Positive Earnings Boost Stock Markets Today
The S&P 500 Index ($SPX) (SPY) is up +0.31%, the Dow Jones Industrials Index ($DOWI) (DIA) has increased by +0.64%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.11%.
Stocks are seeing moderate gains today, with the Dow Jones Industrials reaching a 1-week high. Positive news from companies is driving this upward trend. Super Micro Computer has surged over +10% after announcing it expects to file delayed 10-K and 10-Q reports within Nasdaq’s allotted timeframe. Ross Stores also performed well, gaining more than +4% after reporting stronger-than-expected Q3 earnings and improving its EPS forecast for 2025.
The rise in global bond prices is giving additional support to equity markets. Today, 10-year German bunds reached a 1-month high, which has helped lift T-note prices. T-notes are also benefiting from reports suggesting that President-elect Trump favors Kevin Warsh for the Treasury Secretary role. Warsh is known for his bond-friendly stance and concerns about debt levels.
On the other hand, fears regarding the Eurozone’s economic health are curtailing stock gains. An unexpected contraction in the Eurozone’s November S&P PMI and a downgrade of Germany’s Q3 GDP have heightened these concerns. Additionally, rising tensions from the ongoing Ukraine-Russia conflict are contributing to the cautious mood.
Currently, of the 90% of S&P 500 companies that have reported Q3 earnings, 75% exceeded analysts’ expectations, albeit slightly below the three-year average. Bloomberg Intelligence indicates that these firms have shown an average +8.5% year-over-year growth in quarterly earnings for Q3, which is more than double what analysts predicted before the season began.
The markets currently estimate a 59% chance of a -25 basis point rate cut at the upcoming December 17-18 Federal Reserve meeting.
In international markets, the tone is mixed. The Euro Stoxx 50 is up +0.31%, whereas China’s Shanghai Composite Index has dropped sharply by -3.06%, marking a 2.5-week low. Japan’s Nikkei Stock 225, however, closed up +0.68%.
Interest Rates
December 10-year T-notes (ZNZ24) are up +5 ticks today, with the yield down -1.6 bp to 4.406%. Gains in T-notes reflect a rally in European government bonds and the positive perception surrounding the potential appointment of Kevin Warsh as Treasury Secretary.
European government bond yields are trending lower, with the yield on 10-year German bunds dropping to a 1-month low of 2.235%. The 10-year UK gilt yield also fell to a 3-week low of 4.363%.
Key economic indicators show the Eurozone’s November S&P manufacturing PMI fell -0.8 to 45.2, below the expectation of stability at 46.0. Similarly, the composite PMI decreased -1.9 to 48.1, indicating the steepest contraction in ten months.
Germany’s Q3 GDP was also cut from +0.2% quarter-over-quarter to +0.1%, and from -0.2% year-over-year to -0.3%.
Swaps indicate a full 100% likelihood of a -25 basis point rate cut by the European Central Bank at its upcoming meeting on December 12, with a 45% chance of a steeper -50 basis point cut.
US Stock Movers
Super Micro Computer (SMCI) leads gainers in the S&P 500 and Nasdaq 100 with an increase of over +10% after confirming its filing of delayed reports.
Copart (CPRT) has risen more than +7% following Q1 revenue of $1.15 billion, surpassing expectations of $1.10 billion.
The Gap (GAP) is also up over +8% after reporting a Q3 operating margin of 9.13%, beating the consensus of 8.17%, and adjusting its 2025 gross margin estimate higher.
Ross Stores (ROST) reported stronger-than-expected Q3 EPS of $1.48, leading to more than a +4% gain, while also raising its 2025 EPS forecast to between $6.10 and $6.17.
Elastic NV (ESTC) has surged over +21% after reporting a Q2 adjusted EPS of 59 cents, significantly exceeding the consensus estimate.
Nike (NKE) rose over +2% after Needham & Co. initiated coverage with a buy recommendation and a price target of $84.
Viking Therapeutics (VKTX) is up more than +2% after receiving a buy recommendation and a target price of $109 from B Riley Securities.
NetApp (NTAP) gained over +1% after reporting Q2 net revenue of $1.66 billion, above the expected $1.64 billion.
On the downside, Intuit (INTU) fell more than -3% as it projected Q2 adjusted EPS significantly below expectations.
Palo Alto Networks (PANW) has decreased over -3% after a downgrade from HSBC, now rating it as a reduce from hold, setting a price target of $291.
Reddit (RDDT) experienced a -7% drop reportedly due to user connection issues with its website.
Nvidia (NVDA) declined over -1%, as its Q4 revenue forecast only slightly exceeded estimates.
Similarly, Alphabet (GOOGL) fell more than -1%, compounding losses after the Justice Department proposed significant changes to the company.
Tenet Healthcare (THC) and HCA Healthcare (HCA) are both down more than -1% following downgrades by Raymond James.
Earnings Reports (11/22/2024)
Expect earnings reports from 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), and Spire Global Inc (SPIR).
On the date of publication, Rich Asplund did not hold (either directly or indirectly) positions in any of the securities mentioned. All information and data in this article are meant solely for informational purposes. For further details, please view the Barchart Disclosure Policy
here.
The views and opinions expressed herein are solely those of the author and do not necessarily represent those of Nasdaq, Inc.
