What you need to know…
The S&P 500 Index ($SPX) (SPY) today is up +0.63%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.16%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.98%.
U.S. stocks this morning are mixed, with the Nasdaq 100 climbing to a 13-month high and the Dow Jones Industrials falling to a 1-3/4 month low. Technology stocks are climbing today to boost the overall market as Nvidia surged more than +25% after it reported better-than-expected Q1 revenue and forecast stronger-than-expected Q2 revenue.
A resolution to the U.S. debt ceiling remains elusive. House Republican leader McCarthy said there are still a couple of issues out there, and negotiators will need to work 24/7 to get a deal done. However, stocks received a slight boost on comments from the Republican chairman of the U.S. House Committee on Foreign Affairs, who said they are getting close to a deal and it is down to details now.
Late Wednesday, Fitch Ratings placed the U.S. AAA credit rating on watch, a sign of growing unease about the country’s ability to avert a default. However, Fitch said it still expects a resolution to the debt limit before June 1.
This morning’s U.S. Q1 GDP, initial unemployment claims, and Chicago Fed reports were all stronger than expected, pushing T-note yields higher. The markets have priced in a 45% chance of a 25 bp rate hike at the June 13-14 FOMC meeting.
U.S. weekly initial unemployment claims rose +4,000 to 229,000, showing a stronger labor market than expectations of 245,000.
U.S. Q1 GDP was revised upward to +1.3% (q/q annualized) from +1.1% as Q1 personal consumption was revised upward to 3.8% from 3.7%. The Q1 core PCE deflator was revised upward to 5.0% from 4.9%.
The U.S. Apr Chicago Fed national activity index unexpectedly rose +0.44 to 0.07, stronger than expectations of a decline to -0.20.
U.S. Apr pending home sales were unchanged m/m, weaker than expectations of +1.0% m/m.
Global bond yields are higher. The 10-year T-note yield rose to a 2-1/2 month high of 3.792% and is up +3.5 bp at 3.777%. The 10-year German bund yield is up +1.5 bp at 2.487%, and the UK 10-year gilt yield climbed to a 7-1/4 month high of 4.374% and is up +14.4 bp at 4.3584%.
On the bullish side for stocks, Nvidia is up more than +25% to lead chip stocks higher after reporting stronger-than-expected Q1 revenue and forecasting Q2 revenue well above consensus. Also, Dish Network is up more than +8% after the Wall Street Journal reported that the company is in talks to sell wireless plans through Amazon. In addition, Nutanix is up more than +15% after forecasting Q3 revenue above consensus and raising its full-year revenue forecast.
On the bearish side, Dollar Tree is down more than -14% after reporting Q1 adjusted EPS below consensus and cutting its full-year EPS estimate. Also, Medtronic Plc is down more than -5% after forecasting 2024 adjusted EPS below consensus. In addition, Snowflake is down more than -16% after cutting guidance on its 2024 product revenue estimate.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.21%. China’s Shanghai Composite closed down -0.11%, and Japan’s Nikkei Stock Index closed up +0.39%.
Today’s stock movers…
Chip stocks are rallying today, led by a +25% surge in Nvidia (NVDA) to lead the S&P 500 and Nasdaq 100 higher after reporting Q1 revenue of $7.19 billion, well above the consensus of $6.52 billion, and forecasting Q2 revenue of $11.00 billion-plus or minus 2%, stronger than the consensus of $7.18 billion. Other chip stocks are climbing on the news, with Advanced Micro Devices (AMD) up more than +9% and Applied Materials (AMAT) and ASML Holding NV (ASML) up down more than +4%. Also, KLA Corp (KLAC) and Lam Research (LRCX) are up more than +3%. In addition, Broadcom (AVGO) and Micron Technology (MU) are up more than +2%.
Dish Network (DISH) is up more than +8% after the Wall Street Journal reported that the company is in talks to sell wireless plans through Amazon.
Synopsys (SNPS) is up more than +8% after it initiated an accelerated stock buyback agreement with Mizuho Markets Americas to repurchase $300 million of stock.
Nutanix (NTNX) is up more than +15% after forecasting Q3 revenue of $448.6 million, above the consensus of $431.2 million, and raising its full-year revenue forecast to $1.84 billion-$1.85 billion from a previous forecast of $1.80 billion-$1.81 billion, stronger than the consensus of $1.80 billion.
