What you need to know…
The S&P 500 Index ($SPX) (SPY) today is down -0.05%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.04%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.17%.
Stocks this morning are slightly lower. The broader market is under slight pressure on mixed corporate news. Lower T-note yields today are limiting losses in stocks. Fed Chair Powell did not comment on the economy or interest rates when he delivered opening comments today at the Fed’s Division of Research and Statistics Centennial Conference.
On the positive side, Extra Space Storage is up more than +7% after reporting better-than-expected Q3 revenue. Also, Take-Two Interactive Software is up more than +6% after Bloomberg News reported that the company's Rockstar Games division will soon announce a new version of the Grand Theft Auto game. In addition, DaVita is up more than +4% after boosting its full-year free cash flow estimate, and Axon Enterprises is up more than +5% after reporting stronger-than-expected Q3 net sales and raising its full-year revenue estimate.
On the negative side, Warner Bros Discovery is down more than -15% after reporting a wider-than-expected Q3 loss per share. Also, Ebay is down more than -4% after forecasting full-year revenue below consensus, and Lucid Group is down more than -7% after cutting its full-year vehicle production forecast.
Weekly U.S. MBA mortgage applications rose +2.5% in the week ended Nov 3. The purchase mortgage sub-index rose +3.0%, and the refinancing mortgage sub-index rose +1.6%. The average 30-year fixed rate mortgage fell -25 bp to 7.61% from 7.86% the prior week.
The markets are discounting a 10% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and an 18% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then expecting the FOMC to begin cutting rates later in 2024 in response to an expected slowdown in the U.S. economy.
U.S. and European government bond yields today are moving lower. The 10-year T-note yield is down by -4.1 bp to 4.525%. The 10-year German bund yield dropped to a 1-3/4 month low of 2.614% and is down -4.3 bp at 2.615%. The 10-year UK gilt yield fell to a 1-1/2 month low of 4.233% and is down -3.6 bp at 4.234%.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.62%. China’s Shanghai Composite Index closed down -0.16%. Japan’s Nikkei Stock Index closed down -0.33%.
Today’s stock movers…
DaVita (DVA) is up more than +7% to lead gainers in the S&P 500 after boosting its full-year free cash flow estimate to $950 million-$1.15 billion from a previous forecast of $850 million-$1.10 billion.
Extra Space Storage (EXR) is up more than +6% after reporting Q3 revenue of $748 million, well above the consensus of $675.9 million.
Take-Two Interactive Software (TTWO) is up more than +6% after Bloomberg News reported that Rockstar Games, a division of the company, plans to announce a new version of the Grand Theft Auto game as soon as this week.
Axon Enterprises (AXON) is up more than +5% after reporting Q3 net sales of $413.6 million, stronger than the consensus of $389.9 million, and raising its full-year revenue estimate to $1.55 billion from a prior view of $151 billion-$1.53 billion, above the consensus of $1.52 billion.
Jack Henry & Associates (JKHY) is up more than +4% after reporting Q1 EPS of $1.39, higher than the consensus of $1.33.
Airline stocks are climbing today, with the price of crude falling to a 3-1/2 month low, which should cut fuel costs and improve profit margins. As a result, United Airlines Holdings (UAL), American Airlines Group (AAL), and Delta Air Lines (DAL) are up more than +3%. Also, Southwest Airlines (LUV) and Alaska Air Group (ALK) are up more than +2%.
Ralph Lauren (RL) is up more than +2% after reporting Q2 total comparable sales ex-forex rose +6%, stronger than the consensus of +3.36%.
Mosaic (MOS) is up more than +2% after reporting Q3 net sales of $3.55 billion, stronger than the consensus of $3.21 billion.
Quanta Services (PWR) is up more than +1% after Goldman Sachs upgraded the stock to buy from neutral with a price target of $211.
Warner Bros Discovery (WBD) is down more than -15% to lead losers in the S&P 500 and Nadaq 100 after reporting a Q3 loss per share of -17 cents, weaker than expectations of -9 cents.
