What you need to know…
The S&P 500 Index ($SPX) (SPY) today is up +0.74%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.67%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.08%.
U.S. stock indexes this morning are moderately higher, with the S&P 500 and Nasdaq 100 at 1-week highs and the Dow Jones Industrials at a 2-1/2 week high. Stocks are higher on hopes that the Fed may not be as aggressive as earlier feared about tightening monetary policy. A gauge of long-term U.S. inflation expectations from the University of Michigan declined last Friday, which prompted several Fed policymakers to argue against raising rates by more than 75 bp. In addition, better-than-expected quarterly earnings results today from Goldman Sachs lifted its stock more than +4% and were positive for the overall market.
Stocks have carry-over support from a +1.5% jump today in the Shanghai Composite on speculation China will soon boost stimulus measures. PBOC Governor Yi Gang said that China’s central bank would step up efforts to provide stronger economic support amid the pandemic and external headwinds.
Higher T-note yields today are a negative factor for stocks, with the 10-year T-note yield up +5.9 bp at 2.974%. Also, an increase in inflation expectations weighed on stocks after the 10-year breakeven inflation rate today climbed to a 2-1/2 week high. Finally, stock indexes fell back from their best levels after today’s data showed the U.S. July NAHB housing market index fell more than expected to a 2-year low.
The U.S. July NAHB housing market index fell -12 points to a 2-year low of 55, weaker than expectations of 65.
Today’s stock movers…
Cruise line operators are climbing today on signs of industry expansion after Royal Caribbean Cruises said it received court approval to acquire the ultra-luxury cruise ship Endeavor for $275 million. Royal Caribbean Cruises (RCL), Carnival (CCL), and Norwegian Cruise Line Holdings (NCLH) are all up more than +6%.
Solar stocks are climbing today on speculation higher energy costs will push more countries to invest in their solar-energy producing capabilities. Germany announced that it produced a record 38,174 megawatts from solar panels on Sunday. Enphase Energy (ENPH) is up more than +7% to lead gainers in the S&P 500. Also, Array Technologies (ARRY) is up more than +6%. In addition, SolarEdge Technologies (SEDG) is up more than -5%, and First Solar (FSLR) is up more than +4%.
Nvidia (NVDA) is up more than +5% today after TF Securities initiated coverage of the stock with a buy rating.
Goldman Sachs (GS) is up nearly +4% today to lead gainers in the Dow Jones Industrials after reporting Q2 trading revenue of $6.47 billion, well above the consensus of $5.82 billion.
Boeing (BA) is up more than +3% today after it announced that Delta Air Lines ordered 100 of its 737 Max jets.
Tesla (TSLA) is up more than +3% today after Deutsche Bank added the stock to its short-term Catalyst Call Buy List ahead of the company’s Q2 earnings report expected after the close this Wednesday.
U.S.-listed Chinese stocks are climbing today on hopes for additional stimulus after PBOC Governor Yi Gang said that China’s central bank would step up efforts to provide stronger economic support amid the pandemic and external headwinds. JD.com (JD) is up more than +6%. Also, Pinduoduo (PDD), NetEase (NTES), and Baidu (BIDU) are up more than +3%. Alibaba Group Holding (BABA) is up more than +2%.
Seagen (SGEN) is down more than -4% today to lead losers in the Nasdaq 100 after the Wall Street Journal reported that Merck’s $40 billion deal to acquire the company is delayed until Merck’s quarterly earnings are released later this month.
Hologic (HOLX) is down more than -2% today to lead losers in the S&P 500 after BIG LLC cut its recommendation on the stock to neutral from buy.
Across the markets…
Sep 10-year T-notes (ZNU22) this morning are down -10 ticks, and the 10-year T-note yield is +5.9 bp at 2.974%. A rally in global equity markets today is reducing the safe-haven demand for T-notes. Also, an uptick in inflation expectations is bearish for T-notes after the 10-year U.S. breakeven inflation expectations rate climbed to a 2-1/2 week high today of 2.416%.
The dollar index (DXY00) this morning is down by -0.56%. The dollar today is extending last Friday’s losses, which occurred after St. Louis Fed President Bullard and Atlanta Fed President Bostic argued against raising interest rates by 100 bp at the July 26-27 FOMC meeting. The dollar is also under pressure as a rally in stocks today has curbed liquidity demand for the dollar.
EUR/USD (^EURUSD) is up by +0.66% today, recovering further from last Thursday’s 20-year low. Higher European government bond yields today are supporting EUR/USD, with the 10-year German bund yield up +8.8 bp at 1.221%. Political turmoil in Italy remains a focus of the euro with the risk that Prime Minister Draghi may resign. Prime Minister Draghi had offered his resignation Thursday after Italy’s Five Star Movement boycotted a confidence vote in the Senate.
USD/JPY (^USDJPY) today is down -0.23%. Dollar weakness today is supporting some mild short-covering in the yen, which recovers further from last Thursday's 24-year low against the dollar. Forex trading in USD/JPY may be muted with markets in Japan closed today for the Marine Day holiday.
August gold (GCQ22) this morning is up +12.7 (+0.75%), and September silver (SIU22) is up +0.241 (+1.30%.) Precious metals this morning are moderately higher, boosted by a weaker dollar. Gold also garnered support today on increased demand as an inflation hedge after the U.S. 10-year breakeven inflation rate climbed to a 2-1/2 week high. Precious metals are being undercut today by a rally in stocks and higher global government bond yields.
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