What you need to know…
The S&P 500 Index ($SPX) (SPY) Monday closed up +0.18%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.10%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.37%.
Stocks on Monday mildly 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 rose Monday 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 on Monday limited the upside in stocks.
Upbeat comments Monday 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 closed up more than +6% after reporting better-than-expected Q3 adjusted Ebitda and raising its full-year adjusted Ebitda forecast. Also, Bluegreen Vacations Holdings surged more than +105% after Hilton Grand Vacations agreed to buy the company for $75 per share.
On the negative side, Dish Network plunged more than -36% after reporting Q3 revenue below the consensus. Also, Paramount Global closed down more than -7% 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 17% 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 on Monday moved higher. The 10-year T-note yield rose by +8.6 bp to 4.658%. The 10-year German bund yield rose +9.4 bp to 2.739%. The 10-year UK gilt yield rose +8.9 bp to 4.377%.
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.
Overseas stock markets on Monday settled mixed. The Euro Stoxx 50 closed down -0.38%. China’s Shanghai Composite Index closed up +0.91%. Japan’s Nikkei Stock Index closed up +2.37%.
Today’s stock movers…
Constellation Energy (CEG) closed up more than +6% 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) closed up more than +4% on optimism that 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) closed up more than +4% after D.A. Davidson upgraded the stock to buy from neutral with a price target of $2,400.
Apple (AAPL) closed up more than +1% to lead gainers in the Dow Jones Industrials after Phillip Securities upgraded the stock to accumulate from neutral with a price target of $194.
Clorox (CLX) closed up more than +2% after UBS upgraded the stock to neutral from sell.
Cboe Global Markets (CBOE) closed up more than +2% after Rosenblatt Securities raised its price target on the stock to $192 from $178.
Bluegreen Vacations Holdings (BVH) closed 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) closed up more than +16% 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.
Paramount Global (PARA) closed down more than -7% to lead losers in the S&P 500 after Bank of America double-downgraded the stock to underperform from buy with a price target of $9.
Albemarle (ALB) closed down more than -6% after UBS downgraded the stock to neutral from buy.
Dish Network (DISH) closed down more than -36% 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) closed down more than -6% after the Wall Street Journal reported that CEO Herd is stepping down.
Airbnb (ABNB) closed down more than -3% after Italy’s Finance Police seized 779 million euros ($835 million) from the company after it allegedly failed to pay some taxes.
Bath & Body Works (BBWI) closed down more than -3% after UBS cut its price target on the stock to $34 from $39.
Across the markets…
December 10-year T-notes (ZNZ23) Monday closed down -24.5 ticks, and the 10-year T-note yield rose by +8.6 bp to 4.658%. Strength in stocks Monday curbed the safe-haven demand for T-notes. Supply pressures are also weighing on T-notes as eleven corporate bond offerings totaling around $24 billion were priced Monday, prompting bond dealers to place short positions in T-notes to hedge against the new supply. Also, 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.
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.
