HomeMost PopularMarket Momentum: Stocks Show Resilience Amidst Lower Bond Yields and Quarter-End Rebalancing

Market Momentum: Stocks Show Resilience Amidst Lower Bond Yields and Quarter-End Rebalancing

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The rollercoaster ride of the stock market saw the S&P 500 Index ($SPX) (SPY) climbing up +0.86%, setting a positive tone for Wednesday. The Dow Jones Industrials Index ($DOWI) (DIA) surged by +1.22%, showcasing the power of bullish sentiment. Simultaneously, the Nasdaq 100 Index ($IUXX) (QQQ) edged up +0.39%, reflecting a mixed bag of market movements.

The closing bell revealed a sky painted with optimism as stock indexes wrapped up the day on a higher note. The dip in T-note yields played a pivotal role in supporting the market’s upward trajectory. However, amidst the sea of green, Nvidia’s slight -2% slide cast a shadow over technology stocks, putting a cap on gains in the Nasdaq 100. Overlooking the hiccups, end-of-quarter rebalancing and window dressing by stock fund managers acted as sturdy pillars, underpinning stock prices as investors geared up for the last trading day of Q1. The US stock market continued to ride the wave of positivity, buoyed by a rally in European stocks, with the Euro Stoxx 50 soaring to a new 23-year peak.

Shifting our focus to the mortgage landscape, US weekly MBA mortgage applications faced a minor setback, falling -0.7% in the week ended March 22. The refinancing mortgage sub-index plummeted by -1.6%, while the purchase mortgage sub-index witnessed a decline of -0.2%. The average 30-year fixed rate mortgage experienced a slight dip of -4 basis points, settling at 6.93% from the previous 6.97%.

The air was ripe with speculation as the markets priced in the probability of a -25 basis point rate cut at 15% for the upcoming FOMC meeting on April 30 – May 1, and a hefty 78% chance for the subsequent meeting on June 11-12.

Glancing overseas, the global stock markets painted a varied picture. The Euro Stoxx 50 made significant strides by soaring to a 23-year pinnacle and closing up +0.35%. On the flip side, China’s Shanghai Composite stumbled to a 3-1/2 week low, marking a decline of -1.26%. Meanwhile, Japan’s Nikkei Stock Index managed to cling onto gains, closing up +0.90%.

Interest Rates Rise and Fall

The drama in the financial markets continued to unfold as June 10-year T-notes (ZNM24) closed up +7.5 ticks on Wednesday. The 10-year T-note yield registered a decline of -3.8 basis points, settling at 4.194%. The uptick in June T-note prices mirrored the rally in 10-year German bunds, which touched a two-week high. Adding fuel to the fire, T-notes surged to their peak in the afternoon on strong demand witnessed during the Treasury’s $43 billion 7-year T-note auction, clinched at 4.185% – a figure lower than the 4.193% yield at the 1300 ET bidding deadline. The discourse of robust demand reverberated in the market, restricting the upside potential in T-notes amidst the robust performance of stocks.

The European bond market experienced a downturn as government bond yields tumbled. The 10-year German bund yield plummeted to a two-week low of 2.288%, concluding the day with a decline of -5.8 basis points at 2.292%. Likewise, the 10-year UK gilt yield witnessed a dip of -3.9 basis points, calming the nerves of investors.

The Eurozone Mar economic confidence index painted a rosy picture as it surged +0.8, exceeding market expectations by settling at 96.3.

ECB Governing Council member Kazaks hinted at an impending storm as he stated, “Inflation is low and will continue to fall in the whole Eurozone,” suggesting that June might usher in a period conducive for the ECB to embark on a journey of lowering borrowing costs. Echoing a similar sentiment, ECB Executive Board member Cipollone emphasized the importance of swift action, stating, “If incoming data confirm the scenario foreseen in the March projections, the ECB should stand ready to swiftly dial back its restrictive monetary policy stance.”

Top-Gainers in the US Stock Arena

The tides of fortune favored several entities, with Cintas (CTAS) emerging as a trailblazer by surging more than +8% to lead the pack of gainers in the Nasdaq 100. The stellar Q3 performance showcased by Cintas, with an adjusted EPS of $3.84 surpassing the consensus of $3.47, coupled with an upward revision in full-year EPS guidance to $14.80-$15.00 from the previous projection of $14.35-$14.65, elevated investor confidence in the stock.