Ralph Lauren (RL) is up more than +7% after reporting a Q4 net revenue of $1.54 billion, stronger than the consensus of $1.47 billion.
Adobe Systems (ADBE) is up more than +5% after it said it is rolling out Adobe Firefly generative artificial intelligence into its Photoshop software.
Best Buy (BBY) is up more than +3% after reporting Q1 adjusted EPS of $1.15, better than the consensus of $1.11.
Splunk (SPLK) is up more than +3% after reporting Q1 revenue of $751.5 million, stronger than the consensus of $719.7 million, and forecasting total 2024 annual recurring revenue of $4.13 billion-$4.18 billion, the midpoint above the consensus of $4.15 billion.
MetLife (MET) is up more than +3% after it boosted its stock buyback plan by $1 billion.
Dollar Tree (DLTR) is down more than -14% to lead losers in the S&P 500 and Nasdaq 100 after reporting Q1 adjusted EPS of $1.47, below the consensus of $1.54, and cut its full-year EPS estimate to $5.73-$6.13 from a prior estimate of $6.30-$6.80, well below the consensus of $6.64.
Medtronic Plc (MDT) is down more than -5% after forecasting 2024 adjusted EPS of $5.00-$5.10, weaker than the consensus of $5.20.
Snowflake (SNOW) is down more than -16% after cutting guidance on its 2024 product revenue estimate to $2.60 billion from a prior estimate of $2.71, weaker than the consensus of $2.71 billion.
American Eagle Outfitters (AEO) is down more than -14% after forecasting full-year capex of $150 million-$175 million, the midpoint below the consensus of $171.5 million.
UiPath (PATH) is down more than -12% after forecasting Q2 revenue of $279 million-$284 million, weaker than the consensus of $283.9 million.
Across the markets…
June 10-year T-notes (ZNM23) today are down -16 ticks, and the 10-year T-note yield is up +3.5 bp at 3.777%. Jun T-notes this morning dropped to a 2-1/2 month low, and the 10-year T-note yield rose to a 2-1/2 month high of 3.792%. Stronger-than-expected U.S. economic news today on Q1 GDP and weekly jobless claims is undercutting T-note prices. Also, a sharp rally in stocks today has reduced the safe-haven demand for T-notes. In addition, supply pressures are weighing on T-notes as the Treasury later today will auction $35 billion 7-year T-notes as part of this week’s $142 billion auction package of T-notes and floating-rate notes.
The dollar index (DXY00) today is up +0.31% and posted a 2-1/4 month high. This morning’s better-than-expected U.S. economic reports were hawkish for Fed policy and supportive of the dollar. Also, the jump in the 10-year T-note yield today to a 2-1/2 month high strengthens the dollar’s interest rate differentials and is bullish for the dollar. In addition, concern about a slowdown in China’s recovery knocked the yuan down to a 5-3/4 month low against the dollar.
EUR/USD (^EURUSD) today is down by -0.32% and fell to a 2-month low. European economic concerns are weighing on the euro after Germany’s Q1 GDP was revised lower to show a contraction in the German economy. Also, strength in the dollar today is weighing on EUR/USD.
German Q1 GDP was revised downward to -0.3% q/q and -0.2% y/y from unchanged q/q and +0.2% y/y.
The German Jun GfK consumer confidence index rose +1.6 to a 14-month high of -24.2, although weaker than expectations of -24.0.
ECB Vice President Guindos said the ECB's "future decisions will ensure that the policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to our 2% medium-term target." Once there, they'll "be kept at those levels for as long as necessary."
USD/JPY (^USDJPY) today is up by +0.14%. The yen today slid to a 5-3/4 month low against the dollar. Dovish comments today from BOJ Governor Ueda weighed on the yen when he said we “will patiently” continue with monetary easing as there is still some way to go before reaching our 2% inflation goal. Also, higher T-note yields today are undercutting the yen.
June gold (GCM3) this morning is down -16.3 (-0.83%), and July silver (SIN23) is down -0.130 (-0.56%). Precious metals prices this morning are moderately lower, with gold falling to a 2-1/4 month low and silver dropping to a 2-month low. A rally in the dollar today to a 2-1/4 month high is weighing on metals prices. Also, higher global bond yields today are undercutting metals. In addition, today’s stronger-than-expected U.S. economic reports were hawkish for Fed policy and bearish for metals.
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.
