The S&P 500 Index ($SPX) (SPY) this morning is up +0.26%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.13%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.24%. 

US stock indexes this morning are moderately higher, with the S&P 500 and Nasdaq 100 posting 2-week highs.  Q1 earnings optimism, positive corporate news, and lower bond yields today are boosting the overall market.  Tesla is up more than +12% after Bloomberg reported the company passed key data-security and privacy requirements in China and will partner with Baidu to deploy its Full-Self Driving feature.  Also, Domino’s Pizza is up more than +4% after reporting stronger-than-expected Q1 income from operations.  In addition, Apple is up more than +3% after Bernstein upgraded the stock to outperform.

The weakness in megacap technology stocks today is limiting gains in the overall market as the stocks give back some of last week’s sharp gains. 

Q1 earnings results have been mostly better than expected, a supportive factor for stocks.  According to data compiled by Bloomberg Intelligence, about 81% of the S&P 500 companies that have already reported have beaten Q1 earnings estimates. 

The markets will focus on the results of the Tue/Wed FOMC meeting and comments from Fed Chair Powell on just how long the Federal Reserve is willing to wait before cutting interest rates.  Recent US price data signals stubborn underlying inflation that has pushed back rate cut expectations.  Also, earnings results on Tuesday from Amazon.com and on Thursday from Apple will provide market direction. 

The US Apr Dallas Fed manufacturing outlook survey unexpectedly fell -0.1 to -14.5, weaker than expectations of an increase to -11.2.

The markets are discounting the chances for a -25 bp rate cut at 2% for the next FOMC meeting on April 30-May 1 and 13% for the following meeting on June 11-12.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is down -0.39%.  China's Shanghai Composite rose to a 7-month high and closed up +0.79%.  Japan's Nikkei Stock Index did not trade with Japanese markets closed for the Showa Day holiday.

Interest Rates

June 10-year T-notes (ZNM24) this morning are up +8 ticks.  The 10-year T-note yield is down -4.7 bp at 4.616%.  T-notes prices today are moderately higher. Strength in European government bonds today is providing carryover support to T-notes.  Also, short covering ahead of the Tue/Wed FOMC meeting and post-meeting comments from Fed Chair Powell boosts T-note prices. 

European government bond yields today are moving lower.  The 10-year German bund yield is down -4.4 bp at 2.530%.  The 10-year UK gilt yield is down -2.8 bp at 4.296%.

The Eurozone Apr economic confidence indicator unexpectedly fell -0.6 to 95.6, weaker than expectations of an increase to 96.7.

German Apr CPI (EU harmonized) rose +2.4% y/y, stronger than expectations of +2.3% y/y.

ECB Governing Council member Wunsch said the ECB should be cautious about the signal that a second consecutive interest rate cut in July would send to investors as "cutting again in July would be interpreted by markets to mean that we're going to cut every meeting, and that would lead to repricing that might go too far." 

US Stock Movers

Tesla (TSLA) is up more than +12% to lead gainers in the S&P 500 and Nasdaq 100 after Bloomberg reported the company passed key data-security and privacy requirements in China and will partner with Baidu to deploy its Full-Self Driving feature. 

Albemarle (ALB) is up more than +6% after a weekend article in Barron’s said the stock could turn around now that it has put a lid on additional expansions.

Paramount Global (PARA) is up more than +4% after Bloomberg reported that the Redstone family and Skydance Media have both offered concessions to make a possible change in control at the company more appealing to investors. 

Apple (APPL) is up more than +3% to lead gainers in the Dow Jones Industrials after Bernstein upgraded the stock to outperform from market perform with a price target of $195. 

Domino’s Pizza (DPZ) is up more than +4% after reporting Q1 income from operations of $210.4 million, above the consensus of $197.9 million. 

Heartland Financial USA (HTLF) is up more than +18% after UMB Financial agreed to acquire the company for about $2 billion or $45.74 a share. 

Laboratory Corp of America Holdings (LH) is up more than +3% after it received FDA approval for its companion diagnostic for use with Pfizer’s BEQVEZ to treat hemophilia B. 

AT&T (T) is up more than +2% after Barclays upgraded the stock to overweight from equal weight with a price target of $20. 

Franklin Resources (BEN) is down more than -4% to lead losers in the S&P 500 after reporting Q2 adjusted EPS of 56 cents, below the consensus of 57 cents. 

Megacap technology stocks are weaker today and are weighing on the overall market on some giveback from last week’s sharp gains.  Alphabet (GOOGL) is down more than -2%, and Meta Platforms (META) and Microsoft (MSFT) are down more than -1%.  Also, Netflix (NFLX) is down -0.80%, and Nvidia (NVDA) is down -0.78%.

Intel (INTC) is down more than -1% to lead losers in the Dow Jones Industrials, adding to last Friday’s -9% plunge after forecasting weaker-than-expected Q2 revenue.

Southwest Airlines (LUV) is down more than -2% after Jeffries downgraded the stock to underperform from hold with a price target of $20.

Lululemon Athletica (LULU) is down -0.51% after Barclays downgraded the stock to equal weight from overweight.

Earnings Reports (4/29/2024)

Arch Capital Group Ltd (ACGL), Domino's Pizza Inc (DPZ), Everest Group Ltd (EG), F5 Inc (FFIV), Franklin Resources Inc (BEN), NXP Semiconductors NV (NXPI), ON Semiconductor Corp (ON), Paramount Global (PARA), Revvity Inc (RVTY), SBA Communications Corp (SBAC), Welltower Inc (WELL).

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