The S&P 500 Index ($SPX) (SPY) today is down -0.14%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.72%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.39%.
US stock indexes today are mixed, with the Dow Jones Industrials posting a 2-1/2 week low. A +4% jump in Nvidia is leading chip stocks higher and supporting gains in the broader market. Also, today’s unexpected increase in US May consumer confidence was supportive for the US economy and stocks.
Comments today from Minneapolis Fed President Kashkari were slightly hawkish for Fed policy and negative for stocks when he said the US economy has remained "remarkably resilient" and the Fed should monitor whether inflation is slowing enough to warrant interest rate cuts.
Increased M&A activity is supportive of stocks. Energy Transfer LP agreed to buy WTG Midstream through a deal valued at $3.25 billion. Also, T-Mobile US agreed to buy US Cellular Corp’s wireless operations and some of its spectrum assets for about $2.4 billion.
The markets are awaiting this Friday’s April PCE core deflator, the Fed’s preferred inflation gauge, for clues as to if and when the Fed will begin cutting interest rates. Expectations are for the Apr PCE core deflator to remain unchanged from March at +2.8% y/y.
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 Conference Board US May consumer confidence index unexpectedly rose +4.5 to 102.0, stronger than expectations of a decline to 96.0.
The US May Dallas Fed manufacturing outlook survey unexpectedly fell 4.9 to -19.4, weaker than expectations of an increase to -12.1.
The US Mar S&P CoreLogic composite-20 home price index rose +7.38% y/y, stronger than expectations of +7.30% y/y and the biggest increase in 17 months.
The markets are discounting the chances for a -25 bp rate cut at 0% for the June 11-12 FOMC meeting and 10% for the following meeting on July 30-31.
Overseas stock markets today are lower. The Euro Stoxx 50 fell back from a 1-week high and is down -0.76%. China's Shanghai Composite closed down -0.46%. Japan's Nikkei Stock Index closed down -0.11%.
Interest Rates
June 10-year T-notes (ZNM24) today are down -2 ticks. The 10-year T-note yield is up +2.0 bp at 4.485%. T-notes gave up an early advance and turned lower after the US May consumer confidence unexpectedly rose and after Minneapolis Fed President Kashkari said the Fed should take its time to monitor whether inflation is slowing enough to warrant interest rate cuts. Supply pressures are also limiting the upside in T-notes as the Treasury will auction $69 billion of 2-year T-notes and $70 billion of 5-year T-notes later today as part of this week’s $211 billion slate of T-note and floating rate note auctions.
European government bond yields today are higher. The 10-year German bund yield is up +3.4 bp at 2.581%. The 10-year UK gilt yield is up +0.8 bp at 4.269%.
The ECB Apr 1-year CPI expectations rate eased to +2.9% from +3.0% in March, right on expectations and the lowest rate in 2-1/2 years. The Apr 3-year CPI expectations rate eased to +2.4% from +2.5% in March, slower than expectations of no change at +2.5%.
ECB Governing Council member Knot said the ECB is increasingly confident of bringing consumer price growth back to 2% next year and can loosen its "historically tight" monetary policy step by step.
ECB Governing Council member Holzmann said he "will support" next week's interest rate cut by the ECB but won't automatically support moves after June's rate cut.
US Stock Movers
Nvidia (NVDA) is up more than +4% to lead gainers in the Nasdaq 100 as it extends its rally from last Thursday when it reported better-than-expected Q1 earnings and forecasted stronger-than-expected Q2 earnings. Other chip stocks are moving higher as well, with Micron Technology (MU), Marvell Technology (MRVL), ASML Holding NV (ASML), Advanced Micro Devices (AMD), and Qualcomm (QCOM) up more than +1%. Also, Intel (INTC) is up more than +1% to lead gainers in the Dow Jones Industrials.
Norwegian Cruise Line Holdings (NCLH) is up more than +5% to lead gainers in the S&P 500 after Mizuho Securities upgraded the stock to buy from neutral with a price target of $24.
Dell Technologies (DELL) is up more than +3%, adding to last Thursday’s and last Friday’s +7% gain after Aletheia Capital Limited initiated coverage of the stock with a buy recommendation and a price target of $240.
Deckers Outdoor (DECK) is up more than +3% after Truist Securities upgraded the stock to buy from hold with a price target of $1,200.
Airbnb (ABNB) is up more than +2% after Wedbush upgraded the stock to outperform from neutral with a price target of $165.
Arcturus Therapeutics (ARCT) is up more than +22% after reporting the first four patients in a clinical trial to receive ARCT-032 treatments for cystic fibrosis demonstrated improvement after two treatments with no serious adverse events.
Insmed (INSM) is up more than +114% after reporting that a late-stage study of its experimental therapy for lung disease met its primary goal and “several” secondary endpoints.
Moderna (MRNA) is down more than -9% to lead losers in the S&P 500 and in the Nasdaq 100 on signs of inside selling after an SEC filing showed director Afeyan sold $2.36 million of shares last Wednesday.
Zscaler (ZS) is down more than -3% after Wells Fargo Securities downgraded the stock to equal weight from overweight.
Lululemon Athletica (LULU) is down more than -2% after Stifel cut its price target on the stock to$410 from $539.
PepsiCo (PEP) is down more than -2% after Nielsen industry data showed non-alcoholic beverage sales at Pepsi declined in the latest four-week period.
DraftKings (DKNG) is down more than -10% after Illinois legislators raised the tax that sports betting operators pay on their adjusted gross revenue to between 20% and 40% based on revenue thresholds, compared to a current rate of 15%. Analysts note that the potential for other states to follow suit is a potential negative factor for sports betting companies.
Earnings Reports (5/28/2024)
Box Inc (BOX), Cava Group Inc (CAVA), Digital Turbine Inc (APPS), Golar LNG Ltd (GLNG), HEICO Corp (HEI), Hibbett Inc (HIBB), Nano-X Imaging Ltd (NNOX), Ocean Biomedical Inc (OCEA), Ooma Inc (OOMA), Urban One Inc (UONEK).
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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.
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