The S&P 500 Index ($SPX) (SPY) today is up +0.27%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.04%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.33%.
US stocks today are mildly higher, with the S&P 500 and Nasdaq 100 posting 1-month highs and the Dow Jones Industrials posting a 3-week high. Stocks fell back from their best levels after the US manufacturing PMI was the weakest in 8 months.
Stocks are seeing support from some favorable corporate news. Zoom Video Communications is up more than +6% after reporting better-than-expected Q2 revenue and raising its full-year revenue estimate. Also, Agilent is up more than +2% after reporting stronger-than-expected Q3 net revenue and raising its full-year revenue estimate.
On the negative side, Advance Auto Parts is down more than -18% after cutting its full-year net sales forecast. Also, Williams-Sonoma is down more than -6% after reporting weaker-than-expected Q2 net revenue and cutting its full-year net revenue forecast.
Higher bond yields today are also negative for stocks. Hawkish comments today from Kansas City Fed President Schmid pushed bond yields higher when said he wants to see more economic data before supporting any decision to begin cutting interest rates since demand could pick up again if the Fed isn't careful. The rise in bond yields was limited, however, after Boston Fed President Collin said she expects the Fed to begin easing interest rates soon and that "a gradual, methodical pace" of cuts is likely to be appropriate.
US weekly initial unemployment claims rose +4,000 to 232,000, right on expectations. Weekly continuing claims rose +4,000 to 1.863 million, showing a slightly stronger labor market than expectations of 1.870 million.
S&P’s US manufacturing PMI fell -1.6 to 48.0, weaker than expectations of 49.5 and the weakest report in 8 months.
The markets are awaiting 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.
The markets are discounting the chances at 100% for a -25 bp rate cut for the September 17-18 FOMC meeting and at 30% for a -50 bp rate cut at that meeting.
Overseas stock markets today are mixed. The Euro Stoxx 50 rose to a 4-week high and is up +0.29%. China's Shanghai Composite closed down -0.27%. Japan's Nikkei Stock 225 rallied to a 3-week high and closed up by +0.68%.
Interest Rates
September 10-year T-notes (ZNU24) today are down -12 ticks. The 10-year T-note yield is up +2.5 bp at 3.826%. Sep T-notes today are under pressure from higher European government bond yields. T-notes extended their losses on hawkish comments from Kansas City Fed President Schmid, who said he wants to see more economic data before supporting any decision to begin cutting interest rates. T-notes recovered from their worst levels after Boston Fed President Collin said she expects the Fed to begin easing interest rates soon.
European government bond yields today are higher. The 10-year German bund yield is up +2.4 bp at 2.214%. The 10-year UK gilt yield is up +3.5 bp at 3.926%.
The S&P Aug Eurozone manufacturing PMI fell -0.2 to 45.6, weaker than expectations of no change at 45.8. However, the Aug Eurozone composite PMI unexpectedly rose +1.0 to 51.2, stronger than expectations of a decline to 50.1.
The ECB reported that Q2 Eurozone negotiated wage growth eased to +3.6% y/y from +4.7% y/y in Q1.
The summary of the ECB's July 17-18 policy meeting stated that "The September meeting was widely seen as a good time to re-evaluate the level of monetary-policy restriction as new economic data and a new set of staff projections would be available."
Swaps are discounting the chances of a -25 bp rate cut by the ECB at 98% for the September 12 meeting.
US Stock Movers
Software stocks are under pressure today, led by a -10% fall in Snowflake (SNOW) after it forecasted full-year product revenue of $850 million-$855 million, below some estimates of as much as $900 million.
Zoom Video Communications (ZM) is up more than +6% after reporting Q2 revenue of $1.16 billion, better than the consensus of $1.15 billion, and raising its full-year revenue estimate to $4.63 billion-$4.64 billion from a previous estimate of $4.61 billion-$4.62 billion.
Also, MongoDB (MDB) is down more than -2% to lead losers in the Nasdaq 100.
Estee Lauder (EL) is up more than +2% to lead gainers in the S&P 500 after Piper Sandler upgraded the stock to overweight from neutral with a price target of $114.
Edwards Lifesciences (EW) is up more than +2% after Citigroup opened a 90-day positive watch on the stock.
SentinelOne (S) is up more than +1% after Wells Fargo Securities upgraded the stock to overweight from equal weight with a price target of $29.
Synopsys (SNPS) is up more than +1% after reporting Q3 adjusted EPS of $3.43, stronger than the consensus of $3.28, and raising its full-year adjusted EPS forecast to $13.07-$13.12 from a previous forecast of $12.90-$12.98, above the consensus of $12.95.
Agilent (A) is up more than +2% after reporting Q3 net revenue of $1.58 billion, better than the consensus of $1.56 billion, and raising its full-year revenue estimate to $6.45 billion-$6.50 billion from a previous estimate of $6.42 billion-$6.50 billion, the midpoint above the consensus of $6.46 billion.
Advance Auto Parts (AAP) is down more than -18% after cutting its full-year net sales forecast to $11.15 billion-$11.25 billion from a previous view of $11.30 billion-$11.40 billion, weaker than the consensus of $11.29 billion.
Williams-Sonoma (WSM) is down more than -6% after reporting Q2 net revenue of $1.79 billion, weaker than the consensus of $1.81 billion, and cutting its full-year net revenue forecast to down -1.5% to -4.0% from a previous estimate of -3% to +3%.
Urban Outfitters (URBN) is down more than -11% after reporting Q2 comparable retail segment sales rose +2.00%, below the consensus of +2.94%.
Sprout Social (SPT) is down more than -3% after KeyBank Capital Markets downgraded the stock to underweight from sector weight with a price target of $28.
Earnings Reports (8/22/2024)
Advance Auto Parts Inc (AAP), BILL Holdings Inc (BILL), BJ's Wholesale Club Holdings Inc (BJ), Cava Group Inc (CAVA), Intuit Inc (INTU), Ross Stores Inc (ROST), Williams-Sonoma Inc (WSM), Workday Inc (WDAY).
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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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