Lucid Group (LCID) is down more than -6% after reporting 1,457 Q3 vehicle deliveries, below the consensus of 1,774, and cutting its full-year vehicle production forecast to 8,000-8,500 from a previous estimate of 10,000.
Ebay (EBAY) is down more than -4% in pre-market trading after forecasting full-year revenue of $10.02 billion-$10.08 billion, below the consensus of $10.15 billion.
Gilead Sciences (GILD) is down more than -4% after Wells Fargo Securities called the company’s better-than-expected quarterly earnings results a “low-quality beat.”
Sleep Number (SNBR) is down more than -28% after reporting Q3 net sales of $472.6 million, well below the consensus of $512 million, and cutting its full-year EPS forecast to a loss of -70 cents per share from a prior estimate of a gain of $1.25-$1.75.
Coupang Inc (CPNG) is down more than -10% after reporting Q3 EPS of 5 cents, below the consensus of 7 cents.
NXP Semiconductors NV (NXPI) is down more than -2% after Citigroup downgraded the stock to sell from neutral with a price target of $150. reporting Q3 adjusted EPS of $3.01, above the consensus of $2.87.
Datadog (DDOG) is down more than -2% after Mizuho Securities downgraded the stock to neutral from buy.
Across the markets…
December 10-year T-notes (ZNZ23) this morning are up +6 ticks, and the 10-year T-note yield is down -4.1 bp at 4.525%. T-notes this morning are modestly higher on carryover support from a rally in European government bonds, with 10-year German bunds climbing to a 1-3/4 month high and 10-year UK Gilts climbing to a 1-1/2 month high. Supply pressures are limiting gains in T-notes as the Treasury will auction $40 billion of 10-year T-notes today as part of this week’s quarterly refunding package of $112 billion of T-notes and T-bonds.
The dollar index (DXY00) today is up by +0.17%. The dollar this morning is moderately higher. A weaker-than-expected report on Eurozone Sep retail sales undercut the euro to the dollar’s benefit, and the yen slid against the dollar on weakness in Japanese government bond yields.
EUR/USD (^EURUSD) today is down by -0.16%. Weaker-than-expected Eurozone economic news today weighs on the euro after Eurozone Sep retail sales fell more than expected. Losses in EUR/USD were limited after the ECB's monthly consumer inflation expectations survey showed 1-year inflation expectations in Sep rose to a 5-month high. Also, hawkish ECB comments supported the euro after ECB Governing Council members Makhlouf and Kazaks warned that further ECB rate hikes might be necessary to control inflation.
Eurozone Sep retail sales fell -0.3% m/m, weaker than expectations of -0.2% m/m.
ECB Governing Council member Makhlouf said, "It's far too early to start talking about when the ECB will start cutting interest rates."
ECB Governing Council member Kazaks said the ECB "cannot exclude the possibility that further rate increases might be necessary."
The ECB's monthly consumer inflation expectations survey showed 1-year inflation expectations in Sep rose to a 5-month high of 4.0% from 3.5% in Aug, but Sep 3-year inflation expectations were unchanged at 2.5%.
USD/JPY (^USDJPY) today is up by +0.31%. The yen today dropped to a 1-week low against the dollar. Central bank divergence is undercutting the yen as the BOJ maintains QE and record low-interest rates while other global central banks are tightening their monetary policies. Lower T-note yields today are limiting losses in the yen.
The Japan Sep leading index CI fell -0.5 to 108.7, weaker than expectations of 108.8.
December gold (GCZ3) today is down -5.2 (-0.26%), and Dec silver (SIZ23) is up +0.211 (+0.98%). Precious metals prices today are mixed. A stronger dollar today is undercutting metals prices. Also, hawkish comments today from ECB Governing Council members Makhlouf and Kazaks weighed on gold when they said further interest rate hikes could not be ruled out. Lower global bond yields today are bullish for precious metals. Also, today’s increase in Eurozone Sep 1-year consumer inflation expectations to a 5-month high of 4.0% is positive for gold demand as an inflation hedge.
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.
