Stock Market Update: S&P 500 Hits Record High Amid Earnings Optimism
The S&P 500 Index ($SPX) (SPY) is up by +0.60%, while the Dow Jones Industrials Index ($DOWI) (DIA) is down by -0.15%. The Nasdaq 100 Index ($IUXX) (QQQ) has risen by +1.00%.
Stocks are primarily rising today, with the S&P 500 achieving a new all-time high and the Nasdaq 100 reaching its highest point in nearly three months. Optimism surrounding Q3 corporate earnings is driving these gains, following significant rallies in bank stocks last Friday, spurred by earnings reports from JPMorgan Chase and Wells Fargo. The strength of chip stocks has also contributed to the overall market’s upward movement. Conversely, declines in Boeing and Caterpillar have negatively impacted the Dow Jones Industrials. Trading volume is lower than usual today, largely due to the Columbus Day holiday, which has closed trading in the cash Treasury market, although stock trading remains active.
China’s trade figures provided disappointing news, which is a concern for global economic growth. In September, China’s exports rose by +2.4% year-over-year, falling short of the expected +6.0%. Imports increased by +0.3% year-over-year, also below the anticipated +0.8%.
Additionally, China’s September Consumer Price Index (CPI) rose by +0.4% year-over-year, lower than the expected +0.6%, and the Producer Price Index (PPI) fell by -2.8% year-over-year, not meeting the forecasted -2.6%. This marks the 24th consecutive month of declining producer prices.
Tensions in the Middle East continue to weigh on market sentiment. With ongoing military actions in Gaza and Lebanon, the Israel Defense Force (IDF) has deployed additional troops and continued airstrikes. Investors are closely monitoring Israel’s responses to regional provocations, including an October 1 missile strike from Iran.
The upcoming Q3 earnings reports will likely influence the near-term trajectory of stocks. Bloomberg Intelligence projects that S&P 500 companies will report a +4.2% increase in quarterly earnings from the same period last year, down from the earlier estimate of +7.9% in July.
Currently, markets are pricing in an 84% probability of a -25 basis point rate cut during the FOMC meeting on November 6-7, while the likelihood of a -50 basis point cut stands at 0%.
Globally, stock markets are mostly positive today. The Euro Stoxx 50 has risen to a two-week high with a gain of +0.33%. The Shanghai Composite in China closed up +2.07%. Japan’s Nikkei Stock 225 was closed today for the Health Sports Day holiday.
Interest Rates
December 10-year T-notes (ZNZ24) have decreased by -16 ticks. Trading in the cash Treasury market is inactive today due to the Columbus Day holiday. The decline in T-notes stems from pressure from falling European government bonds and a reduced demand for safe-haven investments as stocks exhibit strength. The recent positive consumer and producer price reports from the U.S. are dampening expectations of aggressive rate cuts from the Federal Reserve.
European government bond yields have risen as well. The yield on 10-year German bunds has increased by +1.8 basis points to 2.283%. In the UK, the yield on 10-year gilts reached a 3-1/4 month high at 4.251%, up +4.1 basis points.
Swaps indicate a 95% chance of a -25 basis point rate cut by the European Central Bank (ECB) at Thursday’s meeting.
US Stock Movers
Chip stocks are leading the market upward today. ARM Holdings Plc (ARM) gained over +3%, driving gains in the Nasdaq 100. Other notable performers include Nvidia (NVDA), Applied Materials (AMAT), Lam Research (LRCX), Marvell Technology (MRVL), ASML Holding NV (ASML), and KLA Corp (KLAC), all increasing by more than +2%. Broadcom (AVGO) and Qualcomm (QCOM) are both up over +1%.
Stocks tied to cryptocurrencies are also advancing, with Bitcoin (^BTCUSD) climbing over +2% to a two-week high. Consequently, Coinbase Global (COIN), Marathon Digital (MARA), MicroStrategy (MSTR), and Riot Platforms (RIOT) have all posted gains exceeding +1%.
Longboard Pharmaceuticals (LBPH) surged more than +51% following its agreement to be acquired by H. Lundbeck A/S for $2.6 billion.
Vistra Corp (VST) rose more than +3% after BNP Paribas Exane started coverage with an outperform recommendation and a price target of $231. Meanwhile, SentinelOne (S) gained over +3% after Piper Sandler upgraded its rating to overweight with a $32 price target. Elastic NV (ESTC) also saw an increase of more than +4% following an upgrade from William Blair to outperform from market perform.
PG&E Corp (PCG) is up over +1% after Jeffries initiated coverage with a buy rating and a price target of $24.
On the downside, Caterpillar (CAT) is down more than -3% after Morgan Stanley downgraded it to underweight from equal weight, setting a new price target of $332. Boeing (BA) is down over -2% following its announcement of a global workforce reduction of about 10% and $5 billion in charges across its commercial airplanes and defense sectors.
AutoZone (AZO) dropped more than -1% after Goldman Sachs double-downgraded its rating to sell from buy, with a price target of $2,917. Amgen (AMGN) also declined by more than -1% following a downgrade by Truist Securities to hold from buy.
VF Corp (VFC) fell over -3% as Wells Fargo Securities downgraded it to underweight, setting a price target of $15. Charles River Laboratories (CRL) and AppLovin (APP) also saw declines of more than -1% after negative coverage changes.
Earnings Reports (10/14/2024)
Hingham Institution for Savings (HIFS).
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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.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
