The S&P 500 Index ($SPX) (SPY) Thursday closed down -0.09%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.04%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.47%. Dec E-mini S&P futures (ESZ24) are down -0.09%, and Dec E-mini Nasdaq futures (NQZ24) are down -0.48%.
Stock indexes on Thursday gave up an early advance and mainly settled lower, with the S&P 500 sliding to a 1-month low and the Nasdaq 100 dropping to a 2-week low. Stocks on Thursday added to Wednesday’s sharp losses as bond yields soared after the FOMC signaled only 50 bp of rate cuts next year, down from 100 bp of rate cuts projected in September.Â
Also, Thursday’s US economic reports were mainly stronger than expected and pushed bond yields even higher, with the 10-year T-note yield climbing to a 6-1/2 month high. In addition, Thursday’s -16% plunge in Micron Technology undercut technology stocks and weighed on the overall market.
US Q3 GDP was unexpectedly revised upward to 3.1% (q/q annualized), stronger than expectations of no change at 2.8%.
US weekly initial unemployment claims fell -22,000 to 220,000, showing a stronger labor market than expectations of 230,000.
The US Dec Philadelphia Fed business outlook survey unexpectedly fell -10.9 to a 20-month low of -16.4, weaker than expectations of an increase to 2.8.
US Nov leading indicators unexpectedly rose +0.3% m/m, stronger than expectations of a -0.1% m/m decline and the largest increase in 2-3/4 years.
US Nov existing home sales rose +4.8% m/m to an 8-month high of 4.15 million, stronger than expectations of +3.2% to 4.09 million.
The markets await key inflation data on Friday with the Nov core PCE price index, the Fed’s preferred inflation gauge, to see if policymakers can continue cutting interest rates.  The Nov core PCE is expected to rise to +2.9% y/y from +2.8% y/y in Oct.
The markets are discounting the chances at 9% for a -25 bp rate cut at the January 28-29 FOMC meeting.
Overseas stock markets Thursday settled lower. The Euro Stoxx 50 fell to a 2-week low and closed down -1.58%. China's Shanghai Composite Index slid to a 2-1/2 week low and closed down -0.36%. Japan's Nikkei Stock 225 dropped to a 2-1/2 week low and closed down -0.69%.
Interest Rates
March 10-year T-notes (ZNH25) Thursday closed down -13 ticks. The 10-year T-note yield rose +6.0 bp to 4.574%. Mar T-notes Thursday fell to a 6-1/2 month low, and the 10-year T-note yield climbed to a 6-1/2 month high of 4.592%. T-note prices retreated Thursday as stronger-than-expected US economic reports were hawkish for Fed policy. T-notes were also weighed down by negative carryover from Wednesday when the FOMC signaled only 50 bp of rate cuts next year, down from 100 bp of rate cuts projected in Sep.Â
European government bond yields on Thursday moved higher. The 10-year German bund yield climbed to a 3-1/2 week high of 2.322% and finished up +6.1 bp to 2.306%. The 10-year UK gilt yield rose to a 13-3/4 month high of 4.651% and finished up +2.1 bp to 4.579%.
Eurozone Nov new car registrations fell -1.9% to 869,816 units.
The German Jan GfK consumer confidence index rose +1.8 to -21.3, stronger than expectations of -22.5.Â
As expected, the Bank of England (BOE) kept the benchmark rate unchanged at 4.75%. BOE Governor Baily said a "gradual approach" to future cuts remains right, and we can't commit to when or by how much to cut interest rates in 2025.
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its January 30 policy meeting and a 12% chance for a 50 bp rate cut at the same meeting.
US Stock Movers
Lamb Weston Holdings (LW) closed down more than -20% to lead losers in the S&P 500 after reporting Q2 adjusted EPS of 66 cents, well below the consensus of $1.02, and cut its 2025 adjusted EPS forecast to $3.05-$3.20 from a previous forecast of $4.15-$4.35, weaker than the consensus of $4.23.Â
Micron Technology (MU) is down more than -16% to lead losers in the Nasdaq 100 after forecasting Q2 adjusted revenue of $7.7 billion-$8.1 billion, well below the consensus of $8.99 billion.
Home builders were under pressure Thursday, led by a -5% fall in Lennar (LEN) after it reported Q4 net new orders of 16,895, weaker than the consensus of 19,174 and forecast Q1 new orders of 17,500 to 18,000, below the consensus of 20,110. Also, DR Horton (DHI) closed down by more than -2%, and PulteGroup (PHM) and Toll Brothers (TOL) closed down by more than -1%.
Vertex Pharmaceuticals (VRTX) closed down more than -10% after saying a placebo arm in its mid-stage pain trial showed a similar effect to its pain-killing drug being tested.Â
Cintas (CTAS) closed down more than -10% after forecasting 2025 revenue of $10.26 billion-$10.32 billion, the midpoint right on consensus of $10.29 billion, disappointing analysts and investors who expected stronger revenue.
C3.ai (AI) closed down more than -10% after KeyBanc Capital Markets downgraded the stock to underweight from sector weight with a price target of $29.
Western Digital (WDC) closed down more than -6% after Benchmark Company LLC downgraded the stock to hold from buy.Â
Worthington Steel (WS) closed down more than -13% after reporting Q2 revenue of $739 million, a -9% decline from the same quarter last year.Â
Darden Restaurants (DRI) closed up more than +14% to lead gainers in the S&P 500 after reporting Q2 sales of $2.89 billion, better than the consensus of $2.86 billion and raised its 2025 sales forecast to $12.1 billion from a previous estimate of $11.8 billion-$11.9 billion, stronger than the consensus of $11.94 billion.Â
Accenture Plc (ACN) closed up more than +7% after reporting Q1 revenue of $17.69 billion, stronger than the consensus of $17.15 billion.
Palantir Technologies (PLTR) closed up more than +5% after agreeing to extend its contract with the US Army on the Vantage data analytics program worth up to $618.9 million.Â
CarMax (KMX) closed up more than +4% after reporting Q3 net sales and operating revenue of $6.22 billion, above the consensus of $6.04 billion.Â
Boeing (BA) closed up more than +3% to lead gainers in the Dow Jones Industrials after Turkey’s Pegasus said it would buy as many as 200 Boeing 737-10 aircraft valued at $36 billion.
Fortinet (FTNT) closed up more than +2% after KeyBanc Capital Markets upgraded the stock to overweight from sector weight with a price target of $115.
American Express (AXP) closed up more than +2% after Morgan Stanley raised its price target on the stock to $305 from $252.
Hewlett Packard Enterprise (HPE) closed up more than +1% after Deutsche Bank upgraded the stock to buy from hold with a price target of $25.Â
Earnings Reports (12/20/2024)
Carnival Corp (CCL), PACS Group Inc (PACS), Winnebago Industries Inc (WGO).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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