Stocks Recover Early Losses on Strong Corporate Earnings

The S&P 500 Index ($SPX) (SPY) this morning is up +0.04%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.21%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.14%. 

US stock indexes this morning recovered from early losses and are slightly higher on some positive corporate earnings results. Vistra Corp is up more than +9% after reporting better-than-expected Q1 adjusted Ebitda.  Also, Arista Networks is up more than +6% after reporting stronger-than-expected Q1 adjusted EPS.  Lyft is up more than +8% after reporting better-than-expected Q1 gross bookings and forecasting Q2 gross bookings above consensus.

On the negative side, Uber Technologies is down more than -8% after reporting Q1 gross bookings below the consensus and forecasting weaker-than-expected Q2 gross bookings.  Also, Match Group is down more than -5% after forecasting Q2 revenue below consensus.   In addition, Broadridge Financial Solutions is down more than -4% after reporting Q3 revenue below consensus.

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. 

US MBA weekly mortgage applications rose +2.6% in the week ended May 3.  The purchase mortgage sub-index rose +1.8%, and the refinancing mortgage sub-index rose +4.5%.  The average 30-year fixed rate mortgage fell -0.11 bp to 7.18% from 7.29% in the prior week.

US Mar wholesale trade sales unexpectedly fell -1.3% m/m, weaker than expectations of a +0.8% m/m increase.

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 today are mixed.  The Euro Stoxx 50 climbed to a 1-month high and is up +0.49%. China's Shanghai Composite closed down -0.61%.  Japan's Nikkei Stock Index closed down -1.63%. 

Interest Rates

June 10-year T-notes (ZNM24) this morning are down -4 ticks.  The 10-year T-note yield is up +2.7 bp at 4.484%.  Higher European government bond yields today are weighing on T-note prices.  Also, supply pressures are negative for T-note prices as the Treasury will auction $42 billion 10-year T-notes this afternoon as part of this week’s May quarterly refunding, where the Treasury is auctioning $125 billion of T-notes and T-bonds.

European government bond yields today are higher.  The 10-year German bund yield is up +3.9 bp at 2.458%.  10-year UK gilt yield is up +1.0 bp at 4.135%.

German Mar industrial production fell -0.4% m/m, a smaller decline than expectations of -0.7% m/m.

ECB Governing Council member Wunsch said with "no sign of de-anchoring" of inflation expectations in the Eurozone in the longer-term, "the costs of remaining tight for too long seem to outweigh those of a premature loosening."

US Stock Movers

Vistra Corp (VST) is up more than +9% to lead gainers in the S&P 500 after reporting Q1 adjusted Ebitda of $790 million, better than the consensus of $679.6 million.

Arista Networks (ANET) is up more than +6% after reporting Q1 adjusted EPS of $1.99, stronger than the consensus of $1.73. 

NRG Energy (NRG) is up more than +4% after reporting Q1 adjusted Ebitda of $849 million, well above the consensus of $677.8 million. 

Louisiana-Pacific (LPX) is up more than +15% after reporting Q1 net sales of $724 million, better than the consensus of $687 million. 

Reddit (RDDT) is up more than +4% after reporting 82.7 million daily active users in Q1, above the consensus of 77.35 million.

Confluent (CFLT) is up more than +8% after raising its full-year total revenue forecast to about $957 million from a previous forecast of about $950 million, above the consensus of $951.5 million. 

Lyft (LYFT) is up more than +8% after reporting Q1 gross bookings of $3.69 billion, stronger than the consensus of $3.59 billion, and forecasting Q2 gross bookings of $4.0 billion-$4.1 billion, better than the consensus of $4.02 billion.

International Flavors & Fragrances (IFF) is up more than +2% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $100.

Match Group (MTCH) is down more than -8%  to lead losers in the S&P 500 after forecasting Q2 revenue of $850 million-$860 million, weaker than the consensus of $882.4 million.

Uber Technologies (UBER) is down more than -7% after reporting Q1 gross bookings of $37.65 billion, below the consensus of $37.97 billion, and forecasting Q2 gross bookings of $38.75 billion-$40.25 billion, weaker than the consensus of $40.04 billion.   

Broadridge Financial Solutions (BR) is down more than -4% after reporting Q3 revenue of $1.73 billion, below the consensus of $1.77 billion.

Electronic Arts (EA) is down more than -2% after reporting Q4 net bookings of $1.67 billion, weaker than the consensus of $1.77 billion, and forecasting 2025 net bookings of $7.30 billion-$7.70 billion, below the consensus of 7.77 billion.

Tesla (TSLA) is down more than -2% after Reuters reports that US prosecutors are looking into whether Tesla misled investors and consumers about its electric vehicles’ self-driving capabilities.

ZoomInfo Technologies (ZI) is down more than -25% after forecasting Q2 revenue of $306 million-$309 million, below the consensus of $312.9 million. 

Twilio (TWLO) is down more than -4% after forecasting Q2 revenue of $1.05 billion-$1.06 billion, weaker than the consensus of $1.08 billion. 

Intel (INTC) is down more than -2% to lead losers in the Dow Jones Industrials after tempering its Q2 outlook and saying it now expects Q2 revenue below the midpoint of $12.5 billion-$13.5 billion.

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).

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