The S&P 500 Index ($SPX) (SPY) Tuesday closed up +0.13%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.08%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.01%.Â
US stock indexes settled mixed on Tuesday, with the S&P 500 posting a 3-week high and the Dow Jones Industrials posting a 4-week high. A decline in the 10-year T-note yield Tuesday to a 3-1/2 week low supported stocks. Also, expectations that the Fed will start cutting interest rates this year are a positive for stocks.Â
Corporate news Tuesday was mixed for stocks. On the positive side, FMC Corp rose more than +9% after forecasting full-year revenue above consensus. Also, GlobalFoundries closed up more than +6% after reporting Q1 adjusted EPS above consensus. In addition, International Paper rose more than +5% after Reuters reported that Suzano approached International Paper with an offer to buy the company for about $15 billion or $42 per share.Â
On the negative side, Builders FirstSource plunged more than -19% after forecasting full-year adjusted Ebitda below consensus. Also, Walt Disney closed down more than -9% after reporting fewer-than-expected Q2 Disney+ subscribers. In addition, Datadog fell more than -11% after announcing that President Agarwal will step down at the end of this year.
Q1 earnings results have been mostly better than expected, a supportive factor for stocks. Q1 earnings are now expected to climb +6.5% y/y, well above the pre-earnings season estimate of +3.8%. According to data compiled by Bloomberg Intelligence, about 81% of reporting S&P 500 companies have beaten Q1 earnings estimates.Â
US Mar consumer credit increased by +$6.274 billion, weaker than expectations of +$15.000 billion.
Comments Tuesday from Minneapolis Fed President Kashkari were hawkish when he said that given recent inflation data, he questions whether Fed policy is restrictive enough to return price growth to the Fed's 2% target. He added that it's likely the Fed will keep interest rates where they are "for an extended period of time" until they are certain inflation is on track to their target.Â
The markets are discounting the chances for a -25 bp rate cut at 10% for the June 11-12 FOMC meeting and 34% for the following meeting on July 30-31.
Overseas stock markets Tuesday settled higher. The Euro Stoxx 50 rose to a 1-week high and closed up +1.19%. China's Shanghai Composite climbed to a 7-3/4 month high and closed up +0.22%.  Japan's Nikkei Stock Index rose to a 3-week high and closed up +1.57%.Â
Interest Rates
June 10-year T-notes (ZNM24) on Tuesday closed up +4 ticks. The 10-year T-note yield fell -2.6 bp at 4.461%. The 10-year T-note yield Tuesday fell to a 3-1/2 week low of 4.420%. T-notes on Tuesday rose moderately on carryover support from strength in European government bonds. Gains were limited by hawkish comments from Minneapolis Fed President Kashkari, who said the Fed will likely keep interest rates where they are "for an extended period of time." Supply pressures also weighed on T-note prices as the auctioned $58 billion of 3-year T-notes as part of this week’s May quarterly refunding, where the Treasury will auction $125 billion of T-notes and T-bonds. Demand for Tuesday’s 3-year T-note auction was adequate as the auction had a bid-to-cover ratio of 2.63, close to the 10-auction average of 2.65.Â
European government bond yields on Tuesday moved lower. The 10-year German bund yield fell to a 3-week low of 2.417% and finished down -4.9 bp at 2.420%. 10-year UK gilt yield fell to a 3-week low of 4.122% and finished down -9.7 bp at 4.125%.
Eurozone Mar retail sales rose +0.8% m/m, stronger than expectations of +0.7% m/m and the largest increase in 1-1/2 years.
German Mar factory orders unexpectedly fell -0.4% m/m, weaker than expectations of +0.4% m/m.
German trade news was better than expected as Mar exports rose +0.9 %m/m, stronger than expectations of +0.3% m/m. Also, Mar imports unexpectedly rose +0.3% m/m, stronger than expectations of -1.0% m/m.
