The S&P 500 Index ($SPX) (SPY) today is down -0.13%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.13%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.30%.
US stocks today are slightly lower this morning, despite a decline in T-note yields. Positive corporate news today is also boosting stocks. Palo Alto Networks is up more than +6% after reporting Q4 revenue above consensus and forecasting stronger-than-expected 2025 revenue. Also, Eli Lilly is up more than +3% after it said a study of patients taking its Zepbound weight-loss drug were 94% less likely to develop diabetes in a three-year study. In addition, Fabrinet is up more than +16% after reporting better-than-expected Q4 adjusted EPS and forecasting Q1 adjusted EPS above consensus.
The markets are awaiting the minutes of the July 30-31 FOMC meeting on Wednesday for clues as to how close the Fed is to cutting interest rates. Also, the markets are waiting for the opening comments from Fed Chair Powell on Friday at the Fed’s annual symposium in Jackson Hole, Wyoming, for any fresh insights on the future course of Fed policy.Â
The markets are discounting the chances at 100% for a -25 bp rate cut for the September 17-18 FOMC meeting and at 28% for a -50 bp rate cut at that meeting.
Overseas stock markets today are mixed. The Euro Stoxx 50 fell back from a 2-1/2 week high and is down -0.05%. China's Shanghai Composite closed down -0.93%. Japan's Nikkei Stock 225 climbed to a 2-1/2 week high and closed up by +1.80%.
Interest Rates
September 10-year T-notes (ZNU24) today are up +8 ticks. The 10-year T-note yield is down -3.2 bp at 3.839%. Sep T-notes today are mildly higher. Dovish ECB comments today knocked 10-year German bund yields lower and are providing carryover support to T-notes. Also, a benign Canadian July CPI report today sparked a rally in 10-year Canadian bonds that underpinned T-note prices. Gains in T-notes are limited by corporate supply pressures, with as much as $20 billion of corporate debt expected to be sold this week, prompting bond dealers to short T-notes as a hedge against the incoming supply.Â
European government bond yields today are mixed. The 10-year German bund yield is down -1.8 bp at 2.228%. The 10-year UK gilt yield rose to a 1-week high of 3.948% and is up +0.4 bp at 3.926%.
Eurozone June construction output rose +1.7% m/m, the largest increase in 17 months.
German’s July PPI fell -0.8% y/y, the thirteenth consecutive month prices have fallen year-over-year.
ECB Governing Council member Rehn said, "In my view, the recent increase in negative growth risks in the Eurozone has reinforced the case for a rate cut at the next ECB monetary meeting in September, provided that disinflation is indeed on track."
The Bundesbank said in its monthly report that "the high level of willingness to strike until recently and the still widespread labor shortage suggest that comparatively high wage increases will continue in the future."Â This will probably keep underlying inflation "at an elevated level."
Swaps are discounting the chances of a -25 bp rate cut by the ECB at 100% for the September 12 meeting.
US Stock Movers
Palo Alto Networks (PANW) is up more than +5% to lead gainers in the S&P 500 and the Nasdaq 100 after reporting Q4 revenue of $2.20 billion, better than the consensus of $2.16 billion, and forecasting 2025 revenue of $9.10 billion-$9.15 billion, with the midpoint above the consensus of $9.11 billion.Â
Fabrinet (FN)Â is up more than +16% after reporting Q4 adjusted EPS of $2.41. Â better than the consensus of $2.25 and forecasting Q1 adjusted EPS of $.33-$2.40, stronger than the consensus of $2.25.Â
Eli Lilly (LLY) is up more than +3% after it said a study of patients taking its Zepbound weight-loss drug were 94% less likely to develop diabetes in a three-year study. Â
Hawaiian Holdings (HA) is up more than +11% after Alaska Air Group said the waiting period for the antitrust review by the US Justice Department of its takeover of Hawaiian Holdings has expired, bringing the $1.9 billion merger one step closer to being finalized.
Amer Sports (AS) is up more than +10% after reporting Q2 adjusted EPS of 5 cents, better than the consensus of a -6 cent loss, and raising its full-year adjusted EPS estimate to 40 cents-44 cents from a previous estimate of 30 cents-40 cents.Â
Vornado Realty (VNO) is up more than +1% after Evercore ISI upgraded the stock to outperform from underperform with a price target of $38.Â
Viking Therapeutics (VKTX)Â is down more than -4% on signs of insider selling after an SEC filing showed CEO Lin sold $7.43 million of shares on Monday.Â
Stride (LRN) is down more than -4% after Citigroup downgraded the stock to neutral from buy, citing valuation.Â
Estee Lauder (EL) is down more than -3% after Morgan Stanley cut its price target on the stock to $100 from $140.
Dentsply Sirona (XRAY) is down more than -3% after announcing that CFO Coleman will resign effective November 7.
Bank of America (BAC) is down more than -2% after an SEC filing showed Berkshire Hathaway sold $550.7 million of its Bank of America stock holdings between August 15-19.
Boeing (BA) is down more than -2% after it said it paused test flights of its 777X jetliner while it inspects cracks in a crucial structural component, marking the latest setback to certify its largest jetliner that is already about five years behind schedule.Â
Earnings Reports (8/20/2024)
Amer Sports Inc (AS), Coty Inc (COTY), Jack Henry & Associates Inc (JKHY), Keysight Technologies Inc (KEYS), Lowe's Cos Inc (LOW), Medtronic PLC (MDT), Premier Inc (PINC), Toll Brothers Inc (TOL).
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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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