Stocks Slip on Corporate News and Hawkish Fed Comments

The S&P 500 Index ($SPX) (SPY) this morning is down -0.15%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.28%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.27%. 

Stock indexes this morning are mildly lower on some negative corporate news.  Take-Two Interactive Software is down more than -6% after gaming news publication Kotaku reported that the company’s Grand Theft Auto VI production has started to fall behind, and the video game could miss its 2025 release window. Also, United Airlines Holdings is down more than -4% on a report that said the Federal Aviation Administration is considering putting temporary sanctions on the company, including preventing it from adding new routes, following a series of safety incidents.  In addition, Intel and Advanced Micro Devices are down more than -2% after a Financial Times report said that China is seeking to limit the use of US-made microprocessors and servers in government computers. 

T-note yields pushed higher today and weighed on stocks on hawkish Fed comments.  Atlanta Fed President Bostic said if the economy performs as expected, the Fed can be patient on interest rates, and he expects just one 25 bp rate cut this year.  Bostic’s projection is less than the three 25 bp rate cuts the FOMC has projected for this year.  Also, Fed Governor Cook said restoring price stability may take a "cautious approach to easing monetary policy over time," and cutting interest rates too soon could risk inflation becoming entrenched.

On the positive side, Super Micro Computer is up more than +9% after JPMorgan Chase initiated a recommendation of overweight on the stock with a price target of $1,150, saying the company is at the “forefront of the AI revolution.” Also, Micron Technology is up more than +7% after CEO Mehrota told China’s commerce minister that his company plans to expand investment in China.  In addition, Walt Disney is up more than +2% after Barclays upgraded the stock overweight from equal weight.

The US Feb Chicago national activity index rose +0.59 to 0.05, stronger than expectations of -0.34.

US Feb new home sales unexpectedly fell -0.3% m/m to 662,000, weaker than expectations of an increase to 677,000.

The markets are discounting the chances for a -25 bp rate cut at 15% for the next FOMC meeting on April 30-May 1 and 81% for the following meeting on June 11-12.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is up +0.34%.  China's Shanghai Composite fell to a 1-week low and closed down -0.71%.  Japan's Nikkei Stock Index closed down -1.16%.

Interest Rates

June 10-year T-notes (ZNM24) this morning are down -8 ticks.  The 10-year T-note yield is up +4.59 bp at 4.212247%.  June T-note prices this morning fell back from a 1-week high and are slightly lower, and the are moderately higher10-year T-note yield rebounded from a 1-week low of 4.188%.  Supply pressures undercut T-note prices as the Treasury will auction $66 billion of 2-year T-notes later today as part of this week’s $161 billion auction package of T-notes and floating rate notes.  T-notes extended their losses today after Atlanta Fed President Bostic said he expected only one 25 bp rate cut by the Fed this year.

European government bond yields today are higher.  The 10-year German bund yield is up +5.2 bp at 2.375%.  The 10-year UK gilt yield is up7.3 +6.8 bp at 3.922996%.

US Stock Movers

Take-Two Interactive Software (TTWO) is down more than -6% to lead losers in the S&P 500 and the Nasdaq 100 after gaming news publication Kotaku reported that the company’s production on Grand Theft Auto VI has started to fall behind and the video game could miss its 2025 release window. 

United Airlines Holdings (UAL) is down more than -76% to lead losers on a report that said the Federal Aviation Administration is considering putting temporary sanctions on the company, including preventing it from adding new routes, following a series of safety incidents. 

McDonald’s (MCD) is down more than -1% to lead losers in the Dow Jones Industrials after Argus Research downgraded the stock to hold from buy, citing weaker customer traffic.

Intel (INTC) and Advanced Micro Devices (AMD) are down more than -1% after a Financial Times report said that China is seeking to limit the use of US-made microprocessors and servers in government computers. 

Apple (AAPL), Alphabet (GOOGL), and Meta Platforms (META) are down more than -1% as they face the risk of fines after the European Union opened a full-blown investigation into the companies’ compliance with new laws under the Digital Markets Act.

Aehr Test Systems (AEHR) is down more than -17% after forecasting Q3 revenue of $7.6 million, well below the consensus of $14.3 million, and forecast full-year revenue of $65 million, weaker than the consensus of $77.5 million. 

Lululemon Athletica (LULU) is down more than -2%, adding to last Friday’s -15% plunge, after warning of a slowdown in visits to stores in the US and forecasting 2025 net revenue below consensus. 

Regeneron Pharmaceuticals (REGN) is down more than -1% after the US Food and Drug Administration failed to approve the company’s experimental drug therapy to treat lymphoma. 

Super Micro Computer (SMCI) is up more than +9% to lead gainers in the S&P 500 after JPMorgan Chase initiated a recommendation of overweight on the stock with a price target of $1,150, saying the company is at the “forefront of the AI revolution.”

Micron Technology (MU) is up more than +7% to lead gainers in the Nasdaq 100 after CEO Mehrota told China’s commerce minister that his company plans to expand investment in China.

Century Aluminum (CENX) is up more than +7% after the US Department of Energy (DOE) announced it would receive $500 million as part of a program to reduce greenhouse gas emissions in manufacturing industries. 

Masimo (MASI) is up more than +3% after it said late last Friday that it will evaluate a proposed separation of its consumer business. 

Walt Disney (DIS) is up more than +2% to lead gainers in the Dow Jones Industrials after Barclays upgraded the stock overweight from equal weight with a price target of $135. 

Constellation Energy (CEG) is up more than +2% after Guggenheim Securities raised its price target on the stock to $199 from $124. 

Cincinnati Financial (CINF) is up more than +2% after BMO Capital Markets upgraded the stock to outperform from market perform with a price target of $135. 

Sotera Health (SHC) is up more than +6% after Jeffries upgraded the stock to buy from hold with a price target of $15.50.

Earnings Reports (3/25/2024)

Bakkt Holdings Inc (BKKT), Boston Omaha Corp (BOC), Dakota Gold Corp (DC), Liberty Media Corp-Liberty Liv (LLYVA), and Sanara Medtech Inc (SMTI).

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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.