Today the S&P 500 index ($SPX) (SPY) rose +0.19%, the Dow Jones Industrial Average index ($DOWI) (DIA) fell -0.43%, and the Nasdaq 100 index ($IUXX) (QQQ) rose +0.63%.
Stock indexes were mixed today. Gains in big tech stocks helped lift the broader market. Carnival also rose more than 5% after reporting revenue and EBITDA above consensus and expected EBITDA. U.S. consumer confidence came in above expectations in June, helping the broader market maintain its gains.
Fed Governor Bowman said today that there are some upside risks to the inflation outlook and that “we are not yet at a point where it is appropriate to cut rates,” a hawkish comment that sent bond yields higher and weakened stocks. Bowman added that “we no longer expect the Fed to cut rates this year and have shifted our outlook for rate cuts to 2025.”
The Conference Board’s U.S. consumer confidence index for June fell 0.9 points to 100.4, beating the forecast of 100.0.
The Richmond Fed’s manufacturing index fell 10 points in June, below expectations of a -3 point drop.
The U.S. S&P CoreLogic Composite 20 Home Price Index fell to +7.20% y/y in April, beating expectations of +7.00% y/y from +7.46% y/y in March.
The US Chicago Fed National Activity Index for June unexpectedly increased by +0.44 to 0.18, beating a previously expected decline to -0.25.
Markets are awaiting the release of the Fed’s preferred inflation gauge, the U.S. core PCE deflator for May, on Friday to gauge whether upward price pressures are easing, which could pave the way for the Fed to start cutting interest rates. The consensus is that the core PCE deflator for May fell to +2.6% y/y from +2.8% y/y in April.
Markets are pricing in a 10% chance of a 25bp cut at the next FOMC meeting on July 30-31, and a 64% chance at the following meeting on September 17-18.
Stocks are being supported by generally strong first-quarter earnings results. First-quarter revenue is expected to grow 7.1% year over year, well above expectations of a 3.8% increase ahead of earnings season. About 81% of S&P 500 companies beat first-quarter earnings expectations, according to data compiled by Bloomberg Intelligence.
Overseas stock markets were mixed today. The Euro Stoxx 50 Index fell -0.49%. China’s Shanghai Composite Index fell to its lowest in four months, closing at -0.44%. Japan’s Nikkei Stock Average rose to its highest level in a week and a half, closing at +0.95%.
Interest level
The September 10-year Treasury note (ZNU24) fell one tick today. The 10-year Treasury yield rose +0.6 basis points to 4.238%. Treasuries gave up early gains and fell slightly today following hawkish comments from Fed Chairman Bowman. Bowman said, “The Fed does not expect to cut rates this year, and has revised its rate cut outlook to 2025.” Also, the Treasury Department is scheduled to auction $211 billion in Treasury and floating rate notes this week, starting with today’s $69 billion 2-year Treasury note auction, which is weakening supply pressures for Treasuries.
Treasury prices initially rose today, supported by continued strength in 10-year German Bunds. They were also supported by lower inflation expectations, as the 10-year breakeven inflation rate fell to a one-week low of 2.211% today.
European government bond yields are falling today. The 10-year German Bund yield is down -2.3bp to 2.396%. The 10-year UK Government Bond yield is down -1.5bp to 4.065%.
Swaps markets are pricing in a 7% chance of the ECB cutting rates by 25 basis points at its July 18 meeting and a 67% chance at its September 12 meeting.
US stock trends
Mega-cap tech stocks are up today, leading the overall market. Nvidia (NVDA) is up over +3% and is the top gainer on the Nasdaq 100. Meta Platforms (META) is up over +2% and Amazon.com (AMZN) is up over +1% and is the top gainer on the Dow Jones Industrial Average. Alphabet (GOOGL) and Tesla (TSLA) are up over +1%.
Cruise line operator shares are rising today after Carnival announced second-quarter revenues of $5.78 billion, beating the consensus estimate of $5.69 billion, and third-quarter adjusted EBITDA guidance of $2.66 billion, beating the consensus estimate of $2.62 billion. As a result, Carnival (CCL) is up more than 5%, making it the top gainer in the S&P 500. Norwegian Cruise Line Holdings (NCLH) is up more than 4%, and Royal Caribbean Cruises Limited (RCL) is up more than 3%.
Apple (AAPL) rose nearly 1% after Maxim Group LLC raised its price target on the stock to $195 from $178.
Capri Holdings (CPRI) rose more than 2% after Wells Fargo raised the stock to overweight from equal weight and set a $43 price target.
Gap (GPS) rose more than 1% after TD Cowen set a $30 price target on the stock and upgraded it to buy from hold.
Insmed Inc. (INSM) shares rose more than 1% after Barclays raised its price target on the stock to $90 from $63.
Trump Media & Technology (DJT) rose more than 4%, following a 20% surge on Monday, after the company said late Friday that it would receive more than $69.4 million in proceeds from the cash exercise of stock warrants.
Pool Corporation (POOL) fell more than 7%, leading the decline in the S&P 500 index, after the company cut its full-year EPS forecast to $11.04-$11.44 from a previous estimate of $13.19-$14.19, well below the consensus estimate of $13.11. Other construction stocks also fell on the news, with Home Depot (HD) falling more than 3% to be the top decliner in the Dow Jones Industrial Average, Tractor Supply (TSCO) dropping more than 4%, and Lowe’s (LOW) dropping more than 3%.
Norfolk Southern (NSC) shares fell more than 4% after Susquehanna Financial cut its price target on the stock to $245 from $265.
Paramount Global (PARA) is down more than 2% after Goldman Sachs reinstated the stock with a sell recommendation and a $9.50 price target.
Builders First Source (BLDR) fell more than 5% after Wedbush cut its price target on the stock to $175 from $215.
TD Synnex (SNX) fell more than 8% after it reported second-quarter revenue of $13.95 billion, below the consensus estimate of $14.1 billion, and forecast third-quarter revenue of $13.3 billion to $14.9 billion, below the midpoint consensus estimate of $14.5 billion.
Shares of Spirit Aero (SPR) fell more than 5% after Bloomberg reported that Boeing had changed its proposed financing for the company from an all-cash to a mostly stock deal.
Birkenstock (BIRK) fell more than 3% after holder L. Catterton Management offered 14 million shares through Morgan Stanley and JPMorgan Chase.
Earnings Report (June 25, 2024)
Carnival Corporation (CCL), FedEx Corporation (FDX), Ocean Biomedical Inc. (OCEA), Progress Software Corporation (PRGS), TD Synex Corporation (SNX), and Worthington Enterprises Inc. (WOR).
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On the date of publication, Rich Asplund did not hold (either directly or indirectly) any 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.
