Stock Indexes Slightly Higher as They Consolidate Below Record Highs

The S&P 500 Index ($SPX) (SPY) today is up +0.09%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.23%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.02%.

Stocks today are slightly higher, consolidating the past week’s rally to record highs.  Higher bond yields today sparked some profit-taking and long liquidation pressures in stocks after following five straight sessions of gains.  Stocks have rallied sharply over the past week, with the S&P 500, Dow Jones Industrials, and the Nasdaq 100 posting new record highs on speculation President-elect Trump will boost corporate profits through tax cuts and reduced regulation.  

The markets are looking ahead to Wednesday’s US consumer price report for October, with Oct CPI expected to climb to +2.6% y/y, up from +2.4% y/y in Sep, and core Oct CPI expected to remain unchanged from Sep at +3.3% y/y.  Also, Friday’s report on retail sales will be looked at to see if consumer spending is holding up.  Oct retail sales are expected to be up +0.3% m/m, and Oct retail sales ex-autos are also expected to be up +0.3% m/m.

Of the 85% of companies in the S&P 500 that have released Q3 earnings so far, 75% surpassed the estimates, slightly below the 3-year average.  According to Bloomberg Intelligence, companies in the S&P 500 have reported an average +8.4% y/y increase in quarterly earnings in Q3, more than double the preseason forecast.

The markets are discounting the chances at 65% for a -25 bp rate cut at the December 17-18 FOMC meeting.

Overseas stock markets today are lower.  The Euro Stoxx 50 is down -1.00%.  China's Shanghai Composite Index closed down -1.39%.  Japan's Nikkei Stock 225 closed down -0.40%.

Interest Rates

December 10-year T-notes (ZNZ24) today are down by -9 ticks.  The 10-year T-note yield is up +8.6 bp to 4.390%. T-notes are under pressure today from carryover weakness in European government bonds.  Also, concerns about inflationary pressures of future policies from President-elect Trump are weighing on T-notes. 

European government bond yields today are moving higher.  The 10-year German bund yield rebounded from a 1-1/2 week low of 2.299% and is up +1.5 bp to 2.342%.  The 10-year UK gilt yield is up +4.6 bp to 4.471%.

The German Nov ZEW survey expectations of economic growth unexpectedly fell -3.7 to 7.4 versus expectations of an increase to 13.2.

ECB Governing Council member Rehn said disinflation in the Eurozone is "well on track," and the growth outlook "seems to be weakening," and "that strengthens the case for an ECB rate cut in December."

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 24% for a -50 bp rate cut at the same meeting.

US Stock Movers

Mosaic (MOS) is down more than -3% after reporting Q3 net sales of $2.8 billion, weaker than the consensus of $3.14 billion.

Neurogene (NGNE) is down more than -40% after a disclosure indicated an emerging serious adverse event in a trial participant for the experimental Rett syndrome drug. 

Ross Stores (ROST) are down more than -1% after Citigroup downgraded the stock to neutral from buy, citing uncertainty tied to the CEO transition. 

Alnylam Pharmaceuticals (ALNY) is down more than -3% after Wolfe Research downgraded the stock to underperform from peer perform with a price target of $205.   

Knight-Swift Transportation Holdings (KNX) is down more than -1% after Citigroup downgraded the stock to sell from neutral with a price target of $56. 

Airbnb (ABNB) is down more than -2% after Phillip Securities downgraded the stock to reduce from neutral with a price target of $120. 

Baxter International (BAX) is down more than -1% after cutting its quarterly dividend to 17 cents per share from 29 cents and after CFRA downgraded the stock to sell from hold. 

Tyson Foods (TSN) is up more than +8% to lead gainers in the S&P 500 after reporting Q4 adjusted EPS of 92 cents, stronger than the consensus of 72 cents.

Honeywell International (HON) is up more than +5% to lead gainers in the Nasdaq 100 after Elliot Investment Management said it built a $5 billion stake in the company and is calling for a breakup of the company.

Live Nation Entertainment (LYV) is up more than +3% after reporting Q3 adjusted operating income of $909.8 million, stronger than the consensus of $856.6 million. 

Nvidia (NVDA) is up more than +1% after Redburn initiated coverage on the stock with a buy recommendation and a price target of $178.

Shopify (SHOP) is up more than +22% after reporting Q3 revenue of $2.16 billion, which is better than the consensus of $2.12 billion. 

SentinelOne (S) is up more than +2% after Deutsche Bank upgraded the stock to buy from hold with a price target of $32. 

Twilio (TWLO) is up more than +3% after Wells Fargo Securities upgraded the stock to overweight from equal weight with a price target of $120. 

Earnings Reports (11/12/2024)

Amdocs Ltd (DOX), Archer-Daniels-Midland Co (ADM), Azenta Inc (AZTA), Cava Group Inc (CAVA), GRAIL Inc (GRAL), Home Depot Inc/The (HD), Light & Wonder Inc (LNW), Maplebear Inc (CART), Mosaic Co/The (MOS), Natera Inc (NTRA), Occidental Petroleum Corp (OXY), Repligen Corp (RGEN), Rocket Cos Inc (RKT), Roivant Sciences Ltd (ROIV), Shift4 Payments Inc (FOUR), Skyworks Solutions Inc (SWKS), Spotify Technology SA (SPOT), Tyson Foods Inc (TSN), ZoomInfo Technologies Inc (ZI).

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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.