The S&P 500 Index ($SPX) (SPY) today is up +0.58%, the Dow Jones Industrials Index ($DOWI) (DIA) is up by +0.06%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up by +1.52%.
After starting the day in the red, stocks have rebounded this afternoon. As reported in today’s US consumer price report, core consumer prices in August rose +3.2% y/y, unchanged from July and well above the Fed’s +2.0% target.
US MBA mortgage applications rose +1.4% in the week ended September 6, with the purchase mortgage sub-index up +1.8% and the refinancing mortgage sub-index up +0.9%. The average 30-year fixed rate mortgage fell -14 bp to a 19-month low of 6.29% from 6.43% in the prior week.
US Aug CPI eased to +2.5% y/y from +2.9% y/y in July, right on expectations and the smallest increase in 3-1/2 years. However, Aug CPI ex-food and energy was unchanged from July at +3.2% y/y, right on expectations.
In the wake of last night’s debate, the odds on the betting website PredictIt of Vice President Harris winning the presidency rose to 56% from 53% before the debate.
The markets are discounting the chances at 100% for a -25 bp rate cut for the September 17-18 FOMC meeting and at 19% for a -50 bp rate cut at that meeting.
Overseas stock markets today are lower. The Euro Stoxx 50 is down -0.04%. China's Shanghai Composite fell to a 7-month low and closed down -0.82%. Japan's Nikkei Stock 225 closed down by -1.49%.
Interest Rates
December 10-year T-notes (ZNZ24) today are up by +5 ticks. The 10-year T-note yield is down -2.1 bp at 3.622%. Dec T-notes today rallied to a 15-month high, and the 10-year T-note yield fell to a 15-month low of 3.603%. Strength in European government bonds today is providing carryover support to T-notes. Also, today’s slide in stocks has boosted safe-haven demand for T-notes.
T-notes fell back from their best levels after the US Aug core CPI rose +3.2% y/y, right on expectations but well above the Fed’s 2.0% price target. The core CPI report knocked the chances of a 50 bp rate cut at next week’s FOMC meeting down to 17% from 50% last Friday. Supply pressures are also negative for T-notes as the Treasury will auction $39 billion 10-year T-notes later today. Losses in T-notes are limited due to carryover support from
European government bond yields today are moving lower. The 10-year German bund yield fell to a 5-week low of 2.092% and is down -3.8 bp at 2.093%. The 10-year UK gilt fell to a 5-week low of 3.745% and is down -7.1 bp at 3.748%.
Swaps are discounting the chances of a -25 bp rate cut by the ECB at 100% for the September 12 meeting.
US Stock Movers
Bank stocks are under pressure for a second day after JPMorgan Chase President Pinto said Tuesday that analysts are too optimistic in projecting next year's expenses and net interest income. As a result, Discover Financial Services (DFS) is down more than -4%. Also, Capital One Financial (COF), Regions Financial (RF), Citizens Financial Group (CFG), Cincinnati Financial Corp (CINF), and M&T Bank (MTB) are down more than -3%.
Health insurance stocks with Medicare Advantage plans are falling for a second day after Leerink Partners published a report Tuesday that said those plans might have a tougher time earning high-quality “star ratings” that drive bonus payments. As a result, Humana (HUM) is down more than -5% to lead losers in the S&P 500, and UnitedHealth Group (UNH) is down more than -2% to lead losers in the Dow Jones Industrials. Also, CVS Health Corp (CVS) is down more than -3%, and Elevance Health (ELV) is down more than -1%.
Albemarle (ALB) is up more than +8% to lead gainers in the S&P 500 as lithium stocks rallied after UBS said CATL curtailed lithium production at its Jiangxi operation.
Starbucks (SBUX) is up more than +1% to lead gainers in the Nasdaq 100 after CEO Niccol said he is open to exploring a new joint venture partnership structure in China.
Trump Media & Technology (DJT) is down more than -14% following last night’s Harris-Trump debate, as the odds on the betting website PredictIt of Vice President Harris winning the presidency rose to 56% from 53% before the debate.
GameStop (GME) is down more than -16% after reporting Q2 net sales of $798.3 million, weaker than the consensus of $895.5 million.
Palantir Technologies (PLTR) is down more than -2% after a trading update showed exchange-traded funds managed by Cathie Wood’s Ark Investment Management sold 124,626 shares of Palantir.
Rollins Inc (ROL) is down more than -4% on negative carryover from a -20% plunge in peer Rentokil after it issued a surprise downgrade to its full-year growth estimates.
Morgan Stanley (MS) is down more than -1% after Goldman Sachs downgraded the stock to neutral from buy.
Viridian Therapeutics (VRDN) is up more than +8% after Needham & Co. raised its price target on the stock to $48 from $30.
AES Corp (AES) is up more than +4% after Jeffries initiated coverage on the stock with a recommendation of buy and a price target of $20.
Viking Therapeutics (VKTX) is up more than +7% after JPMorgan Chase initiated coverage on the stock with a recommendation of overweight and a price target of $80.
William-Sonoma (WSM) is up more than +1% after Jeffries upgraded the stock to buy from hold with a price target of $156.
Earnings Reports (9/11/2024)
Designer Brands Inc (DBI), Oxford Industries Inc (OXM), Vera Bradley Inc (VRA).
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