Mixed Market Results as Tech Stocks Struggle Amid All-Time Highs
The S&P 500 Index ($SPX) (SPY) closed Monday up +0.10%, while the Dow Jones Industrials Index ($DOWI) (DIA) gained +0.69%. In contrast, the Nasdaq 100 Index ($IUXX) (QQQ) slipped down -0.05%.
Stocks ended the day with varied results. The S&P 500 and the Dow both achieved new all-time highs, driven by optimism that President-elect Trump might enhance corporate profits through tax reforms and reduced regulations. Tesla’s shares surged over +8%, adding to last week’s impressive +26% rise, fueled by forecasts that the company could gain from a Trump administration. Additionally, stocks linked to cryptocurrencies soared amid expectations that digital assets might thrive under the new administration. However, trading volume remained below average as the cash treasury market was closed for Veterans’ Day.
On the downside, shares of chip manufacturers fell, dragging the Nasdaq 100 lower. Minneapolis Fed President Kashkari commented that a robust U.S. economy and increased productivity could lead to a smaller than expected reduction in interest rates in the upcoming months.
The price of Bitcoin (^BTCUSD) jumped by more than +14%, reaching a new all-time high as President-elect Trump’s favorable stance toward digital assets and a pro-crypto Congress energized the market.
Looking ahead, investors are anticipating Wednesday’s U.S. consumer price report for October, where the CPI is expected to rise to +2.6% year-over-year from +2.4% in September, while the core CPI is predicted to stay steady at +3.3%. The retail sales report due on Friday will also be scrutinized, with a +0.3% month-over-month increase expected in October, including a +0.3% rise in retail sales excluding autos.
Among the 85% of S&P 500 companies that have reported their third-quarter earnings, 75% beat estimates, slightly lower than the three-year average. Bloomberg Intelligence noted that these companies achieved an average earnings increase of +8.4% year-over-year, substantially exceeding initial forecasts.
The market is currently pricing in a 65% chance for a -25 basis point rate cut at the Federal Open Market Committee meeting scheduled for December 17-18.
In international markets, stocks rose across the board on Monday. The Euro Stoxx 50 climbed +1.07%, China’s Shanghai Composite Index increased by +0.51%, and Japan’s Nikkei Stock 225 edged up by +0.08%.
Interest Rates
December 10-year T-notes (ZNZ24) fell by -12 ticks on Monday. The 10-year T-note yield did not see trading as the cash Treasury market was closed. Hawkish remarks from Fed President Kashkari about a strong economy tempered investor sentiment toward T-notes. Additionally, the new record high for the S&P 500 dampened safe-haven demand, leading to lower T-note prices.
In Europe, yields on government bonds decreased. The 10-year German bund yield dropped to a 1.5-week low of 2.311% before finishing down -4.1 basis points at 2.327%. Meanwhile, the 10-year UK gilt yield also fell, ending at a 1-week low of 4.425%, down -1.0 basis point.
ECB Governing Council member Holzmann stated that there would be “no reason” against cutting interest rates during the upcoming December policy meeting, although a cut is not guaranteed. Another member, Stournaras, mentioned that as inflation decreases, the ECB might continue to lower rates, potentially reaching close to 2% by next September.
Interest rate swaps are indicating a 100% likelihood of a -25 basis point cut by the ECB in its December 12 meeting, with an 18% chance of a -50 basis point reduction.
US Stock Movers
Bristol Myers Squibb (BMY) led gains in the S&P 500, rising over +10% after AbbVie announced that its two mid-stage trials for a schizophrenia treatment did not meet their primary endpoints, potentially increasing demand for BMY’s Cobenfy drug.
Tesla (TSLA) surged more than +8%, reaching a 2.5-year high. This occurred following last week’s +26% surge in anticipation of favorable support from the Trump administration. Wedbush also raised its price target for Tesla to $400 from $300, claiming that a Trump presidency would transform prospects for the company’s autonomous and AI developments.
Stocks tied to cryptocurrencies performed strongly, with Bitcoin’s price soaring above +14% to set a new record high. As a result, Coinbase Global (COIN), Bit Digital (BTBT), MicroStrategy (MSTR), MARA Holdings (MARA), and Riot Platforms (RIOT) all gained over +17%.
Cigna Group (CI) rose more than +7% after confirming it would not pursue a merger with Humana, reiterating expectations for at least $28.40 per share in projected adjusted income for 2024 and a minimum of 10% adjusted EPS growth in 2025.
Salesforce (CRM) added over +6%, benefiting from CEO Benioff’s announcement of plans to hire 1,000 workers to strengthen the company’s AI focus.
RadNet (RDNT) skyrocketed more than +20% after releasing Q3 revenue of $461.1 million, exceeding the anticipated $441.5 million, and announcing a partnership with GE HealthCare for AI imaging technology.
Winnebago Industries (WGO) also saw a rise of over +6% after Northcoast Research upgraded the stock from neutral to buy, setting a price target of $75.
Fortinet (FTNT) gained more than +5% after HSBC upgraded its rating from hold to buy, with a price target of $111.
Chip stocks declined across the board, significantly affecting the Nasdaq 100. Companies such as Intel (INTC) and Microchip Technology (MCHP) saw losses exceeding -4%. KLA Corp (KLAC), ARM Holdings Plc (ARM), and NXP Semiconductors NV (NXPI) dropped over -3%. Additionally, Lam Research (LRCX), Micron Technology (MU), GlobalFoundries (GFS), Analog Devices (ADI), and Broadcom (AVGO) experienced declines greater than -2%.
Monolithic Power Systems (MPWR) fell sharply, leading S&P 500 decliners with a drop of over -14% due to concerns about its Blackwell allocation. AbbVie (ABBV) dropped more than -12% following disappointing trial results for its schizophrenia treatment.
Celanese (CE) lost over -7% after BMO Capital Markets downgraded it to underperform from market perform, adjusting its price target to $76. Newmont Corp (NEM) dipped more than -6% as gold prices slid more than -2%, reaching a one-month low.
Monday.com (MNDY) fell sharply by over -15% after reporting an unexpected Q3 EPS loss of -24 cents, contrary to an anticipated gain of +1 cent.
Sapiens International NV (SPNS) plunged over -26% when it reported Q3 adjusted revenue of $137.0 million, falling short of the expected $140.2 million. Revvity (RVTY) dropped over -1% when Nephron Research downgraded the stock to sell, setting a price target of $105.
Earnings Reports (11/12/2024)
Amdocs Ltd (DOX), Archer-Daniels-Midland Co (ADM), Azenta Inc (AZTA), Cava Group Inc (CAVA), GRAIL Inc (GRAL), Home Depot Inc/The (HD), Light & Wonder Inc (LNW), Maplebear Inc (CART), Mosaic Co/The (MOS), Natera Inc (NTRA), Occidental Petroleum Corp (OXY), Repligen Corp (RGEN), Rocket Cos Inc (RKT), Roivant Sciences Ltd (ROIV), Shift4 Payments Inc (FOUR), Skyworks Solutions Inc (SWKS), Spotify Technology SA (SPOT), Tyson Foods Inc (TSN), ZoomInfo Technologies Inc (ZI).
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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
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
