What you need to know…
The S&P 500 Index ($SPX) (SPY) is up +0.40% today, the Dow Jones Industrials Index ($DOWI) (DIA) is +0.22%, and the Nasdaq 100 Index ($IUXX) ( QQQ) is higher. +0.51%
Stocks this morning are moderately higher, with the S&P 500 climbing to a 3-3/4-month high and the Nasdaq 100 posting a 1-3/4-year high. Stocks are finding support on economic optimism after USQ3 GDP was revised higher and the Q3 core deflator was revised lower, fueling speculation that the US economy will continue to grow at a moderate pace with an easing of price pressures that will allow the Fed to end its interest rate hike rise campaign Lower bond yields today are also supporting stocks, with the 10-year T-note yield falling to a 2-1/2-month low. Stocks fell back from their best levels after hawkish comments from Richmond Fed President Barkin, who said the Fed should keep the option of raising interest rates on the table.
On the positive side for shares, NetApp is up more than +16% after reporting Q2 adjusted EPS above consensus and raising its 2024 adjusted EPS forecast. Also, Labor Day is up more than +10% after reporting Q3 earnings above consensus and raising its forecast for subscription revenue for 2024. In addition, General Motors is up more than +9% after saying it will increase its dividend by 33% and will implement a $10 billion buyback program.
On the downside, Hormel Foods is down more than -4% after reporting weaker-than-expected Q4 net sales. Also, Las Vegas Sands is down more than -4% on news that Miriam Adelson is selling $2 billion of the company’s stock. In addition, PG&E Corp is down more than -2% after announcing an offer of $1.5 billion of convertible senior notes due 2027 in a private placement.
US Q3 GDP was revised up by +0.3 to +5.2% (q/q annualized), stronger than expectations of +5.0%. The Q3 GDP price index was revised up by +0.1 to 3.6%, stronger than expectations of no change at 3.5%, but the Q3 core PCE deflator was revised down by -0.1 to 2.3%, weaker than expectations of no change at 2.4%.
Atlanta Fed President Bostic said, “Our research and input from business leaders tells me that the downward trajectory of inflation is likely to continue.”
Richmond Fed President Barkin said the Fed should keep the option of raising interest rates on the table if inflation proves stubborn.
The markets are discounting a 1% chance for a +25 bp rate at the next FOMC meeting on December 12-13 FOMC and a 0% chance for that +25 bp rate at the next FOMC meeting on December 30-31 January 2024. The markets are then discounting a 52% chance for a -25 bp rate cut at the March 19-20, 2024, FOMC meeting and a 113% chance for that same -25 bp rate cut reduction at April 30-May 1, 2024. , FOMC meeting.
US and European government bond yields are lower today. The 10-year T-note yield fell to a 2-1/2-month low of 4.249% and is down -4.4 bp at 4.276%. The 10-year German bund yield fell to a 4-month low of 2.412% and is down -6.6 bp at 2.430%. The 10-year UK gilt yield fell to a 1-1/2 week low of 4.053% and is down -6.8 bp at 4.105%.
Foreign stock markets are mixed. The Euro Stoxx 50 rises + 0.73%. China’s Shanghai Composite Index closed down -0.56%. Japan’s Nikkei Stock Index closed down -0.26%.
Today’s stock movers…
NetApp ( NTAP ) surged more than +16% to lead gainers on the S&P 500 in premarket trading after reporting Q2 adjusted EPS of $1.58, stronger than the consensus of $1.39, and raising its 2024 adjusted EPS forecast to $6.05-$6.25 from $6.05-$6.25. previous estimate of $5.65-$5.85, above the consensus of $5.73.
General Motors (GM) rallied more than +9% in premarket trading after saying it would boost its dividend by 33% and implement a $10 billion share buyback program.
CrowdStrike Holdings ( CRWD ) rose more than +9% to lead gainers on the Nasdaq 100 after reporting Q3 revenue of $786 million, stronger than the consensus of $777.4 million and raised its 2024 revenue forecast to $3 .05 billion from a previous forecast of $3.03 billion. -$3.04 billion, above the consensus of $3.04 billion.
Workday ( WDAY ) rose more than +10% after reporting Q3 revenue of $1.87 billion, better than the consensus of $1.85 billion, and raised its 2024 subscription revenue forecast to $6.60 billion USD from a previous estimate of USD 6.57 billion – USD 6.59 billion.
HP Enterprise (HPE) rose more than +7% after reporting Q4 adjusted EPS of 52 cents, stronger than the consensus of 50 cents, and unexpectedly raised its dividend to 13 cents per share from 12 cents.
