Stocks Soar with Earnings on Tap

Rich Asplund - Barchart - Mon Apr 22, 10:25AM CDT

The S&P 500 Index ($SPX) (SPY) is up +1.33%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +1.12%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.53%.

US stock indexes today are surging higher. Reduced geopolitical tensions are positive for stocks after it appears that the Iran-Israel exchange of attacks may be over for the time being. Also, a +2% rebound in Nvidia is supportive for the overall market as it recovers some of last Friday’s -10% plunge.

On the negative side for stocks today, Cardinal Health is down -3.9% after saying its pharmaceutical distribution contracts with OptumRx will not be renewed. In addition, Tesla is down more than -3% and is dragging the Nasdaq 100 into negative territory after cutting prices on the vehicles it sells in China in an attempt to stem the slide in sales.

This week, the market awaits quarterly earnings results from four of the “Magnificent Seven” megacap technology stocks. Also, market attention is on this Friday’s core PCE deflator, the Fed’s preferred inflation gauge, to assess when the Fed might begin cutting interest rates.

The US Mar Chicago Fed national activity index rose +0.06 to a 4-month high of 0.15, stronger than expectations of 0.07.

The markets are discounting the chances for a -25 bp rate cut at 3% for the next FOMC meeting on April 30-May 1 and 19% for the following meeting on June 11-12.

Overseas stock markets today are mixed. The Euro Stoxx 50 is up +0.35%. China's Shanghai Composite closed down -0.67%. Japan's Nikkei Stock Index closed up +1.00%.

Interest Rates

June 10-year T-notes (ZNM24) this morning are down -2 ticks. The 10-year T-note yield is up +0.3 bp at 4.623%. Strength in stocks today has curbed safe-haven demand for T-notes. Also, supply pressures are negative for T-note prices as the Treasury will sell $183 billion of T-notes this week, beginning with Tuesday’s $69 billion auction of 2-year T-notes. T-notes recovered from their worst levels as short-covering emerged after 10-year German bunds erased losses and moved higher when ECB Governing Council member Centeno said the ECB could cut interest rates by more than 100 basis points this year.

European government bond yields today are moving higher. The 10-year German bund yield fell back from a 4-3/4 month high of 2.553% and is down -02.8 bp at 2.492%. The 10-year UK gilt yield is down -2.2 bp to 4.208%.

The Eurozone Apr consumer confidence index rose +0.2 to a 2-year high of -14.7, slightly weaker than expectations of -14.5.

US Stock Movers

Nvidia (NVDA) is up more than +2% to boost technology stocks as it recovered from some of last Friday’s -10% plunge.

Vista Outdoor (VSTO) is up more than +5% after it advised MNC Capital to increase its offer price from $37.50 per share.

Robert Half (RHI) is up more than +2% after Truist Securities upgraded the stock to hold from sell, citing improving trends for the company.

Cardinal Health (CAH) is down more than -5% to lead losers in the S&P 500 after saying its pharmaceutical distribution contracts with OptumRx will not be renewed. Sales to OptumRx accounted for 16% of its consolidated revenue in fiscal 2023.

Verizon Communications (VZ) is down more than -3% to lead losers in the Dow Jones Industrials after reporting Q1 operating revenue of $33.0 billion, weaker than the consensus of $33.2 billion.

Tesla (TSLA) is down more than -4% to lead losers in the Nasdaq 100 after cutting prices on the vehicles it sells in China in an attempt to stem the slide in sales.

Informatica (INFA) is down more than -9% after the Wall Street Journal reported that talks for Salesforce to acquire it have cooled as both companies have failed to agree on price.

Newmont (NEM) is down more than -1% to lead mining stocks lower, with the price of gold down more than -2% to a 1-week low an silver down more than -5% to a 2-week low.

Earnings Reports (4/22/2024)

Alexandria Real Estate Equities (ARE), Ameriprise Financial Inc (AMP), Brown & Brown Inc (BRO), Cadence Design Systems Inc (CDNS), Globe Life Inc (GL), Nucor Corp (NUE), Packaging Corp of America (PKG), Truist Financial Corp (TFC), Verizon Communications Inc (VZ).

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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.