Stocks Mixed as Bond Yields Climb

The S&P 500 Index ($SPX) (SPY) today is down -0.03%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.21%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.14%.

Stocks today are mixed, with the Dow Jones Industrials falling to a 1-1/2 week low.  Higher bond yields are weighing on the overall market today, with the 10-year T-note yield up +2.0 bp today to 4.459%, just below last Friday’s 5-1/2 month high of 4.501%, on anxiety that President-elect Trump’s isolationist policies will revive inflation and deter interest rate cuts from the Fed. 

Corporate news today is mixed for stocks.  On the positive side, Tesla is up more than +6% after Bloomberg reported that President-elect Trump’s transition team members have told advisers they plan to make a federal framework for fully self-driving vehicles one of the Transportation Department’s priorities.  Conversely, Nvidia is down more than -2% to weigh on the Dow Jones Industrials after the Information reported the company had asked its suppliers to change the design of the server racks for its new Blackwell graphics processing unit due to an overheating problem. 

The markets will look for news on US Oct housing starts and building permits on Tuesday for direction.  Also, the quarterly earnings results from Walmart and Lowe’s will be scoured on Tuesday to see if consumer spending continues to hold up.  On Wednesday, the markets will look to earnings results from Nvidia to see if future demand for its AI Blackwell chips will continue after reports said Nvidia has asked suppliers to change the design of the server racks for its new Blackwell graphics processing unit due to an overheating problem. 

Of the 90% of companies in the S&P 500 that have released Q3 earnings so far, 75% surpassed the estimates, slightly below the 3-year average.  According to Bloomberg Intelligence, companies in the S&P 500 have reported an average +8.5% y/y increase in quarterly earnings in Q3, more than double the preseason forecast.

The markets are discounting the chances at 58% for a -25 bp rate cut at the December 17-18 FOMC meeting.

Overseas stock markets today are lower.  The Euro Stoxx 50 closed down -0.72%.  China's Shanghai Composite Index fell to a 1-1/2 week low and closed down -0.21%.  Japan's Nikkei Stock 225 dropped to a 2-week low and closed down -1.09%.

Interest Rates

December 10-year T-notes (ZNZ24) today are down -4 ticks.  The 10-year T-note yield is up +1.8 bp to 4.457%.  Dec T-notes Friday slid to a 5-month low, and the 10-year T-note yield rose to a 5-1/2 month high of 4.501%.  T-notes are moderately lower today on carryover pressure from weakness in European government bonds.  Also, concern that President-elect Trump’s isolationist policies will revive inflation and deter interest rate cuts from the Fed is weighing on T-note prices. 

European government bond yields today are moving higher.  The 10-year German bund yield is up +3.9 bp to 2.395%.  The 10-year UK gilt yield is up +1.7 bp to 4.488%.

ECB Governing Council member and Bundesbank President Nagel said if international tensions should intensify, this could lead to greater inflationary pressures or increased volatility in consumer-price growth, and central banks might have to react with higher interest rates.

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 18% for a -50 bp rate cut at the same meeting.

US Stock Movers

Super Micro Computer (SMCI) is up more than +19% to lead gainers in the S&P 500 and Nasdaq 100 ahead of a deadline for the company to either file a delayed 10-K annual report or submit a plan to file the form to Nasdaq to remain listed on the exchange. 

Tesla (TSLA) is up more than +6% after Bloomberg reported that President-elect Trump’s transition team members have told advisers they plan to make a federal framework for fully self-driving vehicles one of the Transportation Department’s priorities. 

Advance Micro Devices (AMD) is up more than +4% after IBM reported it entered into a pact with the company to supply it with MI300x accelerator chips for its cloud network. 

Dell Technologies (DELL) is up more than +3% after Mizuho Securities raised its price target on the stock to $155 from $135.

Globe Life (GL) is up more than +2% after announcing a $1.8 billion stock buyback plan representing 20% of the company’s current market value.

Shift4 Payments (FOUR) is up more than +4% after S&P Dow Jones Indices said the company will replace R1 RCM in the S&P MidCap 400 Index prior to the opening of trading on November 20.

Newmont (NEM) is up more than +2% after it agreed to sell its Musselwhite operation to Orla Mining Ltd for $850 million. 

Hewlett Packard Enterprise (HPE) is up more than +1% after Raymond James upgraded the stock to strong buy from outperform with a price target of $29. 

Nvidia (NVDA) is down more than -3% to lead losers in the Dow Jones Industrials and Nasdaq 100 after the Information reported the company had asked its suppliers to change the design of the server racks for its new Blackwell graphics processing unit due to an overheating problem. 

Palantir Technologies (PLTR) is down more than -8% to lead losers in the S&P 500 on signs of insider selling after an SEC filing showed founder Karp sold $3.99 million of shares from last Wednesday to last Friday.  

Nike (NKE) is down more than -2% after TD Cowen cut its price target on the stock to $73 from $78.

Neurogene (NGNE) is down more than -39% after it paused the use of the higher 3E15 vg dose of its NGN-401 for the treatment of Rett syndrome. 

Avis Budget Group (CAR) is down more than -2% after Northcoast Research downgraded the stock to neutral from buy. 

Charles River Laboratories International (CRL) is down more than -1% after CLSA downgraded the stock to underperform from hold with a price target of $164. 

Fortive Corp (FTV) is down nearly -1% after Argus Research downgraded the stock to hold from buy, citing valuation.

Earnings Reports (11/18/2024)

AECOM (ACM), BellRing Brands Inc (BRBR), Bit Digital Inc (BTBT), Critical Metals Corp (CRML), I3 Verticals Inc (IIIV), Mondee Holdings Inc (MOND), Twist Bioscience Corp (TWST).