What you need to know…
The S&P 500 Index ($SPX) (SPY) today is up +1%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.73%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.39%.
Stock are higher after the Federal Reserve announced it would maintain the federal funds rate in a target range between 5.25%-5.5%.
Weaker-than-expected U.S. ADP employment and ISM manufacturing reports knocked bond yields lower and boosted stocks as the weak news may keep the Fed from further tightening policy.
Stocks also found support on a decline in T-note yields after the Treasury said it would sell $112 billion of T-notes and T-bonds in next week’s quarterly refunding, below expectations of $114 billion.
On the negative side, Paycom Software is down more than -37% after cutting its full-year revenue forecast. Also, Estee Lauder is down more than -20% after reporting Q1 adjusted net sales below consensus and forecasting Q2 EPS below consensus. In addition, Match Group and Trimble are down more than -13% after forecasting Q4 revenue below consensus.
The FOMC later today is expected to keep the fed funds target rate range unchanged at 5.25%-5.50% for a second meeting. The Fed is also expected to maintain its tightening bias, and the markets will look to Fed Chair Powell’s post-meeting comments for clues to future Fed policy.
The U.S. Oct ADP employment change rose +113,000, weaker than expectations of +150,000.
The U.S. Oct ISM manufacturing index unexpectedly fell -2.3 to 46.7, weaker than expectations of no change at 49.0.
U.S Sep JOLTS job openings unexpectedly rose +53,000 to a 4-month high of 9.553 million, stronger than expectations of a decline to 9.400 million.
The markets are discounting a zero percent chance that the FOMC will raise the funds rate by +25 bp at today’s FOMC meeting, a 22% chance for that +25 bp rate hike at the following meeting on Dec 12-13, and a 33% chance for that +25 bp rate hike at the FOMC meeting after that 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 bond yields are lower. The 10-year T-note yield fell to a 2-week low of 4.780% and is down -13.1 bp at 4.799%. The 10-year German bund yield fell to a 2-week low of 2.749% and is down -5.0 bp at 2.756%. The 10-year UK gilt dropped to a 2-week low of 4.450% and is down -3.0 bp at 4.482%.
Overseas stock markets are higher. The Euro Stoxx 50 is up +0.96%. China’s Shanghai Composite Index today closed up +0.14%. Japan’s Nikkei 225 today closed up +2.41%.
Today’s stock movers…
Generac Holdings (GNRC) is up more than +13% to lead gainers in the S&P 500 after reporting Q3 adjusted EPS of $1.64, stronger than the consensus of $1.51.
Assurant (AIZ) is up more than +12% after reporting Q3 net premiums earned of $2.36 billion, above the consensus of $2.28 billion.
Garmin Ltd (GRMN) is up more than +9% after reporting Q3 revenue of $1.28 billion, above the consensus of $1.20 billion, and raising its full-year revenue forecast to $5.15 billion from a prior forecast of $5.05 billion.
Apollo Global Management (APO) is up more than +9% after reporting Q3 total revenue of $2.60 billion, well above the consensus of $2.23 billion.
Trane Technologies Plc (TT) is up more than +9% after reporting Q3 adjusted EPS continuing operations of $2.79, better than the consensus of $2.66.
Kraft Heinz (KHC) is up more than +3% after reporting Q3 adjusted EPS of 72 cents, better than the consensus of 66 cents, and raising its full-year adjusted EPS forecast to $2.91-$2.99 from a prior forecast of $2.83-$2.91, stronger than the consensus of$2.89.
Advanced Micro Devices (AMD) is up more than +3% to lead gainers in the Nasdaq 100 despite reporting a disappointing Q4 forecast after it said its new MI300 AI chip will generate $2 billion in sales next year.
TE Connectivity Ltd (TEL) is up more than +2% after reporting Q4 net sales of $4.04 billion, above the consensus of $4.01 billion.
Paycom Software (PAYC) is down more than -37% to lead losers in the S&P 500 after reporting Q3 revenue of $406.3 million, below the consensus of $411.1 million, and cut its full-year revenue forecast to $1.68 billion from a previous forecast of $1.72 billion, weaker than the consensus of $1.72 billion.
