Markets are Mixed After FOMC

The S&P 500 Index ($SPX) (SPY) is down -0.28%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.29%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.23%. 

The market is mixed the FOMC was released this afternoon. Chairman Jerome Powell announce no change in the 5.25%-5.50% fed funds target range for a sixth straight meeting.  Powell said, “I think it’s unlikely that the next policy rate move will be a hike. I’d say it’s unlikely.”

Corporate earnings results today are mixed.  On the negative side, CVS Health Corp is down more than -19% after reporting weaker-than-expected Q1 adjusted EPS and cutting its full-year adjusted EPS forecast. Also, Starbucks is down more than -16% after reporting an unexpected decline in Q2 comparable sales.  In addition, Super Micro Computer is down more than -15% after reporting weaker-than-expected Q3 net sales.

On the positive side, Bio-Techne is up more than +16% to lead gainers in the S&P 500 after reporting better-than-expected Q3 net sales.  Also, Garmin Ltd is up more than +11% after reporting Q1 revenue above consensus.  In addition, Amazon.com is up more than +2% after reporting stronger-than-expected Q1 net sales.

Q1 earnings results have been mostly better than expected, a supportive factor for stocks.  Q1 earnings are now expected to climb +4.7% from a year ago, compared with the pre-earnings season estimate of +3.8%.  According to data compiled by Bloomberg Intelligence, about 81% of the S&P 500 companies that have already reported have beaten Q1 earnings estimates. 

Weekly US MBA mortgage applications fell -2.3% in the week ended April 26.  The purchase mortgage sub-index fell -1.7% and the refinancing sub-index fell -3.3%.  The average 30-year fixed rate mortgage rose +0.05 bp to 7.29% from 7.24% in the prior week.

The US Apr ADP employment change rose +192,000, stronger than expectations of +183,000.  Also, Mar was revised upward to +208,000 from the previously reported +184,000.

The US Mar JOLTS job openings fell -325,000 to a 3-year low of 8.488 million, showing a weaker labor market than expectations of 8.680 million.

The US Apr ISM manufacturing index fell -1.1 to 49.2, weaker than expectations of 50.0.  The Apr ISM prices paid sub-index unexpectedly rose +5.1 to a 1-3/4 year high of 60.9 versus expectations of a decline to 55.4. 

US Mar construction spending unexpectedly fell -0.2% m/m, weaker than expectations of a +0.3 % m/m increase.

The markets are discounting the chances for a -25 bp rate cut at 2% for Wednesday’s FOMC meeting and 10% for the following meeting on June 11-12.

Overseas stock markets today are lower.  The Euro Stoxx 50 is closed today for the May Day holiday. China's Shanghai Composite was closed for the Labor Day holiday.  Japan's Nikkei Stock Index closed down -0.34%. 

Interest Rates

June 10-year T-notes (ZNM24) this morning are up +7 ticks.  The 10-year T-note yield is down -2.5 bp to 4.655%.  T-notes today are moderately higher on some mild short covering ahead of the results of today’s FOMC meeting and press conference from Fed Chair Powell.  Also, weaker than-expected US economic news on the Mar JOLTS job openings and the Apr ISM manufacturing index boosted T-notes.  A decline in inflation expectations is also supportive for T-notes after the 10-year breakeven inflation rate fell to a 1-1/2 week low today at 2.371%. 

Gains in T-notes are limited after the US Apr ADP employment change rose more than expected.  Also, an unexpected increase in the Apr ISM prices paid sub-index to a 1-3/4 year high was bearish for T-notes.

European government bond yields are higher.  The 10-year German bund is not trading today with markets closed for the Labor Day holiday.  The 10-year UK gilt yield is up +1.7 bp at 4.364%.

US Stock Movers

CVS Health Corp (CVS) is down more than -19% to lead losers in the S&P 500 after reporting Q1 adjusted EPS of $1.31, weaker than the consensus of $1.69, and cutting its full-year adjusted EPS forecast to $7.00 from a prior forecast of $8.30 and well below the consensus of $8.29. 

Starbucks (SBUX) is down more than -16% to lead losers in the Nasdaq 100 after reporting Q2 comparable sales unexpectedly fell -4%, weaker than expectations of an increase of +1.46%. 

