Stocks Slightly Higher Ahead of This Week’s US Inflation Reports

The S&P 500 Index ($SPX) (SPY) this morning is up +0.07%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.15%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.19%. 

US stocks this morning are slightly higher on lower bond yields and some positive corporate news.  Incyte Corp is up more than +8 % after announcing that its board approved a share repurchase authorization of $2 billion.  Also, Walgreens Boots Alliance is up more than +7% after Bloomberg reported the company is reaching out to potential buyers for its Boots drugstore chain in the UK. 

In addition, Intel is up more than +3% after the Wall Street Journal reported the company is in advanced talks for a deal in which Apollo Global Management would provide more than $11 billion to help the company build a chip plant in Ireland.

The markets will focus on US inflation reports this week.  On Tuesday, the April core PPI is expected to ease to +2.3% y/y from +2.4% y/y in March. On Wednesday, April core CPI is expected to ease to +3.6% y/y from +3.8% y/y in March.

Generally positive Q1 earnings results are supportive of stocks.  Q1 earnings are expected to climb +6.5% y/y, well above the pre-earnings season estimate of +3.8%.  According to data compiled by Bloomberg Intelligence, about 81% of reporting S&P 500 companies have beaten Q1 earnings estimates. 

Hawkish comments today from Fed Vice Chair Jefferson were bearish for stocks when he said, "In light of the attenuation in progress, in terms of getting inflation down to our target, it is appropriate that we maintain the policy rate in restrictive territory." 

The markets are discounting the chances for a -25 bp rate cut at 10% for the June 11-12 FOMC meeting and 32% for the following meeting on July 30-31.

Overseas stock markets today are lower.  The Euro Stoxx 50 is down -0.13%.  China's Shanghai Composite closed down -0.21%.  Japan's Nikkei Stock Index fell to a 1-week low and closed down -0.13%. 

Interest Rates

June 10-year T-notes (ZNM24) this morning are up +6 ticks.  The 10-year T-note yield is down -2.8 bp at 4.469%.  T-note prices have carryover support from strength in European government bonds.  T-note prices also have support from speculation this week’s US PPI and CPI reports will show a moderation of price pressures.  Today’s hawkish comments from Fed Vice Chair Jefferson are negative for T-notes when he said the Fed should hold interest rates steady until there is additional evidence that inflation will return to the Fed’s 2% target.

European government bond yields today are lower.  The 10-year German bund yield is down -2.1 bp to 2.496%. The 10-year UK gilt yield is down -1.3 bp to 4.153%.

US Stock Movers

Incyte Corp (INCY) is up more than +8% to lead gainers in the S&P 500 after announcing that its board approved a share repurchase authorization of $2 billion.

Walgreens Boots Alliance (WBA) is up more than +7% to lead gainers in the Nasdaq 100 after Bloomberg reported the company is reaching out to potential buyers for its Boots drugstore chain in the UK. 

Apple (AAPL) is up more than +1% after it was reported the company is closing in on an agreement to use OpenAI’s technology in Apple’s upcoming iOS 18 mobile operating system.

Gaming stocks with exposure to Macau are climbing today after China added eight mainland cities eligible for “individual travel” to Hong Kong and Macau from May 27.  As a result, Wynn Resorts International (WYNN), Las Vegas Sands (LVS), MGM Resorts International (MGM), and Caesars Entertainment (CZR) are up more than +1%.

Intel (INTC) is up more than +3% to lead gainers in the Dow Jones Industrials after the Wall Street Journal reported the company is in advanced talks for a deal in which Apollo Global Management would provide more than $11 billion to help the company build a chip plant in Ireland.

Squarespace (SQSP) is up more than +13% after entering into a definitive agreement to go private by Permira in a deal valued at approximately $6.9 billion, where stockholders will receive $44 per share in cash. 

BioLife Solutions (BLFS) is up more than +7% after Benchmark Company LC upgraded the stock to buy from hold with a price target of $25. 

Alphabet (GOOGL) is down more than -2% to lead losers in the Nasdaq 100after Apple said it is closing in on an agreement to use OpenAI’s technology on the iPhone.

Meta Platforms (META) is down more than -1% after a research arm of the UAE government released Falcon 2 11B, a more powerful AI model that will challenge Meta Platforms' open-source AI model. 

MKS Instruments (MKSI) is down more than -6% after announcing that it plans to offer $1.0 billion of convertible senior notes due 2030.

Booking Holdings (BKNG) is down more than -1% after the European Union (EU) said the company has six months to comply with a raft of measures under the EU’s Digital Markets Act to prevent competition abuses.

Applied Materials (AMAT) is down more than -1% after Jeffries downgraded the stock to hold from buy. 

Earnings Reports (5/13/2024)

ACELYRIN Inc (SLRN), Agilysys Inc (AGYS), Akoustis Technologies Inc (AKTS), Akoya Biosciences Inc (AKYA), Allogene Therapeutics Inc (ALLO), Avita Medical Inc (RCEL), BioVie Inc (BIVI), Boston Omaha Corp (BOC), Caledonia Mining Corp PLC (CMCL), Cara Therapeutics Inc (CARA), Citius Pharmaceuticals Inc (CTXR), Fortrea Holdings Inc (FTRE), Harrow Inc (HROW), Infinera Corp (INFN), NCR Atleos Corp (NATL), Ocean Biomedical Inc (OCEA), Orchestra BioMed Holdings Inc (OBIO), Paysafe Ltd (PSFE), Sanara Medtech Inc (SMTI), Southland Holdings Inc (SLND), StoneCo Ltd (STNE), Terawulf Inc (WULF), Theravance Biopharma Inc (TBPH), Urban One Inc (UONEK), UroGen Pharma Ltd (URGN), Verrica Pharmaceuticals Inc (VRCA), Voyager Therapeutics Inc (VYGR).

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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.