What you need to know…
The S&P 500 Index ($SPX) (SPY) today is down -0.41%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.21%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.60%.
Stock indexes this morning are moderately lower. Weakness in technology stocks is weighing on the overall market, with Oracle down more than -12% after reporting weaker-than-expected Q1 revenue due to slowing cloud sales. Morgan Stanley said Oracle’s results raise questions about the timing of generative artificial intelligence (AI) demand turning into revenue across the broader business.
U.S. financial markets are awaiting Wednesday’s consumer price data for direction. The U.S. Aug CPI is expected to increase to +3.6% y/y from July’s +3.2% and June’s 2-1/4 year low of +3.0%. However, the Aug core CPI is expected to ease to a new 1-3/4 year low of +4.3% y/y from July’s 1-3/4 year low of +4.7%.
The markets are discounting the odds at 7% for a +25 bp rate hike at the September 20 FOMC meeting and 44% for that +25 bp rate hike at the November 1 FOMC meeting.
Global bond yields are mixed. The 10-year T-note yield is up +0.2 bp at 4.289%. The 10-year German bund yield is down -0.3 bp at 2.635%. The 10-year UK gilt yield fell to a 1-week low of 4.407% and is down -5.1 bp at 4.420%.
Overseas stock markets are mixed. The Euro Stoxx 50 is down -0.33%. China’s Shanghai Composite Index closed -0.18%. Japan’s Nikkei Stock Index closed +0.95%.
Today’s stock movers…
Oracle (ORCL) is down more than -12% to lead losers in the S&P 500 after reporting Q1 adjusted revenue of $12.45 billion, weaker than the consensus of $12.47 billion.
Northern Trust (NTRS) is down more than -7% after a disappointing presentation at the Barclays Global Financial Services Conference.
RTX Corp (RTX) is down more than -3% after RBC Capital Markets downgraded the stock to sector perform from outperform.
AerCap Holdings (AER) is down more than -3% after holder GE Capital offered 32.4 million shares of AerCap via Goldman Sachs, Citigroup, Barclays, Bank of America Securities, and JPMorgan Chase.
Apple (AAPL) is down more than -1% to lead losers in the Dow Jones Industrials ahead of today’s launch of its new iPhone 15 product line.
Acelyrin (SLRN) plunged more than -60% after its drug izokibep did not meet the primary endpoint of a clinical trial of patients with hidradenitis suppurativa, a chronic inflammatory skin condition. Citigroup opened a positive catalyst watch on the stock, seeing “a rich catalyst path ahead” for the company.
Comerica (CMA) is down more than -3% after CEO Farmer said Q3 expenses could come in above prior guidance, and the company hasn’t added any brokered deposits this quarter.
United Parcel Service (UPS) is down more than -3% after CEO Tome said the company would pay out the biggest portion of its new five-year labor pact over the next 12 months, making for a challenging upcoming year.
Zions Bancorp (ZION) is up more than +5% to lead gainers in the S&P 500 after the company gave an update on trends so far this quarter on deposits, net interest margin, and net interest income that were all better than estimates.
Westrock (WRK) is up more than +4% after Smurfit Kappa Group Plc agreed to acquire the company in a $11.2 billion deal.
Energy stocks are climbing today, with the price of WTI crude up more than +1% at a nearly 10-month high. As a result, Exxon Mobil (XOM), Occidental Petroleum (OXY), APA Corp (APA), Marathon Oil (MRO), Hess Corp (HES), and Chevron (CVX) are up more than +2%. Also, ConocoPhillips (COP), Diamondback Energy (FANG), Haliburton (HAL), Devon Energy (DVN), and Valero Energy (VLO) are up more than +1%.
Intel (INTC) is up more than +2% to lead gainers in the Dow Jones Industrials after agreeing to sell roughly a 10% stake in the IMS Nanofabrication business to Taiwan Semiconductor Manufacturing for about $4.3 billion.
U.S. automakers are climbing today after Deputy Treasury Secretary Adeyemo said the Biden administration has deployed top officials to facilitate talks between the UAW and automakers and expects a deal between the parties. As a result, General Motors (GM), Ford Motor (F), and Stellantis NV (STLA) are up more than +2%.
PayPal Holdings (PYPL) is up more than +2% after it extended its relationship with Uber to include expanded use of payment processing and alternative debt network routing.
Cintas (CTAS) is up more than +2% after Bank of America Globa Research upgraded the stock to buy from neutral with a price target of $580.
Across the markets…
December 10-year T-notes (ZNZ23) today are down -2 ticks, and the 10-year T-note yield is up +0.2 bp at 4.289%. Dec T-note prices today gave up early gains and are slightly lower. An increase in inflation expectations is undercutting T-note prices as the 10-year breakeven inflation rate today climbed to a 2-1/2 week high of 2.359%. Also, supply pressures are weighing on T-notes as the Treasury will auction $35 billion of re-opened 10-year T-notes later today as part of this week’s $99 billion package of T-note and T-bond auctions. T-notes this morning initially opened higher on carry-over support from today’s rally in 10-year UK gilts to a 1-week high. Also, weakness in stocks today has spurred some safe-haven demand for T-notes.
The dollar index (DXY00) today is up by +0.27%. Weakness in stocks today has boosted the liquidity demand for the dollar. Also, short covering in the dollar ahead of Wednesday’s U.S. August consumer price report is lifting the dollar.
EUR/USD (^EURUSD) is down by -0.29%. Strength in the dollar today is weighing on the euro. Also, a less than 50% chance that the ECB will raise interest rates on Thursday is undercutting the euro as the markets are discounting the odds at 46% that the ECB will raise interest rates by 25 bp at Thursday’s policy meeting.
Today’s Eurozone economic news supported EUR/USD after the German Sep ZEW survey expectations of economic growth unexpectedly rose +0.9 to -11.4, stronger than expectations of a decline to -15.0.
USD/JPY (^USDJPY) is up +0.38%. The yen today is moderately lower. Central bank divergence is bearish for the yen, with the ECB and Federal Reserve currently raising interest rates while the BOJ maintains record-low interest rates. Higher Japanese government bond yields are bullish for the yen as the 10-year JGB bond yield today climbed to a new 9-1/2 year high of 0.722%.
October gold (GCV3) today is down -15.1 (-0.78%), and Dec silver (SIZ23) is down -0.138 (-0.59%). Precious metals prices this morning are moderately lower, with gold falling to a 2-1/2 week low and silver dropping to a 3-week low. A stronger dollar today is bearish for metals prices. Also, the continued liquidation of gold holdings by funds is bearish for gold after long gold holdings in ETFs fell to a 3-1/3 year low last Friday. Losses in gold accelerated today on technical selling after prices fell below the 200-day moving average. Lower global bond yields today are a bullish factor for precious metals.
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.