ECB Governing Council member de Cos said, "If these inflation prospects are maintained, from my point of view, it would be advisable for the ECB to begin reducing the current level of monetary restriction in June."
US Stock Movers
FMC Corp (FMC) closed up more than +9% to lead gainers in the S&P 500 after forecasting full-year revenue of $4.50 billion-$4.70 billion, with the midpoint above the consensus of $4.53 billion.
GlobalFoundries (GFS) closed up more than +7% to lead gainers in the Nasdaq 100 after reporting Q1 adjusted EPS of 31 cents, higher than the consensus of 21 cents.Â
International Flavors and Fragrances (IFF) closed up more than +6% after reporting Q1 net sales of $2.90 billion, stronger than the consensus of $2.78 billion.Â
Fidelity National Information Services (FIS) closed up more than +5% after raising its full-year adjusted EPS forecast to $4.88-$4.98 from a previous forecast of $4.66-$4.76.Â
Kenvue (KVUE) closed up more than +5% after reporting Q1 net sales of $3.89 billion, above the consensus of $3.79 billion.
International Paper (IP) closed up more than +5% after Reuters reported that Suzano approached International Paper with an offer to buy the company for about $15 billion or $42 per share.Â
Symbotic (SYM) closed up more than +11% after reporting Q2 total revenue of $424.3 million, better than the consensus of $412.9 million, and forecasting Q3 total revenue of $450 million-$470 million, stronger than the consensus of $447.1 million.Â
Insulet (PODD) closed up more than +4% after Wolfe Research upgraded the stock to outperform from peer perform with a price target of $200.
Builders FirstSource (BLDR) closed down more than -19% to lead losers in the S&P 500 after forecasting full-year adjusted Ebitda of $2.4 billion-$2.8 billion, the midpoint below the consensus of $2.64 billion.Â
Walt Disney (DIS) closed down more than -9% to lead losers in the Dow Jones Industrials after reporting Q2 Disney+ subscribers of 153.60 million, well below the consensus of 155.66 million.  Â
Datadog (DDOG) closed down more than -11% to lead losers in the Nasdaq 100 after announcing that President Agarwal will step down at the end of this year.Â
Jacobs Solutions (J) closed down more than -4% after forecasting full-year adjusted EPS of $7.80-$8.10, the midpoint below the consensus of $8.05.
Axon Enterprise (AXON) closed down more than -4% after reporting Q1 gross margins of 56.4%, below the consensus of 60.7%.
Palantir (PLTR) closed down more than -14% despite boosting its revenue forecast after William Blair noted the company’s US commercial revenue growth in Q1 decelerated to 40% from 70% in Q4.Â
Tesla (TSLA) closed down more than -3% after reporting Apr China vehicle shipments fell -30% m/m and -18% y/y to 62,167 units.Â
DoorDash (DASH) closed down more than -1% after Instacart partnered with Uber Technologies to offer restaurant deliveries through the Instacart app, competing directly with DoorDash.Â
Earnings Reports (5/8/2024)
Airbnb Inc (ABNB), Atmos Energy Corp (ATO), Broadridge Financial Solutions (BR), Celanese Corp (CE), Corpay Inc (CPAY), Emerson Electric Co (EMR), Fox Corp (FOXA), News Corp (NWSA), NiSource Inc (NI), STERIS PLC (STE), Uber Technologies Inc (UBER).
More Stock Market News from Barchart
- 2 Standout Growth Stocks to Buy Now
- Dollar Climbs on Hawkish Fed Comments and a Weak Yen
- Is It Too Soon to Buy Beaten-Down Peloton Stock?
- 2 Dividend Stocks to Buy on the Dip
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
/Microsoft%20sign%20at%20the%20headquarters%20by%20VDB%20Photos%20via%20Shutterstock.jpg)
/2d%20illustration%20of%20Cloud%20computing%20by%20Blackboard%20via%20Shutterstock.jpg)