Stocks Narrowly Mixed Ahead of US PPI and CPI Reports This Week
The S&P 500 Index ($SPX) (SPY) today is up +0.11%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.22%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.12%.
US stocks today are seeing support from positive corporate news. KeyCorp is up more than +13% after announcing Scotiabank entered an agreement to acquire a 14.9% pre-forma stake for a minority investment in KeyCorp. Also, Monday.com is up more than +8% after reporting Q2 adjusted EPS well above the consensus. Starbucks is up more than +3% after the Wall Street Journal reported that activist investor Starboard Value has taken a stake in the company.
On the negative side, B Riley Financial is down more than -47% after saying it expects a Q2 loss between $435 million-$475 million and suspended its quarterly dividend.
Hawkish comments on Saturday from Fed Governor Bowman helped push bond yields higher and signaled she may not yet favor Fed rate cuts when she said, "The progress in lowering inflation during May and June is a welcome development, but inflation is still uncomfortably above the FOMC's 2% goal."
The markets are awaiting US producer and consumer price reports this week that should clarify when and how much the Fed will cut interest rates. On Tuesday, July PPI is expected to ease to +2.3% y/y from +2.6% y/y in June, and July PPI ex-food and energy is expected to ease to +2.7% y/y from +3.0% y/y in June. On Wednesday, July CPI is expected to remain unchanged at +3.0% y/y from June, and July CPI ex-food and energy is expected to ease to +3.2% y/y from +3.3% y/y in June.
The market consensus is that Q2 earnings for the S&P 500 companies will rise +7.4% y/y. More than 80% of the companies in the S&P 500 have reported thus far. According to Bloomberg, most reporting companies have beaten their earnings consensus, but only 43% have beaten revenue expectations, the lowest percentage in five years.
The markets are discounting the chances at 100% for a -25 bp rate cut for the September 17-18 FOMC meeting and at 52% for a -50 bp rate cut at that meeting.
Overseas stock markets today are mixed. The Euro Stoxx 50 is up +0.02%. China's Shanghai Composite closed down -0.14%. Japan's Nikkei Stock 225 did not trade, with markets closed today for the Mountain Day holiday.
Interest Rates
September 10-year T-notes (ZNU24) today are down -3 ticks. The 10-year T-note yield is up +1.2 bp at 3.951%. T-note prices today are under pressure after Fed Governor Bowman said Saturday that “inflation is still uncomfortably above the FOMC's 2% goal," suggesting she does not yet favor the Fed cutting interest rates. Also, corporate bond supply pressures are bearish for T-notes on the outlook for as much as $25-$30 billion of corporate debt to be issued this week, which will prompt bond dealers to short T-note futures as a hedge against the new supply. Losses in T-notes are limited due to some mild short covering ahead of US producer and consumer price reports on Tuesday and Wednesday.
European government bond yields today are higher. The 10-year German bund yield is up +1.8 bp at 2.242%. The 10-year UK gilt yield is up +0.6 bp at 3.950%.
The German July wholesale price index fell -0.1% y/y, the fifteenth consecutive month wholesale prices have declined.
Swaps are discounting the chances of a -25 bp rate cut by the ECB at 96% for the September 12 meeting.
US Stock Movers
KeyCorp (KEY) is up more than +13% to lead regional bank stocks higher after announcing Scotiabank entered an agreement to acquire a 14.9% pre-forma stake for a minority investment of about $2.8 billion through an issuance of common shares at a price of $17.17 per share. Also, Citizens Financial Group (CFG) and Regions Financial (RF) are up more than +2%. Huntington Bancshares (HBAN), Truist Financial (TFC), M&T Bank (MTB), and US Bancorp (USB) are up more than +1%.
Chip stocks are moving higher today to lend support to the overall market. Nvidia (NVDA) is up more than +2%. Also, ARM Holdings Plc (ARM), KLA Corp (KLAC), Micron Technology (MU), and Applied Materials (AMAT) are up more than +1%.
Starbucks (SBUX) is up more than +3% % to lead gainers in the Nasdaq 100 after the Wall Street Journal reported that activist investor Starboard Value has taken a stake in the company.
Take-Two Interactive Software (TTWO) is up more than +2% after HSBC upgraded the stock to buy from hold with a price target of $179.
Monday.com (MNDY) is up more than +8% after reporting Q2 adjusted EPS of 94 cents, well above the consensus of 56 cents.
Qualcomm (QCOM) is down more than -3% to lead losers in the S&P 500 and Nasdaq 100 after Wolfe Research downgraded the stock to peer perform from outperform.
B Riley Financial (RILY) is down more than -47% after saying it expects a Q2 loss between $435 million-$475 million and suspended its quarterly dividend.
Hawaiian Electric Industries (HE) is down more than -16% after pegging losses from the estimated accrual of liabilities at $1.7 billion from the wildfires in Maui and issued a “going concern” risk in their financial statements until plans to finance the settlement are finalized.
HiIlenbrand Inc (HI) is down more than -4% after D.A. Davidson downgraded the stock to neutral from buy with a price target of $33.
Pilgrim’s Pride (PPC) is down more than -2% after BMO Capital Markets downgraded the stock to market perform from outperform.
Earnings Reports (8/12/2024)
Acrivon Therapeutics Inc (ACRV), Arq Inc (ARQ), Bridger Aerospace Group Holdings (BAER), Caledonia Mining Corp PLC (CMCL), Critical Metals Corp (CRML), DHT Holdings Inc (DHT), Esperion Therapeutics Inc (ESPR), Fortrea Holdings Inc (FTRE), i-80 Gold Corp (IAU), Immersion Corp (IMMR), Inhibrx Biosciences Inc (INBX), Jasper Therapeutics Inc (JSPR), Kodiak Gas Services Inc (KGS), Net Power Inc (NPWR), PACS Group Inc (PACS), Perpetua Resources Corp (PPTA), Perspective Therapeutics Inc (CATX), Pulse Biosciences Inc (PLSE), Pyxis Oncology Inc (PYXS), Sanara Medtech Inc (SMTI), Sonida Senior Living Inc (SNDA), Southland Holdings Inc (SLND), Stereotaxis Inc (STXS), Taysha Gene Therapies Inc (TSHA), Terawulf Inc (WULF), Viant Technology Inc (DSP), VirTra Inc (VTSI), XBiotech Inc (XBIT), Y-mAbs Therapeutics Inc (YMAB).
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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.
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