What you need to know…
The S&P 500 Index ($SPX) (SPY) Thursday closed up +0.57%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.43%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.91%.
Stock indexes Thursday posted moderate gains, with the S&P 500 climbing a 3-1/2 week high, the Dow Jones Industrials posting a 3-week high, and the Nasdaq 100 climbing to a 7-month high. The strength in chipmakers Thursday boosted technology stocks and the overall market.
U.S. stock indexes also had carryover support from a rally in European bank stocks Thursday after ECB Executive Board member Schnabel said that Eurozone banks had not seen a loss of deposits despite the recent financial stability concerns.
Thursday’s U.S. economic news was bearish for stocks as it showed weekly jobless claims rose more than expected, and Q4 GDP was revised downward.
U.S. weekly initial unemployment claims rose +7,000 to 198,000, showing a slightly weaker labor market than expectations of 196,000.
U.S. Q4 GDP was revised slightly lower to 2.6% (q/q annualized) from +2.7% as Q4 personal consumption was revised down to +1.0% from +1.4%. Also, the Q4 core PCE deflator was revised upward by +0.1 point to 4.4% from 4.3%
Mostly hawkish Fed comments on Thursday were negative for stocks. Minneapolis Fed President Kashkari said, "the services part of the economy has not yet slowed down, and wage growth is still growing faster than what is consistent with our 2% inflation target. That tells me the Fed has more work to do to bring the services side of the economy back into balance." Also, Boston Fed President Collins said, "inflation remains too high, and recent indicators reinforce my view that there is more work to do to bring inflation down to the 2% target associated with price stability."
On the neutral side, Richmond Fed President Barkin said he remains undecided on how Fed officials should adjust interest rates at the May FOMC meeting, citing uncertainty in both inflation and consumer demand, as well as additional fallout from the banking crisis.
Global bond yields on Thursday were mixed. The 10-year T-note yield gave up early gains and fell -1.9 bp to 3.545% after stocks fell back from their best levels. However, stronger-than-expected German Mar Consumer prices pushed European government bond yields higher. The 10-year German bund yield climbed to a 2-week high of 2.399%, and the 10-year UK gilt yield rose to a 1-week high of 3.534%.
Overseas stock markets Thursday settled mixed. The Euro Stoxx 50 closed up +1.28%. China’s Shanghai Composite stock index closed up +0.65%, and Japan’s Nikkei Stock Index closed down -0.36%.
Today’s stock movers…
Semiconductor stocks moved higher Thursday after Wednesday’s upbeat forecasts from Micron Technology and Infineon Technologies bolstered sentiment in the sector. Lam Research (LRCX) closed up more than +3%. Also, KLA Corp (KLAC), ASML Holding NV (ASML), Microchip Technology (MCHP), and ON Semiconductor (ON) closed up more than +2%. In addition, Qualcomm (QCOM), Nvidia (NVDA), Texas Instruments (TXN), Advanced Micro Devices (AMD), Analog Devices (ADI), Applied Materials (AMAT), and NXP Semiconductors NV (NXPI) closed up more than +1%.
Zebra Technologies (ZBRA) closed up more than +4% to lead gainers in the S&P 500 after Cowen began coverage of the stock with an outperform rating and a price target of $375.
Paycom Software (PAYC) closed up more than +3% after D.A. Davidson upgraded the stock to buy from neutral.
Intel (INTC) closed up more than +1% to lead gainers in the Dow Jones Industrials after Susquehanna Financial raised its price target on the stock to $31 from $26.
U.S.-listed Chinese technology stocks rallied Thursday after two subsidiaries of JD.com filed for Hong Kong initial public offerings. As a result, JD.com (JD) closed up more than +7% to lead gainers in the Nasdaq 100. Also, PDD Holdings (PDD) is up more than +4%, and Alibaba Group Holding (BABA) closed up more than +3%.
Waste Management (WM) closed up more than +2% after Cowen began coverage of the stock with an outperform rating and a price target of $200.
Kohl’s (KSS) closed up more than +3% on signs of insider buying after an SEC filing showed CEO Kingsbury bought $2.02 million of his company’s shares on March 29.
Phillip Morris International (PM) closed up more than +2% after JPMorgan Chase upgraded the stock to overweight from neutral.
Bank stocks fell Thursday after Wedbush and Piper Sandler cut their price targets and earnings estimates across the sector. First Republic Bank (FRC) closed down -4%. Also, Fifth Third Bancorp (FITB), Zions Bancorp (ZION), M&T Bank (MTB), KeyCorp (KEY), and US Bancorp (USB) closed down more than -2%.
Charles Schwab (SCHW) closed down more than -4% to lead losers in the S&P 500 after Morgan Stanley downgraded the stock to equal weight from overweight.
Semtech (SMTC) closed down more than -21% after forecasting an adjusted Q1 net loss of -4 cents to -11 cents, well below the consensus for a gain of 43 cents EPS.
Across the markets…
June 10-year T-notes (ZNM23) on Thursday closed up +1.5 ticks, and the 10-year T-note yield fell by -1.9 bp to 3.545%. June T-notes on Thursday recovered from a 1-week low and closed slightly higher as short covering emerged in T-notes after stock indexes fell back from their best levels. T-notes Thursday initially moved lower on negative carryover from a slump in 10-year German bunds to a 2-week low after German Mar CPI rose more than expected. Also, rising inflation expectations weighed on T-notes after Thursday's 10-year breakeven inflation rate climbed to a 3-week high of 2.369%.