Super Micro Computer (SMCI) is down more than -15% after reporting Q3 net sales of $3.85 billion, weaker than the consensus of $3.86 billion.

Skyworks Solutions (SWKS) is down more than -13% after forecasting Q3 adjusted EPS of $1.21, weaker than the consensus of $1.47. 

Estee Lauder (EL) is down more than -9% after cutting guidance on its full-year sales forecast to a decline of -2% to -3% from a previous view of -1% to up +1%.

Advanced Micro Devices (AMD) is down more than -6% after forecasting Q2 revenue of $5.4 billion-$6.0 billion, the midpoint below the consensus of $5.72 billion. 

Clorox (CLX) is down more than -6% after reporting Q3 net sales of $1,81 billion, weaker than the consensus of $1.87 billion.

Kraft Heinz (KHC) is down more than -6% after reporting Q1 net sales of $6.41 billion, below the consensus of $6.43 billion. 

Bio-Techne (TECH) is up more than +15% to lead gainers in the S&P 500 after reporting Q3 net sales of $303.4 million, stronger than the consensus of $292.3 million.

Garmin Ltd (GRMN) is up more than +10% after reporting Q1 revenue of $1.38 billion, above the consensus of $1.25 billion.

DuPont de Nemours (DD) is up more than +7% after reporting Q1 adjusted EPS of 79 cents, stronger than the consensus of 65 cents, and raising its full-year adjusted EPS estimate to $3.45-$3.75 from a previous estimate of $3.25-$3.65.

Verisk Analytics (VRSK) is up more than +6% to lead gainers in the Nasdaq 100 after reporting Q1 adjusted EPS of $1.63, better than the consensus of $1.52.

Amazon.com (AMZN) is up more than +3% to lead gainers in the Dow Jones Industrials after reporting Q1 net sales of $143.31 billion, above the consensus of $142.59 billion, and said revenue at its Web Services cloud unit has risen to a $100 billion annual revenue run rate.

Pinterest (PINS) is up more than +19% after reporting Q1 revenue of $740.0 million, well above the consensus of $700.3 million, and forecasting Q2 revenue of $835 million-$850 million, better than the consensus of $828.2 million. 

Automatic Data Processing (ADP) is up more than +3% after reporting Q3 revenue of $5.30 billion, stronger than the consensus of $5.22 billion.

3M Co (MMM) is up more than +2% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $111. 

Earnings Reports (5/1/2024)

Aflac Inc (AFL), Albemarle Corp (ALB), Allstate Corp/The (ALL), American International Group I (AIG), American Water Works Co Inc (AWK), ANSYS Inc (ANSS), APA Corp (APA), Automatic Data Processing Inc (ADP), Bio-Techne Corp (TECH), CDW Corp/DE (CDW), Cencora Inc (COR), CF Industries Holdings Inc (CF), CH Robinson Worldwide Inc (CHRW), Cognizant Technology Solutions (CTSH), Corteva Inc (CTVA), CVS Health Corp (CVS), Dayforce Inc (DAY), Devon Energy Corp (DVN), DuPont de Nemours Inc (DD), eBay Inc (EBAY), Estee Lauder Cos Inc/The (EL), Etsy Inc (ETSY), Eversource Energy (ES), First Solar Inc (FSLR), Garmin Ltd (GRMN), Generac Holdings Inc (GNRC), Global Payments Inc (GPN), Host Hotels & Resorts Inc (HST), IDEXX Laboratories Inc (IDXX), Johnson Controls International (JCI), Kraft Heinz Co/The (KHC), Marathon Oil Corp (MRO), Marriott International Inc/MD (MAR), Mastercard Inc (MA), MetLife Inc (MET), MGM Resorts International (MGM), Mid-America Apartment Communities (MAA), Monolithic Power Systems Inc (MPWR), Mosaic Co/The (MOS), Norwegian Cruise Line Holdings (NCLH), Paycom Software Inc (PAYC), Pfizer Inc (PFE), PPL Corp (PPL), PTC Inc (PTC), Qorvo Inc (QRVO), QUALCOMM Inc (QCOM), Ventas Inc (VTR), Verisk Analytics Inc (VRSK), VICI Properties Inc (VICI), WEC Energy Group Inc (WEC), Yum!  Brands Inc (YUM).

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