The S&P 500 Index ($SPX) (SPY) today is up +1.91%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +3.14%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +2.03%.
Stocks today are sharply higher, with the S&P 500, the Dow Jones Industrials, and the Nasdaq 100 posting new all-time highs. Stocks are soaring today after Republican candidate Trump won the presidential election. Republicans also gained control of the Senate, but control of the House was still undecided, with many races too close to call. Bank stocks are climbing today based on expectations of reduced regulations from the Trump administration. Also, health insurers focused on the Medicare market rallied on the view that the Trump administration will pay higher rates to insurers that provide private versions of the US health program for seniors.
The dollar also rallied to a 4-month high today on the election news, and the 10-year T-note yield jumped to a 4-month high on the prospects of higher inflation due to Trump’s policies of tax cuts and increased tariffs.
Bitcoin (^BTCUSD) is surging more than +6% today and posted a new record high as cryptocurrencies are seen benefiting from relaxed regulation and President-elect Trump’s support for digital currencies. Also, bank stocks are up sharply today, based on the expectation that a Trump presidency will bring looser regulations to the industry.
US MBA mortgage applications fell -10.8% in the week ended November 1, the sixth consecutive week applications have declined. The purchase mortgage sub-index fell -5.1%, and the refinancing mortgage sub-index fell -18.5%. The average 30-year fixed mortgage rate rose +8 bp to 6.81% from 6.73% in the prior week.
The markets are focused on (1) the results of the FOMC meeting today and Thursday (-25 bp rate cut expected) and post-meeting comments from Fed Chair Powell, and (2) Q3 corporate earnings results with nearly 20% of the S&P 500 companies scheduled to report this week.
Of the companies in the S&P 500 that have released Q3 earnings so far, 78% surpassed estimates. According to Bloomberg Intelligence, companies in the S&P 500 are expected to report an average +4.3% y/y increase in quarterly earnings in Q3, down from the +7.9% y/y growth consensus seen in July.
The markets are discounting the chances at 99% for a -25 bp rate cut at the November 6-7 FOMC meeting and at 0% for a -50 bp rate cut at that meeting.
Overseas stock markets today are mixed. The Euro Stoxx 50 fell back from a 1-week high and is down -1.32%. China's Shanghai Composite Index fell back from a 4-week high and closed down -0.09%. Japan's Nikkei Stock 225 rallied to a 3-week high and closed up +2.61%.
Interest Rates
December 10-year T-notes (ZNZ24) today are down -1-1/32 points. The 10-year T-note yield is up +18.0 bp at 4.451%. Dec T-notes today sank to a 4-month low, and the 10-year T-note yield surged to a 4-month high of 4.477%. T-notes are plunging today as President-elect Trump’s policies of low taxes and high tariffs are seen as boosting growth and inflation, which are hawkish factors for Fed policy. Supply pressures are also weighing on T-notes as the Treasury will auction $25 billion of 30-year T-bonds later today to conclude this week’s $125 billion T-note and T-bond auctions for the November quarterly refunding.
European government bond yields today are mixed. The 10-year German bund yield is down -2.7 bp at 2.398%. The 10-year UK gilt yield climbed to a 1-year high of 4.594% and is up +3.8 bp at 4.568%.
The Eurozone Oct composite PMI was revised upward by +0.3 to 50.0 from the previously reported 49.7.
Eurozone Sep PPI eased to -3.4% y/y from -2.3% y/y in Aug, right on expectations.
German Sep factory orders rose +4.2% m/m, stronger than expectations of +1.5% m/m.
ECB Vice President Guindos said global economic output would be weaker, price pressure would be stronger, and established trade flows would be disrupted if US President-elect Trump implemented the kinds of import tariffs he threatened during his campaign.
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 19% for a -50 bp rate cut at the same meeting.
US Stock Movers
Bank stocks are soaring today on expectations that the Trump administration will loosen regulations for the industry. As a result, Discover Financial Services (DFS) and Synchrony Financial (SYF) are up more than +16%. Also, Capital One Financial (COF) and Wells Fargo & Co (WFC) are up more than +12%. In addition, Goldman Sachs (GS) is up more than +12% to lead gainers in the Dow Jones Industrials. Finally, Morgan Stanley (MS), Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM), and M&T Bank (MTB) are up more than +8%.
