Stocks Pressured by Higher Bond Yields and Chip Stock Weakness

The S&P 500 Index ($SPX) (SPY) this morning is down -0.14%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.33%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.43%. 

US stock indexes this morning are mixed, with the Nasdaq 100 falling to a 1-3/4 month low.  Weakness in chip stocks for a second today is weighing on the overall market. Also, rising T-note yields today are undercutting stocks. 

On the positive side, Genuine Parts Co. is up more than +11% after reporting better-than-expected Q1 adjusted EPS and raising its full-year adjusted EPS estimate.  Also, homebuilding stocks are higher after DR Horton reported stronger-than-expected Q2 revenue. 

Today’s stronger-than-expected US unemployment claims and the Philadelphia Fed reports pushed T-note yields higher and were hawkish factors for Fed policy.

Geopolitical risks in the Middle East continue to be a negative factor for stocks on concern Israel will retaliate after Iran fired a barrage of missiles and drones into Israel over the weekend.

US weekly initial unemployment claims were unchanged at 212,000, showing a stronger labor market than expectations of an increase to 215,000.

The US Apr Philadelphia Fed business outlook survey unexpectedly rose +12.3 to a 2-year high of 15.5 versus expectations of a decline to 2.0.

The markets are discounting the chances for a -25 bp rate cut at 3% for the next FOMC meeting on April 30-May 1 and 17% for the following meeting on June 11-12.

Overseas stock markets today are higher.  The Euro Stoxx 50 is up +0.14%.  China's Shanghai Composite rose to a 6-month high and closed up +0.09%.  Japan's Nikkei Stock Index recovered from a 2-month low and closed up +0.31%.

Interest Rates

June 10-year T-notes (ZNM24) this morning are down -9 ticks.  The 10-year T-note yield is up +4.1 bp to 4.629%.  June T-notes came under pressure this morning from stronger-than-expected US economic reports on weekly jobless claims and the Apr Philadelphia Fed business outlook survey.

European government bond yields today are mixed.  The 10-year German bund yield is up +1.9 bp to 2.484%. The 10-year UK gilt yield is down -0.2 bp at 4.260%.

In its monthly report, the Bundesbank updated its assessment of the German economy and said the German economy in Q1 may have seen a "slight increase" in growth, an improvement from March when they projected the economy contracted in Q1.

ECB Executive Board member de Guindos said that should officials' confidence in meeting the 2% target for consumer-price growth increase, "it would be appropriate to reduce the current level of monetary policy restriction."

Eurozone Mar new car registrations fell -5.2% y/y, the biggest decline in 20 months.

Eurozone Feb construction output rose +1.8% m/m, the biggest increase in a year.

US Stock Movers

Genuine Parts Co (GPC) is up more than +11% to lead gainers in the S&P 500 after reporting Q1 adjusted EPS of $2.22, better than the consensus of $2.17, and raising its full-year adjusted EPS estimate to $9.80-$9.95 from a previous estimate of $9.70-$9.90, above the consensus of $9.78. 

Homebuilders are climbing today after DR Horton reported Q2 revenue of $9.11 billion, stronger than the consensus of $8.28 billion.  As a result, DR Horton (DHI) is up more than +3%.  Also, Lennar (LEN), Builders FirstSource (BLDR), PulteGroup (PHM), and Toll Brothers (TOL) are up more than +2%.

Elevance Health (ELV) is up more than +3% after reporting Q1 adjusted EPS of $10.64, better than the consensus of $10.53, and raised its full-year adjusted EPS forecast to above $37.20 from a previous forecast of above $37.10, stronger than the consensus of $37.16.

Comerica (CMA) is up more than 3% after reporting Q1 average deposits of $65.31 billion, above the consensus of $63.85 billion. 

Zscaler (ZS) is up more than +1% to lead gainers in the Nasdaq 10 after KeyBanc Capital Markets upgraded the stock to overweight from sector weight with a price target of $220. 

Equifax (EFX) is down more than -9% to lead losers in the S&P 500 after reporting Q1 operating revenue of $1.39 billion, weaker than the consensus of $1.41 billion, and forecast full-year revenue of $5.67 billion-$5.77 billion, below the consensus of $5.80 billion. 

Las Vegas Sands (LVS) is down more than -6% despite reporting Q1 EPS above expectations after results at its Macau locations broadly missed consensus estimates.

Tesla (TSLA) is down more than -3% to lead losers in the Nasdaq 100 after Deutsche Banks downgraded the stock to hold from buy. 

Autodesk (ADSK) is down more than -3%, adding to Wednesday’s -5% plunge, after saying it won’t file its annual report within the 15-day extension period as it continues investigating free cash flow and non-GAAP operating margin practices. 

Chip stocks are under pressure for a second day and are weighing on technology stocks.  NXP Semiconductors NV (NXPI) and ON Semiconductor (ON) are down more than -2%.  Also, Qualcomm (QCOM), Marvel Technology (MRVL), Applied Materials (AMAT), Lam Research (LRCX), ASML Holding NV (ASML), GlobalFoundries (GFS), and Texas Instruments (TXN) are down more than -1%. 

Earnings Reports (4/18/2024)

Blackstone Inc (BX), Comerica Inc (CMA), DR Horton Inc (DHI), Elevance Health Inc (ELV), Genuine Parts Co (GPC), Intuitive Surgical Inc (ISRG), KeyCorp (KEY), Marsh & McLennan Cos Inc (MMC), Netflix Inc (NFLX), PPG Industries Inc (PPG), Snap-on Inc (SNA).

More Stock Market News from Barchart

• 1 AI Software Stock That's Winning Over Wall Street
• Analysts Expect This 'Strong Buy' Weight-Loss Stock to Double
• How to Buy PLTR for a 14% Discount, or Achieve a 47% Annual Return
• Stocks Rise Before the Open With Earnings in Focus, U.S. Economic Data and Fed Speak on Tap

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.