What you need to know…
The S&P 500 Index ($SPX) (SPY) today is up +0.16%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.06%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.51%.
Stocks this morning are moderately higher. A decline in bond yields today underpins stock prices after Atlanta Fed President Bostic said the Fed could return to its 2% inflation target without additional rate hikes. Stocks and bonds came off their highs after today’s report from the University of Michigan showed U.S. inflation expectations unexpectedly rose.
On the positive side for stocks, Hologic Inc is up more than +6% after reporting stronger-than-expected Q4 revenue. Also, Doximity Inc is up more than +15% after reporting stronger-than-expected Q2 adjusted Ebitda and raising its 2024 adjusted Ebitda forecast. In addition, Dentsply Sirona, Toast Inc, and Southwestern Energy are all up more than +2% after being upgraded to outperform.
On the negative side, Illumina is down more than 13% after reporting weaker-than-expected Q3 revenue and cutting its full-year revenue forecast. Also, Trade Desk is down more than -18% after forecasting Q4 revenue well below consensus. In addition, Wynn Resorts Ltd is down more than -7% after reporting Q3 Macau adjusted property Ebitdar below consensus.
Comments from Atlanta Fed President Bostic suggest he favors pausing Fed rate hikes when he said, "I think we will get to our 2% target without us having to do anything more."
The University of Michigan U.S. Nov consumer sentiment index fell -3.4 to a 6-month low of 60.4, weaker than expectations of 63.7.
The University of Michigan U.S. Nov 1-year inflation expectations unexpectedly rose to a 7-month high of 4.4% from 4.2% in Oct, versus expectations of a decline to 4.0%. Also, the 5-10-year inflation expectations rose to a 12-year high of 3.2%, above expectations of no change at 3.0%.
The markets are discounting a 10% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 22% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then expecting the FOMC to begin cutting rates later in 2024 in response to an expected slowdown in the U.S. economy.
U.S. and European government bond yields today are mixed. The 10-year T-note yield is down -3.2 bp at 4.592%. The 10-year German bund yield is up +5.8 bp at 2.704%. The 10-year UK gilt yield is up +4.1 bp at 4.314%.
Overseas stock markets are lower. The Euro Stoxx 50 is down -1.23%. China’s Shanghai Composite Index closed down -0.47%. Japan’s Nikkei Stock Index closed down -0.24%.
Today’s stock movers…
Hologic Inc (HOLX) is up more than +6% to lead gainers in the S&P 500 after reporting Q4 revenue of $945.3 million, better than the consensus of $938.7 million.
Dentsply Sirona (XRAY) is up more than +3% after William Blair upgraded the stock to outperform from market perform.
Henry Schein (HSIC) is up more than +2% after Stifel upgraded the stock to buy from hold with a price target of $70.
Doximity Inc (DOCS) is up more than +15% after reporting Q2 adjusted Ebitda of $54.2 million, better than the consensus of $44.8 million, and raising its 2024 adjusted Ebitda forecast to $207 million-$219 million from a previous forecast of $193 million-$209 million, stronger than the consensus of $200.4 million.
Southwestern Energy (SWN) is up more than +1% after Wolfe Research upgraded the stock to outperform from underperform.
Toast Inc (TOST) is up more than +1% after Baird upgraded the stock to outperform from neutral.
Illumina (ILMN) is down more than 13% to lead losers in the S&P 500 after reporting Q3 revenue of $1.12 billion, below the consensus of $1.13 billion, and cutting its full-year revenue forecast to down -2% to -3% from a previous view of up about +1%.
Wynn Resorts Ltd (WYNN) is down more than -7% after reporting Q3 Macau adjusted property Ebitdar of $77.9 million, well below the consensus of $94.6 million.
Trade Desk (TTD) is down more than -18% to lead losers in the Nasdaq 100 after forecasting Q4 revenue of $580 million, well below the consensus of $610.2 million.
Groupon (GRPN) is down more than -35% after reporting an unexpected Q3 EPS loss of -12 cents, much weaker than the consensus of an +11 cents EPS profit.
Unity Software (U) is down more than -2% after reporting Q3 revenue of $544.2 million, below the consensus of $549.8 million.
Brown-Forman Corp (BF/B) is down more than -3% after UK distiller Diageo warned of lower growth and profit in the second half of this year.
Mettler-Toledo International (MTD) is down more than -2% after reporting Q3 net sales of $942.5 million, weaker than the consensus of $950.9 million.
Across the markets…
December 10-year T-notes (ZNZ23) this morning are up +4 ticks, and the 10-year T-note yield is down -3.2 bp at 4.592%. T-notes are moving higher today on dovish comments from Atlanta Fed President Bostic, who said he favors pausing Fed rate hikes. Also, the bigger-than-expected decline in the University of Michigan U.S. Nov consumer sentiment index to a 6-month low supports T-notes. Gains in T-note were limited after the University of Michigan U.S. Nov inflation expectations unexpectedly rose.
The dollar index (DXY00) today is up by +0.01%. The dollar this morning is slightly higher on positive carryover from Thursday’s hawkish comments from Fed Chair Powell, who said the Fed may not be dome raising interest rates. The dollar gave up most of its advance after the University of Michigan U.S. Nov consumer sentiment fell more than expected to a 6-month low.
EUR/USD (^EURUSD) today is up by +0.04%. Strength in European government bond yields today is supporting modest gains in the euro. The upside in EUR/USD is limited by dovish comments from ECB President Lagarde that suggest she favors pausing ECB rate hikes.
Comments from ECB President Lagarde suggest she favors pausing ECB rate hikes when she said that keeping the deposit rate at its current 4% should be enough to tame inflation.
USD/JPY (^USDJPY) today is up by +0.09%. The yen today fell to a new 1-week low against the dollar. Dollar strength today and central bank divergence are undercutting the yen as the BOJ maintains negative interest rates and QE while other G-7 central banks are tightening monetary policy. A decline in T-note yields today is limiting losses in the yen.
December gold (GCZ3) today is down -21.0 (-1.07%), and Dec silver (SIZ23) is down -0.470 (-2.05%). Precious metals prices today are retreating, with gold falling to a 3-week low and silver dropping to a 1-month low. Negative carryover from Thursday’s hawkish comments from Fed Chair Powell is weighing on precious metals when he said policymakers are "not confident" they have achieved the stance to return inflation to the Fed's 2% target. Also, concerns about an escalation of the Israeli-Hamas war have faded, curbing safe-haven demand for precious metals.
On the positive side for precious metals are today’s dovish central bank comments after Atlanta Fed President Bostic and ECB President Lagarde signaled they favored pausing interest rate hikes. Gold prices also garnered support from today’s news that showed the University of Michigan U.S. Nov inflation expectations unexpectedly rose, boosting demand for gold as an inflation hedge.
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.
