Stocks Push Higher on Positive Corporate News

The S&P 500 Index ($SPX) (SPY) today is up +0.31%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.64%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.11%.

Stocks today are moderately higher, with the Dow Jones Industrials posting a 1-week high.  Positive corporate news today is boosting stocks.  Super Micro Computer is up more than +10% to lead gainers in the S&P 500 and Nasdaq 100 after it said it believes it can file its delayed 10-K and 10-Q reports in the period available under Nasdaq rules.  Also, Ross Stores is up more than +4% after reporting stronger-than-expected Q3 EPS and raising its 2025 EPS forecast.

Today’s rally in global government bond prices is supporting equity markets after 10-year German bunds climbed to a 1-month high, providing carryover support to T-note prices.  T-notes are also climbing after the Wall Street Journal reported that President-elect Trump supports Kevin Warsh as the next Treasury Secretary, who is seen as a bond-friendly pick as Warsh has previously spoken out against high deficits.

Concern about weakness in the Eurozone economy is limiting gains in stocks after the Eurozone Nov S&P PMI unexpectedly contracted and Germany’s Q3 GDP was revised lower. Also, the recent escalation of the Ukraine-Russia conflict is weighing on stocks.

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 59% for a -25 bp rate cut at the December 17-18 FOMC meeting.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is up +0.31%.  China's Shanghai Composite Index fell to a 2-1/2 week low and closed down sharply by -3.06%.  Japan's Nikkei Stock 225  closed up +0.68%.

Interest Rates

December 10-year T-notes (ZNZ24) today are up +5 ticks.  The 10-year T-note yield is down -1.6 bp to 4.406%.  Dec T-notes today are climbing on carryover support from a rally in European government bonds.  T-notes also gained support from a Wall Street Journal report that said President-elect Trump is seen as supporting Kevin 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 policy scenarios Trump has discussed. 

European government bond yields today are moving lower.  The 10-year German bund yield fell to a 1-month low of 2.235% and is down -5.4 bp to 2.264%.  The 10-year UK gilt yield dropped to a 3-week low of 4.363% and is down -4.1 bp to 4.401%.

The Eurozone Nov S&P manufacturing PMI fell -0.8 to 45.2, weaker than expectations of no change at 46.0.  Also, the Eurozone Nov S&P composite PMI fell -1.9 to 48.1, weaker than expectations of no change at 50.0 and the steepest pace of contraction in 10 months.

German Q3 GDP was revised downward to +0.1% q/q and -0.3% y/y from the previously reported +0.2% q/q and -0.2% y/y.

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 45% for a -50 bp rate cut at the same meeting.

US Stock Movers

Super Micro Computer (SMCI) is up more than +10% to lead gainers in the S&P 500 and Nasdaq 100 after it said it believes it can file its delayed 10-K and 10-Q reports in the period available under Nasdaq rules.

Copart (CPRT) is up more than +7% after reporting Q1 revenue of $1.15 billion, stronger than the consensus for $1.10 billion.

The Gap (GAP) is up more than +8% after reporting Q3 operating margin of 9.13%, better than the consensus of 8.17%, and raising its 2025 gross margin estimate to about +220 bps from a previous estimate of about +200 bps. 

Ross Stores (ROST) is up more than +4% after reporting Q3 EPS of $1.48, stronger than the consensus of $1.40, and raising its 2025 EPS forecast to $6.10-$6.17 from a previous forecast of $6.00-$6.13, the midpoint above the consensus of $6.13.

Elastic NV (ESTC) is up more than +21% after reporting Q2 adjusted EPS of 59 cents, well above the consensus of 38 cents, and raising its 2025 adjusted EPS forecast to $1.68-$1.72 from a previous estimate of $152.$1.56, stronger than the consensus of $1.53. 

Nike (NKE) is up more than +2% to lead gainers in the Dow Jones Industrials after Needham & Co. initiated coverage on the stock with a buy recommendation and a price target of $84. 

Viking Therapeutics (VKTX) is up more than +2% after B Riley Securities initiated coverage of the stock with a recommendation of buy and a price target of $109.

NetApp (NTAP) is up more than +1% after reporting Q2 net revenue of $1.66 billion, above the consensus of $1.64 billion, and raising its 2025 net revenue forecast to $6.54 billion-$6.74 billion from a previous forecast of $6.48 billion-$6.68 billion.

Intuit (INTU) is down more than -3% after forecasting Q2 adjusted EPS of $2.55-$2.61, well below the consensus of $3.23.

Pala Alto Networks (PANW) is down more than -3% to lead losers in the Nasdaq 100 after HSBC downgraded the stock to reduce from hold with a price target of $291.

Reddit (RDDT) is down more than -7% after Downdetector reported that users are having problems connecting to Reddit’s website.   

Nvidia (NVDA) is down more than -1% to lead losers in the Dow Jones Industrials after the company’s forecast for Q4 revenue exceeded estimates by only $400 million, the second consecutive quarter that revenue didn’t exceed estimates by $1 billion or more, suggesting the recent hyper-growth of the stock is fading.

Alphabet (GOOGL) is down more than -1%, adding to Thursday’s -4% loss after the US Justice Department proposed major changes to Google, including a forced sale of its Chrome web browser, saying the browser “fortified” the company’s dominance. 

Tenet Healthcare (THC) is down more than -1% after Raymond James downgraded the stock to outperform from a strong buy.

HCA Healthcare (HCA) is down more than -1% after Raymond James downgraded the stock to market perform from outperform. 

Earnings Reports (11/22/2024)

AMMO Inc (POWW), B Riley Financial Inc (RILY), Buckle Inc/The (BKE), Destination XL Group Inc (DXLG), Evolv Technologies Holdings Inc (EVLV), IES Holdings Inc (IESC), Spire Global Inc (SPIR).