Merck (MRK) joined the winners’ league by climbing more than +4% in the Dow Jones Industrials after receiving the FDA’s nod for its Winrevair drug, aimed at treating pulmonary arterial hypertension.

Marvell Technology (MRVL) basked in the limelight, recording a remarkable uptick of more than +5% post Citigroup’s unveiling of a 30-day upside catalyst for the stock in anticipation of its AI Investor event slated for the upcoming month.

The positive sentiment transcended to Extra Space Storage (EXR), which surged more than +4% following Barclays’ initiation of coverage on the stock with an overweight recommendation and a price target of $157.

Medtronic Plc (MDT) secured a spot among the gainers, moving northward by more than +3% as the FDA greenlighted its aortic valve replacement system for treating symptomatic severe aortic stenosis.

NCino (NCNO) delivered a stunning performance, skyrocketing more than +17% post its report of Q4 adjusted EPS of 21 cents, comfortably outstripping the consensus of 12 cents. Additionally, the robust forecast of 2025 adjusted EPS falling within the range of 60 cents-64 cents, as opposed to the consensus of 57 cents, further solidified investor confidence in the stock.

Novocure Ltd (NVCR) didn’t shy away from the winners’ podium, climbing more than +11% after successfully meeting the primary endpoint in a late-stage trial for its drug aimed at treating patients with brain metastases from non-small cell lung cancer.

Roivant Sciences Ltd (ROIV) managed to distinguish itself, marking an uptick of more than +7% after S&P Dow Jones Indices announced the company’s forthcoming inclusion in the S&P MidCap 400, effectively replacing Sunrun from April 1.

Not all players emerged unscathed, as Arista Networks (ANET) grappled with a dip of more than -3% to lead the parade of losers in the S&P 500. Insider selling took center stage post an SEC filing revealing President and CEO Ullal’s sale of $6.67 million worth of shares the past Friday.

Profit-scooping led to Nvidia (NVDA) witnessing a slide of more than -2%, despite boasting an impressive year-to-date surge of over +86%. The tale of profit-taking unraveled, casting a shadow on the stock’s performance.

Netflix (NFLX) braced itself for a tumble, shedding more than -2% after Wedbush’s decision to strip the stock from its Best Ideas List, citing the challenges in impressing investors this year as opposed to the previous year’s endeavors.

Salesforce (CRM) faced the music, closing down more than -1% and leading the losers in the Dow Jones Industrials. Signs of insider selling emerged post an SEC filing showcasing CEO Benioff’s sale of $4.59 million worth of shares on Monday.

Market Movers – from Highs to Lows

The stock market theater witnessed a heart-wrenching moment as Direct Digital Holdings (DRCT) grappled with a significant dip of more than -39%. Benchmark Company LLC’s decision to slash the price target on the stock from $30 to $23 acted as a catalyst in the downward spiral.

The cybersecurity realm witnessed a somber episode as profit-taking sentiments gripped the markets, with Crowdstrike Holdings (CRWD) witnessing a decline of more than -2%. Additionally, stalwarts such as Palo Alto Networks (PANW) and Zscaler (ZS) bore the brunt of the downturn, shedding more than -1%.

DraftKings (DKNG) grappled with a slide of more than -6% after ESPN’s revelation of NCAA President Baker’s efforts to ban prop bets on college athletes across various betting markets.

FedEx (FDX) found itself on shaky grounds, closing down -0.32% post BNP Paribas Exane’s decision to downgrade the stock to underperform from neutral, coupled with a revised price target of $250.

Unveiling Tomorrow’s Earnings Reports (3/28/2024)

The suspense is palatable as we await earnings reports from MSC Industrial Direct Inc (MSM) and Walgreens Boots Alliance Inc (WBA) tomorrow.

Dive deeper into the world of stocks and market trends with Barchart.

Rich Asplund affirms no direct or indirect positions in any securities mentioned in this article, solely aiming to provide informational content. For more information, refer to the Barchart Disclosure Policy for a detailed insight.

The opinions expressed in this article are a reflection of the author’s views and do not necessarily align with those of Nasdaq, Inc.

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