What you need to know…
The S&P 500 Index ($SPX) (SPY) today is up +0.22%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.14%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.41%.
Stocks today extended last week’s rally, with the Dow Jones Industrials posting a 1-1/2 month high and the Nasdaq 100 index climbing to a 2-1/2 week high. Stocks are moderately higher on positive carryover from last Friday when the weaker-than-expected U.S. October payrolls report and Oct ISM services report showed a slowing in the economy that may keep the Fed from raising interest rates and even begin cutting them by the middle of next year. Higher T-note yields this morning are limiting the upside in stock index futures.
Upbeat comments today from Fed Vice Chair Brainard were bullish for stocks when she said the economy is performing exceptionally and is near the point of sustainable growth and that most forecasters are taking recession calls off the table.
On the positive side, Constellation Energy is up more than +4% after reporting better-than-expected Q3 adjusted Ebitda and raising its full-year adjusted Ebitda forecast. Also, Bluegreen Vacations Holdings surged more than +100% after Hilton Grand Vacations agreed to buy the company for $75 per share.
On the negative side, Dish Network is down more than -19% after reporting Q3 revenue below the consensus. Also, Paramount Global is down more than -4% after Bank of America double-downgraded the stock to underperform from buy.
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 16% 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 today are higher. The 10-year T-note yield is up by +6.0 bp at 4.633%. The 10-year German bund yield is up +8.3 bp at 2.728%. The 10-year UK gilt yield is up +7.7 bp at 4.365%.
Overseas stock markets are mixed. The Euro Stoxx 50 is down -0.45%. China’s Shanghai Composite Index today closed up +0.91%. Japan’s stock market today closed up +2.37%.
Today’s stock movers…
Constellation Energy (CEG) is up more than +4% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q3 adjusted Ebitda of $1.20 billion, above the consensus of $1.03 billion, and raising its full-year adjusted Ebitda forecast to $3.8 billion-$4 billion from a previous forecast of $3.30 billion-$3.70 billion, stronger than the consensus of $3.58 billion.
Eli Lilly (LLY) is up more than +3% on optimism the company’s weight-loss drugs will boost earnings after Q3 sales of its Mounjaro drug rose to $1.41 billion, up +650% y/y.
Booking Holdings (BKNG) is up more than +2% after D.A. Davidson upgraded the stock to buy from neutral with a price target of $2,400.
Cboe Global Markets (CBOE) is up more than +2% after Rosenblatt Securities raised its price target on the stock to $192 from $178.
Bluegreen Vacations Holdings (BVH) is up more than +105% after Hilton Grand Vacations agreed to buy the company for $75 per share in a deal valued at $1.5 billion.
Freshpet (FRPT) is up more than +19% after reporting Q3 net sales of $200.6 million, better than the consensus of $194.6 million, and raising its full-year net sales forecast to about $755 million from a previous estimate of about $750 million, stronger than the consensus of $750.9 million.
Albemarle (ALB) is down more than -5% after UBS downgraded the stock to neutral from buy.
Paramount Global (PARA) is down more than -4% after Bank of America double-downgraded the stock to underperform from buy with a price target of $9.
Dish Network (DISH) is down more than -19% after reporting Q3 revenue of $3.70 billion, well below the consensus of $3.82 billion, and saying CEO Carlson will resign effective November 12.
Bumble Inc (BMBL) is down more than -6% after the Wall Street Journal reported that CEO Herd is stepping down.
Fortinet (FTNT) is down more than -2% after HSBC downgraded the stock to hold from buy.
Across the markets…
December 10-year T-notes (ZNZ23) this morning are down -19 ticks, and the 10-year T-note yield is up +6.0 bp at 4.633%. Strength in stocks today has curbed the safe-haven demand for T-notes. Also, supply pressures are weighing on T-notes as the Treasury will auction $112 billion of T-notes and T-bonds in this week’s quarterly refunding operation, beginning with a $48 billion sale of 3-year T-notes on Tuesday.
The dollar index (DXY00) today is up by +0.09%. The dollar this morning recovered from a 1-1/2 month low and is slightly higher. Strength in T-note yields today is bullish for the dollar. Also, hawkish comments from Fed Vice Chair Brainard helped the dollar recover early losses when she said the U.S. economy is performing exceptionally well. The dollar today initially opened lower on ideas that the Fed’s rate-hike regime is over and that the Fed may be cutting interest rates by mid-2024.
EUR/USD (^EURUSD) today is up +0.08% and climbed to a 1-3/4 month high. A weaker dollar today is supportive of the euro. Also, better than expected Eurozone economic news was bullish for EUR/USD after the Nov Sentix investor confidence index unexpectedly rose to a 5-month high and after German Sep factory orders unexpectedly increased.
The Eurozone Nov Sentix investor confidence index unexpectedly rose +3.3 to a 5-month high of -18.6, stronger than expectations of a decline to -22.2.
German Sep factory orders unexpectedly rose +0.2% m/m, stronger than expectations of a decline of -1.5% m/m.
USD/JPY (^USDJPY) today is up by +0.25%. Higher T-note yields today are weighing on the yen. Also, a rally in the Nikkei Stock Index today to a 1-1/2 month high reduced the safe-haven demand for the yen. In addition, the yen fell on dovish comments from BOJ Governor Ueda, who said negative interest rates would continue in Japan through year-end.
The Japan Oct Jibun Bank services PMI was revised upward by +0.5 to 51.6 from the previously reported 51.1.
BOJ Governor Ueda said it’s “unlikely” the BOJ will have the data needed to end negative interest rates by year-end.
December gold (GCZ3) today is down -9.0 (-0.45%), and Dec silver (SIZ23) is down -0.090 (-0.39%). Precious metals prices today are moderately lower. Higher global bond yields today are undercutting precious metals prices. Also, the lack of escalation of the Israeli-Hamas war has reduced geopolitical concerns in the Middle East and safe-haven demand for precious metals. A recovery in the dollar index today to slightly higher from a 1-1/2 month low is another bearish factor for metals. Silver found support in today’s economic news that showed German Sep factory orders unexpectedly increased, a sign of strength in industrial metals demand.
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.
