The S&P 500 Index ($SPX) (SPY) today is down -0.88%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.46%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.40%.
Stocks today are moderately lower, with the S&P 500 and Dow Jones Industrials falling to 3-week lows and the Nasdaq 100 dropping to a 1-week low. Disappointing earnings results from Microsoft and Meta Platforms are weighing down tech stocks and market sentiment. Stocks maintained their losses on today’s mixed US economic news. Weekly initial unemployment claims unexpectedly fell to a 5-month low, Sep personal spending rose more than expected, and the Sep core PCE price index was unchanged from Aug at +2.7% y/y.
However, stocks found support today on falling wage pressures after the Q3 employment cost index eased to the slowest growth rate in 3 years. Also, today’s stronger-than-expected economic news bolstered the outlook for a soft landing.
On the positive side, Paycom Software is up more than +20% after reporting better-than-expected Q3 revenue and raising the lower end of its full-year revenue forecast. Also, Booking Holdings is up more than +6% after reporting stronger-than-expected Q3 gross bookings. In addition, Etsy is up more than +9% after reporting Q3 revenue above consensus.
US weekly initial unemployment claims unexpectedly fell -12,000 to a 5-month low of 216,000, showing a stronger labor market than expectations of an increase to 230,000.
The US Q3 employment cost index rose +0.8% q/q, weaker than expectations of +0.9% q/q and the slowest pace of increase in 3 years.
US Sep personal spending rose +0.5% m/m, stronger than expectations of +0.4% m/m. Sep personal income rose +0.3% m/m, right on expectations.
The US Sep core PCE price index was unchanged from Aug at +2.7% y/y, stronger than expectations of +2.6% y/y.
Caution in the markets persists ahead of earnings from Amazon and Apple after Thursday’s close. Also, the markets await Friday's US Oct unemployment report (Oct payrolls expected +90,000 on strike and storm disruptions; Oct unemployment rate expected unchanged at 4.1%) and next Tuesday's US election.
Corporate Q3 earnings season is in its peak week. Of the companies in the S&P 500 that have released earnings so far, 76% surpassed estimates. According to Bloomberg Intelligence, companies in the S&P 500 are expected to report an average +4.3% y/y increase in quarterly earnings in Q3, down from the +7.9% y/y growth consensus seen in July.
The markets are discounting the chances at 94% for a -25 bp rate cut at the November 6-7 FOMC meeting and at 0% for a -50 bp rate cut at that meeting.
Overseas stock markets today are mixed. The Euro Stoxx 50 fell to a 6-week low and is down -0.65%. China's Shanghai Composite Index closed up +0.42%. Japan's Nikkei Stock 225 closed down -0.50%.
Interest Rates
December 10-year T-notes (ZNZ24) today are down -10 ticks. The 10-year T-note yield is up +2.3 bp to 4.303%. T-notes today are moderately lower on negative carryover from a slide in European government bonds. T-note prices extended their losses after today’s economic news showed US weekly jobless claims unexpectedly fell to a 5-month low and the Sep core PCE price index rose more than expected, hawkish factors for Fed policy. Also, rising inflation expectations are negative for T-notes after the 10-year breakeven inflation rate today climbed to a 4-3/4 month high of 2.358%. T-notes continue to be undercut by ideas that the US budget deficit will continue to be a major problem regardless of who wins next week's presidential election. Losses in T-notes were limited as wage pressures eased after the Q3 employment cost index eased to the slowest growth rate in 3 years.
European government bond yields today are moving higher. The 10-year German bund yield climbed to a 3-month high of 2.436% and is up +4.4 bp at 2.432%. The 10-year UK gilt yield rose to a 10-3/4 month high of 4.473% and is up +11.9 bp at 4.471%.
The Eurozone Sep unemployment rate was unchanged at a record low of 6.3%, showing a stronger labor market than expectations of an increase to 6.4%.
Eurozone Oct CPI rose +2.0% y/y, stronger than expectations of +1.9% y/y. Oct core CPI rose +2.7% y/y, stronger than expectations of +2.6% y/y.
German Sep retail sales unexpectedly rose +1.2% m/m, stronger than expectations of a -0.6% m/m decline.
ECB Governing Council member Panetta said, "Monetary conditions are still tight," and the ECB must continue to lower borrowing costs to keep inflation from undershooting.
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 20% for a -50 bp rate cut at the same meeting.
US Stock Movers
Meta Platforms (META) is down more than -2% despite reporting better-than-expected Q3 EPS after it didn’t forecast its 2025 capital expenditure plans and just talked about “continued investment.”
