjusted EPS of 56 cents, better than the consensus of 51 cents, and raising its full-year adjusted EPS forecast to $2.29-$2.34 from a previous forecast of $2.23-$2.27, above the consensus of $2.26. 

Semiconductor stocks are climbing after Texas Instruments reported Q1 revenue of $3.66 billion, stronger than the consensus of $3.60 billion, and forecast Q2 revenue of $3.65 billion-$3.95 billion, the midpoint above the consensus of $3.78 billion.  As a result, Texas Instruments (TXN) is up more than +7%.  Also, ON Semiconductor (ON) is up more than +6%, and Microchip Technology (MCHP) and Analog Devices (ADI) are up more than +5%.  NXP Semiconductors NV (NXPI) is up more than +4%, and Advanced Micro Devices (AMD), Applied Materials (AMAT), Marvel Technology (MRVL), KLA Corp (KLAC), GlobalFoundries (GFS), Lam Research (LRCX), and Qualcomm (QCOM) are up more than +2%. 

CoStar Group (CSGP) is up more than +7% after reporting Q1 revenue of $656 million, stronger than the consensus of $649.5 million.

Hilton Worldwide Holdings (HLT) is up more than +5% after reporting Q1 adjusted Ebitda of $750 million, stronger than the consensus of $705.4 million, and raising its full-year adjusted Ebitda forecast to $3.38 billion-$3.43 billion from a previous forecast of $3.33 billion-$3.38 billion, above the consensus of $3.37 billion.

Boeing (BA) is up more than +3% to lead gainers in the Dow Jones Industrials after reporting Q1 revenue of $16.57 billion, stronger than the consensus of $16.25 billion. 

AT&T (T) is up more than +2% after it said it added 349,000 wireless phone subscribers in Q1, above the consensus of 303,539. 

Teledyne Technologies (TDY) is down more than -8% to lead losers in the S&P 500 after reporting Q1 net sales of $1.35 billion, weaker than the consensus of $1.40 billion. 

Fortive Corp (FTV) is down more than -4% after reporting Q1 revenue of $1.52 billion, weaker than the consensus of $1.53 billion.

General Dynamics (GD) is down more than -4% after reporting Q1 EPS of $2.88, weaker than the consensus of $2.91. 

Norfolk Southern (NSC) is down more than -3% after reporting Q1 adjusted EPS of $2.49, below the consensus of $2.55.

Old Dominion Freight Line (ODFL) is down more than -3% to lead losers in the Nasdaq 100 after reporting Q1 revenue of $1.46 billion, below the consensus of $1.47 billion.

Molson Coors (TAP) is down more than -2% after Citigroup downgraded the stock to sell from neutral with a price target of $56.

Earnings Reports (4/24/2024)

Align Technology Inc (ALGN), Amphenol Corp (APH), AT&T Inc (T), Avery Dennison Corp (AVY), Biogen Inc (BIIB), Boeing Co/The (BA), Boston Scientific Corp (BSX), Bunge Global SA (BG), Chipotle Mexican Grill Inc (CMG), CME Group Inc (CME), Entergy Corp (ETR), Ford Motor Co (F), Fortive Corp (FTV), General Dynamics Corp (GD), Hasbro Inc (HAS), Hilton Worldwide Holdings Inc (HLT), Humana Inc (HUM), International Business Machine (IBM), Interpublic Group of Cos Inc/T (IPG), Lam Research Corp (LRCX), Masco Corp (MAS), Meta Platforms Inc (META), Molina Healthcare Inc (MOH), Norfolk Southern Corp (NSC), Old Dominion Freight Line Inc (ODFL), O'Reilly Automotive Inc (ORLY), Otis Worldwide Corp (OTIS), Raymond James Financial Inc (RJF), Rollins Inc (ROL), ServiceNow Inc (NOW), Synchrony Financial (SYF), TE Connectivity Ltd (TEL), Teledyne Technologies Inc (TDY), Teradyne Inc (TER), Thermo Fisher Scientific Inc (TMO), Tyler Technologies Inc (TYL), United Rentals Inc (URI), Universal Health Services Inc (UHS), Waste Management Inc (WM), Westinghouse Air Brake Technol (WAB).

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