The S&P 500 Index ($SPX) (SPY) this morning is up +0.18%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.10%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.52%.
Stock indexes this morning are moderately higher on signs that inflation pressures are continuing to ease after the Jan core personal consumption expenditures, the Fed’s preferred inflation gauge, rose 2.8% in January, right on expectations and the slowest pace of increase in 2-3/4 years. Also, other Fed-friendly reports today on weekly jobless claims, the Jan MNI Chicago PMI, and Jan pending homes sales knocked bond yields lower and supported gains in stocks. Chip stocks are also rallying today after Citigroup said it was “wildly bullish” on the sector.
U.S. weekly initial unemployment claims rose +13,000 to 215,000, showing a weaker labor market than expectations of 210,000.
U.S. Jan personal spending rose +0.2% m/m, right on expectations. Jan personal income rose +1.0% m/m, stronger than expectations of +0.4% m/m and the biggest increase in a year.
The U.S. Jan PCE core deflator eased to 2.8% y/y from 2.9% y/y in Dec, right on expectations and the slowest pace of increase in 2-3/4 years.
The U.S. Feb MNI Chicago PMI unexpectedly fell -2.0 to 44.0, weaker than expectations of an increase to 48.0 and the steepest pace of contraction in 7 months.
U.S. Jan pending home sales unexpectedly fell -4.9% m/m, weaker than expectations of an increase of 1.5% m/m and the biggest decline in 5 months.
The markets are discounting the chances for a -25 bp rate cut at 3% for the March 19-20 FOMC meeting and 23% for the following meeting on April 30-May 1.
Overseas stock markets today are mixed. The Euro Stoxx 50 is down -0.09%. China’s Shanghai Composite closed up +1.94%. Japan’s Nikkei Stock Index closed down -0.11%.
Interest Rates
March 10-year T-notes (ZNH24) this morning are up by +8 ticks, and the 10-year T-note yield is down -3.7 bp at 4.227%. T-notes shook off early losses today and are slightly higher on some Fed-friendly economic news. The Jan core PCE deflator rose at the slowest pace in 2-3/4 years, a sign of easing price pressures, and weekly jobless claims rose more than expected, a sign of labor market weakness. Gains in T-notes accelerated after the Jan MNI Chicago PMI unexpectedly contracted by the most in seven months, and after Jan pending home sales unexpectedly fell by the most in five months, dovish factors for Fed policy.
European government bond yields today are lower. The 10-year German bund yield fell back from a 3-month high of 2.512% and is down -4.3 bp at 2.416%. The 10-year UK gilt yield rose to a 3-month high of 4.265% and is down -5.4 bp to 4.131%.
ECB Governing Council member Holzmann said he doesn't see any significant talks on lowering borrowing costs before the ECB's policy meeting in June.
German Jan retail sales unexpectedly fell -0.4% m/m, weaker than expectations of +0.5% m/m.
German Feb unemployment change rose +11,000, showing a weaker labor market than expectations of +5,000. The Feb unemployment rate was unchanged at a 2-1/2 year high of 5.9%, weaker than expectations of 5.8%.
German Feb CPI (EU harmonized) eased to 2.7% y/y from 3.1% y/y in Jan, right on expectations.
U.S. Stock Movers
Hormel Foods (HRL) is up more than +11% to lead gainers in the S&P 500 after reporting Q1 net sales of $3.00 billion, stronger than the consensus of $2.91 billion.
Chip stocks are climbing today after Citigroup said it is still “wildly bullish on semiconductor stocks given stable demand in PCs/Handsets/Servers,“ while “the AI market continues to grow” with all kinds of businesses and organizations buying AI chips. As a result, Advanced Micro Devices (AMD) is up more than +6% to lead gainers in the Nasdaq 100. Also, Marvell Technology (MRVL) is up more than +3%, and Nvidia (NVDA), GlobalFoundries (GFS), and Intel (INTC) are up more than +2%.
Monster Beverage (MNST) is up more than +5% after reporting Q4 gross margins of 54.2%, above the consensus of 53.3%.
Best Buy (BBY) is up more than +3% after reporting Q4 revenue of $14.65 billion, above the consensus of $14.55 billion, and forecasting Q1 comparable sales up 5%, stronger than the consensus of -2.35%.
Paramount Global (PARA) is up more than +3% after reporting Q4 direct-to-consumer revenue, a gauge of demand for streaming services, rose $1.87 billion, stronger than the consensus of $1.84 billion.
Newmont Corp (NEM) is up more than +4% after Jeffries upgraded the stock to buy from hold with a price target of $38.
Salesforce (CRM) is up more than +2% to lead gainers in the Dow Jones Industrials after Raymond James raised its price target on the stock to $380 from $300.
Okta (OKTA) is up more than +20% after reporting Q4 adjusted EPS of 63 cents, higher than the consensus of 51 cents, and forecast 2025 adjusted EPS of $2.24-$2.29, well above the consensus of $1.98.
Pure Storage (PSTG) is up more than +21% after reporting Q4 adjusted EPS of 50 cents, stronger than the consensus of 44 cents.
Xcel Energy (XEL) is down more than -6% to lead losers in the S&P 500 on concerns the Smokehouse Creek wildfire in the Texas panhandle will damage some of the company’s infrastructure in Texas.
Bath & Body Works (BBWI) is down more than -3% after forecasting Q1 EPS of 28 cents-33 cents, below the consensus of 38 cents.
HP Inc (HPQ) is down more than -2% after reporting Q1 net revenue of $13.19 billion, weaker than the consensus of $13.58 billion.
Boeing (BA) is down more than -1% to lead losers in the Dow Jones Industrials after Bloomberg reported the U.S. Justice Department is looking into the midair blowout last month of a door plug on an Alaska Air flight, which could expose the company to criminal prosecution.
Snowflake (SNOW) is down more than -19% after forecasting 2025 product revenue of $3.25 billion, weaker than the consensus of $3.46 billion.
Chemours (CC) is down more than -37% after announcing management changes and delaying its earnings report.
Macy’s (M) is down more than -2% after TD Cowen downgraded the stock to market perform from outperform.
Regeneron Pharmaceuticals (REGN) is down more than -1% on signs of insider selling after an SEC filing showed EVP Larosa sold $990,000 of shares on Monday.
Earnings Reports (2/29/2024)
Autodesk Inc (ADSK), Bath & Body Works Inc (BBWI), Best Buy Co Inc (BBY), Cooper Cos Inc/The (COO), DENTSPLY SIRONA Inc (XRAY), Evergy Inc (EVRG), Hewlett Packard Enterprise Co (HPE), Hormel Foods Corp (HRL), NetApp Inc (NTAP).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
