Stocks Settle Mixed Ahead of Big Tech Earnings and FOMC

What you need to know…

The S&P 500 Index ($SPX) (SPY) on Monday closed up +0.13%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.28%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.55%. 

U.S. stock indexes on Monday settled mixed.  Weakness in technology stocks Monday weighed on the overall market.  Semiconductor stocks Monday led losers in technology stocks after Barclays warned that “chip stocks are still in for a substantial reset.”  In addition, expectations for tighter Fed policy boosted T-note yields Monday and undercut stocks on the outlook for the Fed to raise the fed funds target range by 75 bp after the Tue/Wed FOMC meeting. 

Stocks have support from general Q2 earnings optimism.  The market is focused on earnings results this week from the mega-tech companies of Alphabet, Apple, and Microsoft.  Energy stocks moved higher Monday after the price of crude oil climbed +2%.

Monday’s U.S. economic data was negative for stocks after the June Chicago Fed national activity index was unchanged at a 16-month low of -0.19, weaker than expectations of 0.00. Also, the July Dallas Fed outlook for manufacturing activity index fell -4.9 to a 2-year low of -22.6, weaker than expectations of -18.5.

Today’s stock movers…

Semiconductor stocks retreated Monday and led losers in technology stocks after Barclays said, “we are not buyers of the recent bounce in chip stocks and think they are still in for a substantial reset.”  Align Technology (ALGN) closed down more than -5% to lead losers in the Nasdaq 100.  Also, Marvell Technology (MRVL) and Okta (OKTA) closed down by more than -3%.  In addition, Nvidia (NVDA), Lam Research (LRCX), Adobe (ADBE), and Micron Technology (MU) closed down by more than -2%.

Newmont (NEM) closed down more than -13% Monday to lead losers in the S&P 500 after reporting Q2 adjusted EPS of 46 cents, weaker than the consensus of 65 cents. 

IDEXX Laboratories (IDXX) closed down more than -4% Monday after Stifel downgraded the stock to hold from buy, citing “too many concerns.”

Energy stocks and energy service providers moved higher Monday as the price of crude oil climbed +2%. Marathon Oil (MRO) and APA Corp (APA) closed up more than +6%.  Also, Valero Energy (VLO), Diamondback Energy (FANG), Devon Energy (DVN), and  Occidental Petroleum (OXY) closed up more than +5%.  In addition,  Haliburton (HAL), Exxon Mobil (XOM), and Phillips 66 (PSX) closed up more than +3%.  Finally, Chevron (CVX) closed up more than +2% to lead gainers in the Dow Jones Industrials. 

SVB Financial Group (SIVB) closed up more than +8% Monday to lead gainers in the S&P 500 on dip buying after the stock tumbled to a 19-month low last Friday.

Agricultural stocks gained Monday following Russia’s weekend attack on the seaport of Odessa, Ukraine, despite the new Ukraine-Russia deal that was struck to move grain through the Black Sea.  Fertilizer stocks Mosaic (MOS) and CF Industries (CF) closed up more than +6%.  Also, Cal-Maine Foods (CALM) closed up more than +5%, and Archer-Daniels-Midland (ADM) closed up more than +2%. 

Travelers Cos (TRV) closed up more than +2% Monday after Raymond James upgraded the stock to a strong buy from market perform.

Across the markets…

Sep 10-year T-notes (ZNU22) on Monday closed down -7.5 ticks, and the 10-year T-note yield rose +6.2 bp to 2.812%.  T-notes prices Monday were under pressure the entire day on expectations for the Fed to raise the fed funds target range by 75 bp after the Tue/Wed FOMC meeting. Also, supply pressures weighed on T-note prices, with the Treasury auctioning $129 billion of T-notes this week. 

A rebound in 10-year German bund prices helped T-notes recover from their worst levels.  Bunds rallied on safe-haven demand when a Bloomberg report said another Nord Stream turbine had been halted, sparking new concerns about the energy crisis in Europe.

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