What you need to know…
The S&P 500 Index ($SPX) (SPY) today is up +0.34%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.25%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.51%.
Stocks this morning are mildly higher, with the S&P 500 and Dow Jones Industrials posting 2-1/2 month highs and the Nasdaq 100 posting a 1-3/4 year high. Positive corporate news is boosting the overall market, with Palo Alto Networks up more than +4% after increasing its stock repurchase plan. Also, Microsoft is up nearly +1% after hiring OpenAI cofounders Sam Altman and Greg Brockman to lead its artificial intelligence (AI) team.
Limiting gains in the overall market is an increase in T-note yields ahead of today’s $16 billion auction of 20-year T-bonds. Also, weaker-than-expected U.S. economic news is bearish for stocks after Oct leading indicators fell more than expected.
An upbeat outlook for the holiday spending season shows confidence in the economy and is supportive of stocks. A survey from Deloitte shows consumers plan to spend an average of $567 during Black Friday and Cyber Monday shopping events, up +13% from last year. Also, the National Retail Federation projects that 182 million people are planning to shop from Thanksgiving Day through Cyber Monday, the most since 2017.
U.S. Oct leading indicators fell -0.8% m/m, slightly weaker than expectations of -0.7% m/m and the biggest decline in 6 months.
The markets are discounting a 0% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 2% 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 71% 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 higher. The 10-year T-note yield is up +2.9 bp at 4.465%. The 10-year German bund yield is up +3.0 bp at 2.618%. The 10-year UK gilt yield is up +1.9 bp at 4.123%.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.04%. China’s Shanghai Composite Index closed up +0.46%. Japan’s Nikkei Stock Index closed down -0.59%.
Today’s stock movers…
Palo Alto Networks (PANW) is up more than +4% to lead gainers in the S&P 500 after it announced it would buy back up to an additional $316.7 million of its stock, an increase to the existing $3.3 billion repurchase plan.
Boeing (BA) is up more than +3% to lead gainers in the Dow Jones Industrials after Deutsche Bank upgraded the stock to a buy with a price target of $270.
Intel (INTC) is up more than +1% after Mizuho Securities upgraded the stock to buy from neutral with a price target of $50.
Energy stocks and energy service providers are moving higher today, with the price of WTI crude up more than +1%. As a result, APA Corp (APA), ConocoPhillips (COP), Devon Energy (DVN), Marathon Oil (MRO), Occidental Petroleum (OXY), Phillips 66 (PSX), and Haliburton (HAL) are up more than +1%.
Arm Holdings Plc (ARM) is up more than +3% after Wells Fargo Securities initiated coverage on the stock with a recommendation of overweight and a price target of $70.
Palantir Technologies (PLTR) is up more than +3% after Wilian O’Neill reinstated coverage of the stock with a buy recommendation.
Equifax (EFX) is up nearly +1% after Citigroup initiated coverage on the stock with a buy recommendation and a price target of $243.
Bristol-Meyers Squibb (BMY) is down more than -2% after rival Bayer AG stopped a Phase III trial of a competitor drug Asundexian for lack of efficacy, which could cause FDA scrutiny of Bristol’s rival drug Milvexian.
United Rentals (URI) is down more than -1% after peer Ashstead Plc cut its full-year group and U.S. rental revenue forecast to +11% to +13% from a previous forecast of +13% to +16%.
Expedia Group (EXPE) is down more than -1% on signs of insider selling after an SEC filing showed CLO Dzielak sold $9.42 million of his company’s stock last Friday.
Chegg (CHGG) fell more than -3% in pre-market trading after Morgan Stanley downgraded the stock to underweight with a price target of $9.
KB Home (KBH) slid over -1% in pre-market trading after Wedbush downgraded the stock to neutral from outperform.
Ryan Specialty Holdings (RYAN) slid more than -1% in pre-market trading after Goldman Sachs downgraded the stock to neutral from buy.
Across the markets…
December 10-year T-notes (ZNZ23) this morning are down -6 ticks, and the 10-year T-note yield is up +2.1 bp at 4.457%. Dec T-note prices are under pressure today on negative carryover from a decline in 10-year German bunds after ECB Governing Council member Wunsch warned that the ECB may have to raise interest rates again if investor bets on monetary easing undermine the central bank's policy stance. Also, supply pressures are weighing on T-note prices as the Treasury will auction $16 billion of 20-year T-bonds later today.
The dollar index (DXY00) today is down by -0.27% and fell to a 2-1/2 month low. The dollar today is moderately lower and remains under pressure after last week’s better-than-expected U.S. inflation news and weekly jobs data that point to a slowing labor market have bolstered speculation the Fed is down raising interest rates. Higher T-note yields today are limiting losses in the dollar.
EUR/USD (^EURUSD) today is up by +0.22% and posted a 2-1/2 month high. Hawkish comments today from ECB Governing Council member Wunsch gave EUR/USD a boost when he warned the ECB may have to raise interest rates again if overly dovish market expectations undermine the ECB’s policy stance.
ECB Governing Council member Wunsch the ECB may have to raise interest rates again if investor bets on monetary easing undermine the central bank's policy stance as the markets are taking an "optimistic" view by discounting the possibility of further rate hikes and expecting a rate cut by the ECB as soon as April.
USD/JPY (^USDJPY) today is down by -0.82%. The yen today rallied to a 1-1/4 month high against the dollar. Speculation that the Fed is nearing the end of its policy tightening is undercutting the dollar to the yen’s benefit. Higher T-note yields today are limiting the upside in the yen.
December gold (GCZ3) today is down -12.3 (-0.62%), and Dec silver (SIZ23) is down -0.282 (-1.18%). Precious metals prices today are moderately lower, with gold falling back from a 1-1/2 week high and silver retreating from a 2-1/2 month high. Higher global bond yields today are undercutting precious metals prices. Also, hawkish comments from ECB Governing Council member Wunsch weighed on gold when he warned the ECB might have to raise interest rates again if investor bets on monetary easing undermine the central bank's policy stance. Losses in metals are limited after the dollar index today dropped to a 2-1/2 month low.
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.
