What you need to know…
The S&P 500 Index ($SPX) (SPY) Thursday closed up +1.96%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +1.56%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +2.76%.
Stock indexes Thursday rallied sharply, with the Nasdaq 100 posting a 1-week high. Strength in technology stocks Thursday boosted market sentiment and led the overall market higher after Meta Platforms soared more than +13% after reporting better-than-expected earnings. U.S. banking woes also eased slightly after First Republic Bank closed up more than +8%, recovering a bit after the -80% plunge in its stock price seen over the previous two sessions.
Stocks rallied Thursday even after news showed the U.S. economy in Q1 grew less than expected. Also, bond yields jumped after U.S economic reports Thursday showed weekly jobless claims unexpectedly fell, and inflation pressures remain elevated as the Q1 core PCE deflator rose more than expected. The markets are showing a 90% chance of a 25 bp rate hike by the Federal Reserve at the May 2-3 FOMC meeting and have fully priced in a 25 bp rate hike by the ECB at its May 4 ECB meeting.
Global bond yields Thursday moved higher. The 10-year T-note yield rose +7.7 bp to 3.526%. The 10-year German bund yield rose +6.2 bp at 2.460%. The 10-year UK gilt yield rose +6.5 bp to 3.794%.
U.S. Q1 GDP rose +1.1% (q/q annualized), weaker than expectations of +1.9%. Q1 personal consumption rose +3.7%, weaker than expectations of +4.0%. The Q1 core PCE deflator rose +4.9% (q/q annualized), stronger than expectations of +4.7%.
U.S. weekly initial unemployment claims unexpectedly fell -16,000 to 230,000, showing a stronger labor market than expectations of an increase to 248,000. Weekly continuing claims unexpectedly fell -3,000 to 1.858 million, showing a stronger labor market than expectations of an increase to 1.870 million.
U.S. Mar pending home sales unexpectedly fell -5.2% m/m, weaker than expectations of an +0.8% m/m increase and the biggest decline in 6 months.
On the bullish side for stocks, Meta Platforms closed up more than +13% after reporting stronger-than-expected Q1 revenue and forecasting Q2 revenue above consensus. Also, Hasbro closed up more than +14% after reporting Q1 net revenue above consensus. In addition, banking concerns eased slightly, after First Republic Bank closed more than +8% on short covering following its 2-day plunge as the focus remains on whether it can find a buyer to shore up its finances.
On the bearish side, Align Technology closed down more than -10% after reporting weaker-than-expected Q1 case volume. Also, AbbVie closed down more than -7% after forecasting full-year adjusted EPS below consensus. In addition, Keurig Dr Pepper closed down more than -5% after reporting Q1 adjusted operating income below consensus.
Overseas stock markets Thursday settled higher. The Euro Stoxx 50 closed up +0.24%. China’s Shanghai Composite closed up +0.67%, and Japan’s Nikkei Stock Index closed up +0.15%.
Today’s stock movers…
Hasbro (HAS) closed up more than +14% to lead gainers in the S&P 500 after reporting Q1 net revenue of $1.0 billion, well above the consensus of $885.3 million.
Meta Platforms (META) closed up more than +13% to lead gainers in the Nasdaq 100 after reporting Q1 revenue of $28.65 billion, better than expectations of $27.67 billion, and forecast Q2 revenue of $29.5 billion-$32 billion, stronger than the consensus of $29.48 billion.
Comcast (CMCSA) closed up more than +10% after reporting Q1 adjusted EPS of 92 cents, above the consensus of 83 cents.
Pentair Plc (PNR) closed up more than +9% after reporting Q1 net sales of $1.03 billion, stronger than the consensus of $998.8 million.
CBRE Group (CBRE) closed up more than +8% after reporting Q1 revenue of $7.41 billion, better than the consensus of $7.10 billion.
First Republic Bank (FRC) closed up more than +8% on short covering following its 2-day plunge as the focus remains on whether it can find a buyer to shore up its finances.
KLA Corp (KLAC) closed up more than +7% after reporting Q3 revenue of $2.43 billion, better than the consensus of $2.36 billion, and forecast Q4 revenue of $2.13 billion-$2.38 billion, the midpoint above the consensus of $2.17 billion.
Honeywell International (HON) closed up more than +4% after reporting Q1 sales of $8.86 billion, above the consensus of $8.51 billion, and raised its full-year sales estimate to $36.5 billion-$37.3 billion from an earlier projection of $36 billion-$37 billion.
Align Technology (ALGN) closed down more than -10% to lead losers in the S&P 500 and Nasdaq 100 after reporting Q1 case volume of 575,000, weaker than expectations of 585,000.
AbbVie (ABBV) closed down more than -7% after forecasting full-year adjusted EPS of $10.72-$11.12, the midpoint weaker than the consensus of $10.96.
Domino’s Pizza (DPZ) closed down more than -6% after reporting Q1 revenue of $1.02 billion, weaker than the consensus of $1.04 billion.
Keurig Dr Pepper (KDP) closed down more than -5% after reporting Q1 adjusted operating income was $699.0 million, below the consensus of $723.4 million, and that Q1 U.S. net coffee sales fell -1.3% y/y to $931 million.
United Rentals (URI) closed down more than -4% after reporting Q1 adjusted EPS of $7.95, below the consensus of $8.04.
International Paper (IP) closed down more than -4% after forecasting full-year Ebitda of $2.3 billion-$2.5 billion, weaker than the consensus of $2.63 billion.
Southwest Airlines (LUV) closed down more than -3% after reporting Q1 operating revenue of $5.71 billion, weaker than the consensus of $5.73 billion.
Across the markets…
June 10-year T-notes (ZNM23) on Thursday closed down -26 ticks, and the 10-year T-note yield rose by +7.7 bp to 3.536%. June T-notes Thursday retreated on signs of strength in the labor market and higher inflation. Thursday’s U.S. economic reports showed weekly jobless claims unexpectedly fell and that the Q1 core PCE deflator rose more than expected. Also, strength in stocks Thursday reduced the safe-haven demand for T-notes. Weak demand for the Treasury’s $35 billion auction of 7-year T-notes pushed T-note prices to their lows Thursday afternoon as the auction had a bid-to-cover ratio of 2.41, well below the 10-auction average of 2.51.
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.
