Stocks Climb on Strength in Chip Stocks

The S&P 500 Index ($SPX) (SPY) today is up +0.70%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.95%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.58%.

Stocks today are moderately higher, recovering some of last Friday’s sharp sell-off on some light dip buying.  Also, the strength in chip stocks today is boosting the broader market. In addition, some positive corporate news is giving stocks a lift today.  Palantir Technologies is up more than +11%, and Dell Technologies is up more than +4%, following the news that both companies will join the S&P 500 as part of the latest quarterly change to the index before the opening of trading on September 23.  Boeing is also up more than +3% on optimism that a labor deal with its largest union will avoid a strike at its Seattle-area factories.

The markets are looking ahead to US consumer price news on Wednesday to see if inflation falls by enough to allow the Fed to ease monetary policy aggressively.  The consensus is for Aug CPI to ease to +2.6% y/y from +2.9% y/y in July and for the Aug core CPI to be unchanged from July at +3.2% y/y. 

Weakness in consumer and producer prices in China fueled concern about deflation and signaled slack consumer demand, which was negative for global growth prospects and bearish for global stocks.  Today’s China Aug CPI rose +0.6% y/y, slightly weaker than expectations of +0.7% y/y. Also, Aug PPI fell -1.8% y/y, weaker than expectations of -1.5% y/y. 

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 is up +0.71%.  China's Shanghai Composite fell to a 7-month low and closed down -1.06%.  Japan's Nikkei Stock 225 dropped to a 1-month low and closed down by -0.48%.

Interest Rates

December 10-year T-notes (ZNZ24) today are down -2 ticks.  The 10-year T-note yield is up +0.2 bp at 3.710%.  Dec T-notes today are modestly lower as a rebound in stocks reduced safe-haven demand for T-notes.  Also, weakness in 10-year German bunds today is weighing on T-note prices.  In addition, supply pressures are undercutting T-notes as the Treasury will auction $119 billion of T-notes and T-bonds this week, beginning with Tuesday’s auction of $58 billion of 3-year T-notes. 

European government bond yields today are mixed.  The 10-year German bund yield is up +0.1 bp at 2.173%. The 10-year UK gilt yield is down -2.1 bp at 3.865%.

The Eurozone Sep Sentix investor confidence index unexpectedly fell -1.5 to an 8-month low of -15.4, weaker than expectations of an increase to -12.2.

Swaps are discounting the chances of a -25 bp rate cut by the ECB at 100% for the Sep 12 meeting.

US Stock Movers

Chip stocks are climbing today and are giving the overall market a boost.  ARM Holdings Plc (ARM) is up more than +3% after the Financial Times reported that Apple’s iPhone 16 will include a next-generation chip based on ARM’s “newest design architecture.”  Also, Intel (INTC) and Marvell Technology (MRVL) are up more than +2%.  Nvidia (NVDA), Analog Devices (ADI), ON Semiconductor (ON), Texas Instruments (TXN), and Advanced Micro Devices (AMD) are up more than +1%. 

Shares of health insurers with Medicare Advantage plans are under pressure today after Leerink Partners published a report saying those plans might have a tougher time earning high-quality “star ratings” that drive bonus payments.  As a result, Humana (HUM) is down more than -3% to lead losers in the S&P 500 and CVS Health Corp (CVS) is down more than -2%.  Also, HCA Healthcare (HCA), UnitedHealth Group (UNH), and Universal Health Services (UHS) are down more than -1%. 

Palantir Technologies (PLTR) is up more than +11%, and Dell Technologies (DELL) is up more than +4% following news that both companies will join the S&P 500 as part of the latest quarterly change to the index before the opening of trading on Sep 23.

Boeing (BA) is up more than +3% to lead gainers in the Dow Jones Industrials on optimism that a labor deal with its largest union will avoid a strike at its Seattle-area factories.

Moderna (MRNA) is up more than +5% to lead gainers in the S&P 500 and Nasdaq 100 after the UK’s Medicines and Healthcare Products Regulatory Agency authorized Moderna’s updated Covid vaccine targeting the JN.1 variant.

Summit Therapeutics (SMMT) is up more than +59% after the latest data from trials of its lung cancer drug ivonescimab developed in partnership with Akeso, showed “statistically significant improvement” in progression-free survival compared to Merk & Co’s Keytruda. 

MarineMax (HZO) is up more than +4% after Citigroup upgraded the stock to buy from neutral with a price target of $44.   

United States Steel (X) is up more than +3% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $42. 

Steel Dynamics (STLD) is up more than +1% after JPMorgan Chase upgraded the stock to neutral from underweight. 

Merck & Co (MRK) is down more than -2% to lead losers in the Dow Jones industrials after the latest data from trials of Summit Therapeutics lung cancer drug ivonescimab showed “statistically significant improvement” in progression-free survival compared to Merk & Co’s Keytruda. 

Take-Two Interactive Software (TTWO) is down more than -2% after it recorded a -10% decline in weekly in-app purchases in the week ended Sep 8, the biggest drop among gaming companies tracked by Bloomberg using data from Apptopia.

Invitation Homes (INVH) is down -0.83% after RBC Capital Markets downgraded the stock to sector perform from outperform.

Colgate-Palmolive (CL) is down -0.65% after Deutsche Bank downgraded the stock to hold from buy.

Earnings Reports (9/9/2024)

Apartment Income REIT Corp (AIRC), Aviat Networks Inc (AVNW), Avid Bioservices Inc (CDMO), Calavo Growers Inc (CVGW), Dakota Gold Corp (DC), Dakota Gold Corp (DC), Limoneira Co (LMNR), Matrix Service Co (MTRX), Mission Produce Inc (AVO), Oracle Corp (ORCL).

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