What you need to know…

The S&P 500 Index ($SPX) (SPY) today is up +0.63%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.32%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.21%.

U.S. stocks this morning are moderately higher, with the S&P 500 at a 9-3/4 month high, the Dow Jones Industrials at a 5-week high, and the Nasdaq 100 at a 14-month high.  Strength in technology stocks is leading the overall market higher, with Tesla up more than +5% to lead the way after General Motors announced that it is joining Tesla’s charging network for electric vehicles. 

Higher T-note yields this morning are limiting the upside in stocks. The markets are looking ahead to interest rate decisions from the Fed, ECB, and BOJ next week.  Market expectations for the Fed to raise the fed funds target range by +25 bp at next week’s FOMC meeting rose to 30% today from 28% on Thursday. 

Global bond yields are mixed.  The 10-year T-note yield is up +3.7 bp at 3.755%.  The 10-year German bund yield is down -1.6 bp at 2.386%, and the UK 10-year gilt yield is up +0.7 bp at 4.240%.

On the bullish side of stocks, Tesla is up more than +5% after General Motors said it would adapt its electric vehicles to Tesla’s Superchargers. Also, Etsy is up more than +6% after a report from Sensor Tower showed Etsy’s May app downloads rose +27% y/y and beat other e-commerce competitors.    In addition, Salesforce is up more than +3% after it said it was expanding its AI product offerings with Marketing GPT and Commerce GPY to adapt to customer needs.   

On the bearish side, weakness in regional bank stocks is weighing on the overall market.  Also, Target is down more than -1% after Citigroup downgraded the stock.  In addition, Xcel Energy is down more than -1% after a report from the Boulder County Sheriff’s Office regarding a 2021 fire. 

Overseas stock markets are mixed.  The Euro Stoxx 50 is down -150.12%.  China’s Shanghai Composite closed up +0.55%, and Japan’s Nikkei Stock Index closed up +1.97%. 

Today’s stock movers…

Tesla (TSLA) is up more than +5% to lead gainers in the Nasdaq 100 after General Motors said it would adapt its electric vehicles to Tesla’s Superchargers, following a similar move from Ford Motor last month.  General Motors (GM) also rose more than +4% on the news.

Salesforce (CRM) is up more than +3% to lead gainers in the Dow Jones Industrials after it said it was expanding its AI product offerings with Marketing GPT and Commerce GPY to adapt to customer needs.   

Etsy (ETSY) is up more than +6% to lead gainers in the S&P 500 after Sensor Tower data showed Etsy’s May app downloads rose +27% y/y and beat other e-commerce competitors. 

Adobe (ADBE) is up more than +5% after Wells Fargo Securities upgraded the stock to overweight from neutral with a price target of $525. 

Corning (GLW) is up more than +4% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $38.

Carvana (CVNA) is up more than +3% after it said it expects Q2 adjusted earnings would be $50 million, well above the consensus of a loss of -$3.6 million. 

Netflix (NFLX) is up more than +1% after research firm Antenna reported that Netflix averaged more than 70,000 new customers a day in the four days after it began telling customers they could no longer share passwords on May 23. 

Braze Inc (BRZE) is up more than +18% after reporting Q1 revenue of $101.8 million, above the consensus of $99.2 million, and raised its 2024 revenue forecast to $442.5 million-$446.5 million from a previous forecast of $433 million-$438 million, stronger than the consensus of $436.5 million. 

Weakness in regional bank stocks is weighing on the overall market.  Comerica (CMA) is down more than -2%.  Also, Huntington Bancshares (HBAN), KeyCorp (KEY), Lincoln National (LNC), and Truist Financial (TFC) are down more than -1%.

Target (TGT) is down more than -1% after Citigroup downgraded the stock to neutral from buy, citing a deceleration in foot traffic and tough competition.

Xcel Energy (XEL) is down more than -1% after a report from the Boulder County Sheriff’s Office said hot particles from an Xcel Energy powerline were the most likely cause of one of the two wildfires in Colorado in 2021 that destroyed more than 1,000 homes.

Celanese (CE) is down more than -1% after Vertical Research Partners downgraded the stock to hold from buy.

First Watch Restaurant Group (FWRG) is down more than -4% after announcing the launch of an underwritten secondary offering of 3 million shares by funds managed by Advent International Corporation.

Across the markets…

September 10-year T-notes (ZNU23) today are down -13 ticks, and the 10-year T-note yield is up +3.7 bp at 3.755%.  Sep T-notes this morning are moderately lower as bond dealers put on short hedges in T-notes futures ahead of next week’s $90 billion auctions of T-notes and T-bonds, beginning with Monday’s $40 billion auction of 3-year T-notes and $32 billion auctions of 10-year T-notes.  T-notes recovered from their worst levels on positive carryover from a rally in 10-year Canadian bonds after this morning’s weaker-than-expected Canada May jobs report.   

The dollar index (DXY00) this morning is up +0.07%.  The dollar today recovered from a 2-1/2 week low and is modestly higher.  Higher T-note yields today are supporting the dollar.

EUR/USD (^EURUSD) today is down by -0.10%.  A rebound in the dollar today from a 2-1/2 week to higher on the day sparked long liquidation in the euro.  Also, an unexpected decline in Italy's Apr industrial production raises economic concerns for the Eurozone and is bearish for EUR/USD.  Losses in the euro are limited by central bank divergence on the prospects for the Fed to pause raising interest rates next week while the ECB raises rates.

Italy's Apr industrial production unexpectedly fell -1.9% m/m, weaker than expectations of +0.2% m/m and the biggest decline in 7 months.

USD/JPY (^USDJPY) today is up by +0.45%.  The yen is under pressure today from rising T-note yields. Also, a Bloomberg report today weighed on the yen when it said BOJ officials still see the need to continue with monetary stimulus, and they see little need to adjust yield-curve control (YCC) policy at next week’s policy meeting. 

August gold (GCQ3) this morning is down -4.2 (-0.21%), and July silver (SIN23) is down -0.023 (-0.09%).  Precious metals prices this morning gave up early gains and are slightly lower.  A stronger dollar today is bearish for metals prices.  Also, higher global bond yields are undercutting metals.  In addition, today’s rally in the S&P 500 to a 9-3/4 month high has reduced the safe-haven demand for precious metals. Losses in precious metals are limited on the prospects for the Fed to pause its rake hike campaign at next week’s FOMC meeting.

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