What you need to know…
The S&P 500 Index ($SPX) (SPY) today is up +0.98%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.74%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.75%.
U.S. stock indexes today are moderately higher, with the Nasdaq 100 climbing to a 2-3/4 month high. An easing of U.S.-China tensions is boosting stocks today after House Speaker Pelosi left Taiwan without incident. Also, better-than-expected quarterly earnings results from CVS Health, Moderna, and PayPal boosted the overall market. Stock gains accelerated this morning on better-than-expected U.S factory orders and ISM reports.
A jump in T-note yields today is negative for stocks as the 10-year T-note yield climbed to a 1-1/2 week high today at 2.847%. Hawkish comments from St. Louis Fed President Bullard helped push yields higher when he said, "we still have some ways to go here to get to restrictive monetary policy." He added that he favors a strategy of "front-loading" big interest rate hikes, and he wants the fed funds rate at 3.75% to 4.00% at the end of the year.
U.S. June factory orders rose +2.0% m/m, stronger than expectations of +1.2% m/m and the biggest increase in 5 months.
The U.S. July ISM services index unexpectedly rose +1.4 to 56.7, stronger than expectations of a decline to 53.5.
Today’s stock movers…
Moderna (MRNA) is up more than +16% today to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q2 revenue of $4.75 billion, stronger than the consensus of $4.02 billion, and announcing a $3 billion stock buyback plan.
PayPal (PYPL) is up than +12% today after reporting Q2 adjusted EPS of 93 cents, better than the consensus of 86 cents, and raised its full-year adjusted EPS of $3.87-$3.97 from a prior view of $3.81-$3.93, above the consensus of $3.83.
CVS Health Corp (CVS) is up more than +5% today after reporting that Q2 comparable sales rose +8.0%, much stronger than the consensus of +1.4%, and raised guidance on its full-year adjusted EPS estimate to $8.40-$8.60 from a prior view of $8.20-$8.40, above the consensus of $8.35.
Gilead Sciences (GILD) is up more than +5% today after reporting Q2 revenue of $6.26 billion, well above the consensus of $5.84 billion, and raised its full-year product sales estimate to $24.5 billion-$25.0 billion from a prior estimate of $23.8 billion-$24.3 billion, better than the consensus of $24.12 billion.
Regeneron Pharmaceuticals (REGN) is up more than +5% today after reporting Q2 revenue of $2.86 billion, above the consensus of $2.80 billion.
NortonLifeLock (NLOK) is up more than +5% today after the UK’s Competition and Markets Authority provisionally cleared its purchase of Avast.
Match Group (MTCH) is down more than -20% today to lead losers in the S&P 500 and Nasdaq 100 after reporting Q2 revenue of $794.5 million, below the consensus of $804.1 million.
SolarEdge Technologies (SEDG) is down more than -18% today after reporting Q2 revenue of $727.8 million, weaker than the consensus of $731.9 million.
Airbnb (ABNB) is down more than -5% today after the company forecast Q3 bookings to increase by 25%, nearly the same as Q2, which disappointed analysts and led to price cuts of the stock at Wells Fargo, RBC Capital Markets, and Piper Sandler.
Across the markets…
Sep 10-year T-notes (ZNU22) today are down -16 ticks, and the 10-year T-note yield is up +5.8 bp at 2.807%. Sep T-notes dropped to a 1-1/2 week low today, and the 10-year T-note yield rose to a 1-1/2 week high of 2.847%. T-note prices are under pressure today on hawkish comments from St. Louis Fed President Bullard. A rally in stocks today is also weighing on T-notes, along with an easing of U.S.-China tensions after House Speaker Pelosi left Taiwan without incident.
Negative carry-over from hawkish Fed comments this week continues to pressure T-note prices. T-notes had rallied last week after Fed Chair Powell signaled the pace of future Fed rate hikes might slow later this year. However, several Fed officials have since said the Fed is far from done with its rate-hike regime.
The U.S. Treasury announced this morning that it would auction $98 billion of notes and T-bonds at its Aug quarterly refunding next week, down $5 billion from the May refunding and the fourth consecutive refunding the Treasury has cut the size of its long-term Treasury issuance.
The dollar index (DXY00) today is up +0.10%. Higher T-note yields today are boosting the dollar along with hawkish comments by St. Louis Fed President Bullard, who said, "we still have some ways to go here to get to restrictive monetary policy." A rally in stocks today is reducing liquidity demand for the dollar.
EUR/USD (^EURUSD) is little changed after mixed Eurozone economic data. On the negative side, Eurozone June retail sales unexpectedly fell -1.2% m/m, weaker than expectations of unchanged and the sharpest decline in 6 months. Also, the Eurozone June PPI rose +1.1% m/m and +35.8% y/y, stronger than expectations of +1.0% m/m and +35.7% y/y. On the positive side, The Eurozone July S&P Global composite PMI was revised upward by +0.5 to 49.4 from the originally reported 49.4. Also, German June exports rose +4.5% m/m, stronger than expectations of +1.0% m/m.
USD/JPY (^USDJPY) today is up +0.67%. Higher T-note yields today are weighing on the yen along with strength in stocks, which curbs the safe-haven demand for the yen. Also, an easing of Taiwan tensions has reduced the safe-haven demand for the yen after House Speaker Pelosi left Taiwan without incident.
October gold (GCV22) this morning is down -6.6 (-0.37%), and September silver (SIU22) is down -0.119 (-0.59%). A stronger dollar today is weighing on precious metal prices. Also, an easing of Taiwan tensions has reduced the safe-haven demand for precious metals. Gold is also falling back today on higher global government bond yields.
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