The S&P 500 Index ($SPX) (SPY) today is down -0.03%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.02%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.14%.
Stocks today are slightly lower as they consolidate this week’s rally where the S&P 500, the Dow Jones Industrials, and the Nasdaq 100 posted new all-time highs. T-note yields are moving higher today to weigh on stocks based on hawkish comments Wednesday night from San Francisco Fed President Daly, who said there's "no sense of urgency" for the Fed to lower interest rates. Today’s US economic news was mixed for stocks, with weekly initial unemployment claims climbing more than expected while the Oct trade deficit narrowed more than expected.
US weekly initial unemployment claims rose +9,000 to a 6-week high of 224,000, showing a weaker labor market than expectations of 215,000.
The US Oct trade deficit narrowed to -$73.8 billion from -$83.8 billion in Sep, better than expectations of -$75.0 billion and a positive factor for Q4 GDP.
San Francisco Fed President Daly said there's "no sense of urgency" to lower interest rates, and policymakers can "carefully calibrate policy and make sure it's in line with the economy we have today and one we expect to have going forward."
The price of Bitcoin (^BTCUSD) is up more than +4% at a record high above $103,000 after President-elect Trump selected Pual Atkins, a cryptocurrency proponent, to replace outgoing Securities & Exchange Commission Chair Gensler.
The markets are awaiting Friday’s Nov nonfarm payrolls (expected +215,000) and Nov average hourly earnings (expected to ease to +3.9% y/y from +4.0% y/y in Oct).
The markets are discounting the chances at 74% for a -25 bp rate cut at the December 17-18 FOMC meeting.
Overseas stock markets today are higher. The Euro Stoxx 50 rose to a 5-week high and is up +0.50%. China's Shanghai Composite Index closed up +0.12%. Japan's Nikkei Stock 225 climbed to a 3-week high and closed up +0.30%.
Interest Rates
March 10-year T-notes (ZNH25) today are down -8 ticks. The 10-year T-note yield is +3.5 bp to 4.215%. Mar T-notes today are under pressure on comments made Wednesday night from San Francisco Fed President Daly who said there's "no sense of urgency" for the Fed to lower interest rates. T-notes are also being undercut by negative carryover from a decline in European government bonds. T-notes recovered from their worst level after US weekly jobless claims rose more than expected to a 6-week high, a dovish factor for Fed policy.
European government bond yields today are moving higher. The 10-year German bund yield is up +4.3 bp to 2.104%. The 10-year UK gilt yield is up +2.5 bp to 4.273%.
Eurozone Oct retail sales fell -0.5% m/m, weaker than expectations of -0.3% m/m and the biggest decline in 4 months.
The German Nov S&P construction PMI fell -2.2 to 38.0, the steepest pace of contraction in 7 months.
German Oct factory orders fell -1.5% m/m, a smaller decline than expectations of -2.0% m/m.
ECB Governing Council member and Bundesbank President Nagel said the ECB shouldn't cut interest rates below neutral as “I do not see a significant risk of inflation undershooting that would warrant the Eurosystem becoming expansionary in the near future."
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 7% for a -50 bp rate cut at the same meeting.
US Stock Movers
Synopsys (SNPS) is down more than -7% to lead losers in the S&P 500 and Nasdaq 100 after forecasting 2025 revenue of $6.75 billion-$681 billion, below the consensus of $6.87 billion.
Fiserv (FI) is down more than -6% after President-elect Trump tapped CEO Bisignani to serve as the Commissioner of the Social Security Administration.
SentinelOne (S) is down more than -10% after reporting Q3 adjusted EPS of $0, weaker than expectations of +1 cent, and forecast 2025 adjusted operating margin of -4%, below the consensus of -3.61%.
American Eagle Outfitters (AEO) is down more than -13% after lowering its full-year comparable sales forecast to about +3% from a prior estimate of +4%, below the consensus of +4.05%.
AeroVironment (AVAV) is down more than -12% after reporting Q2 adjusted EOS of 47 cents, well below the consensus of 67 cents and forecast 2025 adjusted EOS of $3.18-$3.49, the midpoint weaker than the consensus of $3.49.
PVH Corp (PVH) is down more than -4% after forecasting Q4 adjusted EPS of $3.05-$3.20, well below the consensus of $3.69.
Applied Materials (AMAT) is down more than -2% after Morgan Stanley downgraded the stock to underweight from equal weight with a price target of $164.
Cryptocurrency-related stocks are climbing today with the price of Bitcoin up more than +4% at a record high. As a result, Coinbase Global (COIN), Bit Digital (BTBT), MARA Holdings (MARA), MicroStrategy (MSTR), and Riot Platforms (RIOT) are up more than +4%.
Brown-Forman (BF/B) is up more than +12% to lead gainers in the S&P 500 after reporting Q2 net sales of $1.095 billion, better than the consensus of $1.07 billion.
Tesla (TSLA) is up more than +4% to lead gainers in the Nasdaq 100 after Bank of America Global Research raised its price target on the stock to $400 from $350.
American Airlines Group (AAL) is up more than +10% after raising its Q4 adjusted EPS estimate to 55 cents-75 cents from a previous estimate of 25 cents-50 cents., stronger than the consensus of 40 cents.
Southwest Airlines (LUV) is up more than +4% after it raised its Q4 unit revenue estimate to 5.5% to 7% from a previous forecast of 5.5%.
Five Below (FIVE) is up more than +11% after reporting Q3 net sales of $843.7 million, stronger than the consensus of $800.9 million, and raised its 2025 net sales forecast to $3.84 billion-$3.87 billion from a previous estimate of $3.73 billion-$3.80 billion, better than the consensus of $3.80 billion.
Brinker International (EAT) is up more than +2% after Goldman Sachs reinstated coverage on the stock with a recommendation of buy and a price target of $150.
HP Enterprise (HPE) is up more than +2% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $28.
ConocoPhillips (COP) is up more than +1% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $123.
Earnings Reports (12/5/2024)
Brown-Forman Corp (BF/B), Cooper Cos Inc/The (COO), DocuSign Inc (DOCU), Dollar General Corp (DG), Gitlab Inc (GTLB), Guidewire Software Inc (GWRE), HashiCorp Inc (HCP), Hewlett Packard Enterprise Co (HPE), Kroger Co/The (KR), Lululemon Athletica Inc (LULU), Science Applications International (SAIC), Smartsheet Inc (SMAR), Super Micro Computer Inc (SMCI), UiPath Inc (PATH), Ulta Beauty Inc (ULTA), Veeva Systems Inc (VEEV).
