Markets Show Mixed Signals as Earnings Reports Roll In
Indices on the Rise Amid Positive Corporate Updates
The S&P 500 Index ($SPX) (SPY) is up +0.26%, the Dow Jones Industrials Index ($DOWI) (DIA) has increased by +0.57%, and the Nasdaq 100 Index ($IUXX) (QQQ) sees a slight rise of +0.04% today.
Today’s stock market is experiencing moderate gains, with the S&P 500 and Dow Jones Industrials hitting week-long highs. Positive corporate news is driving these increases. Super Micro Computer has soared over +11%, leading the S&P 500 and Nasdaq 100 after announcing plans to file its overdue 10-K and 10-Q reports according to Nasdaq timelines. Additionally, Ross Stores is up more than +2% following a Q3 earnings report that exceeded expectations and a raised forecast for its 2025 earnings. However, bearish trends in Nvidia and Alphabet are impacting technology stocks, limiting gains in the Nasdaq 100 Index.
Mixed Economic Data Influences Stock Sentiment
Today’s U.S. economic reports present a mixed bag for investors. The November S&P manufacturing and service PMIs showed positive growth, but the University of Michigan’s consumer sentiment index fell unexpectedly.
The U.S. November S&P manufacturing PMI rose by +0.3, reaching a four-month high of 48.8, which is slightly below the expected 48.9. Meanwhile, the November services PMI increased by +2.0 to a two-and-a-half-year high of 57.0, surpassing forecasts of no change at 55.0.
Contrastingly, the University of Michigan’s consumer sentiment index dropped by -1.2 to 71.8, falling short of predictions for an increase to 73.9.
In global markets, rising bond prices are providing a boost to stocks. The 10-year German bund has reached a one-month high, contributing to the support for U.S. Treasury note prices. Additionally, T-notes have gained traction following news that President-elect Trump is leaning towards Kevin Warsh for Treasury Secretary, a pick viewed favorably by bond markets due to Warsh’s historical stance against high deficits.
Despite these positive cues, fears about the Eurozone’s economic performance are holding back stock gains after the Eurozone November S&P PMI unexpectedly contracted and Germany’s Q3 GDP was revised downwards. Complicating matters further are the ongoing tensions from the Ukraine-Russia conflict.
Earnings Season Shows Promising Results But Mixed Outlook
So far this earnings season, 90% of S&P 500 companies have reported Q3 earnings, with 75% exceeding estimates. This is slightly below the three-year average. According to Bloomberg Intelligence, these companies have seen an average year-over-year earnings increase of +8.5% in Q3, more than double the preseason expectations.
Market sentiment is also leaning towards a 59% chance for a -25 basis points rate cut at the upcoming December 17-18 FOMC meeting.
International stock markets present mixed results today, with the Euro Stoxx 50 up +0.57%. In contrast, China’s Shanghai Composite Index has dropped sharply by -3.06%, marking a two-and-a-half-week low. Japan’s Nikkei Stock 225 closed with a +0.68% increase.
Interest Rates and Bond Market Reactions
December 10-year T-notes (ZNZ24) are up +2 ticks today. The yield on the 10-year T-note stands at 4.416%, down -0.6 basis points. This uptick in T-notes is also attributed to support from European government bond rallies, alongside speculation about Kevin Warsh’s potential Treasury Secretary appointment, which could signal stability and fiscal responsibility in the long term.
European bond yields have decreased notably, with the 10-year German bund yield dropping to a one-month low of 2.235%. Similarly, the 10-year UK gilt yield fell to a three-week low of 4.363%.
US Stock Movers and Sector Highlights
Super Micro Computer (SMCI) is leading gainers in the S&P 500 and Nasdaq 100, up over +11% on promising report filing news. Copart (CPRT) has climbed more than +8% after announcing Q1 revenue of $1.15 billion, surpassing the $1.10 billion consensus estimate.
The Gap (GAP) reports a positive swing, rising over +6% following a Q3 operating margin of 9.13% and a raised gross margin estimate for 2025. Elastic NV (ESTC) has surged more than +17% on impressive Q2 adjusted EPS results, pushing its 2025 forecast higher.
Deckers Outdoor (DECK) and Nike (NKE) both have seen gains of over +4% and +2%, respectively, due to positive analyst ratings.
Challenging Days for Some Stocks
On the downside, Palo Alto Networks (PANW) leads losses in the Nasdaq 100, down more than -4% following a downgrade by HSBC. Intuit (INTU) has also retreated over -4% after issuing lower Q2 EPS forecasts. Nvidia (NVDA) and Alphabet (GOOGL) are both showing declines, impacted by recent mixed performance forecasts and regulatory scrutiny.
Moreover, issues on Reddit’s website have seen its stock (RDDT) plummet over -7%, and Tenet Healthcare (THC) faces a drop after being downgraded by Raymond James. HCA Healthcare (HCA) is similarly down following a downgrade from outperform to market perform.
Earnings Reports (11/22/2024)
AMMO Inc (POWW), B Riley Financial Inc (RILY), Buckle Inc/The (BKE), Destination XL Group Inc (DXLG), Evolv Technologies Holdings Inc (EVLV), IES Holdings Inc (IESC), Spire Global Inc (SPIR).
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 the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