Estee Lauder (EL) is down more than -20% after reporting Q1 adjusted net sales of $3.52 billion, weaker than the consensus of $3.54 billion, and forecasting Q2 adjusted EPS of 48 cents-58 cents, well below the consensus of $1.25.
Match Group (MTCH) is down more than -15% after forecasting Q4 revenue of $855 million-$865 million, well below the consensus of $893.6 million.
Trimble Inc (TRMB) is down more than -13% after forecasting Q4 revenue of $890 million-$930 million, well below the consensus of $992.6 million.
Idexx Laboratories (IDXX) is down more than -5% to lead losers in the Nasdaq 100 after reporting Q3 revenue of $915.5 million, weaker than the consensus for $928.6 million, and cut its full-year revenue forecast to $3.64 billion-$3.65 billion from a previous forecast of $3.66 billion-$3.72 billion.
CVS Health Corp (CVS) is down more than -3% after management told investors to expect adjusted 2024 profit toward the low end of the company’s forecast.
Dupont de Nemours (DD) is down more than -4% after reporting Q3 net sales of $3.10 billion, weaker than the consensus of $3.15 billion, and cut its full-year net sales forecast to $12.17 billion from a prior forecast of $12.45 billion-$12.55 billion.
Across the markets…
December 10-year T-notes (ZNZ23) are up +14 ticks, and the 10-year T-note yield is down -13.1 bp at 4.799%. Dec T-notes rallied to a 2-week high today, and the 10-year T-note yield dropped to a 2-week low of 4.793%. Weaker-than-expected ADP employment and ISM manufacturing reports lifted T-note prices. Also, T-notes received a boost after the Treasury said it would sell $112 billion of T-notes and T-bonds in next week’s quarterly refunding, below expectations of $114 billion. In addition, a slide in inflation expectations is bullish for T-notes after the 10-year breakeven inflation rate fell to a 1-week low today of 2.383%.
The dollar index (DXY00) today is up +0.08% and climbed to a 4-week high. The dollar is climbing today on speculation the FOMC will signal a hawkish Fed pause after the FOMC meeting. Gains in the dollar are limited on weaker-than-expected U.S. economic news today on Oct ADP employment and Oct ISM manufacturing.
EUR/USD (^EURUSD) today is down -0.15% and dropped to a 2-week low. Dollar strength today is weighing on the euro. The euro is also under pressure on speculation the FOMC today will signal a hawkish pause in its interest rate hiking cycle.
USD/JPY (^USDJPY) today is down -0.52%. The yen today is moving higher as it rebounds from Tuesday’s 1-year low against the dollar. The yen rallied after Masato Kanda, Japan’s top currency official, said, “We are on standby” and are ready to take necessary actions in the forex market if needed. Also, giving the yen a boost today is a decline in T-note yields. In addition, the yen has support after the 10-year JGB bond yield rose to a new 10-year high today at 0.974%.
A bearish factor for the yen was today’s action by the BOJ today to announce an unscheduled bond-buying operation where it will buy 300 billion yen of 5 to 10-year debt and 100 billion yen of 3 to 5-year securities.
Today’s Japanese economic news was bullish for the yen after the Oct Jibun Bank manufacturing PMI was revised upward by +0.2 to 48.7 from the previously reported 48.5.
December gold (GCZ3) today is up +6.6 (+0.33%), and Dec silver (SIZ23) is up +0.163 (+0.71%). Precious metals prices today are moderately higher on expectations for the FOMC to pause the Fed’s rate hike hiking cycle for a second meeting. Geopolitical concerns boosting safe-haven demand for precious metals as the Israeli-Hamas conflict continues. In addition, a decline in bond yields today is bullish for precious metals. Gains in metals are limited after the dollar index climbed to a 4-week high. Silver is also under pressure as weaker-than-expected manufacturing news in China and the U.S. signal reduced industrial metals demand after the China Oct Caixin manufacturing PMI and U.S. Oct ISM manufacturing indexes unexpectedly declined.
More Stock Market News from Barchart
- Markets Today: Stocks Recover Overnight Looses on Weak ADP Report
- Options Insight: Low Implied Volatility Stocks to Keep an Eye On
- Stocks Climb Before the Open as Fed Rate Decision Looms, U.S. Jobs Data in Focus
- Stocks Finish Higher Ahead of Wednesday’s FOMC Decision
