What you need to know…
The S&P 500 Index ($SPX) (SPY) today is down -0.45%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.08%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.83%.
Stock indexes this morning are mostly lower, with the S&P 500 falling to a 1-1/2 week low and the Nasdaq 100 index falling to a one-week low. The broader market is under pressure today due to weakness in technology stocks. Apple is down more than -3% to add to Wednesday’s -3% drop to lead technology stocks lower on a report from the Wall Street Journal that said China plans to expand a ban on the use of iPhones to government-backed agencies and state companies. Strength in defensive pharmaceutical stocks today is providing support for the Dow Jones Industrials index.
Stocks are also under pressure from today’s news that U.S. weekly initial unemployment claims unexpectedly fell to a 7-month low, a sign of strength in the labor market that may prompt the Fed to keep interest rates higher for longer.
U.S. weekly initial unemployment claims unexpectedly fell -13,000 to a 7-month low of 216,000, showing a stronger labor market than expectations of an increase to 233,000. Weekly continuing claims fell -40,000 to 1.679 million, showing a stronger labor market than expectations of 1.719 million.
U.S. Q2 nonfarm productivity was revised lower to +3.5% from the initially reported +3.7%, stronger than expectations of +3.4%. Also, Q2 unit labor costs were revised higher to +2.2% from the initially reported +1.6%, stronger than expectations of +1.9%.
The markets are discounting the odds at 7% for a +25 bp rate hike at the September 20 FOMC meeting and 50% for that +25 bp rate hike at the November 1 FOMC meeting.
Global bond yields are lower. The 10-year T-note yield fell back from a 2-week high of 4.304% and is down -0.1 bp at 4.278%. The 10-year German bund yield is down -3.1 bp at 2.623%. The 10-year UK gilt yield is down -5.0 bp at 4.483%.
Overseas stock markets are lower. The Euro Stoxx 50 is down -0.30%. China’s Shanghai Composite Index closed down -1.13%. Japan’s Nikkei Stock Index closed down -0.75%.
Today’s stock movers…
Apple (AAPL) is down more than -3% to lead losers in the Dow Jones Industrials, adding to Wednesday’s -3% drop, as China plans to expand a ban on the use of iPhones to government-backed agencies and state companies. Apple suppliers are also falling on the news, with Qualcomm (QCOM) down more than -6%, leading losers in the Nasdaq 100. Also, Skyworks Solutions (SWKS) is down more than -6%, and Qorvo (QRVO) is down more than -5%. In addition, Micron Technology (MU) is down more than -1%.
Seagate Technology Holdings Plc (STX) is down more than -8% to lead losers in the SP 500 after Barclays downgraded the stock to equal weight from overweight.
Rollins (ROL) is down more than -7 % after holder LOR Inc. announced a sale of 38.7 million shares of the stock via Goldman Sachs and Morgan Stanley.
FMC Corp (FMC) is down more than -3% after Blue Orca Capital said FMC’s patents aren’t enough to protect it from competition from rival generic products.
Nvidia (NVDA) is down more than -2%, adding to Wednesday’s -2% fall after Research Affiliates said the stock is “a textbook story of a Big Market Delusion,” and with shares trading around 110 times earnings, the stock is priced beyond perfection.
Verint Systems (VRNT) is down more than -14% after reporting Q2 adjusted revenue of $210.4 million, weaker than the consensus of $226.6 million, and cut its full-year adjusted revenue forecast to $910 million from a previous estimate of $935 million, below the consensus of $933.6 million.
C3.ai (AI) is down more than -13% after saying it expects its fiscal-year adjusted loss will be as much as -$100 million, wider than a previous estimate of -$75 million, and that profitability would take longer than expected.
Dell Technologies (DELL) is down more than -1% after Barclays downgraded the stock to underweight from equal weight.
Westrock (WRK) is up more than +5% to lead gainers in the S&P 500 after the Wall Street Journal reported the company is nearing a deal to merge with Smurfit Kappa.
T-Mobile US (TMUS) is up more than +3% to lead gainers in the Nasdaq 100 after Bloomberg Intelligence said the launch of the iPhone 15 could provide a boost to T-Mobile’s premium service plans.
G-III Apparel Group Ltd (GIII) is up more than +15% after reporting Q2 net sales of $659.8 million, well above the consensus of $592.2 million.
UiPath (PATH) is up more than +8% after reporting Q2 total revenue of $287.3 million, better than the consensus of $282.3 million, and sees 2024 revenue of $1.27 billion-$1.28 billion, stronger than the consensus of $1.27 billion.
Akamai Technologies (AKAM) is up more than +3% after Bank of America Global Research initiated coverage of the stock with a buy recommendation and a price target of $145.
Cboe Global Markets (CBOE) is up more than +1% after reporting the average daily volume for August was up +25.4%
McDonald’s (MCD) is up more than +1% after Wells Fargo Securities upgraded the stock to overweight from equal weight.
Across the markets…
December 10-year T-notes (ZNZ23) today are up +3 ticks, and the 10-year T-note yield is down -0.1 bp at 4.278%. Dec T-note prices today recovered from a 1-1/2 week low, and the 10-year T-note yield fell back from a 2-week high of 4.304% as a slump in stocks sparked safe-haven demand for government debt. T-notes this morning initially moved lower on U.S. economic news that showed weekly jobless claims unexpectedly fell to a 7-month low, and Q2 unit labor costs were revised higher.
The dollar index (DXY00) today is up +0.17% and climbed to a 5-3/4 month high. Today’s U.S. economic news that showed an unexpected decline in weekly jobless claims and an upward revision to Q2 labor costs are hawkish for Fed policy and bullish for the dollar. Also, pessimism in China’s economic outlook prompted the yuan to fall to a 15-year low against the dollar.
EUR/USD (^EURUSD) is down by -0.24% and fell to a 3-month low. Strength in the dollar today is weighing on the euro. Also, weaker-than-expected Eurozone economic news is bearish for EUR/USD after Eurozone Q2 GDP was revised lower and German July industrial production fell more than expected.
Eurozone Q2 GDP was revised lower to +0.1% q/q and +0.5% y/y from the previously reported +0.3% q/q and +0.6% y/y. Also, German July industrial production fell -0.8% m/m, weaker than expectations of -0.4% y/y.
USD/JPY (^USDJPY) is down -0.21%. The yen today recovered from a 10-month low against the dollar and is moderately higher. A slump in stocks today has boosted the safe-haven demand for the yen. The yen also found support today on comments from BOJ Board member Nakagawa, who said the BOJ will closely coordinate with the government in monitoring foreign exchange rates.
Today’s Japanese economic news was bearish for the yen after the July leading index CI fell -1.2 to a 2-3/4 year low of 107.6, weaker than expectations of 107.8.
October gold (GCV3) today is down -1.0 (-0.05%), and Dec silver (SIZ23) is down -0.198 (-0.84%). Precious metals prices this morning are moderately lower, with silver falling to a 2-1/2 week low. Today's rally in the dollar index to a 5-3/4 month high weighs metals prices. Silver prices were undercut today by industrial metals demand concerns after Eurozone Q2 GDP was revised downward and German July industrial production fell more than expected. In addition, gold prices are under pressure on continued liquidation of gold holdings by funds after long gold holdings in ETFs fell to a 3-1/3 year low Wednesday. Losses in gold were limited as today’s selloff in stocks sparked some safe-haven demand for gold.
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.
