S&P 500 and Nasdaq 100 Post New Record Highs on Chip Stock Strength

The S&P 500 Index ($SPX) (SPY) today is up +0.20%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.12%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.35%.

Stock indexes today are mixed, with the S&P 500 and Nasdaq 100 posting new all-time highs.  Today's strength in chip stocks is leading technology stocks and the broader market higher.  Higher T-note yields today are a negative factor for equities. 

The markets are looking ahead to Fed Chair Powell’s semiannual monetary policy report to the Senate Banking Committee today and to the House Financial Services Committee on Wednesday. The markets will then look to Thursday’s June US CPI report to see if price pressures are continuing to ease. The consensus is that the June CPI eased to +3.1% y/y from +3.3% y/y in May, and the June core CPI remained unchanged from May at +3.4% y/y.  Finally, Q2 earnings season begins Friday as some of the biggest US banks, including JPMorgan Chase, Citigroup, and Wells Fargo, will report quarterly results.  

The markets are discounting the chances for a -25 bp rate cut at 5% for the next FOMC meeting on July 30-31 and 75% for the following meeting on September 17-18.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is down -0.90%.  China's Shanghai Composite recovered from a 4-1/2 month low and closed up +1.26%.  Japan's Nikkei Stock 225 Index rallied to a new all-time high and closed up +1.96%.

Interest Rates

September 10-year T-notes (ZNU24) today are down -5 ticks.  The 10-year T-note yield is up +1.0 bp at 4.288%.  Sep T-notes are under pressure today on negative carryover from a fall in European government bonds.  Also, supply pressures are weighing on T-notes as the Treasury will auction $119 billion of T-notes and T-bonds this week, beginning with today’s auction of $58 billion of 3-year T-notes. 

European government bond yields today are higher.  The 10-year German bund yield is up +2.3 bp at 2.563%.  The 10-year UK gilt yield is up +3.3 bp at 4.146%.

ECB Governing Council member Panetta said the ECB shouldn't be overly worried about stubborn services inflation and still-robust wage growth and that "the reduction in key interest rates will continue at a gradual pace, accompanying the return of inflation to target, if macroeconomic developments remain in line with the ECB Governing Council's expectations."

Swaps are discounting the chances of a -25 bp rate cut by the ECB at 5% for the July 18 meeting and 71% for the September 12 meeting.

US Stock Movers

Chip stocks are climbing today after KeyBanc Capital Markets raised its price target on Nvidia to $180 from $130 and on Qualcomm to $225 from $205.  As a result, Intel (INTC) is up more than +3% to lead gainers in the S&P 500, Dow Jones Industrials, and Nasdaq 100.  Also, Nvidia (NVDA) and Micron Technology (MU) are up more than +2%.  ARM Holdings Plc (ARM), Marvell Technology (MRVL), Applied Materials (AMAT), KLA Corp (KLAC), and Broadcom (AVGO) are up more than +1%. 

Tempus AI (TEM) is up more than +5% after William Blair & Co. initiated coverage of the stock with a recommendation of outperform.

Corning (GLW) is up more than +2% after Argus Research raised its price target on the stock to $50 from $40.

Principal Financial Group (PFG) is up more than +2% after Raymond James upgraded the stock to strong buy from market perform with a price target of $99.

CRH Plc (CRH) is up more than +1% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $88.

Bank of America (BAC) is up nearly +1% after Piper Sandler upgraded the stock to neutral from underweight.

CH Robinson Worldwide (CHRW) is up more than +1% after Vertical Research Partners upgraded the stock to buy from hold with a price target of $102.

Energy producers and energy service providers are under pressure today after the price of WTI crude fell to a 1-week low.  As a result, Marathon Petroleum (MPC), Valero Energy (VLO), Diamondback Energy (FANG), Phillips 66 (PSX), Haliburton (HAL), Schlumberger (SLB), and Marathon Oil (MRO) are down more than -1%. 

Heartland Express (HTLD) is down more than -7% after UBS downgraded the stock to neutral from buy.

CSX Corp (CSX) is down more than -2% after it said it would review the capitalization of certain prior engineering materials and labor.

Helen of Troy (HELE) is down more than -30% after reporting preliminary Q1 adjusted EPS of 99 cents, well below the consensus of $1.59, and cutting its 2025 adjusted EPS estimate to $7.00-$7.50 from a prior estimate of $8.70-$9.20, weaker than the consensus of $8.93.

Helios Technologies (HLIO) is down more than -12% after placing CEO and president Matosevic on paid leave following allegations of a potential violation of the company’s Code of Business Conduct and Ethics.

Chewy (CHWY) is down more than -1% after Argus Research downgraded the stock to hold from buy. 

Earnings Reports (7/9/2024)

Byrna Technologies Inc (BYRN), Helen of Troy Ltd (HELE), Kura Sushi USA Inc (KRUS), SMART Global Holdings Inc (SGH).

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