Stocks Mixed as Apple Soars to a Record

The S&P 500 Index ($SPX) (SPY) today is down -0.18%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.52%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.14%.

Stock indexes today are mixed, with the Dow Jones Industrials falling to a 1-week low.  Stocks are seeing some downward pressure on caution ahead of Wednesday’s CPI report and the Tue/Wed FOMC meeting results.  Also, a negative carryover from weakness in European stocks is weighing on US stocks as the Euro Stoxx 50 fell to a 1-week low on political upheaval in France after French President Macron on Sunday called for early parliamentary elections later this month in an attempt to stop the advance of his far-right rivals.

Stock indexes recovered from their worst levels today, with the Nasdaq 100 pushing into positive territory after Apple soared more than 5% to a record high when D.A. Davidson upgraded the stock to buy from neutral with a price target of $230 on “expectation of an iPhone upgrade cycle.” 

Stocks are looking ahead to Wednesday’s US May consumer price report, which is expected to show that the May CPI was unchanged from Apr at +3.4% y/y and that the May CPI ex-food and energy eased slightly to +3.5% y/y from +3.6% y/y in April. 

Also, stock investors are awaiting Wednesday’s results of the 2-day FOMC meeting that begins today.  The consensus is that the Fed will keep the Fed funds target rate unchanged at 5.25%-5.50%. The FOMC will also release new estimates for growth and inflation and dot-plot projections for the path of interest rates.  In addition, post-meeting comments from Fed Chair Powell will be scrutinized for when the Fed might cut interest rates. 

The markets are discounting the chances for a -25 bp rate cut at 1% for the June 11-12 FOMC meeting and 8% for the following meeting on July 30-31.

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. 

Overseas stock markets today are mixed.  The Euro Stoxx 50 fell to a 1-week low and is down -1.08%. China's Shanghai Composite fell to a 1-3/4 month low and closed down -0.76%.  Japan's Nikkei Stock 225 Index climbed to a 3-week high and closed up +0.25%.

Interest Rates

September 10-year T-notes (ZNU24) today are up +6 ticks.  The 10-year T-note yield is down -2.0 bp at 4.447%.  Sep T-note prices today are mildly higher on positive carryover from a rally in European government bonds.  Also, stock weakness today has boosted some safe-haven demand for T-notes. Supply pressures are a bearish factor as the Treasury will auction $39 billion 10-year T-notes today as part of this week’s $119 billion auction package of T-notes and T-bonds.   

European government bond yields today are lower.  The 10-year German bund yield fell back from a 1-week high of 2.687% and is down -3.5 bp at 2.636%.  The 10-year UK gilt yield is down -4.7 bp at 4.275%. 

ECB Governing Council member Rehn said the ECB isn't pre-committing to any path for interest rates.

Swaps are discounting the chances of a -25 bp rate cut by the ECB at 7% for the July 18 meeting and 50% for the September 12 meeting.

US Stock Movers

Bank stocks are under pressure today and are undercutting the broader market after Pimco said It expects more regional bank failures in the US because of a “very high” concentration of troubled commercial real estate loans on their books.  As a result, Comerica (CMA), Bank of New York Mellon (BK), and Citigroup (C) are down more than -3%.  Also, JPMorgan Chase (JPM) is down more than -2% to lead losers in the Dow Jones Industrials.  In addition, Bank of America (BAC), M&T Bank (MTB), Regions Financial (RF), Fifth Third Bancorp (FITB), KeyCorp (KEY), Synchrony Financial (SYF), and Wells Fargo (WFC) are down more than -2%. 

Autodesk (ADSK) is down more than -3% to lead losers in the Nasdaq 100 after Bloomberg reported the SEC and Department of Justice are probing the company after it reassigned its CFO following an internal investigation into its accounting practices.

Target Hospitality (TH) is down more than -37% after the Wall Street Journal reported the Biden administration is closing an Immigration and Customs Enforcement detention center in Dilley, Texas, that was used to house migrant families who crossed the border illegally.   

PayPal Holdings (PYPL) is down more than -3% after Apple showed off a new tap-to-cash feature that allows quick payment between individuals. 

Cleveland-Cliffs (CLF) is down more than -5% after JPMorgan Chase downgraded the stock to neutral from overweight. 

CoreCivic (CXW) is down more than -18% after Wedbush downgraded the stock to neutral from outperform.

Mining stocks are under pressure with the price of COMEX copper down more than -1%.  As a result, Southern Copper (SCCO) is down more than -2%, and Freeport McMoRan (FCX) is down more than -1%.   

Comcast (CMCSA) is down nearly -1% after BNP Paribas Exane downgraded the stock to underperform from neutral with a price target of $34.

Apple (AAPL) is up more than 5% at a record high to lead gainers in the S&P 500, Dow Jones Industrials, and Nasdaq 100 after D.A. Davidson upgraded the stock to buy from neutral with a price target of $230 on “expectation of an iPhone upgrade cycle.” 

FMC Corp (FMC) is up more than +4% after Fermium Research LLC upgraded the stock to buy from hold with a price target of $60.

Calavo Growers (CVGW) is up more than +8% after reporting Q2 net sales of $184.4 million, well above the consensus of $159 million. 

Robert Half (RHI) is up more than +1% after BNP Paribas Exane upgraded the stock to outperform from underperform. 

General Motors (GM) is up more than +1% after it authorized a new $6 billion share buyback plan and raised its quarterly dividend by 33% to 12 cents a share. 

Earnings Reports (6/11/2024)

Academy Sports & Outdoors Inc (ASO), Casey's General Stores Inc (CASY), Ocean Biomedical Inc (OCEA), Oracle Corp (ORCL), PetMed Express Inc (PETS), Urban One Inc (UONEK).

• Is Deere & Company Stock Underperforming the S&P 500?
• Dollar Rises on Weakness in Stocks and the Euro
• How Is Lowe’s Companies’ Stock Performance Compared to Other Retail Stocks?
• Booking Holdings Stock: Is BKNG Outperforming the Consumer Cyclical Sector?