Stocks Settle Mixed on Rising Bond Yields and Tech Strength

The S&P 500 Index ($SPX) (SPY) Wednesday closed up +0.02%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.11%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.32%. 

US stock indexes on Wednesday settled mixed, with the S&P 500 and Nasdaq 100 posting 1-week highs.  Strength in technology stocks was supportive of the overall market.  However, gains in the broader market were limited as rising bond yields pressured stocks. 

On the positive side, Tesla rose more than +12% despite reporting weaker-than-expected Q1 EPS after it said it would accelerate the launch of less-expensive models as soon as this year.  Also, semiconductor stocks rallied Wednesday after Texas Instruments reported stronger-than-expected Q1 revenue and forecasted Q2 revenue above consensus.  In addition, Hilton Worldwide Holdings rose more than +3% after reporting better-than-expected Q1 adjusted Ebitda and raising its full-year adjusted Ebitda forecast.

On the negative side, Old Dominion Freight Line closed down more than -11% after reporting Q1 revenue below consensus.  Also, Teledyne Technologies fell more than -10% after reporting weaker-than-expected Q1 net sales.  In addition, General Dynamics closed down more than -3% after reporting Q1 EPS below consensus.

Q1 corporate earnings take center stage for stocks with 180 of the S&P 500 companies, or more than 40% of total capitalization, scheduled to report earnings this week, including four of the “Magnificent Seven” megacap technology companies.  Meta Platforms will report after Wednesday’s close, and Alphabet and Microsoft will report on Thursday. 

US Mar capital goods new orders nondefense ex-aircraft and parts, a proxy for capital spending, rose +0.2% m/m, right on expectations.

US weekly MBA mortgage applications fell -2.7% in the week ended April 19.  The purchase mortgage sub-index fell -1.0% w/w, and the refinancing mortgage sub-index fell -5.6% w/w.  The average 30-year fixed mortgage rate rose +0.11 bp to a 5-month high of 7.24% from 7.13% in the prior week.

The markets are discounting the chances for a -25 bp rate cut at 3% for the next FOMC meeting on April 30-May 1 and 19% for the following meeting on June 11-12.

Overseas stock markets Wednesday settled mixed.  The Euro Stoxx 50 closed down -0.37%.  China's Shanghai Composite closed up +0.76%.  Japan's Nikkei Stock Index closed up +2.42%.

Interest Rates

June 10-year T-notes (ZNM24) on Wednesday closed down -11 ticks.  The 10-year T-note yield rose +5.0 bp to 4.650%.  T-notes prices on Wednesday were weighed down by negative carryover from a slide in 10-year German bunds to a 4-3/4 month low. Also, supply pressures undercut T-note prices after the Treasury auctioned a record $70 billion of 5-year T-notes Wednesday as part of this week’s $183 billion T-note auctions.

T-notes maintained moderate losses Wednesday on tepid demand for the Treasury’s $70 billion auction of 5-year T-notes that had a bid-to-cover ratio of 2.39, below the 10-auction average of 2.46.

European government bond yields Wednesday moved higher.  The 10-year German bund yield rose to a 4-3/4 month high of 2.600% and finished up +8.6 bp at 2.588%.  The 10-year UK gilt yield rose to a 5-1/4 month high of 4.356% and finished up +9.3 bp at 4.334%.

The German Apr IFO business climate rose +1.5 to an 11-month high of 89.4, stronger than expectations of 88.8.

ECB Governing Council member and Bundesbank president Nagel said a June rate cut by the ECB "won't necessarily" start a series of rate cuts.

US Stock Movers

Tesla (TSLA) closed up more than +12% to lead gainers in the S&P 500 and Nasdaq 100 despite reporting weaker-than-expected Q1 EPS after it said it will accelerate the launch of less-expensive models as soon as this year. 

Hasbro (HAS) closed up more than +11% after reporting Q1 adjusted EPS of 61 cents, well above the consensus of 27 cents.

Westinghouse Air Brake Technologies (WAB) closed up more than +10% after reporting Q1 net sales of $2.50 billion, above the consensus of $2.40 billion, and raised its full-year sales estimate to $10.25 billion-$10.55 billion from a previous estimate of $10.05 billion-$10.35 billion. 

CoStar Group (CSGP) closed up more than +8% after reporting Q1 revenue of $656 million, stronger than the consensus of $649.5 million.

Boston Scientific (BSX) closed up more than +5% after reporting Q1 adjusted EPS of 56 cents, better than the consensus of 51 cents, and raising its full-year adjusted EPS forecast to $2.29-$2.34 from a previous forecast of $2.23-$2.27, above the consensus of $2.26. 

