Stocks Climb as US Weekly Jobless Claims Ease Economic Concerns

The S&P 500 Index ($SPX) (SPY) today is up +0.99%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.81%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.10%.

US stocks are trading higher today after US weekly initial unemployment claims fell more than expected, signaling labor market strength and easing economic concerns that arose after last Friday’s weaker-than-expected July payroll report.  Also, chip stocks recovered some of Wednesday’s losses and are trading higher today, boosting the overall market.

Some positive corporate news is also supportive of stocks.  Eli Lilly is up more than +10% after raising its full-year revenue forecast.  Also, Zillow Group is up more than +11% after reporting stronger-than-expected Q2 revenue. In addition, HubSpot is up more than +6% after reporting Q2 adjusted EPS above consensus and raising its full-year adjusted EPS forecast.

Strength in the yen weighed on Japanese stocks today as the Nikkei Stock Index closed down -0.74%, putting some pressure on US stock index futures.  The yen moved higher even after a summary of opinions from the BOJ's July 31 policy meeting showed officials expected monetary policy to remain accommodative even after they raised interest rates, suggesting they didn't expect the move to be big enough to disrupt global financial markets.

Financial markets have been in turmoil since last week when the BOJ unexpectedly raised interest rates, which sparked a surge in the yen to a 7-month high against the dollar and fueled a rapid unwinding of the yen carry trade that dragged down risk assets globally. 

The market consensus is that Q2 earnings for the S&P 500 companies will rise +9% y/y.  More than half 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 76% for a -50 bp rate cut at that meeting.

Overseas stock markets today are lower.  The Euro Stoxx 50 is down -0.29%.  China's Shanghai Composite closed unchanged.  Japan's Nikkei Stock 225 closed down -0.74%.

Interest Rates

September 10-year T-notes (ZNU24) today are down -10 ticks.  The 10-year T-note yield is up +6.4 bp at 4.007%.  T-notes gave up overnight gains and turned lower today after US weekly jobless claims fell more than expected, signaling labor market strength that is hawkish for Fed policy.  Supply pressures are also negative for T-notes as the Treasury will auction $25 billion of 30-year bonds later today to conclude this week’s $125 billion August quarterly refunding operation. 

European government bond yields today are higher.  The 10-year German bund yield is up +0.9 bp at 2.277%.  The 10-year UK gilt yield rose to a 1-week high of 3.990% and is up +3.8 bp at 3.987%.

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 moving higher today and are giving the overall market a boost.  ON Semiconductor (ON) is up more than +4%.  Also, Marvell Technology (MRVL), Microchip Technology (MCHP), and Lam Research (LRCX) are up more than +3%.  NXP Semiconductors (NXPI), Micron Technology (MU), Broadcom (AVGO), KLA Corp (KLAC), and  ARM Holdings Plc (ARM) are up more than +2%. 

Viatris (VTRS) is up more than +11% to lead gainers in the S&P 500 after reporting Q2 adjusted net income of $826.5 million, better than the consensus of $820.2 million.

Eli Lilly (LLY) is up more than +10% after raising its full-year revenue forecast to $45.4 billion-$46.6 billion from a previous forecast of $43.6 billion. 

Parker-Hannifin (PH) is up more than +8% after reporting Q4 net sales of $5.19 billion, stronger than the consensus of $5.08 billion.

Datadog (DDOG) is up more than +7% to lead gainers in the Nasdaq 100 after reporting Q2 adjusted EPS of 43 cents, better than the consensus of 37 cents, and raising its full-year adjusted EPS estimate to $1.62-$1.66 from a previous estimate of $151-$1.57.

Zillow Group (ZG) is up more than +14% after reporting Q2 revenue of $572 million, well above the consensus of $538.2 million.

CRH Plc (CRH) is up more than +7% after raising its full-year net income forecast to $3.70 billion-$3.85 billion from a previous estimate of $3.55 billion-$3.80 billion, stronger than the consensus of $3.67 billion. 

SharkNinja (SN) is up more than +12% after reporting Q2 net sales of $1.25 billion, stronger than the consensus of $1.09 billion.

Vornado Realty Trust (VNO) is up more than +3% after BMO Capital Markets upgraded the stock to outperform from market perform with a price target of $40. 

Monster Beverage (MNST) is down more than -12% to lead losers in the S&P 500 after reporting Q2 net sales of $1.90 billion, below the consensus of $2.02 billion.

McKesson (MCK) is down more than -11% after reporting Q1 revenue of $79.3 billion, weaker than the consensus of $82.65 billion.

Warner Bros Discovery (WBD) is down more than -11% after reporting Q2 revenue of $9.71 billion, weaker than the consensus of $10.12 billion. 

Dutch Bros (BROS) is down more than -27% after projecting it will open 150 to 165 new shops, at the lower end of its previous guidance. 

Celsius Holdings (CELH) is down more than -3% after Bank of America downgraded the stock to underperform from neutral with a price target of $32. 

Walt Disney (DIS) is down more than -1% to lead losers in the Dow Jones Industrials after Deutsche Bank cut its price target on the stock to $115 from $130. 

Earnings Reports (8/8/2024)

Akamai Technologies Inc (AKAM), Eli Lilly & Co (LLY), EPAM Systems Inc (EPAM), Expedia Group Inc (EXPE), Gilead Sciences Inc (GILD), Insulet Corp (PODD), Martin Marietta Materials Inc (MLM), News Corp (NWSA), NRG Energy Inc (NRG), Paramount Global (PARA), Parker-Hannifin Corp (PH), Solventum Corp (SOLV), Take-Two Interactive Software (TTWO), Viatris Inc (VTRS), Vistra Corp (VST).

More Stock Market News from Barchart

• Is Wall Street Bullish or Bearish on VICI Properties Stock?
• Super Micro Computer Stock: You’ll Regret Not Buying the Dip
• Las Vegas Sands Stock Outlook: Is Wall Street Bullish or Bearish?
• Are Wall Street Analysts Predicting Centene Stock Will Climb or Sink?

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.