Microsoft (MSFT) is down more than -5% to lead losers in the Dow Jones Industrials despite reporting reporting better-than-expected Q1 EPS since it reported that Q1 Azure cloud revenue rose +34%, down slightly from +35% growth in Q4, and forecasted Q2 Azure cloud revenue growth of +31% to +32%.
Chip stocks are sinking today and are weighing on the overall market. Broadcom (AVGO) is down more than -3%. Also, Nvidia (NVDA), KLA Corp (KLAC), ON Semiconductor (ON), NXP Semiconductors NV (NXPI), Micron Technology (MU), Marvell Technology (MRVL), and Analog Devices (ADI) are down more than -2%.
eBay (EBAY) is down more than -9% after forecasting Q4 revenue of $2.53 billion-$2.59 million, weaker than the consensus of $2.64 billion.
Estee Lauder (EL) is down more than -22% after forecasting Q2 adjusted EPS of 20 cents-35 cents, well below the consensus of $1.05. The company also withdrew its 2025 fiscal outlook and cut its dividend to 35 cents per share from 66 cents.
Super Micro Computer (SMCI) is down more than -14% to lead losers in the Nasdaq 100, adding to Wednesday’s -32% plunge, after accounting firm Ernst & Young LLP resigned as SMCI’s auditor amid a US Justice Department probe of the company’s accounting practices.
Arm Holdings (ARM) is down more than -7% after Bernstein downgraded the stock to underperform from market perform with a price target of $100.
MGM Resorts International (MGM) is down more than -8% after reporting Q3 adjusted EPS of 54 cents, below the consensus of 59 cents.
Huntington Ingalls Industries (HII) is down more than -22% to lead losers in the S&P 500 after reporting Q3 EPS of $2.56, well below the consensus of $3.85.
Paycom Software (PAYC) is up more than +20% to lead gainers in the S&P 500 after reporting Q3 revenue of $451.9 million, better than the consensus of $447.2 million, and raising the lower end of its full-year revenue forecast to $1.87 billion from a previous forecast of $1.86 billion-$1.88 billion.
International Paper (IP) is up more than +7% after reporting Q3 adjusted operating EPS of 44 cents, well above the consensus of 25 cents.
Etsy (ETSY) is up more than +9% after reporting Q3 revenue of $662.4 million, better than the consensus of $652.4 million.
Booking Holdings (BKNG) is up more than +5% to lead gainers in the Nasdaq 100 after reporting Q3 gross bookings of $43.4 billion, stronger than the consensus of $41.37 billion.
Comcast (CMCSA) is up more than +3% after reporting Q3 adjusted EPS of $1.12 billion, better than the consensus of $1.06.
Carvana (CVNA) is up more than +19% after reporting Q3 vehicle unit sales of 108,651, well above the consensus of 106,702.
Confluent (CFLT) is up more than +21% after reporting Q3 adjusted EPS of 10 cents, above the consensus of 5.2%, and raised its full-year adjusted EPS forecast to 25 cents from 19 cents to 20 cents, stronger than the consensus of 21 cents.
Earnings Reports (10/31/2024)
AES Corp/The (AES), Alliant Energy Corp (LNT), Altria Group Inc (MO), Amazon.com Inc (AMZN), Amcor PLC (AMCR), AMETEK Inc (AME), Apple Inc (AAPL), Aptiv PLC (APTV), Ball Corp (BALL), BorgWarner Inc (BWA), Bristol-Myers Squibb Co (BMY), Camden Property Trust (CPT), Cigna Group/The (CI), CMS Energy Corp (CMS), Comcast Corp (CMCSA), ConocoPhillips (COP), Coterra Energy Inc (CTRA), Eastman Chemical Co (EMN), Eaton Corp PLC (ETN), Entergy Corp (ETR), Erie Indemnity Co (ERIE), Estee Lauder Cos Inc/The (EL), Generac Holdings Inc (GNRC), Huntington Ingalls Industries (HII), IDEXX Laboratories Inc (IDXX), Ingersoll Rand Inc (IR), Intel Corp (INTC), Intercontinental Exchange Inc (ICE), International Paper Co (IP), IQVIA Holdings Inc (IQV), Juniper Networks Inc (JNPR), Kellanova (K), Kimco Realty Corp (KIM), Linde PLC (LIN), Mastercard Inc (MA), Merck & Co Inc (MRK), Norwegian Cruise Line Holdings (NCLH), Parker-Hannifin Corp (PH), Quanta Services Inc (PWR), Regeneron Pharmaceuticals Inc (REGN), Southern Co/The (SO), Teleflex Inc (TFX), Uber Technologies Inc (UBER), VICI Properties Inc (VICI), WEC Energy Group Inc (WEC), Willis Towers Watson PLC (WTW), WW Grainger Inc (GWW), Xcel Energy Inc (XEL), Xylem Inc/NY (XYL).
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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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