What you need to know…

The S&P 500 Index ($SPX) (SPY) on Tuesday closed up +0.48%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.20%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.11%.

U.S. stock indexes Tuesday posted moderate gains.  A decline in T-note yields Tuesday sparked some short-covering in stocks. The 10-year T-note yield fell -1.6 bp to 2.965%, moving lower from Monday’s 3-1/4 year high of 3.008%. Stock indexes raced to their highs Tuesday morning on stronger-than-expected U.S. economic data for March factory orders and March JOLTS job openings.

Central bank actions this week could impact the near-term direction of stocks.  The FOMC began a 2-day policy meeting Tuesday and is expected to raise its federal funds target range by 50 bp on Wednesday.  On Thursday, the BOE is expected to raise its bank rate by 25 bp. The Reserve Bank of Australia on Tuesday raised its cash rate by 25 bp to 0.35%, a larger increase than expectations of +15 bp to 0.25%. 

U.S. Mar factory orders rose +2.2% m/m, stronger than expectations of +1.2% m/m and the largest increase in 10 months.

U.S. Mar JOLTS job openings unexpectedly rose +205,000 to a record 11.549 million, showing a stronger labor market than expectations of a decline to 11.200 million.

Fitch Ratings cut its 2022 China GDP estimate to 4.3% from 4.8%, citing Covid lockdowns.

Today’s stock movers…

Western Digital (WDC) closed up more than +14% Tuesday after Elliot Investment Management, which manages funds that have about a $1 billion investment in Western Digital, called for a separation of the company’s flash business and sent a letter to the company’s board urging a strategic review. 

Monolithic Power Systems (MPWR) closed up more than +11% Tuesday after it reported Q1 revenue of $377.7 million, better than the consensus of $361.2 million, and forecast Q2 revenue of $420 million-$440 million, well above the consensus of $379 million.

Catalent (CTLT) closed up more than +10% Tuesday after reporting Q3 net revenue of $1.27 billion, above the consensus of $1.22 billion, and raised its full-year revenue estimate to $4.80 billion-$4.90 billion from a prior view of $4.74 billion-$4.86 billion. 

Devon Energy (DVN) closed up more than +9% Tuesday after reporting Q1 core EPS of $1.88, above the consensus of $1.76.

Waters (WAT) closed up more than +8% Tuesday after reporting Q1 adjusted EPS of $2.80, well above the consensus of $2.33, and raised its full-year sales at a constant exchange range forecast of +7.5% to +9.0% from a prior view of +5.0% to +7.0%.

IPG Photonics (IPGP) closed up more than +7% Tuesday after reporting Q1 net sales of $370 million, stronger than the consensus of $335.9 million, and forecast Q2 revenue of $35 million-$ 385 million, the midpoint higher than the consensus of $363.6 million.

Rockwell Automation (ROK) closed down more than -14% Tuesday to lead losers in the S&P 500 after reporting Q2 adjusted EPS of $1.66, weaker than the consensus of $2.32 and cut its full-year adjusted EPS forecast to $9.20-$9.80 from a prior view of $10.50-$11.10.

Expedia Group (EXPE) closed down more than -14% Tuesday after reporting Q1 gross bookings of $24.41 billion, weaker than the consensus of $24.53 billion.  Other travel and lodging stocks fell on the news as well.  Airbnb (ABNB) closed down more than -5% to lead losers in the Nasdaq 100.  Also, Booking Holdings (BKNG) closed down by more than -3%.

FMC Corp (FMC) closed down more than -6% Tuesday after the company lowered guidance on full-year adjusted EPS to $6.70-$8.00 from a prior view of $6.80-$8.10, citing cost inflation and congestion at Chinese ports as a result of Covid lockdowns. 

Estee Lauder (EL) closed down more than -5% Tuesday after cutting its full-year adjusted EPS estimate to $7.05-$7.15 from a prior view of $7.43-$7.58, well below the consensus of $7.57.

Hilton Worldwide Holdings (HLT) closed down more than -4% Tuesday after forecasting full-year 2022 adjusted EPS of $3.77-$4.02, weaker than the consensus of $4.14. 

Across the markets…

June 10-year T-notes (ZNM22) on Tuesday closed up by +5.5 ticks, and the 10-year T-note yield fell -1.6 bp to 2.965%. June T-notes recovered from early losses and posted moderate gains after a rally in 10-year German bunds sparked some short-covering in T-note prices.  The 10-year German bund yield initially climbed to a 6-3/4 year high Tuesday of 1.015% before falling back on global growth concerns after Fitch Ratings cut its 2022 China GDP forecast.