Stocks Mixed on Weakness in Energy Stocks as Crude Plunges

What you need to know…

The S&P 500 Index ($SPX) (SPY) this morning is down -0.08%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.36%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.28%. 

U.S. stock indexes this morning are mixed, with the Nasdaq 100 at a 1-1/2 month high. A more than -7% slump in crude oil today is undercutting energy stocks and weighing on the overall market.  On the other hand, strength in software stocks and cybersecurity firms is boosting the Nasdaq 100.  Also, Tesla is up more than +5% today after it said it would seek shareholder approval for a stock split. 

Today’s U.S. economic data was bearish for stocks.  U.S. Feb wholesale inventories rose +2.1% m/m, a bigger increase than expectations of +1.0% m/m.  Also, the Mar Dallas Fed manufacturing outlook level of general business activity fell -5.3 to 8.7, weaker than expectations of 11.0.

Today’s stock movers…

Tesla (TSLA) is up more than +5% today to lead gainers in the S&P 500 and Nasdaq 100 after it said it plans to seek shareholder approval for a stock split.

Software stocks and cybersecurity firms are climbing today and are a positive factor for the overall market. Atlassian Corp  (TEAM) is up more than +4%, Zscaler (ZS) is up more than+ 3%, and Datadog (DDOG), Adobe (ADBE), Micron Technology (MU), Fortinet (FTNT), Synopsys (SNPS) and Cadence Design Systems (CDNS) are up more than +2%.  Microsoft (MSFT) is up more than 2% to lead gainers in the Dow Jones Industrials. 

Energy stocks and energy service providers are falling today, with the price of WTI crude down more than -7%. Haliburton (HAL) is down more than -4%, and Devon Energy (DVN), Marathon Oil (MRO), Occidental Petroleum (OXY), ConocoPhillips (COP), Baker Hughes (BKR), Exxon Mobil (XOM), and Schlumberger (SLB) are down more than -3%.

CF Industries (CF) is down more than -4% today after Scotiabank cut its recommendation on the stock to sector perform from sector outperform.  Other fertilizer stocks fell back on the news, with Mosaic (MOS) down more than -6% to lead losers in the S&P 500 and Compass Minerals International (CMP) down nearly -2%.

HP Inc (HPQ) is down more than -5% today after acquiring Plantronics for $3.3 billion.

Across the markets…

June 10-year T-notes (ZNM22) this morning are up +8 ticks, and the 10-year T-note yield is down -2.0 bp at 2.451%.  Jun T-note prices this morning recovered from a 3-1/4 year nearest-futures low and moved higher, and the 10-year T-note jumped to a new 2-3/4 year high of 2.553% before falling back.  Weakness in stocks today sparked short-covering in T-notes along with a decline in inflation expectations as crude prices are down by more than-5%.

The dollar index (DXY00) this morning is up +0.48%.  The dollar rallied to a 3-week high today and is moderately higher.  Weakness in stocks today has fueled some liquidity demand for the dollar.  The dollar also has support on today’s plunge in the yen to a 6-1/2 year low against the dollar. 

EUR/USD (^EURUSD) this morning is down -0.14%.  EUR/USD today is weaker as the war in Ukraine continues, which bolsters economic growth concerns for the Eurozone.  Losses in EUR/USD are limited by a jump in bond yields after the 10-year German bund yield rose to a 3-3/4 year high today of 0.629%. 

USD/JPY (^USDJPY) this morning is up +1.46%.  USD/JPY today jumped to a 6-1/2 year high on divergent central bank policies.  The yen tumbled today after the BOJ offered to buy an unlimited amount of 10-year Japanese government bonds over the next three days.  The BOJ is concerned over rising interest rates after the 10-year Japan JGB bond yield rose to a 6-year high today of 0.255%. 

April gold (GCJ22) this morning is down -17.8 (-0.91%), and May silver (SIK22) is down -0.435 (-1.70%).  Precious metals this morning are moderately lower.  A rally in the dollar index to a 3-week high today is pressuring metals prices. Gold prices are also under pressure on soaring global bond yields, with the 10-year UK gilt yield and Japan's 10-year JGB bond yield climbing to 6-year highs today, the 10-year German bund yield rising to a 3-3/4 year high, the and the 10-year T-note yield climbing to a 2-3/4 year high.