Stocks Move Higher on Strength in Chip Stocks and Positive Corporate News

The S&P 500 Index ($SPX) (SPY) today is up +0.85%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.64%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.11%.

Stocks today are moderately higher, recovering some of last Friday’s sharp sell-off as chip stocks move higher.  Also, some positive corporate news is giving stocks a lift today. Palantir Technologies is up more than +8% and Dell Technologies is up more than +5% following news that both companies will join the S&P 500 as part of the latest quarterly change to the index before the open of trading on Sep 23.  Also, Boeing is up more than +4% on optimism that a labor deal with its largest union will avoid a strike at its Seattle-area factories.

The markets are looking ahead to US consumer price news on Wednesday to see if inflation falls enough to allow the Fed to ease monetary policy aggressively.  The consensus is for Aug CPI to ease to +2.6% y/y from +2.9% y/y in July.  Also, Aug CPI ex-food and energy is expected to remain unchanged from July at +3.2% y/y. 

Weakness in consumer and producer prices in China fuels concerns about deflation and signals slack consumer demand, which is negative for global growth prospects and bearish for stocks. Today’s news showed China Aug CPI rose +0.6% y/y, weaker than expectations of +0.7% y/y.  Also, Aug PPI fell -1.8% y/y, weaker than expectations of -1.5% y/y. 

The markets are discounting the chances at 100% for a -25 bp rate cut for the September 17-18 FOMC meeting and at 28% for a -50 bp rate cut at that meeting.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is up +0.71%.  China's Shanghai Composite fell to a 7-month low and closed down -1.06%.  Japan's Nikkei Stock 225 dropped to a 1-month low and closed down by -0.48%.

Interest Rates

December 10-year T-notes (ZNZ24) today are down -6 ticks.  The 10-year T-note yield is up +2.3 bp to 3.731%.  Dec T-notes today are moderately lower as a rebound in stocks reduces safe-haven demand for T-notes.  Also, higher European government bond yields today are weighing on T-note prices.  In addition, supply pressures are undercutting T-notes as the Treasury will auction $119 billion of T-notes and T-bonds this week, beginning with Tuesday’s auction of $58 billion of 3-year T-notes. 

European government bond yields today are moving higher.  The 10-year German bund yield is up +3.0 bp to 2.203%.  The 10-year UK gilt yield is up +2.1 bp to 3.908%.

Eurozone Sep Sentix investor confidence unexpectedly fell -1.5 to an 8-month low of -15.4, weaker than expectations of an increase to -12.2.

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

US Stock Movers

Chip stocks are climbing today to give the overall market a boost. ARM Holdings Plc (ARM) is up more than +4% to lead gainers in the Nasdaq 100.  Also, Nvidia (NVDA) and Marvell Technology (MRVL) are up more than +3%.  In addition, Qualcomm (QCOM) is up more than +2%, and Analog Devices (ADI), GlobalFoundries (GFS), Applied Materials (AMAT), ON Semiconductor (ON), Texas Instruments (TXN), KLA Corp (KLAC), Advanced Micro Devices (AMD), and Intel (INTC) are up more than +1%. 

Palantir Technologies (PLTR) is up more than +11%, and Dell Technologies (DELL) is up more than +5% following news that both companies will join the S&P 500 as part of the latest quarterly change to the index before the open of trading on Sep 23.

Boeing (BA) is up more than +3% to lead gainers in the Dow Jones Industrials on optimism that a labor deal with its largest union will avoid a strike at its Seattle-area factories.

Moderna (MRNA) is up more than +5% to lead gainers in the S&P 500 after the UK’s Medicines and Healthcare Products Regulatory Agency authorized Moderna’s updated Covid vaccine targeting the JN.1 variant.

Summit Therapeutics (SMMT) is up more than +38% after the latest data from trials of its lung cancer drug ivonescimab developed in partnership with Akeso, showed “statistically significant improvement” in progression-free survival compared to Merk & Co’s Keytruda. 

MarineMax (HZO) is up more than +3% after Citigroup upgraded the stock to buy from neutral with a price target of $44.   

United States Steel (X) is up more than +2% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $42. 

Steel Dynamics (STLD) is up more than +1% after JPMorgan Chase upgraded the stock to neutral from underweight. 

Managed healthcare stocks are under pressure today.  Humana (HUM) is down more than -5% to lead losers in the S&P 500.  Also, UnitedHealth Group (UNH) is down more than -2% to lead losers in the Dow Jones industrials.  

Merck & Co (MRK) is down more than -2% after the latest data from trials of Summit Therapeutics lung cancer drug ivonescimab showed “statistically significant improvement” in progression-free survival compared to Merk & Co’s Keytruda. 

Church & Dwight (CHD) as down more than -1% after Morgan Stanly downgraded the stock to equal weight from overweight. 

Take-Two Interactive Software (TTWO) is down more than -2% after it recorded a -10% decline in weekly in-app purchases in the week ended Sep 8, the biggest drop among gaming companies tracked by Bloomberg using data from Apptopia.

Invitation Homes (INVH) is down -0.53% after RBC Capital Markets downgraded the stock to sector perform from outperform.

Colgate-Palmolive (CL) is down -0.78% after Deutsche Bank downgraded the stock to hold from buy.

Earnings Reports (9/9/2024)

Apartment Income REIT Corp (AIRC), Aviat Networks Inc (AVNW), Avid Bioservices Inc (CDMO), Calavo Growers Inc (CVGW), Dakota Gold Corp (DC), Dakota Gold Corp (DC), Limoneira Co (LMNR), Matrix Service Co (MTRX), Mission Produce Inc (AVO), Oracle Corp (ORCL).

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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.