Stocks Edge Higher on Optimism Over President-elect Trump’s Agenda

The S&P 500 Index ($SPX) (SPY) today is up +0.17%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.19%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.05%.

Stocks today are mostly higher, with the S&P 500 and the Dow Jones Industrials posting new all-time highs.  Stocks have rallied sharply this week on speculation President-elect Trump will boost corporate profits through tax cuts and reduced regulation.  Also, bond yields are moving lower today and supporting stocks on carryover support from Thursday when the FOMC cut the federal funds rate target by 25 bp.  In addition, Axon Enterprise is up more than +10% after raising its full-year revenue outlook, and Expedia Group is up more than +6% after reporting Q3 adjusted EPS above consensus.

Some negative corporate news limited the upside in stocks, with Akamai Technologies down more than -10% after cutting its full-year adjusted EPS estimate and Arista Networks down more than -6% after forecasting fiscal 2025 revenue growth below consensus.

Of the companies in the S&P 500 that have released Q3 earnings so far, 78% 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 71% for a -25 bp rate cut at the December 17-18 FOMC meeting.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is down -0.82%.  China's Shanghai Composite Index fell back from a 1-month high and closed down -0.53%.  Japan's Nikkei Stock 225 closed up +0.30%.

Interest Rates

December 10-year T-notes (ZNZ24) today are up by +4 ticks.  The 10-year T-note yield is down -2.3 bp at 4.302%.  Dec T-notes today are moderately higher on carryover support from a rally in European government bonds.  T-notes also have carryover support from Thursday when the FOMC cut the federal funds target range by -25 bp.  The weakness in stocks today has also prompted some mild short covering in T-notes. 

European government bond yields today are moving lower.  The 10-year German bund yield is down -5.0 bp at 2.395%.  The 10-year UK gilt yield is down -4.7 bp at 4.452%.

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 13% for a -50 bp rate cut at the same meeting.

US Stock Movers

Axon Enterprise (AXON) is up more than +10% to lead gainers in the S&P 50 after raising its full-year revenue outlook to +$2.07 billion from a previous estimate of +$2.00 billion-$2.05 billion, better than the consensus of $2.04 billion.

Insulet Corp (PODD) is up more than +10% after reporting Q3 adjusted EPS of 90 cents, well above the consensus of 71 cents.

Expedia Group (EXPE) is up more than +5% after reporting Q3 adjusted EPS of $6.13, stronger than the consensus of $6.10.

Molson Coors Beverage (TAP) is up more than +4% after Wells Fargo Securities double-upgraded the stock to overweight from underweight with a price target of $74.

Doximity (DOCS) is up more than +38% after reporting Q2 revenue of $136.8 million, above the consensus of $127.1 million, and raising its 2025 revenue forecast to $535 million-$540 million from $514 million-$523 million, well above the consensus of $520.3 million. 

Five9 Inc (FIVN) is up more than +16% after reporting Q3 adjusted EPS of 67 cents, stronger than the consensus of 59 cents, and raising its full-year adjusted EPS forecast to $2.36-$2.38 from a prior view of $2.25-$2.29, better than the consensus of $2.27. 

Upstart (UPST) is up more than +37% after reporting Q3 adjusted loss per share of -6 cents, a smaller loss than the consensus of -14 cents. 

BILL Holdings (BILL) is up more than +16% after reporting Q1 adjusted EPS of 63 cents, better than the consensus of 50 cents, and raising its 2025 adjusted EPS forecast to $1.65-$1.83 from a previous forecast of $1.36-$1.61, stronger than the consensus of $1.55. 

Home Depot (HD) and Lowe’s (L) are up more than +1% after Telsey Advisory Group upgraded the stocks to outperform from market perform, with a price target of $455 for Home Depot and $305 for Lowe’s. 

Airbnb (ABNB) is down more than -9% after reporting Q3 EPS of $2.13, weaker than the consensus of $2.15. 

Akamai Technologies (AKAM) is down more than -10% to lead losers in the S&P 500 after cutting its full-year adjusted EPS estimate to $6.31-$6.38 from a previous estimate of $6.34-$6.47.

Mettler-Toledo International (MTD) is down more than -7% after forecasting Q4 adjusted EPS of $11.63-$11.78, weaker than the consensus of $11.88.

Arista Networks (ANET) is down more than 5% after forecasting fiscal 2025 revenue growth of 15% to 17%, weaker than the consensus of 18%. 

Baxter International (BAX) is down more than -5% after cutting its full-year sales estimate to up +1% to +2% from a previous estimate of up +3%.

Pinterest (PINS) is down more than -12% after forecasting Q4 revenue of $1.13 billion-$1.15 billion, the midpoint below the consensus of $1.15 billion. 

Cloudflare (NET) is down more than -7% after forecasting Q4 revenue of $451 million-$452 million, below the consensus of $455.6 million.

US-listed Chinese stocks are under pressure today after the Chinese government announced a plan to refinance local government debt but stopped short of announcing other measures to boost housing and consumption. As a result, Alibaba Group Holding (BABA), JD.com (JD), Baidu (BIDU), PDD Holdings (PDD), and NetEase (NTES) are down more than -3%. 

Earnings Reports (11/8/2024)

Advanced Drainage Systems Inc (WMS), Baxter International Inc (BAX), CNH Industrial NV (CNH), Dillard's Inc (DDS), Flowers Foods Inc (FLO), Fortrea Holdings Inc (FTRE), Lamar Advertising Co (LAMR), NRG Energy Inc (NRG), Paramount Global (PARA), RB Global Inc (RBA).

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