What you need to know…
The S&P 500 Index ($SPX) (SPY) on Tuesday closed down -0.20%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.18%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down. -0.58%.
Stocks posted moderate losses on Tuesday as some disappointing corporate earnings results weighed on the overall market. Also, semiconductor stocks pulled back on some rebound after Monday’s sharp gains. Stocks pared their losses after the release of the minutes of the Oct. 31-Nov. 1 FOMC meeting, where policymakers saw interest rates remaining restrictive for “some time.”
Losses in the broader market were contained as bond yields fell on weaker-than-expected US Chicago Fed and existing home sales reports. The weak reports reinforced expectations that the Fed will raise interest rates.
Stocks were subdued on Tuesday after Goldman Sachs told clients that the recent rally in stocks increased the risk of “disappointment in the near term” amid persistent concerns about economic growth and inflation.
On the negative side for shares, Jacobs Solutions closed more than -8% after forecasting 2024 adjusted Ebitda below consensus. Also, Lowe’s fell more than -3% after reporting a larger-than-expected decline in Q3 same-store sales and lowering its full-year adjusted revenue forecast. In addition, Kohl’s fell more than -9% after reporting a bigger-than-expected drop in Q3 same-store sales.
On the positive side, Agilent rose more than +8% after reporting stronger than expected Q4 net income. Also, Tesla closed up more than +2% after Bloomberg reported that it is nearing an agreement with India to allow exports of its cars to India from next year and set up a factory there within two years.
The US eight Chicago Fed national activity index fell -0.47 to a seven-month low of -0.49, weaker than expectations of zero.
US existing home sales for October fell -4.1% m / m to a 13-year low of 3.79 million, weaker than expectations of 3.90 million.
The minutes of the October 31st FOMC meeting were neutral to slightly hawkish as they stated, “All participants agreed that the committee can proceed with caution and that policy decisions at each meeting will continue to be based on the totals coming in. information.” Also, “Everything on the FOMC saw rates remaining restrictive for some time.”
The markets are discounting a 5% chance for a +25 bp rate at the next FOMC meeting on December 12-13 FOMC and a 5% chance for that +25 bp rate at the next FOMC meeting on December 30-31 January 2024. The markets then discount a 24% chance for a -25bp rate cut at the March 19-20, 2024, FOMC meeting and a 71% chance for that same -25bp rate cut -reduction at April 30-May 1, 2024. , FOMC meeting.
The yield on US and European government bonds fell on Tuesday. The 10-year T-note yield fell -1.2 bp to 4.408%. The 10-year German bund yield fell -4.5 bp to 2.566%. The 10-year UK gilt yield fell -2.0 bp to 4.105%.
ECB president Lagarde said the ECB cannot yet declare victory over inflation and will have to remain “vigilant” until it returns firmly to the 2% target.
Comments from ECB Governing Council member Simkus suggest he prefers to keep ECB policy steady when he said, “There is no reason to talk about a further hike this December, and market expectations that there will be ECB interest rate cuts in a few months , are too optimistic in my opinion.”
Foreign stock markets settled lower on Tuesday. The Euro Stoxx 50 closed down -0.24%. China’s Shanghai Composite Index closed down -0.01%. Japan’s Nikkei Stock Index closed down -0.10%.
Today’s stock movers…
Jacobs Solutions (J) is down more than -7% to lead losers in the S&P 500 after forecasting 2024 adjusted Ebitda of $1.53 billion – $1.60 billion, weaker than the $1.61 billion consensus.
Semiconductor stocks retreated on some return from Monday’s sharp gains. On Semiconductor (ON), Globalfoundries (GFS) and Marvell Technology (MRVL) closed more than -3%. Also, Applied Materials (AMAT), Microchip Technology (MCHP), Micron Technology (MU), Intel (INTC) and Advanced Micro Devices (AMD) closed up more than -2%.
Zions Bancorp (ZION) closed more than -4% after Citigroup downgraded the stock to neutral from buy.
Lowe’s (LOW) closed up -3% after reporting a -7.4% drop in Q3 same-store sales, weaker than consensus of -4.9%, and lowered its full-year adjusted revenue forecast to a -5% decline from prior view from 02% to -4%.
Kohl’s ( KSS ) closed up more than -8% after reporting Q3 same-store sales fell -5.5%, a bigger decline than the consensus of -3.45%.
Incyte Corp (INCY) closed down more than -2% after Goldman Sachs downgraded the stock to neutral from buy.
Live Nation Entertainment (LYV) closed down more than -2% after the Senate Permanent Subcommittee on Investigations subpoenaed the company for records related to its ticket prices, fees and resale practices.
Stanley Black & Decker (SWK) closed down more than -2% after Moody’s Investors Service downgraded the company’s senior unsecured debt rating to Baa3 from Baa2.
Agilent (A) closed up more than +8% to lead gainers in the S&P 500 after reporting Q4 net income of $1.69 billion, better than the consensus of $1.67 billion.
Medtronic Plc (MDT) closed up +4% after reporting Q2 adjusted EPS of $1.25, stronger than the consensus of $1.18.
Tesla (TSLA) closed up more than +2% to lead gainers in the Nasdaq 100 after Bloomberg reported that it is nearing an agreement with India to allow exports of its cars to India from next year and set up a factory there within two years.
Burlington Stores (BURL) closed up more than +20% after reporting Q3 comparable sales rose +6.00%, above consensus of +5.88%.
Hibbett (HIBB) closed up more than +9% after reporting Q3 EPS of $2.05, well above consensus of $1.18, and raising its 2024 EPS forecast to $8.00-$8.30 from previous estimate of $7.00-$7.75, stronger than the consensus of $7.27. .
Dick’s Sporting Goods ( DKS ) closed up more than +2% after reporting Q3 net sales of $3.04 billion, above consensus of $2.95 billion, and raised its 2024 comparable sales forecast to +0.5% to +2.0% from previous view of 0. % to + 2.0%, the midpoint above the consensus of + 1.02%.
Gen Digital (GEN) closed up more than +1% after Morgan Stanley upgraded the stock to overweight from equal with a price target of $26.
Through the markets…
December 10-year T-notes (ZNZ23) Tuesday closed up +3 ticks, and the 10-year T-note yield fell -1.2 bp to 4.408%. Dec T notes closed modestly higher on Tuesday. Weaker-than-expected US economic news on Tuesday boosted T-notes after the Octo Chicago Fed national activity index fell to a 7-month low and October existing home sales fell to a 13-year low. Also, a decline in inflation expectations supported T-notes after the 10-year flat inflation rate fell to a 1-1/4-month low Tuesday at 2.249%. T-notes retreated from their best levels on Tuesday in the slightly hawkish minutes of the Oct. 31-Nov. 1 FOMC meeting, where policymakers saw interest rates remaining restrictive for “some time.”
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As of 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 for informational purposes only. For more information, please see Barchart’s Disclosure Policy here.
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