Stocks Mixed Before Wednesday’s US CPI Report

The S&P 500 Index ($SPX) (SPY) this morning is up +0.07%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.16%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.31%. 

Stock indexes this morning are mixed.  The broader market is finding support today from a decline in bond yields.  Weakness in telecommunication stocks is weighing on the Dow Jones Industrials.

Investors are cautious ahead of Wednesday’s US CPI, which could affect expectations for the timing of the Fed’s first rate cut.  The consensus is for the US March headline CPI to rise to +3.4% y/y from Feb’s +3.2%, but for the core CPI to ease to +3.7% y/y from Feb’s +3.8%.

Q1 corporate earnings season begins in earnest this Friday with results from big banks, including JPMorgan Chase, Citigroup, and Wells Fargo.  The consensus is that S&P 500 companies will post an average of +3.9% y/y profit growth in Q1, the smallest year-over-year profit growth since 2019.

The markets are discounting the chances for a -25 bp rate cut at 5% for the next FOMC meeting on April 30-May 1 and 55% for the following meeting on June 11-12.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is down -0.66%.  China's Shanghai Composite recovered from a 1-week low and closed up +0.052%.  Japan's Nikkei Stock Index closed up +1.08%.

Interest Rates

June 10-year T-notes (ZNM24) this morning are up +10 ticks.  The 10-year T-note yield is down -4.8 bp at 4.372%. June T-note prices are moderately higher, garnering support from strength in European government bond markets. Also, position squaring ahead of Wednesday’s US CPI report is boosting T-note prices.  Supply pressures are limiting the upside in T-notes as the Treasury will auction $58 billion auction of reopened 3-year T-notes today as part of this week’s $119 billion Treasury auctions of T-notes and T-bonds. 

European government bond yields today are lower.  The 10-year German bund yield is down -4.5 bp at 2.390%. The 10-year UK gilt yield is down -5.0 bp at 4.035%.

In its quarterly Bank Lending Survey, the ECB said demand for corporate loans in the Eurozone saw a "substantial decline" in Q1 as the region continues to reel from elevated borrowing costs.

US Stock Movers

Freeport McMoRan (FCX) is up more than +3% after Bank of America Global Research upgraded the stock to buy from hold with a price target of $59. 

Nasdaq (NDAQ) is up more than +3% after Morgan Stanley named the stock a top pick with US brokers and exchanges.

Illumina (ILMN) is up more than +3% after Barclays raised its price target on the stock to $100 from $85.

Chip stocks are moving higher today on a decline in T-note yields. ON Semiconductors (ON), GlobalFoundries (GFS), Marvell Technology (MRVL), Micron Technology (MU), and Analog Devices (ADI) are up more than +2%.  Also, Broadcom (AVGO), Texas Instruments (TXN), NXP Semiconductors (NXPI), and Lam Research (LRCX) are up more than +1%. 

Amkor Technology (AMKR) is up more than +3% after Needham & Co. initiated coverage of the stock with a recommendation of buy and a price target of $40.

Alkermes Plc (ALKS) is up more than +1% after it said its ALKS 2680 demonstrated clinically meaningful and statistically significant improvements from baseline in mean sleep latency compared to a placebo in a Phase 1b study.

Newmont (NEM) is up more than +2% after gold prices rose to a new record high and silver climbed to a 2-3/4 year high. 

Digital Realty (DLR) is up more than +1% after Wells Fargo Securities upgraded the stock to overweight from equal weight with a price target of $155.

Telecommunication stocks are under pressure today, with Verizon Communications (VZ) down more than -2% to lead losers in the Dow Jones Industrials.  Also, AT&T (T), Charter Communications (CHTR), and Comcast (CMCSA) are down more than -1%.

Defense-related stocks are sliding today, with Huntington Ingalls Industries (HII), Martin Marrietta Materials (MLM), Transdigm Group (TDG), and RTX Corp (RTX) down more than -1%.

Cboe Global Markets (CBOE) is down more than -2% after Morgan Stanley downgraded the stock to equal weight from overweight.

Inmode Ltd (INMD) is down more than -4% after cutting its full-year revenue forecast to $485 million-$495 million from a previous forecast of $495 million-$505 million, weaker than the consensus of $498.8 million. 

Neogen (NEOG) is down more than -8% after cutting its full-year revenue forecast to $910 million-$920 million from a previous forecast of $935 million-$955 million, below the consensus of $938.5 million. 

Earnings Reports (4/9/2024)

Aehr Test Systems (AEHR), Dakota Gold Corp (DC), Liberty Media Corp-Liberty Liv (LLYVA), Neogen Corp (NEOG), PriceSmart Inc (PSMT), RCI Hospitality Holdings Inc (RICK), SMART Global Holdings Inc (SGH), WD-40 Co (WDFC).

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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.