Fluence Energy ( FLNC ) rises more than +27% after reporting Q4 total revenue of $673 million, well above consensus of $510.5 million, and forecast 2024 total revenue of $2.7 billion – 3/3 billion, the midpoint above the consensus of $2.78. a billion
Foot Locker (FL) rose more than +17% after reporting Q3 comparable sales fell -8%, a smaller decline than the -9.77% consensus, and raised its full-year sales forecast to a -8.0% decline to -8, 5% from a previous estimate of -8% to -9%.
Salesforce (CRM) rose more than +1% to lead gainers in the Dow Jones Industrial after reporting Cyber Week cyber sales reached $298 billion worldwide, up +6% y/y.
Hormel Foods ( HRL ) is down more than -4% to lead losers in the S&P 500 after reporting Q4 net sales of $3.20 billion, below the $3.26 billion consensus.
Las Vegas Sands (LVS) is down more than -4% on news that Miriam Adelson is selling $2 billion of shares in the company.
PG&E Corp (PCG) is down more than -2% after announcing an offering of $1.5 billion of convertible senior notes due 2027 in a private placement.
Patterson Cos ( PDCO ) is down more than -14% after reporting Q2 net sales of $1.65 billion, weaker than the $1.70 billion consensus.
Jabil Inc (JBL) is down more than -11% after forecasting 2024 revenue of around $31 billion, weaker than the consensus of $33.67 billion.
Okta ( OKTA ) fell more than -3% after saying hackers who breached its network two months ago stole information about all users of its customer support system, far more than the 1% of customers the company previously said were affected
Through the markets…
December 10-year T-notes (ZNZ23) are up +12 ticks this morning, with the 10-year T-note yield down -4.4 bp at 4.276%. December T-note prices this morning rose to a 2-1/2-month high, and the 10-year T-note yield fell to a 2-1/2-month low of 4.249%. T-notes have a positive carryover from rally in 10-year German bonds today to a 4-month high. T-notes extended their gains after the US Q3 core PCE deflator was revised lower, a dovish factor for Fed policy.
The dollar index (DXY00) today recovered from a 3-1/2 month low and is up +0.02%. The dollar bounced back today after US Q3 GDP was revised higher than expected. Also, relaxation of consumer price pressures in Germany and Spain is appropriate for ECB policy and has weighed on the euro to benefit the dollar. Strength in stocks today is curbing liquidity demand for the dollar and limiting its gains.
EUR/USD (^EURUSD) today fell from a 3-1/2 month high and is down -0.10%. Slowing price pressures in Germany and Spain knocked European government bond yields lower today and weighed on the euro. EUR/USD today initially climbed to a 3-1/2-month high on hawkish comments from ECB Governing Council member Stournaras after Eurozone economic confidence rose more than expected to a 4-month high.
ECB Governing Council member Stournaras cautioned against premature bets on when the ECB will cut interest rates, saying, “The current numbers betting on a rate cut in April seem a bit optimistic.”
Eurozone New economic confidence rose +0.3 to a 4-month high of 93.8, stronger than expectations of 93.6.
German New CPI (EU harmonized) fell to +2.3% y/y from +3.0% y/y in October, better than expectations of +2.5% y/y and the smallest pace of increase in almost 2-1/2 years
Spain New CPI (EU harmonized) unexpectedly decreased to + 3.2% y/y from + 3.5% y/y in October, better than expectations of an increase to + 3.7% y/y.
USD/JPY (^USDJPY) is down -0.05% today. The yen today extended this week’s rally to a 2-1/2 month high against the dollar. A decline in T-note yields today is boosting the yen. However, the yen fell from its best levels on comments from BOJ member Adachi, who said his preference was to wait at least until April before the BOJ exits its ultra-easy monetary policy.
BOJ member Adachi indicated his preference to wait at least until April before the BOJ abandons its ultra-easy monetary policy, saying, “We have to continue with easing patiently, and we are not in a phase to discuss an exit strategy, given the current economy and inflation.”
Dec gold (GCZ3) today is up +4.1 (+0.20%), and Dec silver (SIZ23) is up +0.230 (+0.92%). Precious metals prices are moderately higher today, with gold posting a 6-1/2 month high and silver posting a 4-1/2 month high. Precious metals are climbing today on a positive carryover from Tuesday, when Fed Governor Waller signaled that he favors a pause in Fed rates. Also, today’s decline in global bond yields is bullish for precious metals. Silver prices have support after US Q3 GDP was revised higher than expected, a positive factor for industrial metals demand. Today’s rally in stocks is curbing safe-haven demand and limiting gains in precious metals. Also, today’s recovery in the dollar to higher on the day from a 3-1/2 month low is bearish for metals.
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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.