Stocks Settle Mostly Higher on Tech Stock Strength and Lower Bond Yields

The S&P 500 Index ($SPX) (SPY) Monday closed up +0.39%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.13%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.71%.

Stocks on Monday settled mixed, with the Dow Jones Industrials falling to a 1-1/2 week low.  The broader market found support on Monday as some positive corporate news boosted technology stocks.  Tesla closed up more than +5% 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.  Also, Advance Micro Devices closed up more than +3% after IBM reported it entered into a pact with the company to supply it with MI300x accelerator chips for its cloud network.  Bond yields on Monday gave up an early advance and turned lower, another supportive factor for stocks. 

The Dow Jones Industrials fell to a 1-1/2 week low Monday due to a -2% fall in Nike after TD Cowen cut its price target on the stock, saying they are more cautious about the company’s business after meeting with channel contacts and fieldwork.  Also, Nvidia closed down more than -1% to weigh on the Dow Jones industrials after the Information reported that Nvidia asked its suppliers to change the design of the server racks for its new Blackwell graphics processing unit due to an overheating problem. 

Monday’s US economic news showed the Nov NAHB housing market index unexpectedly rose +3 to a 7-month high of 46, stronger than expectations of a decline to 42.

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 on Monda settled lower.  The Euro Stoxx 50 closed down -0.09%.  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) Monday closed up +4 ticks.  The 10-year T-note yield fell -2.9 bp to 4.401%.  T-notes Monday recovered from early losses and settled moderately higher as short covering emerged on reports that President-elect Trump’s key advisers are signaling support for Keven Warsh as the next Treasury Secretary.  The appointment of Warsh, a former Fed governor known as a hawk who has warned about surging debt burdens, would be seen as a sign of stability and someone who would push back against some of the most extreme tariff scenarios Trump has discussed. 

T-notes Monday initially opened lower on carryover pressure from weakness in European government bonds.  Also, Monday’s unexpected increase in the US NAHB Nov house market index to a 7-month high was hawkish for Fed policy and bearish for T-notes. 

European government bond yields on Monday were mixed.  The 10-year German bund yield rose +1.8 bp to 2.373%.  The 10-year UK gilt yield fell -0.6 bp to 4.465%.

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.

ECB Governing Council member Stournaras warned that economic activity could weaken and the Eurozone could fall into recession if the US imposes additional tariffs.

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 17% for a -50 bp rate cut at the same meeting.

US Stock Movers

Super Micro Computer (SMCI) closed up more than +13% 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) closed up more than +5% 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. 

Henry Schein (HSIC) closed up more than +7% after Reuters reported that Ananym Capital Management is urging the company to refresh its board, cut costs, tackle succession planning and consider selling its medical distribution business.

Advanced Micro Devices (AMD) closed up more than +3% after IBM reported it entered into a pact with the company to supply it with MI300x accelerator chips for its cloud network. 

Moderna (MRNA) closed up more than 7% after HSBC upgraded the stock to buy from hold with a price target of $58. 

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

Shift4 Payments (FOUR) closed up more than +3% after S&P Dow Jones Indices said the company will replace R1 RCM in the S&P MidCap 400 Index before the opening of trading on November 20.

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

Palantir Technologies (PLTR) closed down more than -6% 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) closed down more than -2% to lead losers in the Dow Jones Industrials after TD Cowen cut its price target on the stock to $73 from $78, saying they are more cautious on the company’s business after meeting with channel contacts and fieldwork.

Nvidia (NVDA) closed down more than -1% 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. 

Neurogene (NGNE) closed down more than -44% after it paused the use of the higher 3E15 vg dose of its NGN-401 for treating Rett syndrome. 

IQVIA Holdings (IQV) closed down more than -1% after Mizuho Securities cut its price target on the stock to $247 from $277. 

Biogen (BIIB) closed down more than -1% after Needham downgraded the stock to hold from buy, saying it does not see a “meaningful source of upside” for the stock in the next 12 months.

Okta Inc (OKTA) closed down more than -1% after OTR Global downgraded the stock to negative from neutral.

Earnings Reports (11/19/2024)

Amer Sports Inc (AS), AZEK Co Inc/The (AZEK), Dolby Laboratories Inc (DLB), Jacobs Solutions Inc (J), Keysight Technologies Inc (KEYS), Lowe's Cos Inc (LOW), Medtronic PLC (MDT), Valvoline Inc (VVV), Walmart Inc (WMT), XP Inc (XP).