What you need to know…
The S&P 500 Index ($SPX) (SPY) on Tuesday closed down -0.15%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.42%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.17%.
Stocks on Tuesday settled mixed. Reduced expectations for a Fed interest rate cut in March weighed on stocks as swap markets now show expectations for a -25 bp rate cut by the Fed at the March 19-20 FOMC meeting have fallen to a 67% chance from a 100% chance last month.
Some negative corporate news on Tuesday was also bearish for stocks. Charles River Laboratories closed down more than -5% on disappointment in the company’s overview of business developments at a presentation at the JPMorgan Healthcare Conference. Also, Becton Dickinson closed down more than -3% after forecasting full-year revenue below consensus. In addition, Verizon Communications closed down more than -2% after Headwater Partners II LLC sued the company for infringement on two of its patents on 4G and 5G base station technology.
On the positive side for stocks, Juniper Networks closed up more than +21% after the Wall Street Journal reported that HP Enterprise is in advanced talks to acquire the company for about $13 billion. Also, Illumina closed up more than +4% after reporting preliminary Q4 revenue above consensus. In addition, Match Group closed up more than +3% after the Wall Street Journal reported that Elliot Investment Management had built a stake of about $1 billion in the company.
Bitcoin (^BTCUSD) whipsawed up to a 21-month high and then plunged more than -2% after the U.S. Securities and Exchange Commission (SEC) said it had not yet granted approval for spot-Bitcoin exchange-traded funds (ETFs). Bitcoin initially surged to a 21-month high after a post on an SEC regulator’s X account said that the agency approved spot Bitcoin ETFs. However, Bitcoin prices plunged after SEC Chairman Gensler said the regulator’s X account was compromised and an unauthorized tweet was posted.
Today’s U.S. trade news supported stocks after the Nov trade deficit unexpectedly narrowed to -$63.2 billion from $64.5 billion in Oct, better than expectations of a widening to -$64.9 billion and a positive factor for Q4 GDP.
The markets are discounting the chances for a -25 bp rate cut at 5% at the next FOMC meeting on Jan 30-31 and 67% for that same -25 bp rate cut for the following meeting on March 19-20.
U.S. and European government bond yields on Tuesday moved higher. The 10-year T-note yield rose +0.3 bp to 4.011%. The 10-year German bund yield rose +5.2 bp to 2.188%. The 10-year UK gilt yield rose +1.0 bp to 3.782%.
ECB Governing Council member Centeno said the December inflation report for the Eurozone was "good news" and officials will decide when to cut interest rates "sooner than we thought until recently."
The Eurozone Nov unemployment rate unexpectedly fell -0.1 to match a record low of 6.4%, showing a stronger labor market than expectations of no change at 6.5%.
German Nov industrial production unexpectedly fell -0.7% m/m, weaker than expectations of +0.3% m/m, and the sixth consecutive month industrial production has declined.
Japan Nov household spending fell -2.9% y/y, weaker than expectations of -2.3% y/y, and the ninth consecutive month spending has declined.
Tokyo Dec CPI eased to +2.4% y/y from +2.7% y/y in Nov, better than expectations of +2.5% y/y and the slowest pace of increase in 1-1/2 years. Dec CPI ex-fresh food and energy eased to +3.5% y/y from +3.6% y/y in Nov, right on expectations.
Overseas stock markets on Tuesday settled mixed. The Euro Stoxx 50 closed down -0.41%. China’s Shanghai Composite Index closed up +0.20%. Japan’s Nikkei Stock Index closed up +1.16%.
Today’s stock movers…
HP Enterprise (HPE) closed down more than -8% to lead losers in the S&P 500 after the Wall Street Journal reported the company is in advanced talks to acquire Juniper Networks for about $13 billion.
Charles River Laboratories (CRL) closed down more than -5% on disappointment in the company’s overview of business developments at a presentation at the JPMorgan Healthcare Conference.
Becton Dickinson (BDX) closed down more than -3% after forecasting full-year revenue of about $20.1 billion to $20.3 billion, the midpoint below the consensus of $20.21 billion.
Verizon Communications (VZ) closed down more than -2% to lead losers in the Dow Jones Industrials after Headwater Partners II LLC sued the company for infringement on two of its patents on 4G and 5G base station technology.
Fortinet (FTNT) closed down more than -3% after Citigroup downgraded the stock to neutral from buy.
Newmont (NEM) closed down more than -3% after TD Securities downgraded the stock to hold from buy.
Boeing (BA) closed down more than -1%, adding to Monday’s -7% plunge after the National Transportation Safety Board said it is considering widening the probe into other Boeing 737 Max jets after Alaska Air Group and United Airlines Holdings found loose parts in inspections of their Max 9 jets.
Morgan Stanley (MS) closed down more than -1% after HSBC downgraded the stock to hold from buy.
Juniper Networks (JNPR) closed up more than +21% to lead gainers in the S&P 500 after the Wall Street Journal reported that HP Enterprise is in advanced talks to acquire the company for about $13 billion.
Crowdstrike Holdings (CRWD) closed up more than +4% to lead gainers in the Nasdaq 100 after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $304.
Illumina (ILMN) closed up more than +4% after reporting preliminary Q4 revenue of $1.12 billion, above the consensus of $1.07 billion.
Acuity Brands (AYI) closed up more than +11% after reporting Q1 adjusted EPS of $3.72, well above the consensus of $3.14.
Match Group (MTCH) closed up more than +3% after the Wall Street Journal reported that Elliot Investment Management had built a stake of about $1 billion in the company.
ResMed (RMD) closed up more than +2% after JPMorgan Chase raised their price target on the stock to $195 from $160.
Revvity (RVTY) closed up more than +2% after reporting Q4 preliminary revenue of at least $690 million, stronger than the consensus of $670.5 million.
United Airlines Holdings (UAL) closed up more than +1% after Bank of America Global Research upgraded the stock to buy from underperform.
Across the markets…
March 10-year T-notes (ZNH24) on Tuesday closed down -4.5 ticks, and the 10-year T-note yield rose by +0.3 bp to 4.011%. Mar T-notes Tuesday closed moderately lower on negative carryover from weakness in 10-year German bunds. T-notes were also under pressure Tuesday after crude prices rallied more than +2%, boosting inflation expectations.
T-notes recovered from their worst levels Tuesday on strong demand for the Treasury’s $52 billion auction of 3-year T-notes that was awarded at 4.105% versus the 4.116% when-issued yield at the 1 pm EST bidding deadline.
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.