Semiconductor stocks rallied Wednesday after Texas Instruments reported Q1 revenue of $3.66 billion, stronger than the consensus of $3.60 billion, and forecast Q2 revenue of $3.65 billion-$3.95 billion, the midpoint above the consensus of $3.78 billion.  As a result, ON Semiconductor (ON) closed up more than +6%, and Texas Instruments (TXN) and Microchip Technology (MCHP) closed up more than +5%.  Also, NXP Semiconductors NV (NXPI) closed up more than +4%, and Analog Devices (ADI) closed up more than +3%.  In addition, GlobalFoundries (GFS), Marvel Technology (MRVL), KLA Corp (KLAC), Lam Research (LRCX), Intel (INTC), and Qualcomm (QCOM) closed up more than +1%. 

Biogen (BIIB) closed up more than +4% after reporting Q1 adjusted EPS of $3.67, stronger than the consensus of $3.44 and forecast full-year adjusted EPS of $15.00-$16.00, the midpoint above the consensus of $15.49.

Hilton Worldwide Holdings (HLT) closed up more than +3% after reporting Q1 adjusted Ebitda of $750 million, stronger than the consensus of $705.4 million, and raising its full-year adjusted Ebitda forecast to $3.38 billion-$3.43 billion from a previous forecast of $3.33 billion-$3.38 billion, above the consensus of $3.37 billion.

Old Dominion Freight Line (ODFL) closed down more than -11% to lead losers in the S&P 500 and Nasdaq 100 after reporting Q1 revenue of $1.46 billion, below the consensus of $1.47 billion.

Teledyne Technologies (TDY) closed down more than -10% after reporting Q1 net sales of $1.35 billion, weaker than the consensus of $1.40 billion. 

Fortive Corp (FTV) closed down more than -5% after reporting Q1 revenue of $1.52 billion, weaker than the consensus of $1.53 billion.

Masco (MAS) closed down more than -4% after reporting Q1 net sales of $1.93 billion, weaker than the consensus of $1.94 billion and forecasting full-year adjusted EPS of $4.00-$4.25, the midpoint below the consensus of $4.14.

General Dynamics (GD) closed down more than -4% after reporting Q1 EPS of $2.88, weaker than the consensus of $2.91. 

Humana (HUM) closed down more than -3% after pulling guidance for 2025, saying it needs “more clarity” before providing guidance. 

Norfolk Southern (NSC) closed down more than -3% after reporting Q1 adjusted EPS of $2.49, below the consensus of $2.55.

Boeing (BA) closed down more than -2% to lead losers in the Dow Jones Industrials after Moody’s Ratings downgraded the company’s senior unsecured debt rating to Baa3 from Baa2 and cut its outlook to negative from watch negative. 

Earnings Reports (4/25/2024)

A O Smith Corp (AOS), Allegion plc (ALLE), Alphabet Inc (GOOGL), Altria Group Inc (MO), American Airlines Group Inc (AAL), Arthur J Gallagher & Co (AJG), AvalonBay Communities Inc (AVB), Bristol-Myers Squibb Co (BMY), Capital One Financial Corp (COF), Carrier Global Corp (CARR), Caterpillar Inc (CAT), Cincinnati Financial Corp (CINF), CMS Energy Corp (CMS), Comcast Corp (CMCSA), Dexcom Inc (DXCM), Dover Corp (DOV), Dow Inc (DOW), DTE Energy Co (DTE), Eastman Chemical Co (EMN), Edwards Lifesciences Corp (EW), Fair Isaac Corp (FICO), FirstEnergy Corp (FE), GE Vernova Inc (GEV), Gilead Sciences Inc (GILD), Hartford Financial Services Group (HIG), Healthpeak Properties Inc (DOC), Hess Corp (HES), Honeywell International Inc (HON), Intel Corp (INTC), International Paper Co (IP), Juniper Networks Inc (JNPR), Keurig Dr Pepper Inc (KDP), KLA Corp (KLAC), L3Harris Technologies Inc (LHX), Laboratory Corp of America Holdings (LH), Merck & Co Inc (MRK), Microsoft Corp (MSFT), Mohawk Industries Inc (MHK), Nasdaq Inc (NDAQ), Newmont Corp (NEM), Northrop Grumman Corp (NOC), PG&E Corp (PCG), Pool Corp (POOL), Principal Financial Group Inc (PFG), ResMed Inc (RMD), Robert Half Inc (RHI), Royal Caribbean Cruises Ltd (RCL), S&P Global Inc (SPGI), Southwest Airlines Co (LUV), Textron Inc (TXT), T-Mobile US Inc (TMUS), Tractor Supply Co (TSCO), Union Pacific Corp (UNP), Valero Energy Corp (VLO), VeriSign Inc (VRSN), West Pharmaceutical Services Inc (WST), Western Digital Corp (WDC), Weyerhaeuser Co (WY), Willis Towers Watson PLC (WTW),WW Grainger Inc (GWW), Xcel Energy Inc (XEL).

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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.