Stocks Stabilize after Monday’s Sharp Losses

The S&P 500 Index ($SPX) (SPY) today is up +0.25%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.17%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.11%.

US stocks today are slightly higher, recovering some of Monday’s sharp losses.  A sharp rebound in Japanese stocks today provided carryover support to US stocks. Japan’s Nikkei Stock Index surged more than +10% today as a weaker yen sparked a rally in Japanese exporters after the Bank of Japan (BOJ) said it was holding a three-way meeting with the Ministry of Finance and the Financial Services Agency met in Tokyo to discuss international markets.  The Nikkei Stock Index plunged by more than -12% on Monday after a rally in the yen to a 7-month high against the dollar caused a further unwinding of the yen carry trade. 

Some positive corporate news today is also boosting stocks.  Kenvue is up more than +13% after reporting stronger-than-expected Q2 net sales.   Also, Molson Coors Beverage is up more than +5% after reporting better-than-expected Q2 net sales.  In addition, Uber Technologies is up more than +4% after reporting stronger-than-expected Q2 gross bookings.

The US June trade deficit shrank to -$73.1 billion from a revised -$75.1 billion in May, a larger deficit than expectations of -$72.5 billion and a negative factor for Q2 GDP.

The market consensus is that Q2 earnings for the S&P 500 companies will rise +9% y/y.  About half of the companies in the S&P 500 have reported thus far.  According to Bloomberg, most reporting companies have beaten their earnings consensus, but only 43% have beaten revenue expectations, the lowest percentage in five years.

The markets are discounting the chances at 100% for a -25 bp rate cut for the September 17-18 FOMC meeting and at 86% for a -50 bp rate cut at that meeting.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is down -0.69%.  China's Shanghai Composite recovered from a 5-3/4 month low and closed up +0.23%.  Japan's Nikkei Stock 225 closed up sharply by +10.23%.

Interest Rates

September 10-year T-notes (ZNU24) today are down -10 ticks.  The 10-year T-note yield is up +2.1 bp at 3.809%.  Sep T-notes are under pressure today from a slight recovery in US equity markets, which has curbed safe-haven demand for government debt.  Also, supply pressures are weighing on T-notes as the Treasury will auction $58 billion of 3-year T-notes later today as part of this week’s $125 billion quarterly refunding operation.  Losses in T-notes were limited by carryover support from a rally in European government bonds.

European government bond yields today are lower.  The 10-year German bund yield is down -4.9 bp at 2.142%. The 10-year UK gilt yield is down -0.5 bp at 3.864%.

Eurozone June retail sales fell -0.3% m/m, weaker than expectations of -0.1% m/m and the biggest decline in 6 months.

German Jun factory orders rose +3.9% m/m, stronger than expectations of +0.5% m/m and the largest increase in 6 months.

Swaps are discounting the chances of a -25 bp rate cut by the ECB at 100% for the September 12 meeting.

US Stock Movers

Kenvue (KVUE) is up more than +12% to lead gainers in the S&P 500 after reporting Q2 net sales of $4.00 billion, stronger than the consensus of $3.93 billion.

Molson Coors Beverage (TAP) is up more than +5% after reporting Q2 net sales of $3.25 billion, stronger than the consensus of $3.18 billion.

Palantir Technologies (PLTR) is up more than +8% after reporting Q2 revenue of $678.1 million, better than the consensus of $652.8 million, and raising its full-year revenue forecast to $2.74 billion-$2.75 billion from a previous estimate of $2.68 billion-$2.69 billion, stronger than the consensus of $2.74 billion.

Trimble (TRMB) is up more than +5% after reporting Q2 revenue of $870.8 million, better than the consensus of $862.6 million, and raising the lower end of its full-year revenue forecast to $3.59 billion -$3.67 billion from a previous forecast of $3.57 billion-$3.67 billion. 

Uber Technologies (UBER) is up more than +3% after reporting Q2 gross bookings of $39.95 billion, above the consensus of $39.70 billion. 

Planet Fitness (PLNT) is up more than +4% after reporting Q2 adjusted EPS of 71 cents, above the consensus of 66 cents. 

Caterpillar (CAT) is up more than +1% after reporting Q2 adjusted EPS of $5.99, above the consensus of $5.53, and said it sees a full-year operating profit margin above the top end of its target. 

Henry Schein (HSIC) is down more than -5% to lead losers in the S&P 500 after reporting Q2 net sales of $3.14 billion, weaker than the consensus of $3.26 billion.

Vulcan Materials (VMC) is down more than -4% after reporting Q2 adjusted Ebitda of $603 million, below the consensus of $615 million, and cutting its full-year adjusted Ebitda forecast to $1.00 billion-$2.15 billion from a previous forecast of $2.15 billion-$2.30 billion, weaker than the consensus of $2.19 billion. 

Expeditors International of Washington (EXPD) is down more than -3% after reporting Q2 operating income of $223.9 million, weaker than the consensus of $231.2 million.

Apple (AAPL) is down more than -2% to lead losers in the Dow Jones Industrials and Nasdaq 100 after Monday’s ruling on Google by a US judge that Google illegally monopolized the search market through exclusive deals might impact the more than $20 billion Apple collects annually from Google.

Teradata (TDC) is down more than -13% after reporting Q2 revenue of $436 million, below the consensus of $446.9 million.   

Tempur Sealy International (TPX) is down more than -3% after reporting Q2 adjusted EPS of 63 cents, below the consensus of 64 cents, and cut its full-year adjusted EPS forecast to $2.45-$2.65 from a prior estimate of $2.60-$2.90, weaker than the consensus of $2.67.

Earnings Reports (8/6/2024)

Airbnb Inc (ABNB), Amgen Inc (AMGN), Assurant Inc (AIZ), Axon Enterprise Inc (AXON), Baxter International Inc (BAX), Broadridge Financial Solutions (BR), Builders FirstSource Inc (BLDR), Caterpillar Inc (CAT), Constellation Energy Corp (CEG), DaVita Inc (DVA), Devon Energy Corp (DVN), Duke Energy Corp (DUK), Expeditors International of Washington (EXPD), Fidelity National Information (FIS), Fortinet Inc (FTNT), Fox Corp (FOXA), Henry Schein Inc (HSIC), IDEXX Laboratories Inc (IDXX), International Flavors & Fragrance (IFF), Jacobs Solutions Inc (J), Kenvue Inc (KVUE), Marathon Petroleum Corp (MPC), 

MarketAxess Holdings Inc (MKTX), Molson Coors Beverage Co (TAP), Mosaic Co/The (MOS), Sempra (SRE), STERIS PLC (STE), Super Micro Computer Inc (SMCI), TransDigm Group Inc (TDG), Trimble Inc (TRMB), Uber Technologies Inc (UBER), Vulcan Materials Co (VMC), Wynn Resorts Ltd (WYNN), Yum! Brands Inc (YUM), 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.