Stocks Close Higher as Market Sentiment Improves

The S&P 500 Index ($SPX) (SPY) Friday closed up +0.47%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.13%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.54%.

US stocks settled moderately higher on Friday due to an improvement in market sentiment.  Corporate news Friday was mixed but leaned toward the positive side.  Akamai Technologies rose more than +10% after reporting Q2 adjusted EPS above consensus.  Also, Expedia Group closed up more than +10% after reporting better-than-expected Q2 revenue.  In addition, Trade Desk closed up more than +12% after reporting Q2 revenue above consensus and forecasting stronger-than-expected Q3 revenue.

Lower bond yields on Friday also supported stocks.  Dovish comments from Boston Fed President Collins knocked bond yields lower when she said, "If the data continue the way that I expect, I do believe that it will be appropriate soon for the FOMC to begin adjusting policy and easing how restrictive the policy is."

On the negative side, Insulet closed down more than -9% after reporting weaker-than-expected Q2 adjusted EPS.  Also, Intel closed down more than -3% after Moody’s Ratings downgraded Intel’s senior unsecured debt rating and lowered its outlook to negative.

The market consensus is that Q2 earnings for the S&P 500 companies will rise +9% y/y.  More than half of the companies in the S&P 500 have reported thus far.  According to Bloomberg, most reporting companies have beaten their earnings consensus, but only 43% have beaten revenue expectations, the lowest percentage in five years.

The markets are discounting the chances at 100% for a -25 bp rate cut for the September 17-18 FOMC meeting and at 54% for a -50 bp rate cut at that meeting.

Overseas stock markets Friday settled mixed.  The Euro Stoxx 50 closed up +0.14%.  China's Shanghai Composite closed down -0.27%.  Japan's Nikkei Stock 225 closed up +0.56%.

Interest Rates

September 10-year T-notes (ZNU24) Friday closed up +9.5 ticks.  The 10-year T-note yield fell -4.1 bp to 3.947%.  T-note prices Friday posted moderate gains on dovish comments from Boston Fed President Collins, who said Fed rate cuts will come “soon” if consumer prices keep falling.  Also, bond dealer short covering boosted T-note prices as the dealers progressively lifted short hedges they had in place for the August quarterly refunding operation held earlier this week.  Strength in stocks Friday limited the upside in T-notes.

European government bond yields Friday moved lower.  The 10-year German bund yield fell -4.3 bp to 2.225%.  The 10-year UK gilt yield fell -3.4 bp to 3.945%.

Swaps are discounting the chances of a -25 bp rate cut by the ECB at 97% for the September 12 meeting.

US Stock Movers

Akamai Technologies (AKAM) closed up more than +10% to lead gainers in the S&P 500 after reporting Q2 adjusted EPS of $1.58, better than the consensus of $1.55. 

Expedia Group (EXPE) closed up more than +10% after reporting Q2 revenue of $3.56 billion, better than the consensus of $3.53 billion. 

Trade Desk (TTD) closed up more than +12% to lead gainers in the Nasdaq 100 after reporting Q2 revenue of $585 million, stronger than the consensus of $578.4 million, and forecasting Q3 revenue of at least $618 million, above the consensus of $604.6 million. 

Eli Lilly (LLY) closed up more than +5% after Leerink Partners raised its price target on the stock to $990 from $901.

Take-Two Interactive Software (TTWO) closed up more than +4% after DZ Bank AG upgraded the stock to buy from hold with a price target of $172.

Solventum (SOLV) closed up more than +3% after boosting its full-year adjusted EPS forecast to $6.30-$6.50 from a previous forecast of $6.10-$6.40.

Doximity (DOCS) closed up more than +38% after raising its 2025 revenue forecast to $514 million-$523 million from a previous forecast of $506 million-$518 million, stronger than the consensus of $512.3 million. 

Sweetgreen (SG) closed up more than +31% after reporting Q2 revenue of $184.6 million, above the consensus of $180.9 million, and raising its full-year revenue forecast to $670 million-$680 million from $660 million-$675 million, stronger than the consensus of $674.3 million. 

Insulet (PODD) closed down more than -8% to lead losers in the S&P 500 after reporting Q2 adjusted EPS of 55 cents, below the consensus of 57 cents.

Intel (INTC) closed down more than -3% to lead losers in the Dow Jones Industrials and Nasdaq 100 after Moody’s Ratings downgraded Intel’s senior unsecured debt rating to Baa1 from A3 and lowered its outlook to negative from stable. 

Chip stocks were under pressure Friday and limited the upside in the overall market.  ON Semiconductor (ON), Microchip Technology (MCHP), Advanced Micro Devices (AMD), ASML Holding NV (ASML), GlobalFoundries (GFS), Analog Devices (ADI), Marvell Technology (MRVL), and NXP Semiconductors NV (NXPI) are down more than -1%. 

Sealed Air Corp (SEE) closed down more than -6% after forecasting full-year adjusted EPS of$2.65-$3.05, the midpoint weaker than the consensus of $2.90. 

EchoStar (SATS) closed down more than -16% after reporting Q2 revenue of $3,95 billion, weaker than the consensus of $3.98 billion. 

Elf Beauty (ELF) closed down more than -14% after forecasting 2025 adjusted EPS of $3.36-$3.41, below the consensus of $3.42. 

Five9 Inc (FIVN) closed down more than -26% after cutting its full-year revenue forecast to $1.013 billion-$1.017 billion from a previous forecast of $1.053 billion-$1.057 billion.

Gilead Sciences (GILD) closed down more than -2% after forecasting full-year product sales of $27.1 billion-$27.5 billion, the midpoint below the consensus of $27.32 billion.

Earnings Reports (8/12/2024)

Acrivon Therapeutics Inc (ACRV), Arq Inc (ARQ), Bridger Aerospace Group Holdings (BAER), Caledonia Mining Corp PLC (CMCL), Critical Metals Corp (CRML), DHT Holdings Inc (DHT), Esperion Therapeutics Inc (ESPR), Fortrea Holdings Inc (FTRE), i-80 Gold Corp (IAU), Immersion Corp (IMMR), Inhibrx Biosciences Inc (INBX), Jasper Therapeutics Inc (JSPR), Kodiak Gas Services Inc (KGS), Net Power Inc (NPWR), PACS Group Inc (PACS), Perpetua Resources Corp (PPTA), Perspective Therapeutics Inc (CATX), Pulse Biosciences Inc (PLSE), Pyxis Oncology Inc (PYXS), Sanara Medtech Inc (SMTI), Sonida Senior Living Inc (SNDA), Southland Holdings Inc (SLND), Stereotaxis Inc (STXS), Taysha Gene Therapies Inc (TSHA), Terawulf Inc (WULF), Viant Technology Inc (DSP), VirTra Inc (VTSI), XBiotech Inc (XBIT), Y-mAbs Therapeutics Inc (YMAB).