Stocks Mixed as Chip Stocks Turn Lower

The S&P 500 Index ($SPX) (SPY) today is up +0.16%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.01%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.31%.  March E-mini S&P futures (ESH25) are up +0.21%, and March E-mini Nasdaq futures (NQH25) are up +0.07%. 

Stocks today are mixed in quiet holiday trade, with the markets closed on Wednesday for the New Year’s Day holiday.  Energy stocks are climbing today, with WTI crude oil rising to an 8-week high.  Stocks are seeing support from today’s decline in the 10-year T-note yield to a 1-week low.   Chip stocks gave up an early advance today and turned lower, weighing on the Nasdaq 100. 

Stocks have some negative carryover from today’s -1% slide in China’s Shanghai Composite Stock Index to a 1-week low on slower-than-expected growth in Chinese manufacturing activity.  The China Dec manufacturing PMI fell -0.2 to 50.1, weaker than expectations of 50.2.

Today’s Oct S&P CoreLogic US composite-20 home price index rose +0.3% m/m and +4.2% y/y, stronger than expectations of +0.2% m/m and +4.1% y/y.

Low volumes and thin trading conditions during this holiday week may lead to exaggerated stock moves, with most global equity markets closed Wednesday for the New Year’s holiday.  The markets are awaiting Friday’s US Dec ISM manufacturing index for market direction and to gauge the health of the US manufacturing sector.  Expectations are for the Dec ISM Manufacturing Index to slip -0.2 to 48.2.   

The markets are discounting the chances at 11% for a -25 bp rate cut at the January 28-29 FOMC meeting.

Overseas stock markets Tuesday settled mixed.  The Euro Stoxx 50 closed up +0.55%.  China’s Shanghai Composite Index fell to a 1-week low and closed down -1.63%.  Japan’s Nikkei Stock 225 was closed for a bank holiday.

Interest Rates

March 10-year T-notes (ZNH25) today are up +2 ticks.  The 10-year T-note yield is down -0.4 bp to 4.529%.  Mar T-notes today rose to a 1-week high, and the 10-year T-note yield fell to a 1-week low of 4.503%.  T-note prices are seeing some support today from month-end rebalancing as bond fund managers buy longer-term government debt to balance their portfolios, with Bloomberg estimating the duration of bond indexes will extend by an estimated 0.07 of a year this month.  T-notes fell back from their best levels after the Oct S&P CoreLogic composite-20 home price index rose more than expected, a hawkish factor for Fed policy.

European government bond yields today are moving lower.  The 10-year German bund yield did not trade today, with markets in Germany closed for the New Year’s holiday.   The 10-year UK gilt yield fell to a 1-week low of 4.545% and finished down -4.3 bp to 4.568%.

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its January 30 policy meeting and at 12% for a -50 bp rate cut at that meeting.

US Stock Movers

Energy stocks are moving higher, with the price of WTI crude oil climbing to an 8-week high.  As a result, APA Corp (APA), Marathon Petroleum (MPC), and Occidental Petroleum (OXY) are up more than +2%.  Also, ConocoPhillips (COP), Chevron (CVX), Haliburton (HAL), Schlumberger (SLB), Exxon Mobil (XOM), Phillips 66 (PSX), and Valero Energy (VLO) are up more than +1%.

Acadia Pharmaceuticals (ACAD) is up more than +12% after S&P Dow Jones Indices said the stock will replace Independent Bank Group in the S&P SmallCap 600 before the opening of trading on Friday, January 3. 

FTAI Aviation (FTAI) is up more than +16 after it said it is starting a strategic capital initiative and announced an initial guidance for 2025, which Citigroup said was “very encouraging.”

VeriSign (VRSN) is up more than +1% after an SEC filing showed Warren Buffet’s Berkshire Hathaway bought $15.6 million of the stock over the past three sessions.

Yum!  Brands (YUM) is up +0.43% after Argus Research upgraded the stock to buy from hold with a price target of $155. 

Chip stocks today are under pressure and are weighing on the overall market.  Nvidia (NVDA) is down more than -1% to lead losers in the Dow Jones Industrials.  Also, Advanced Micro Devices (AMD), ARM Holdings Plc (ARM), Marvell Technology (MRVL), and Micron Technology (MU) are down more than -0.50%. 

Vistra Corp (VST) is down more than -1% on year-end profit taking and tax selling, with the stock up more than +260% this year.

GoDaddy (GDDY) is down -0.70% after Bloomberg Intelligence said the company’s net additions continue to slow, putting pressure on average revenue per customer to drive growth.

Dave Inc (DAVE) is down more than -9% after the Federal Trade Commission said it referred its federal court case against the company to the Justice Department for allegedly deceiving customers and hiding fees.

Earnings Reports (12/31/2024)

None.