Cryptocurrency-related stocks are sharply higher today with the price of Bitcoin up more than +6% at a record high. As a result, Coinbase Global (COIN), Marathon Digital (MARA), MicroStrategy (MSTR), and Riot Platforms (RIOT) are up by more than +11%.
Chip stocks are climbing today. GlobalFoundries (GFS) is up more than +10%. Also, Intel (INTC) and Texas Instruments (TXN) are up more than +4%. In addition, Micron Technology (MU), ON Semiconductor (ON), Analog Devices (ADI), and Marvell Technology (MRVL) are up more than +3%. In addition, Nvidia (NVDA), Qualcomm (QCOM), and NXP Semiconductors NV (NXPI) are up more than +2%.
Tesla (TSLA) is up more than +11% to lead gainers in the Nasdaq 100 on speculation the company will be a major beneficiary of Trump’s return to the White House.
US health insurers focused on the Medicare market are rallying today on expectations that the Trump administration will pay higher rates to companies that provide private versions of the US health program for seniors. As a result, UnitedHealth Group (UNH), Humana (HUM), and CVS Health (CVS) are up more than +6%.
Qualys Inc (QLYS) is up more than +15% after reporting Q3 adjusted EPS of $1.56, stronger than the consensus of $1.33, and raising its full-year adjusted EPS forecast to $5.81-$5.91 from a previous forecast of $5.46-$5.62, above the consensus of $5.59.
Charles River Laboratories International (CRL) is up more than +11% after reporting Q3 revenue of $1.01 billion, better than the consensus of $976.7 million.
Globus Medical (GMED) is up more than +7% after reporting Q3 net sales of $625.7 million, stronger than the consensus of $603.9 million, and raising its full-year net sales forecast to $2.49 billion-$2.50 billion from a previous forecast of $2.47 billion-$2.49 billion, better than the consensus of $2.48 billion.
Super Micro Computer (SMCI) is down more than -25% to lead losers in the S&P 500 and Nasdaq 100 after reporting preliminary Q1 net sales of $5.9 billion-$6.0 billion, weaker than the consensus of $6.47 billion and forecast Q2 net sales of $5.5 billion-$6.1 billion, well below the consensus of $6.79 billion.
Home builders are sinking today as the jump in the 10-year T-note yield to a 4-month high will push mortgage rates higher and dampen housing demand. As a result, PulteGroup (PHM), Toll Brothers (TOL), DR Horton (DHI), and Lennar (LEN) are down more than -4%.
US health insurers that sell private versions of Medicaid are under pressure because of the expectation that the Trump administration will pull back on funding. As a result, Centene (CNC), HCA Healthcare (HCA), and Molina Healthcare (MOH) are down more than -2%.
Exact Sciences (EXAS) is down more than -28% after reporting Q3 revenue of $708.1 million, below the consensus of $716.9 million, and cutting its full-year revenue forecast to $2.73 billion-$2.75 billion from a previous forecast of $2.81 billion-$2.85 billion, weaker than the consensus of $2.83 billion.
Coupang (CPNG) is down more than -10% after reporting Q3 retail net sales of $6.14 billion, below the consensus of $6.24 billion.
Five Below (FIVE) is down more than -7% after Bank of America Global Research downgraded the stock to underperform from neutral with a price target of $75.
Cboe Global Markets (CBOE) is down more than -5% after Morgan Stanley downgraded the stock to underweight from equal weight with a price target of $199.
Earnings Reports (11/6/2024)
Albemarle Corp (ALB), Ameren Corp (AEE), American Electric Power Co Inc (AEP), ANSYS Inc (ANSS), APA Corp (APA), Atmos Energy Corp (ATO), Cencora Inc (COR), Charles River Laboratories Int (CRL), Corteva Inc (CTVA), CVS Health Corp (CVS), Fair Isaac Corp (FICO), Gilead Sciences Inc (GILD), Host Hotels & Resorts Inc (HST), Howmet Aerospace Inc (HWM), Iron Mountain Inc (IRM), Johnson Controls International (JCI), Marathon Oil Corp (MRO), MarketAxess Holdings Inc (MKTX), Match Group Inc (MTCH), McKesson Corp (MCK), Pinnacle West Capital Corp (PNW), PTC Inc (PTC), QUALCOMM Inc (QCOM), Sempra (SRE), STERIS PLC (STE), Take-Two Interactive Software (TTWO), Trimble Inc (TRMB), Williams Cos Inc/The (WMB).
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.
