Mixed Market Performance as Corporate Earnings Weigh on Stocks

The S&P 500 Index ($SPX) (SPY) is down -0.33%, while the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.03%. The Nasdaq 100 Index ($IUXX) (QQQ) sees a larger decline, down -1.12%.

Corporate Setbacks Drag Down Market

Today, stock performance is mixed, highlighted by the Dow Jones reaching a new all-time high. However, disappointing corporate forecasts are holding back the overall market. HP Inc. has dropped over -13% after projecting first-quarter adjusted EPS below expectations. Dell Technologies also reported weaker-than-anticipated Q3 total net revenue and is down more than -12%. Additionally, Symbotic shares fell over -38% due to delays in filing its annual Form 10-K, triggered by a financial recognition error.

Easing Yields Amid Mixed Economic Signals

Despite the negative corporate news, market sentiment was somewhat supported by mixed U.S. economic data that led to lower T-note yields. The 10-year T-note yield fell to a 3-1/2 week low. Notably, October capital goods orders—excluding aircraft and parts, which serve as a proxy for capital spending—unexpectedly fell, while personal consumption growth for Q3 GDP was revised down.

Jobless claims reflected divergent trends: initial claims dropped unexpectedly to a 7-month low but continuing claims rose to a 3-year high, suggesting a complex labor market condition.

Mortgage Activity Shows Growth

The U.S. MBA mortgage applications increased by +6.3% in the week of November 22, supported by a +12.4% rise in the purchase mortgage sub-index. Conversely, refinancing applications declined by -2.6%. The average 30-year fixed mortgage rate slightly decreased to 6.86% from the previous week’s 6.90%.

Surprising Consumer Trends and Rate Cut Expectations

U.S. Q3 GDP figures remained unchanged at 2.8%, consistent with expectations, although personal consumption was adjusted downwards from 3.7% to 3.5%. In October, capital goods orders fell -0.2% month-over-month, contrasting expectations for a slight increase.

Additionally, the November MNI Chicago PMI fell to 40.2, indicating a steep contraction in economic activity. Personal spending rose by +0.4% in October, aligning with estimates, while personal income growth exceeded expectations at +0.6%.

As for inflation, the core PCE price index increased by +0.3% month-over-month and +2.8% year-over-year, meeting forecasted levels. Furthermore, pending home sales saw an unexpected rise of +2.0% in October.

Market anticipates a 69% chance of a -25 bp rate cut at the upcoming December 17-18 FOMC meeting.

Global Market Trends Mixed

International indices displayed mixed results today. The Euro Stoxx 50 is down -0.62%, while China’s Shanghai Composite Index rebounded, closing up by +1.53%. Japan’s Nikkei Stock 225 finished with a loss of -0.80%.

Interest Rates and Bond Yields

December 10-year T-notes (ZNZ24) rose +9 ticks as the yield declined -4.5 bp to 4.262%. The 10-year T-note climbed to a 3-1/2 week high, supported by strength in European bonds. Supply pressures may cap further gains as the Treasury prepares to auction $44 billion in 7-year T-notes.

European bond yields are decreasing, with the 10-year German bund dipping to a 1-3/4 month low of 2.135%. Similarly, the 10-year UK gilt yield fell to a 4-week low of 4.288%.

The German GfK consumer confidence index dropped to -23.3, its lowest in 7 months, missing expectations of -18.8.

European Central Bank officials caution against aggressive interest rate cuts, stating that existing borrowing costs are near neutral levels.

Swaps are projecting a 100% probability for a -25 bp rate cut by the ECB in its December 12 meeting, with a 15% chance for a -50 bp cut.

Notable Company Movements

HP Inc (HPQ) leads decliners in the S&P 500, down more than -13% after forecasting Q1 adjusted EPS between 70 cents-76 cents, below the consensus estimate of 86 cents. Dell Technologies (DELL) is down over -12%, reporting Q3 net revenue of $24.37 billion, which falls short of the $24.59 billion consensus.

Other losers include Autodesk (ADSK) and Workday (WDAY), down more than -7% after reporting margins and revised revenue estimates that missed expectations.

Symbotic (SYM) plummeted over -38% due to delays in its annual filing process.

On a brighter note, Ambarella (AMBA) rose more than +8% after exceeding EPS expectations, while Urban Outfitters (URBN) surged over +15% after reporting better-than-anticipated net sales.

Upgrades also helped stocks like Embecta (EMBC) and Paramount Global (PARA) gain traction in today’s market.

Upcoming Earnings Reports

Keep an eye on the following reports: Anavex Life Sciences Corp (AVXL), Dakota Gold Corp (DC), Golden Ocean Group Ltd (GOGL), and Immersion Corp (IMMR) are set to release their financials on November 27, 2024.

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.
More news from Barchart

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.