Stocks Rally on Blockbuster Earnings from Alphabet and Microsoft

The S&P 500 Index ($SPX) (SPY) this morning is up +0.55%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.31%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.05%. 

US stock indexes this morning are moderately higher as blockbuster earnings results from Alphabet and Microsoft boost the overall market.  Alphabet is up more than +10% after reporting stronger-than-expected Q1 revenue.  Also, Microsoft is up more than +2% after reporting Q3 revenue above consensus.

Stock indexes maintained their gains despite today’s US economic news that showed Mar personal spending and the Mar core PCE deflator rose more than expected, hawkish factors for Fed policy.

On the negative side, Intel is down more than -12% after forecasting weaker-than-expected Q2 revenue. Also, Dexcom is down more than -5% after forecasting full-year revenue below consensus.

US Mar personal spending rose +0.8% m/m, stronger than expectations of +0.6% m/m.  Mar personal income rose +0.5% m/m, right on expectations.

The US Mar PCE core deflator, the Fed's preferred inflation gauge, rose +2.8% y/y, unchanged from Feb and stronger than expectations of +2.7% y/y.

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 13% for the following meeting on June 11-12.

Overseas stock markets today are higher.  The Euro Stoxx 50 is up +0.83%.  China's Shanghai Composite rose to a 1-week high and closed up +1.17%.  Japan's Nikkei Stock Index closed up +0.81%.

Interest Rates

June 10-year T-notes (ZNM24) this morning is up +7 ticks.  The 10-year T-note yield is down -3.5 bp to 4.669%.  T-notes prices today are moderately higher as inflation concerns eased after the US Mar PCE core deflator, the Fed's preferred inflation gauge, rose +2.8% y/y, unchanged from Feb.  T-notes also have carryover support from today’s gains in European government bonds after the ECB’s Mar 1-year inflation expectations declined.  Gains in T-notes are mute as today’s rally in stocks reduces safe-haven demand for T-notes.

European government bond yields today are lower.  The 10-year German bund yield is down -5.3 bp at 2.577%. The 10-year UK gilt yield is down -3.9 bp at 4.324%.

Eurozone Mar M3 money supply rose +0.9% y/y, stronger than expectations of +0.6% y/y and the fastest pace of increase in 10 months. 

ECB Mar 1-year inflation expectations eased to +3.0% from +3.1% in Feb, the lowest in over two years.  The Mar 3-year inflation expectations were +2.5%, unchanged from Feb and stronger than expectations of +2.4%.

US Stock Movers

Alphabet (GOOGL) is up more than +10% to lead gainers in the Nasdaq 100 after reporting Q1 revenue ex-TAC of $67.59 billion, stronger than the consensus of $66.07 billion.

Microsoft (MSFT) is up more than +2% to lead gainers in the Dow Jones Industrials after reporting Q3 revenue of $61.86 billion, better than the consensus of $60.87 billion.  Other cloud stocks rallied on the news, with Datadog (DDOG) up more than +4% and MongoDB (MDB) up more than +3%.

ResMed (RMD) is up more than +11% to lead gainers in the S&P 500 after reporting Q3 adjusted EPS of $2.13, stronger than the consensus of $1.92. 

Skechers USA (SKX) is up more than +14% after reporting Q1 net sales of $2.25 billion, stronger than the consensus of $2.20 billion. 

Autoliv (ALV) is up more than +7% after reporting a Q1 adjusted EPS of $1.58, better than the consensus of $1.40. 

Snap Inc (SNAP) is up more than +24% after reporting Q1 revenue of $1.19 billion, stronger than the consensus of $1.12 billion, and forecasting Q2 revenue of $1.23 billion-$1.26 billion, well above the consensus of $1.21 billion. 

Mohawk Industries (MHK) is up more than +4% after reporting Q1 net sales of $2.70 billion, stronger than the consensus of $2.64 billion.

Intel (INTC) is down more than -12% to lead losers in the S&P 500, Dow Jones Industrials, and Nasdaq 100 after forecasting Q2 revenue of $12.5 billion-$13.5 billion, weaker than the consensus of $13.63 billion.

Atlassian (TEAM) is down more than -10% after co-founder Farquhar announced that he is stepping down as CEO after 23 years. 

Aon Plc (AON) is down more than -9% after reporting Q1 adjusted EPS of $5.66, below the consensus of $5.89.

Boyd Gaming (BYD) is down more than -13% after reporting Q1 adjusted EPS of $1.51, weaker than the consensus of $1.59. 

Dexcom (DXCM) is down more than -4% after forecasting full-year revenue of $4.20 billion-$4.35 billion, the midpoint below the consensus of $4.33 billion.

Phillips 66 (PSX) is down more than -3% after reporting Q1 pretax profit of $1.06 billion, below the consensus of $1.24 billion.

Charter Communications (CHTR) is down more than -2% after reporting Q1 revenue of $13.68 billion, weaker than the consensus of $13.73 billion.

Earnings Reports (4/26/2024)

AbbVie Inc (ABBV), Aon PLC (AON), Ball Corp (BALL), Centene Corp (CNC), Charter Communications Inc (CHTR), Chevron Corp (CVX), Colgate-Palmolive Co (CL), Exxon Mobil Corp (XOM), HCA Healthcare Inc (HCA), LyondellBasell Industries NV (LYB), Phillips 66 (PSX), Roper Technologies Inc (ROP), T Rowe Price Group Inc (TROW).

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