Stocks Mixed on M&A Activity and Higher Bond Yields

The S&P 500 Index ($SPX) (SPY) today is up +0.15%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.20%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.38%. 

US stock indexes today are mixed.  M&A activity is supporting stocks today after SouthState acquired Independent Bank Group in an all-stock transaction valued at about $2 billion.  Also, CyberArk Software Ltd agreed to buy Venafi for $1.54 billion.

Cruise line operators are climbing today after Norwegian Cruise Line Holdings boosted its full-year adjusted EPS estimate.  Also, Nvidia is up more than +2% after Barclays raised its price target on the stock ahead of its quarterly earnings results.  Higher T-note yields today are a negative factor for stocks. 

Today's comments from Atlanta Fed President Bostic were slightly hawkish and weighed on stocks and bonds when he said, "Nothing has changed," regarding his view that maybe only one rate cut will be appropriate in 2024. 

The markets will look ahead to Wednesday’s April 30-May 1 FOMC meeting minutes to see how close the Fed is to cutting interest rates.  Also, earnings results from Nvidia and Analog Devices on Wednesday will be looked at to gauge the demand for semiconductor chips.  In addition, earnings results from big-box retailer Target will be scoured on Wednesday for clues to consumer spending.

Generally positive Q1 earnings results are supportive of stocks.  Q1 earnings are expected to climb +7.1% 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. 

The markets are discounting the chances for a -25 bp rate cut at 10% for the June 11-12 FOMC meeting and 32% for the following meeting on July 30-31.

Overseas stock markets today are higher.  The Euro Stoxx 50 is up +0.21%.  China's Shanghai Composite rose to an 8-1/2 month high and closed up +0.54%.  Japan's Nikkei Stock Index rose to a 5-week high and closed up +0.73%. 

Interest Rates

June 10-year T-notes (ZNM24) today are down -5 ticks.  The 10-year T-note yield is up +2.9 bp to 4.449%.  June T-notes are under pressure today from weakness in European government bonds.  Also, today’s stock rally has reduced safe-haven demand for T-notes. 

European government bond yields today are moving higher.  The 10-year German bund yield is up +1.5 bp to 2.530%.  The 10-year UK gilt yield is up +3.0 bp to 4.157%.

ECB Governing Council member Kazaks said, "June seems the right moment to start lowering borrowing costs, but decisions on any subsequent steps are best determined by incoming data."

US Stock Movers

Cruise line operators are climbing today after Norwegian Cruise Line Holdings boosted its full-year adjusted EPS estimate to $1.42 from a prior view of $1.32.  As a result, Norwegian Cruise Line Holdings (NCLH) is up more than +5% to lead gainers in the S&P 500.  Also, Carnival (CCL) is up more than +4%, and Royal Caribbean Cruises (RCL) is up more than +3%. 

Teradyne (TER) is up more than +5% after Goldman Sach upgraded the stock to buy from neutral with a price target of $161.

Nvidia (NVDA) is up more than +2% after Barclays raised their price target on the stock to $1,100 from $850. 

Johnson Controls International (JCI) is up more than +2% after Bloomberg reported that Elliot Investment Management has built up a position in the company worth more than $1 billion. 

Wix.com (WIX) is up more than +15% after raising the lower-end of its full-year revenue forecast to $1.74 billion-$1.76 billion from a previous forecast of $1.73 billion-$1.76 billion. 

Micron Technology (MU) is up more than +2% to lead gainers in the Nasdaq 100 after Mogan Stanley upgraded the stock to equal weight from underweight. 

Ulta Beauty (ULTA) is down more than +2% after Piper Sandler cut its price target on the stock to $505 from $595. 

Tesla (TSLA) is down more than -1% after Bloomberg reported Tesla will continue with rolling job cuts through at least June. 

Earnings Reports (5/20/2024)

Keysight Technologies Inc (KEYS), Nordson Corp (NDSN), Palo Alto Networks Inc (PANW), Zoom Video Communications Inc (ZM).

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