Stocks Climb on Chip Stock Strength and Lower Bond Yields

The S&P 500 Index ($SPX) (SPY) today is up by +0.41%, the Dow Jones Industrials Index ($DOWI) (DIA) is up by +0.49%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up by +0.22%.

Stocks today are moderately higher, with the S&P 500 and Dow Jones Industrials posting 1-1/2 week highs and the Nasdaq 100 posting a 2-week high.  Today, the strength of chip stocks is lifting the overall market. Also, a decline in bond yields today supports stocks on dovish comments from former New York Fed President Dudley, who said there’s “a strong case for a 50 bp rate cut” at next week’s FOMC meeting.  Signs of easing price pressures are also bullish for bonds and stocks after today’s news showed the US Aug import price index ex-petroleum unexpectedly fell -0.1% m/m, weaker than expectations of a +0.2% m/m increase.

Corporate news today is mixed for stocks.  On the positive side, Uber Technologies is up more than +5% on the news it will be the sole supplier of driverless rides on Alphabet’s Waymo cars in Austin and Atlanta. Also, Oracle is up more than +3% after raising its 2026 sales outlook.  On the negative side, Adobe is down more than -9% after forecasting weaker-than-expected Q4 revenue.  Also, Boeing is down more than -2% after the company’s workers in Seattle walked off the job for the first time since 2008.

The markets are discounting the chances at 100% for a -25 bp rate cut for the September 17-18 FOMC meeting and at 33% for a -50 bp rate cut at that meeting.

Overseas stock markets today settled mixed.  The Euro Stoxx 50 rose to a 1-week high and is up +0.24%.  China's Shanghai Composite fell to a 7-1/4 month low and closed down -0.48%.  Japan's Nikkei Stock 225 closed down by +0.68%.

Interest Rates

December 10-year T-notes (ZNZ24) today are up +6 ticks.  The 10-year T-note yield is down -2.6 bp to 3.648%.  Dec T-notes are climbing today on dovish comments from former New Tork Fed President Dudley, who said “there’s a strong case for a 50 bp rate cut” at next week’s FOMC meeting.  Also, short covering is propping up T-notes as bond dealers cover short hedges put on during this week’s $119 billion Treasury auction slate of T-notes and T-bonds.  T-notes maintained moderate gains after the Aug import price index ex-petroleum unexpectedly fell, a dovish factor for Fed policy. 

European government bond yields today are moving lower.  The 10-year German bund yield is down -1.1 bp to 2.141%.  The 10-year UK gilt is down -1.7 bp to 3.764%.

Eurozone Jul industrial production fell -0.3% m/m, right on expectations.

ECB President Lagarde said she is open to considering an interest rate cut in October if the Eurozone economy suffers a major setback, but a cut at the December ECB meeting is more likely as we will have more comprehensive information available on the economy by then. 

ECB Governing Council member Holzmann said the October ECB meeting might not be the time for another rate cut, but there could be room for another rate cut at the December meeting.

ECB Governing Council member Kazaks said a slump in the Eurozone economy would be required for the ECB to cut interest rates at its next meeting in October.

Swaps are discounting the chances of a -25 bp rate cut by the ECB at 56% for the October 17 meeting.

US Stock Movers

Chip stocks are climbing today to support gains in the broader market. Micron Technology (MU), ON Semiconductor (ON), KLA Corp (KLAC), Microchip Technology (MCHP), and Lam Research (LRCX) are up more than +2%.  Also, Advanced Micro Devices (AMD), Texas Instruments (TXN) GlobalFoundries (GFS), and NXP Semiconductors NV (NXPI) are up more than +1%.  Finally, Intel (INTC) is up more than +1% to lead gainers in the Dow Jones Industrials.  

Uber Technologies (UBER) is up more than +5% to lead gainers in the S&P 500 on news it will be the sole supplier of driverless rides on Alphabet’s Waymo cars in Austin and Atlanta that will begin next year.

Oracle (ORCL) is up more than +3% after raising its 2026 sales outlook to $66 billion from $65 billion, above the consensus of $64.5 billion, and forecasting annual revenue will climb to at least $104 billion in fiscal 2029.

RH (RH) is up more than +20% after reporting Q2 adjusted EPS of $1.69, stronger than the consensus of $1.60.  Etsy (ETSY) and Wayfair (W) also rose more than +4% on the news.

Summit Therapeutics (SMMT) is up more than +7%, adding to Thursday’s 20% surge after it raised $235 million from investors in a private placement on the heels of promising late-stage trial data from its lung cancer drug ivonescimab.

Vistra Corp (VST) is up more than +2% after Jeffries named the stock its top pick in the power sector with a buy recommendation and a price target of $99.

ARM Holdings Plc (ARM) is up more than +3% after Raymond James initiated coverage on the stock with a recommendation of outperform and a price target of $160. 

SL Green Realty (SLG) is up more than +2% after Citigroup upgraded the stock to neutral from sell. 

GE Vernova (GEV) is up more than +2% after BMO Capital Markets initiated coverage on the stock with a recommendation of outperform and a price target of $245. 

Adobe (ADBE) is down more than -9% to lead losers in the S&P 500 and Nasdaq 100 after forecasting Q4 revenue of $5.50 billion-$5.55 billion, below the consensus of $5.60 billion. 

Boeing (BA) is down more than -2% to lead losers in the Dow Jones Industrials after the company’s workers in Seattle walked off the job for the first time since 2008.

Moderna (MRNA) is down more than -2%, adding to Thursday’s -12% plunge after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $70. 

Garmin Ltd (GRMN) is down more than -6% after Barclays downgraded the stock to underweight from equal weight with a price target of $133.

Nabors Industries Ltd (NBR) is down more than -1% after Citigroup downgraded the stock to neutral from buy.

Earnings Reports (9/13/2024)

Dakota Gold Corp (DC), Selectquote Inc (SLQT), Spire Global Inc (SPIR).

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