What you need to know…
The S&P 500 Index ($SPX) (SPY) on Wednesday closed +0.82%, the Dow Jones Industrials Index ($DOWI) (DIA) closed +0.40%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up. up +1.04%.
On Wednesday, stocks posted moderate gains, with the S&P 500 and Nasdaq 100 climbing to new record highs. Stocks have rallied on optimism that a resilient U.S. economy will continue to fuel corporate earnings. Stellar earnings results boosted market sentiment Wednesday, with Emerson Electric closing up more than +10% after reporting better-than-expected Q1 net sales and boosting its full-year adjusted EPS forecast. Also, cybersecurity stocks rose after Fortinet reported Q4 earnings above consensus. In addition, Chipotle Mexican Grill closed up +7% after reporting Q4 earnings above consensus.
Stocks shrugged off welcoming comments from several Fed members who suggested they were in no rush to cut interest rates. Also, Wednesday’s US economic reports on Dec’s trade deficit and Dec’s consumer credit were negative for stocks.
The December US trade deficit widened to -$62.2 billion, a larger deficit than expectations of -$62.0 billion and a negative factor for Q4 GDP.
US Dec consumer credit increased by +$1.561 billion, weaker than expectations of +$16.0 trillion and the smallest increase in 4 months.
Richmond Fed President Barkin said he is “very supportive” of the Fed’s patient stance in determining when to begin easing monetary policy.
Boston Fed President Collins said she is looking for more evidence that inflation is on a sustainable path toward the Fed’s 2% target before cutting interest rates “later this year.”
Minneapolis Fed President Kashkari said, “We can take time to evaluate data before cutting interest rates,” and he sees two to three 25-bp rate hikes this year as appropriate now.
The markets are discounting the chances of a -25 bp rate cut at 21% at the March 19-20 FOMC meeting and 82% for that -25 bp rate cut at the next April 30-1 meeting of May
The yield on US and European government bonds rose on Wednesday. The 10-year T note rose +0.4 bp to 4.104%. The 10-year German bund yield rose +2.5 bp to 2.316%. The 10-year UK gilt yield rose +3.8 bp to 3.988%.
ECB Executive Board member Schnabel said that due to sticky service inflation, a resilient labor market, a notable easing of financial conditions and tensions in the Red Sea, “this cautions against adjusting the policy stance too soon.”
German Dec industrial production fell -1.6% m/m, weaker than expectations of -0.5% m/m and the biggest decline in 9 months.
Foreign stock markets settled mixed on Wednesday. The Euro Stoxx 50 closed down -0.26%. China’s Shanghai Composite Index closed up +1.44%. Japan’s Nikkei Stock Index closed down -0.11%.
Today’s stock movers…
Emerson Electric (EMR) closed up more than +10% after reporting Q1 net sales of $4.12 billion, better than the consensus of $3.91 billion, and boosting its full-year adjusted EPS forecast to $5.30-$5.45 from a previous forecast of $5.15-$5.35. .
Chipotle Mexican Grill (CMG) closed up +7% after reporting Q4 revenue of $2.52 billion, above consensus of $2.49 billion.
Cybersecurity stocks are rising today after Fortinet reported Q4 billings of $1.86 billion, better than the consensus of $1.62 billion. As a result, Palo Alto Networks (PANW) closed up more than +6% to lead gainers in the Nasdaq100. Also, Crowdstrike Holdings (CRWD) closed up more than +5%, and Zscaler (ZS) closed up more than +4%. In addition, Fortinet (FTNT) closed up more than +3%, and SentinelOne (S) closed up more than +2%.
Generac Holdings (GNRC) closed up more than +6% after CFRA upgraded the stock to strong buy from hold with a price target of $145.
Prudential Financial (PRU) closed up more than +5% after reporting Q4 operating income pre-tax of $1.25 billion, stronger than the consensus of $1.23 billion.
Ford Motor (F) closed up more than +5% after reporting Q4 adjusted Ebitda of $1.10 billion, stronger than the consensus of $997.4 million, and forecast 2024 adjusted Ebitda of $10 billion – $12 billion, above the consensus of $9.24 billion.
Veralto (VLTO) closed up more than +5% after reporting Q4 adjusted EPS of 87 cents, stronger than the consensus of 80 cents, and forecast Q1 adjusted EPS of 73 cents-78 cents, the midpoint above the consensus of 74 cents.
Assurant ( AIZ ) closed up more than +3% after reporting Q4 net premiums earned of $2.42 billion, above consensus of $2.35 billion.
VF Corp (VFC) closed up more than -9% to lead losers in the S&P 500 after reporting Q3 revenue of $2.96 billion, weaker than the consensus of $3.24 billion.
Amgen ( AMGN ) closed up more than -6% to lead losers in the Dow Jones Industrials and Nasdaq 100 after forecasting 2024 adjusted EPS of $18.90-$20.30, the midpoint weaker than the $19.83 consensus.
Gilead Sciences ( GILD ) closed up more than -4% after forecasting 2024 adjusted EPS of $6.85-$7.25, the midpoint below the $7.20 consensus.
Omnicron Group ( OMC ) closed up more than -3% after reporting a Q4 operating margin of 15.9%, below consensus of 16.2%.
Dayforce (DAY) closed down more than -2% after forecasting 2024 revenues of $1.72 billion – $1.73 billion, below the consensus of $1.74 billion.
Aptiv Plc (APTV) closed up more than -2% after Morgan Stanley downgraded the stock to underweight of equal weight with a price target of $74.
Snap (SNAP) closed down more than -34% after reporting Q4 revenue of $1.36 billion, below consensus of $1.38 billion.
Gartner ( IT ) closed down more than -2% after CFRA downgraded the stock to sell from hold with a price target of $383.
Through the markets…
March 10-year T-notes (ZNH24) closed down -3 ticks on Wednesday, and the 10-year T-note yield rose +0.4 bp to 4.104%. Mar T notes closed slightly lower on Wednesday. Hawkish comments from several Fed members weighed on T-note prices as they all suggested they were in no rush to cut interest rates. Also, Wednesday’s rally in the S&P 500 to a record high stalled safe haven for T-notes.
T-notes found support Wednesday in some safe-haven concerns about regional banks after Moody’s Investors Service cut New York Community Bancorp’s credit rating to junk. Also, strong demand for the Treasury’s $42 billion 10-year T-note supported T-notes, as the auction was awarded at 4.093%, below the 4.105% when-issued yield at the 1 pm EST deadline and a sign of solid demand.
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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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.