Stocks Mixed on Positive Corporate News and Weakness in Chip Stocks

The S&P 500 Index ($SPX) (SPY) today is up +0.23%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.58%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.32%.

Stock indexes today are mixed.  Some positive corporate news today is giving stocks a lift, with Spirit AeroSystems up more than +4% after Boeing agreed to buy the company for approximately $4.7 billion, or $37.25 per share, in an all-stock deal.  Also, Chewy is up more than +4% after Keith Gill, known online as “Roaring Kitty,” disclosed a 6.6% passive stake in the company.   

US stocks have carryover support from a rally in European stocks as the Euro Stoxx 50 rose to a 2-week high today after French parliamentary elections Sunday showed Marine Le Pen’s far-right party faces a tougher-than-expected road to an absolute majority, signaling there’s a reduced chance of French policymakers being able to enact extreme policies that would rattle financial markets. 

On the negative side for equities today is higher bond yields as the 10-year T-note yield climbed to a 2-1/2 week high.  Also, weakness in chip stocks is weighing on the Nasdaq 100

The markets are discounting the chances for a -25 bp rate cut at 9% for the next FOMC meeting on July 30-31 and 58% for the following meeting on September 17-18.

Overseas stock markets today are higher.  The Euro Stoxx 50 rose to a 2-week high and is up +1.12%. China's Shanghai Composite rose to a 1-week high and closed up +0.92%.  Japan's Nikkei Stock 225 Index rose to a 2-3/4 month high and closed up +0.12%.

Interest Rates

September 10-year T-notes (ZNU24) today are down -20 ticks.  The 10-year T-note yield is up +4.9 bp to 4.445%.  Sep T-notes today dropped to a 2-1/2 week low, and the 10-year T-note yield rose to a 2-1/2 week high of 4.447%.  T-notes are sliding today on negative carryover from a decline in European government bonds.  Also, an increase in inflation expectations weighed on T-notes after the 10-year breakeven inflation rate rose to a 3-week high today at 2.317%. 

European government bond yields today are moving higher.  The 10-year German bund yield rose to a 2-1/2 week high of 2.588% and is up +8.4 bp at 2.585%.  The 10-year UK gilt yield rose to a 2-1/2 week high of 4.242% and ended up +6.9 bp at 4.241%. 

The Eurozone Jun S&P manufacturing PMI was revised upward by 0.2 to 45.8 from the previously reported 45.6.

German Jun CPI (EU harmonized) eased to +2.5% y/y from +2.8% y/y in May, right on expectations.

Swaps are discounting the chances of a -25 bp rate cut by the ECB at 12% for the July 18 meeting and 65% for the September 12 meeting.

US Stock Movers

Merck & Co (MRK) is up more than +3% to lead gainers in the Dow Jones Industrials after it converted its co-exclusive license covering prostate cancer drug candidate Opevesostat with Orion into an exclusive global license for Merck.

Spirit AeroSystems (SPR) is up more than +4% after Boeing agreed to buy the company for approximately $4.7 billion, or $37.25 per share, in an all-stock deal.

Teleflex (TFX) is up more than +2% after Piper Sandler upgraded the stock to overweight from neutral with a price target of $245.

Cryptocurrency-linked stocks are climbing today, with the price of Bitcoin (^BTCUSD) up more than +4% at a 1-week high. As a result, Coinbase Global (COIN), Marathon Digital (MARA), and Riot Platforms (RIOT) are up +3% or more.   

Chewy (CHWY) is up more than +5% after Keith Gill, known online as “Roaring Kitty,” disclosed a 6.6% passive stake in the company. 

Birkenstock Holding Plc (BIRK) is up more than +2% after UBS upgraded the stock to buy from neutral with a price target of $65.

Amkor Technology (AMKR) is up more than +2% after JPMorgan Chase initiated coverage on the stock with a recommendation of overweight and a price target of $48.

Chip stocks are under pressure today, with Super Micro Computer (SMCI) down more than -4% to lead losers in the S&P 500 and Arm Holdings Plc (ARM) down more than -4% to lead losers in the Nasdaq 100.  Also, Advanced Micro Devices (AMD) is down more than -3%, and Nvidia (NVDA) and Micron Technology (MU) are down more than -2%.  In addition, Intel (INTC) is down nearly -1% to lead losers in th Dow Jones Industrials.

Zimmer Biomet Holdings (ZBH) is down nearly -0.24% after Piper Sandle downgraded the stock to neutral from overweight.

Earnings Reports (7/1/2024)

Grail Inc (GRAL).

• Tesla's Quarterly Earnings Preview: What You Need to Know
• Stock Market Forecast H2 2024: Will the 'AI Rally' Get a Reality Check?
• 3 'Strong Buy' Semiconductor Stocks With Double-Digit Upside Potential
• A Decade from Now, You'll Wish You Had Bought This Growth Stock