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Stocks Waver Before This Week’s US Election and FOMC Meeting
The S&P 500 Index ($SPX) (SPY) today is off -0.40%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.88%, and the Nasdaq 100 Index ($IUXX) (QQQ) is off -0.35%.
Stocks are churning today and are trading mostly lower ahead of the US presidential election on Tuesday and the results of the Wed-Thu FOMC meeting. On the positive side, homebuilders are climbing with today’s -9.7 bp decline in the 10-year T-note yield, a supportive factor for housing demand. Also, Nvidia is up more than +1% after S&P Dow Jones Indices said the stock will replace Intel in the Dow Jones Industrial average before trading on November 8. In addition, Fox Corp is up more than +4% after reporting stronger-than-expected Q1 revenue.
On the negative side, US power stocks are under pressure today after the Federal Energy Regulatory Commission voted 2-1 against the proposal that would have increased the amount of power supplied to an Amazon.com AI data facility. In addition, Marriott International is down more than -2% after reporting weaker-than-expected Q3 adjusted Ebitda and cutting its full-year adjusted Ebitda forecast.
US Sep factory orders fell -0.5% m/m, which was right on expectations.
The markets are looking ahead this week to (1) Tuesday’s US presidential election, where polls are showing the election a toss-up and official results may not be known for several days, (2) the Oct ISM services index on Tuesday, expected -1.1 to 53.8, (3) the results of the Wed-Thu FOMC meeting (expected a -25 bp rate cut) and post-meeting comments from Fed Chair Powell, and (4) Q3 corporate earnings results.
Of the companies in the S&P 500 that have released Q3 earnings so far, 79% 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 settled mixed. The Euro Stoxx 50 is down -0.21%. China's Shanghai Composite Index closed up +1.17%. Japan's Nikkei Stock 225 was closed for the Culture Day holiday.
Interest Rates
December 10-year T-notes (ZNZ24) today are up +15 ticks. The 10-year T-note yield is down -9.7 bp to 4.287%. Dec T-notes today are moderately higher as some polls over the weekend shifted in favor of Democratic candidate Harris for president. Harris’ high-tax and low-tariff policies are seen as limiting growth and inflation and are more supportive of T-notes than Republican candidate Trump’s low-tax and high-tariff policies. Also, expectations that the FOMC will cut interest rates by 25 bp on Thursday are supporting T-notes. Further gains in T-notes may be limited by supply pressures as the Treasury will auction $125 billion of T-notes and T-bonds this week’s quarterly refunding beginning with today’s $58 billion auction of 3-year T-notes.
European government bond yields today are moving lower. The 10-year German bund yield is down -0.6 bp to 2.399%. The 10-year UK gilt yield is down -1.1 bp to 4.434%.
The Eurozone Nov Sentix investor confidence index rose +1. to -12.8, weaker than expectations of -12.6.
The Eurozone Oct manufacturing PMI was revised upward by +0.1 to 46.0 from the previously reported 45.9.
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 17% for a -50 bp rate cut at the same meeting.
US Stock Movers
Mosaic (MOS) is up more than +8% to lead gainers in the S&P 500 and fertilizer stocks higher after Belarus President Lukashenko asked the CEO of the country’s biggest potash fertilizer firm to speak to Russian companies about a coordinated output cut.
Fox Corp (FOXA) is up more than +5% after reporting Q1 revenue of $3.56 billion, stronger than the consensus of $3.37 billion.
Homebuilders are climbing today with today’s drop in T-note yields, which lowers mortgage rates and supports housing demand. As a result, DR Horton (DHI) and Lennar (LEN) are up more than +3%. Also, PulteGroup (PHM) and Toll Brothers (TOL) are up more than +2%.
Nvidia (NVDA) is up more than +1% after S&P Dow Jones Indices said the stock will replace Intel in the Dow Jones Industrial average before the start of trading on November 8.
Sherwin-Williams (SHW) is up more than +3% after S&P Dow Jones Indices said the stock will replace Dow in the Dow Jones Industrial average before the start of trading on November 8.
Air Transport Services Group (ATSG) is up more than +25% after Reuters reported that Stonepeak Partners was in advanced talks to acquire the company for about $3.1 billion, including debt.
Yum China (YUMC) is up more than +7% after reporting Q3 adjusted EPS of 77 cents, stronger than the consensus of 62 cents.
Revvity (RVTY) is up more than +5% after reporting Q3 adjusted EPS continuing operations of $1.28, stronger than the consensus of $1.13.
Intel (INTC) is down more than -3% to lead losers in the Dow Jones Industrials after S&P Dow Jones Indices said Nvidia will replace the stock in the Dow Jones Industrial average before the start of trading on November 8.
US power stocks are under pressure today after the Federal Energy Regulatory Commission voted 2-1 against the proposal that would have increased the amount of power supplied to an Amazon.com AI data facility. As a result, Constellation Energy (CEG) is down more than -11% to lead losers in the S&P 500 and Nasdaq 100. Also, Talen Energy Corp (TLN) is down more than -5%, and Vistra Corp (VST) is down more than -4%.
B. Riley Financial (RILY) is down more than -13% after it announced it will need to take an additional impairment of $120 million related to its equity investment in the parent unit of Franchise Group.
Public Service Enterprise Group (PEG) is down more than -5% after reporting Q3 operations and maintenance expenses of $464 million, above the consensus of $438.6 million.
Marriott International (MAR) is down more than -2% after reporting Q3 adjusted Ebitda of $1.23 billion, weaker than the consensus of $1.24 billion, and cutting its full-year adjusted Ebitda forecast to $4.93 billion-$4.96 billion from a previous estimate of $4.95 billion-$5.02 billion, below the consensus of $4.99 billion.
Dow Inc (DOW) is down more than -2% after S&P Dow Jones Indices said Sherwin-Williams will replace the stock in the Dow Jones Industrial average before the start of trading on November 8.
Earnings Reports (11/4/2024)
American International Group Inc (AIG), AvalonBay Communities Inc (AVB), Celanese Corp (CE), Constellation Energy Corp (CEG), Diamondback Energy Inc (FANG), Eversource Energy (ES), Fidelity National Information (FIS), Fox Corp (FOXA), Franklin Resources Inc (BEN), Hologic Inc (HOLX), Loews Corp (L), Marriott International Inc/MD (MAR), NXP Semiconductors NV (NXPI), Palantir Technologies Inc (PLTR), Public Service Enterprise Group (PEG), Realty Income Corp (O), Revvity Inc (RVTY), Vertex Pharmaceuticals Inc (VRTX), Wynn Resorts Ltd (WYNN), Zoetis Inc (ZTS).
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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.
