What you need to know…
The S&P 500 Index ($SPX) (SPY) Tuesday closed down -0.06%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.22%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.24%.
Stocks on Tuesday settled mixed. A decline in bond yields Tuesday supported technology stocks and the Nasdaq 100. Bond yields tumbled after the Oct JOLTS job openings report fell more than expected to a 2-1/2 year low, a sign the labor market is cooling and a dovish factor for Fed policy. Stocks had some positive carryover from Tuesday’s rally in the Euro Stoxx 50 to a 4-month high as European government bond yields fell after ECB Executive Board member Schnabel said another hike in interest rates by the ECB was "rather unlikely." Stock gains were limited after China’s Shanghai Composite fell to a 5-week low when Moody's Investors Service cut its outlook on China’s sovereign debt to negative, which is bearish for global growth prospects.
On the negative side for stocks, Charter Communications closed down more than -8% after CFO Fischer warned of short-term challenges for the company. Also, Procter & Gamble closed down more than 3% after it said it expected to record $2.0 billion to $2.5 billion of charges from restructuring its business operations in certain enterprise markets. In addition, Designer Brands closed down more than -32% after reporting Q4 adjusted EPS well below consensus and cutting its 2024 EPS forecast.
On the positive side, MarketAxess Holdings closed up more than +5% after the company’s November monthly metrics showed total credit average daily trading volume rose month-over-month to $14.3 billion. Also, CVS Health Corp closed up more than +3% after forecasting stronger-than-expected 2024 revenue. In addition, JM Sucker closed up more than +3% after reporting better-than-expected Q2 adjusted EPS.
U.S. Oct JOLTS job openings fell -617,000 to a 2-1/2 year low of 8.733 million, showing a weaker labor market than expectations of 9.300 million.
The U.S. Nov ISM services index rose +0.9 to 52.7, stronger than expectations of 52.3.
The markets are discounting a 0% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 0% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then discounting a 76% chance for a -25 bp rate cut at the March 19-20, 2024, FOMC meeting and are more than fully discounting (148%) that -25 bp rate cut at the April 30-May 1, 2024, FOMC meeting.
U.S. and European government bond yields moved lower on Tuesday. The 10-year T-note yield fell to a 3-month low of 4.159% and finished down -8.2 bp at 4.171%. The 10-year German bund yield fell to a 6-month low of 2.239% and finished down -10.6 bp at 2.247%. The 10-year UK gilt yield dropped to a 6-1/4 month low of 4.008% and finished down -16.9 bp at 4.025%.
Moody's Investors Service kept its long-term rating on China's sovereign bond at A1 but cut its outlook to negative from stable, saying China's usage of fiscal stimulus to support local governments and its spiraling property downturn poses risks to its economy.
The China Nov Caixin services PMI rose +1.1 to 51.5, stronger than expectations of 50.5.
ECB Executive Board member Schnabel said inflation in the Eurozone is showing a "remarkable" slowdown, making another hike in interest rates "rather unlikely."
The Tokyo Nov CPI eased to +2.6% y/y from +3.2% y/y in Oct, weaker than expectations of +3.0% y/y and the slowest pace of increase in 16 months. The Tokyo Nov CPI ex-fresh food and energy eased to +3.6% y/y from +3.8% y/y in Oct, better than expectations of +3.7% y/y.
Overseas stock markets Tuesday settled mixed. The Euro Stoxx 50 closed up +0.86%. China’s Shanghai Composite Index closed down -1.67%. Japan’s Nikkei Stock Index closed down -1.37%.
Today’s stock movers…
Charter Communications (CHTR) closed down more than -8% to lead losers in the S&P 500 and Nasdaq 100 after CFO Fischer warned of short-term challenges for the company.
Procter & Gamble (PG) closed down more than -3% to lead losers in the Dow Jones Industrials after it said it expects to record $2.0 billion to $2.5 billion of charges from restructuring its business operations in certain enterprise markets to address “challenging macroeconomic and fiscal conditions.”
Albemarle (ALB) closed down more than -5% after Piper Sandler downgraded the stock to underweight from neutral, citing a significant deterioration of global lithium markets.
KeyCorp (KEY) closed down more than -3% after it cut its Q4 noninterest income estimate to down -5% to -8% from a previous view of up +1% to +3%.
Designer Brands (DBI) closed down more than -33% after reporting Q4 adjusted EPS of 24 cents, well below the consensus of 49 cents, and cutting its 2024 EPS forecast to 40 cents-70 cents from a prior view of $1.20-$1.50, weaker than the consensus of $1.28.
Vornado Realty Trust (VNO) closed down more than -3% after Moody’s Investors Service cut the company’s senior unsecured debt rating to junk or Ba1 from Baa3.
Goldman Sachs (GS) closed down more than -1% after CFO Coleman said dealmaking is below trend and the trading business is trending flat year-over-year.
MarketAxess Holdings (MKTX) closed up more than +5% to lead gainers in the S&P 500 after the company’s November monthly metrics showed total credit average daily trading volume rose month-over-month to $14.3 billion.
Apple (AAPL) closed up more than +1% to lead gainers in the Dow Jones Industrials after Hon Hai Precision Industry, or Foxconn, reported an +18% increase in November revenue, the first year-on-year improvement in monthly results since January, which Citigroup said “is positive for Apple, which contributes 50% on Hon Hai’s revenue.”
Nvidia (NVDA) closed up more than +2% to lead gainers in the Nasdaq 100 after it said it plans to partner with Japanese research organizations, companies, and startups to build AI factories in Japan.
CVS Health Corp (CVS) closed up more than +3% after forecasting 2024 revenue of at least $366 billion, stronger than the consensus of $345.52 billion.
AT&T (T) closed up more than +3% after it selected Ericsson AB to modernize its wireless network and said the new network will let it “quickly capitalize on the next generation of wireless technology.”
JM Sucker (SJM) closed up more than +3% after reporting Q2 adjusted EPS of $2.59, better than the consensus of $2.45.
Ferguson Plc (FERG) closed up more than +3% after reporting Q1 revenue of $7.71 billion, above the consensus of $7.62 billion.
Tesla (TSLA) closed up more than +1% after reporting its China November vehicle shipments rose +14.3% m/m to 82,432.
Across the markets…
March 10-year T-notes (ZNH24) Tuesday closed up +23.5 ticks, and the 10-year T-note yield fell -8.2 bp to 4.171%. Mar T-note prices on Tuesday rallied to a 3-month high, and the 10-year T-note yield fell to a 3-month low of 4.159%. T-notes had carryover support from a rally in 10-year German bunds to a 6-month high. Also, a fall in inflation expectations supported T-note prices after the 10-year U.S. breakeven inflation rate dropped to a 4-1/2 month low of 2.186%. T-notes extended their gains on signs of weakness in the U.S. labor market after the Oct JOLTS job openings fell more than expected to a 2-1/2 year low.
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.
