What you need to know…
The S&P 500 Index ($SPX) (SPY) Friday closed up +1.56%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +1.15%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +2.25%.
Stocks on Friday pushed higher, with the S&P 500 and Dow Jones Industrials posting 7-week highs and the Nasdaq 100 posting a 2-month high. Friday's strength in chip stocks and megacap technology stocks led the overall market higher. Stocks shrugged off a fall in the University of Michigan’s U.S. Nov consumer sentiment to a 6-month low and an unexpected increase in the University of Michigan’s inflation expectations.
On the positive side for stocks, Hologic Inc rose more than +7% after reporting stronger-than-expected Q4 revenue. Also, Doximity Inc closed up more than +16% after reporting stronger-than-expected Q2 adjusted Ebitda and raising its 2024 adjusted Ebitda forecast. In addition, chip stocks staged a rally that lifted the overall market.
On the negative side, Illumina closed down more than -8% after reporting weaker-than-expected Q3 revenue and cutting its full-year revenue forecast. Also, Trade Desk tumbled more than -16% after forecasting Q4 revenue well below consensus. In addition, Wynn Resorts Ltd fell more than -5% after reporting Q3 Macau adjusted property Ebitdar below consensus.
Friday’s Fed comments were mixed for stocks. On the dovish side, Atlanta Fed President Bostic suggested 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." On the hawkish side, San Francisco Fed President Daly said if inflation "continues to move sideways, and the labor market and GDP growth remain solid or strong, we'll probably have to raise rates again."
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 24% 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 Friday were mixed. The 10-year T-note yield fell -0.4 bp to 4.620%. The 10-year German bund yield rose +7.0 bp to 2.717%. The 10-year UK gilt yield rose +6.3 bp to 4.336%.
Comments from ECB President Lagarde suggest she favors pausing ECB rate hikes when she said keeping the deposit rate at its current 4% should be enough to tame inflation.
UK Q3 GDP was unch q/q and +0.6% y/y, stronger than expectations of -0.1% q/q and +0.5% y/y.
Overseas stock markets Friday settled lower. The Euro Stoxx 50 closed down -0.75%. 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) closed up more than +7% to lead gainers in the S&P 500 after reporting Q4 revenue of $945.3 million, better than the consensus of $938.7 million.
Chip stocks rallied Friday and boosted technology stocks and the overall market. KLA Corp (KLAC) closed up more than +5% to lead gainers in the Nasdaq 100. Also, Lam Research (LRCX), Microchip Technology (MCHP), Applied Materials (AMAT), and Broadcom (AVGO) closed up more than +5%. In addition, Advanced Micro Devices (AMD), ON Semiconductor (ON), and Marvell Technology (MRVL) closed up more than +4%. Finally, Intel (INTC) closed up more than +2% to lead gainers in the Dow Jones Industrials.
Megacap technology stocks rallied Friday. Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Meta Platforms (META), Netflix (NFLX), and Tesla (TSLA) all closed up more than +2%.
Doximity Inc (DOCS) closed up more than +16% 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.
Dentsply Sirona (XRAY) closed up more than +4% after William Blair upgraded the stock to outperform from market perform.
Henry Schein (HSIC) closed up more than +3% after Stifel upgraded the stock to buy from hold with a price target of $70.
Toast Inc (TOST) closed up more than +1% after Baird upgraded the stock to outperform from neutral.
Illumina (ILMN) closed down more than -8% 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) closed down more than -5% after reporting Q3 Macau adjusted property Ebitdar of $77.9 million, well below the consensus of $94.6 million.
Trade Desk (TTD) closed down more than -16% to lead losers in the Nasdaq 100 after forecasting Q4 revenue of $580 million, well below the consensus of $610.2 million.
Walt Disney (DIS) closed down more than -2% to lead losers in the Dow Jones Industrials after it delayed the release of several films, including a third Deadpool film and a fourth Captain America film.
Groupon (GRPN) closed down more than -34% after reporting an unexpected Q3 EPS loss of -12 cents, much weaker than the consensus of an +11 cents EPS profit.
Brown-Forman Corp (BF/B) closed down more than -2% after UK distiller Diageo warned of lower growth and profit in the second half of this year.
T Rowe Price Group (TROW) closed down more than -1% after it warned that clients would likely withdraw more than $26.3 billion in Q4, extending a streak of redemptions by investors ditching actively managed mutual funds for cheaper products such as money market holdings.
Across the markets…
December 10-year T-notes (ZNZ23) Friday closed down -3.5 ticks, and the 10-year T-note yield fell by -0.4 bp to 4.620%. Dec T-notes Friday gave up early gains and turned lower after the University of Michigan U.S. Nov inflation expectations unexpectedly rose. Also, hawkish comments from San Francisco Fed President Daly weighed on T-note prices when she said the Fed may have to raise interest rates again if inflation stalls. In addition, Friday’s stock rally curbed safe-haven demand for T-notes.
T-notes Friday initially moved higher 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 supported T-notes.
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.
