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 +0.33%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.24%.
Stocks this morning are moderately higher, with the Dow Jones Industrials posting a 3-1/2 month high. Dovish Fed comments today knocked the 10-year T-note yield down to a 2-1/4 month low and is giving stocks a boost. Stocks extended their gains after this morning’s U.S. Nov consumer confidence report came in stronger than expected.
On the negative side, Micron Technology is down more than -3% after forecasting Q1 adjusted operating expenses well above expectations. Also, Zscaler is down more than 1% after forecasting 2024 calculated billings below consensus. In addition, Morgan Stanley, Edward Lifesciences, and Shopify are down more than -1% after being downgraded.
Comments from Fed Governor Waller suggest he favors pausing Fed rate hikes when he said, "I am increasingly confident that Fed policy is currently positioned to slow the economy and get inflation back to 2%."
The U.S. Sep CoreLogic composite-20 home price index rose +3.92% y/y, stronger than expectations of +3.90% and the largest increase in 9 months.
The Conference Board U.S. Nov consumer confidence index rose +2.9 to 102.0, stronger than expectations of 101.0.
The U.S. Nov Richmond Fed manufacturing survey fell -8 to -5, weaker than expectations of 1.
The markets are discounting a 4% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 4% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then discounting a 30% chance for a -25 bp rate cut at the March 19-20, 2024, FOMC meeting and a 78% chance for that same -25 bp rate cut at the Apr 30-May 1, 2024, FOMC meeting.
U.S. and European government bond yields today are lower. The 10-year T-note yield fell to a 2-1/4 month low of 4.352% and is down -3.1 bp at 4.356%. The 10-year German bund yield fell to a 2-3/4 month low of 2.490% and is down -5.7 bp at 2.492%. The 10-year UK gilt yield is down -5.3 bp at 4.159%.
Overseas stock markets are mixed. The Euro Stoxx 50 is down -0.30%. China’s Shanghai Composite Index closed up +0.23%. Japan’s Nikkei Stock Index closed down -0.12%.
Today’s stock movers…
Micron Technology (MU) is down more than -3% to lead losers in the S&P 500 and Nasdaq 100 after forecasting Q1 adjusted operating expenses of $990 million, well above the consensus of $902.8 million.
Airbnb (ABNB) is down more than -2% on signs of insider selling after an SEC filing showed CSO Blecharczyk sold $4.15 million worth of shares last Wednesday.
Zscaler (ZS) is down more than -1% after forecasting 2024 calculated billings of $2.52 billion-$2.56 billion, the midpoint below the consensus of $2.55 billion.
Edwards Lifesciences (EW) is down more than -1% after Wolfe Research downgraded the stock to underperform from peer perform.
Morgan Stanley (MS) is down more than -1% after Societe Generale downgraded the stock to hold from buy.
Lululemon Athletica (LULU) is down more than -1% after Raymond James removed the stock from its Current Favorites List.
Shopify (SHOP) is down more than -1% after Piper Sandler downgraded the stock to underweight from neutral with a price target of $56.
Booz Allen Hamilton Holding Corp (BAH) is down more than -1% after Wells Fargo Securities downgraded the stock to equal weight from overweight.
PDD Holdings ADRs (PDD) is up more than +16% to lead gainers in the Nasdaq 100 after reporting Q3 revenue of 68.54 billion yuan, stronger than the consensus of 54.87 billion yuan.
SpringWorks Therapeutics (SWTX) is up more than +20% after the FDA approved the company’s nirogacestat, an oral treatment for desmoid tumors.
Carlyle Group (CG) is up more than +4% after S&P Dow Jones Indices said the company will replace ICU Medical in the S&P MidCap 400 before the opening of trading on Thursday, Nov 30.
Affirm Holdings (AFRM) is up more than +2% after Jeffries upgraded the stock to hold from underperform.
Crocs (CROX) is up more than +2% after Raymond James upgraded the stock to a strong buy from outperform and placed the company on its Current Favorites List, replacing Lululemon Athletica.
Boeing (BA) is up more than+1% to lead gainers in the Dow Jones Industrials after RBC Capital Markets upgraded the stock to outperform from sector perform with a price target of $275.
Newmont (NEM) is up more than +1%, with the price of gold today climbing to a 6-1/2 month high.
Across the markets…
December 10-year T-notes (ZNZ23) this morning are up +10 ticks, and the 10-year T-note yield is down -3.1 bp at 4.356%. Dec T-note prices this morning climbed to a 2-1/4 month high, and the 10-year T-note yield dropped to a 2-1/4 month low of 4.352%. A decline in inflation expectations is bullish for T-notes as today's 10-year breakeven inflation rate fell to a 4-1/4 month low of 2.212%. Also, dovish comments from Fed Governor Waller today supported T-notes when he signaled that he favored a pause in Fed rate hikes. Limiting gains in T-notes was today’s stronger-than-expected report on U.S. Nov consumer confidence and supply pressures as the Treasury will auction $49 billion of 7-year T-notes later today.
The dollar index (DXY00) today is down by -0.18% and dropped to a 3-1/2 month low. The dollar today is under pressure on dovish comments from Fed Governor Waller who said that Fed policy is well-positioned, signaling he favors a continued pause to Fed rate hikes. Also, hawkish ECB comments today boosted EUR/USD to a 3-1/2 month high and undercut the dollar. The dollar recovered from its worst levels after U.S. Nov consumer confidence rose more than expected.
EUR/USD (^EURUSD) today is up by +0.32% and posted a 3-1/2 month high. A weaker dollar today is supportive of the euro. Also, hawkish comments today from ECB Governing Council member and Bundesbank President Nagel boosted the euro when he said the ECB isn’t at the point where it should consider lowering interest rates.
The Eurozone Oct M3 money supply fell -1.0% y/y, weaker than expectations of -0.9% y/y.
The German Dec GfK consumer confidence index unexpectedly rose +0.5 to -27.8, stronger than expectations of a decline to -28.2.
ECB Governing Council member and Bundesbank President Nagel said, "It would be premature for the ECB to lower interest rates soon or to speculate about such steps."
USD/JPY (^USDJPY) today is down by -0.61%. The yen today is moderately higher against the dollar. The yen is finding support today on some month-end rebalancing. Also, lower T-note yields today are bullish for the yen.
December gold (GCZ3) today is up +15.2 (+0.76%), and Dec silver (SIZ23) is up +0.089 (+0.36%). Precious metals prices today are moderately higher, with gold climbing to a 6-1/2 month high. Today’s slump in the dollar index to a 3-1/2 month low is bullish for metals. Also, lower T-note yields today are supportive of precious metals. In addition, dovish comments today from Fed Governor Waller supported gold when he signaled that he favored a pause in Fed rate hikes.
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.
