Stocks Jump on Solid Amazon Earnings and Dovish US Payroll Report

The S&P 500 Index ($SPX) (SPY) today is up +0.76%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.82%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.73%.

Stocks today are moving higher on some positive corporate earnings results.  Amazon.com is up more than +6% after forecasting Q4 operating income above consensus.  Also, chip stocks are climbing today, led by a +5% jump in Intel after it reported better-than-expected Q3 revenue and forecasted Q4 revenue above consensus.  Stocks added to their gains today as T-note yields fell on the weaker-than-expected US Oct payroll report.

On the negative side, Apple is down more than -1% after reporting Q4 service revenue below consensus and weaker-than-expected China revenue. Also, Amcor Plc is down more than -6% after reporting Q1 net sales below consensus.

US Oct nonfarm payrolls rose by +12,000, weaker than expectations of +100,000 and the smallest increase in 3-3/4 years.  The small payroll increase was due to weather and strike disruptions. Also, Sep payrolls were revised lower to +223,000 from the previously reported +254,000.  The Oct unemployment rate was unchanged at 4.1%, right on expectations.

US Oct average hourly earnings rose +4.0% y/y, right on expectations and the largest increase in 5 months.

Of the companies in the S&P 500 that have released Q3 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 99% 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 is up +0.87%.  China's Shanghai Composite Index closed down -0.24%.  Japan's Nikkei Stock 225 closed down -2.63%.

Interest Rates

December 10-year T-notes (ZNZ24) today are up by +6 ticks.  The 10-year T-note yield is down -1.4 bp at 4.271%.  Dec T-notes today whipsawed higher from a 3-3/4 month low after US Oct nonfarm payrolls posted their smallest increase in 3-3/4 years, a dovish factor for Fed policy. 

Supply pressures may limit the near-term upside in T-notes as the Treasury will auction $125 billion of T-notes and T-bonds next week at the quarterly Nov refunding operation.  T-note prices continue to be undercut by the idea that the US budget deficit will continue to be a major problem regardless of who wins next week's presidential election. 

European government bond yields today are moving lower.  The 10-year German bund yield is down -2.0 bp at 2.370%.  The 10-year UK gilt yield is down -5.9 bp at 4.387%.

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 25% for a -50 bp rate cut at the same meeting.

US Stock Movers

Amazon.com (AMZN) is up more than +6% to lead gainers in the Dow Jones Industrials after reporting Q3 EPS of $1.43, stronger than the consensus of $1.16, and forecasting Q4 operating income of $16.0-$20.0 billion, with the midpoint above the consensus of $17.49 billion.

Intel (INTC) is up more than +3% to lead chip stocks higher after reporting Q3 revenue of $13.28 billion, better than the consensus of $13.02 billion, and forecasting Q4 revenue of $13.3 billion-$14.13 billion, with the midpoint above the consensus of $13.6 billion.  Also, Nvidia (NVDA), GlobalFoundries (GFS), and Marvell Technology (MRVL) are up more than +1%.

Waters Corp (WAT) is up more than +17% to lead gainers in the S&P 500 after reporting Q3 adjusted EPS of $2.93, above the consensus of $2.68, and raising its full-year adjusted EPS forecast to $11.67-$11.87 from a previous estimate of $11.55-$11.65, stronger than the consensus of $11.60.

Atlassian Corp (TEAM) is up more than +16% to lead gainers in the Nasdaq 100 after reporting Q1 revenue of $1.19 billion, stronger than the consensus of $1.15 billion, and forecasting Q2 revenue of $1.23 billion-$1.24 billion, above the consensus of $1.23 billion. 

Cardinal Health (CAH) is up more than +6% after reporting Q1 adjusted EPS of $1.88, stronger than the consensus of $1.62, and raising its full-year adjusted EPS estimate to $7.75-$7.90 from a previous estimate of $7.55-$7.70.

Abbott Laboratories (ABT) is up more than +3% after a St. Louis jury cleared the company regarding a claim that the company hid risks that its premature-infant formula can cause a bowel disease that severely sickened a baby boy.

Charter Communications (CHTR) is up more than +15% after reporting Q3 revenue of $13.80 billion, better than the consensus of $13.65 billion. 

Super Micro Computer (SMCI) is down more than -4% to lead losers in the Nasdaq 100, extending this week’s -40% rout after accounting firm Ernst & Young LLP resigned as SMCI’s auditor amid a US Justice Department probe of the company’s accounting practices.

AES Corp (AES) is down more than -6% after reporting Q3 revenue of $3.29 billion, weaker than the consensus of $3.46 billion.

Apple (AAPL) is down more than -1% to lead losers in the Dow Jones Industrials after reporting Q4 service revenue of $24.97 billion, weaker than the consensus of $25.27 billion, and reporting Q4 greater China revenue of $15.03 billion, below the consensus of $15.80 billion.

Amcor Plc (AMCR) is down more than -6% to lead losers in the S&P 500 after reporting Q1 net sales of $3.35 billion, below the consensus of $3.45 billion.

PayPal Holdings (PYPL) is down more than -3% after Phillip Securities downgraded the stock to accumulate from buy, citing valuation concerns. 

BJ’s Restaurants (BJRI) is down more than -7% after reporting Q3 restaurant-level operating margin of 11.7%, below the consensus of 12.5%. 

Earnings Reports (11/1/2024)

Cardinal Health Inc (CAH), Cboe Global Markets Inc (CBOE), Charter Communications Inc (CHTR), Chevron Corp (CVX), Church & Dwight Co Inc (CHD), Dominion Energy Inc (D), Exxon Mobil Corp (XOM), LyondellBasell Industries NV (LYB), Monster Beverage Corp (MNST), PPL Corp (PPL), Simon Property Group Inc (SPG), T Rowe Price Group Inc (TROW), Waters Corp (WAT).

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