Stocks Little Changed as Powell Refrains from Commenting on Monetary Policy
What you need to know…
The S&P 500 Index ($SPX) (SPY) today is down -0.03%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.07%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.01%.
Stock indexes this morning are slightly lower due to higher bond yields, with the 10-year T-note yield up +7.7 bp at 3.610%. Yields are climbing on negative carry-over from Monday when San Francisco Fed President Daly and Atlanta Fed President Bostic said they expect the Fed this year to raise the federal funds rate above 5% and hold it there for some time.
Weakness in technology stocks is weighing on the overall market today. Illumina is down more than -5% after forecasting weaker-than-expected EPS for 2023. Also, Broadcom is down more than -3% after Bloomberg News reported that Apple is pushing to replace chips inside its devices with homegrown components and will drop a key part made by Broadcom in 2025.
Stocks were also under pressure today after the World Bank cut its global 2023 GDP forecast to 1.7%, about half of what it predicted in June, and warned that new adverse shocks could tip the global economy into a recession.
Stocks recovered from their worst levels this morning after Fed Chair Powell refrained from speaking on monetary policy at a symposium hosted by the Riksbank in Stockholm, Sweden. The markets were on edge ahead of Mr. Powell’s comments on the chance that he could issue fresh hawkish remarks.
Today’s U.S. economic news was bearish for stocks after Nov wholesale trade sales unexpectedly fell -0.6% m/m, weaker than expectations of +0.2% m/m and the biggest decline in 4 months.
Overseas markets today are mixed. The Euro Stoxx 50 index is down -0.26%. The Shanghai Composite Stock index closed down by -0.21%, and Japan’s Nikkei Stock index closed up +0.78%.
Today’s stock movers…
Illumina (ILMN) is down more than -5% to lead losers in the S&P 500 and Nasdaq 100 after forecasting 2023 EPS of $1.25 to $1.50 a share, weaker than the consensus of $2.99 a share.
DISH Network (DISH) is down more than -6% on liquidity concerns as the company now has $7.99 billion of distressed debt outstanding, the third most of any U.S. company.
Kimco Realty (KIM) is down more than -3% after Mizuho Securities downgraded the stock to neutral from buy.
Waste Management (WM) is down more than -2% after UBS downgraded the stock to neutral from buy.
Boeing (BA) is down more than -1% to lead losers in the Dow Jones Industrials after Morgan Stanley downgraded the stock to equal weight from overweight.
Broadcom (AVGO) is down more than -3% after Bloomberg News reported that Apple is pushing to replace chips inside its devices with homegrown components and will drop a key part made by Broadcom in 2025.
Steris Plc (STE) is up more than +5% today to lead gainers in the S&P 500 following Sotera Health’s +70% surge after a jury verdict in an ethylene oxide emissions case that was favorable to the company.
Agilent Technologies (A) is up more than +4% after it announced a $2 billion share buyback plan and after Wells Fargo Securities upgraded the stock to overweight from equal weight.
Amazon.com (AMZN) is up more than +2% after announcing that it will expand its prime delivery service to more web stores and that its “Buy with Prime” service will be widely available in the U.S. by the end of this month.
Danaher (DHR) is up more than +4% after announcing that preliminary Q4 adjusted core revenue growth was in the high-single-digit percent range, stronger than previous guidance of flat to low-single-digit percent decline.
Laboratory stocks are climbing today after PerkinElmer said preliminary Q4 results met or exceeded guidance provided in November. PerkinElmer (PKI) is up more than +4%. Also, Thermo Fisher Scientific (TMO) is up more than +3%. In addition, Bio-Rad Laboratories (BIO), Mettler-Toledo International (MTD), and IDEXX Laboratories (IDXX) are up more than +2%.
Bio-Techne (TECH) is up more than +2% after Wells Fargo Securities upgraded the stock to equal weight from underweight with a price target of $90.
Across the markets…
March 10-year T-notes (ZNH23) today are down -17 ticks, and the 10-year T-note yield is up +7.7 bp at 3.610%. Mar T-note prices this morning are moderately lower on higher German bund yields and supply pressures. The 10-year German bund yield is up +6.5 bp to 2.292% following hawkish ECB comments. Also, supply pressures are weighing on T-note prices as the Treasury later today will auction $40 billion of 3-year T-notes as part of this week’s $90 billion auction package of T-notes and T-bonds.
The dollar index (DXY00) today is up by +0.14%. Higher T-note yields today are strengthening the dollar’s interest rate differentials and giving the dollar a boost.
EUR/USD (^EURUSD) today is up by +0.11%. The euro today is slightly higher and just below Monday’s 7-month high. Better-than-expected French manufacturing and industrial production reports were supportive for the euro. Also, hawkish comments from ECB Executive Board member Schnabel today pushed bund yields higher and supported EUR/USD when she said, "interest rates will still have to rise significantly at a steady pace” to curb inflation. In addition, the euro found support after Goldman Sachs said it no longer predicts a recession in the Eurozone this year.
French Nov industrial production rose +2.0% m/m, stronger than expectations of +0.8% m/m. Also, French Nov manufacturing production rose +2.4% m/m, stronger than expectations of +0.8% m/m
ECB Executive Board member Schnabel said, "interest rates will still have to rise significantly at a steady pace to reach levels that are significantly restrictive to ensure a timely return of inflation to our 2% medium-term target."
Goldman Sachs no longer predicts a recession in the Eurozone this year as it raised its 2023 Eurozone GDP forecast to +0.6% compared with an earlier forecast for a contraction of -0.1%, citing the sharp fall in nat-gas prices and the reopening of China's economy earlier than anticipated.
USD/JPY (^USDJPY) today is up by +0.06%. Higher T-note yields today are weighing on the yen. Also, weaker-than-expected news on Japanese Nov household spending undercut the yen. Losses in the yen are limited as the 10-year Japan JGB bond yield climbed to a 7-1/2 year high today after Tokyo Dec consumer prices ex-fresh food rose more than expected by the most in 40 years.
Japan Nov household spending unexpectedly fell -1.2% y/y, weaker than expectations of +0.5% y/y and the biggest decline in 7 months.
Japan Tokyo Dec CPI ex-fresh food rose +4.0% y/y, stronger than expectations of +3.8% y/y and the largest increase in 40 years.
February gold (GCG3) this morning is up +2.8 (+0.15%), and March silver (SIH23) is down -0.156 (-0.65%). Precious metals prices this morning are mixed. A stronger dollar today is negative for metals prices. Signs of faster global inflation boosted demand for gold as an inflation hedge after today’s news showed Tokyo Dec CPI ex-fresh food rose at a stronger-than-expected +4.0% y/y pace, the most in 40 years. Higher global bond yields today are bearish for metals.
More Stock Market News from Barchart
- Investors Are Shorting Amazon Puts For Income Ahead of Earnings
- Lululemon: It’s Time to Do a Protective/Married Put
- Markets Today: Stocks Fall Back Ahead of Comments from Fed Chair Powell
- How To Find Options Trades This Earnings Season
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.
Provided Content: Content provided by Barchart. The Globe and Mail was not involved, and material was not reviewed prior to publication.