What you need to know…

The S&P 500 Index ($SPX) (SPY) on Thursday closed down -1.48%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -1.05%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -1.99%.

U.S. stock indexes Thursday erased an early rally and settled moderately lower. Hawkish Fed comments Thursday bolstered the outlook for the Fed to be aggressive in tightening monetary policy. That pushed T-note yields higher Thursday and weighed on stocks after the 10-year T-note yield rose +8.1 bp to 2.913%, just below Wednesday’s 3-1/2 year high of 2.977%. 

Stock indexes on Thursday initially moved higher, with the S&P 500 and Nasdaq 100 posting 1-1/2 week highs and the Dow Jones Industrials posting a 2-1/4 month high.  Strong corporate earnings results were positive for stock indexes early Thursday.  Tesla rose more than +3% after reporting stronger-than-expected Q1 earnings.  Also, airline, travel, and leisure stocks rallied Thursday after the CEO of American Airlines said air travel demand is the strongest he has seen in 30 years.  Q1 quarterly earnings results thus far are positive for stocks, with 80% of the 87 S&P 500 companies that have reported earnings beating estimates. 

Fed Chair Powell said he saw merit in "front-end loading" policy moves and that "a 50 basis point rate hike will be on the table for the May FOMC meeting."

San Francisco Fed President Daly said she sees interest rates "expeditiously" marching towards neutral and that the Fed is likely to raise interest rates by 50 bp at a couple of meetings.

U.S. weekly initial unemployment claims fell -2,000 to 184,000, showing a slightly weaker labor market than expectations of a decline to 180,000.

The U.S. Apr Philadelphia Fed business outlook survey fell -9.8 to 17.6, weaker than expectations of 21.4.

Today’s stock movers…

A jump in T-note yields Thursday undercut technology stocks and weighed on the overall market.  Align Technology (ALGN) closed down more than -8% to lead losers in the Nasdaq 100.  Also, Meta Platforms (FB) and Nvidia (NVDA) closed down by more than -6%, and Atlassian Corp (TEAM), Pala Alto Networks (PANW), and Splunk (SPLK) closed down by more than -5%.  In addition, Dexcom (DXCM), Advanced Micro Devices (AMD), and Marvell Technology (MRVL) closed down by more than -4%.

The Invesco Solar ETF (TAN) tumbled more than -6% Thursday after NextEra Energy said the U.S. investigation into Chinese solar-panel suppliers could delay up to 2 Gigawatts of solar and battery storage projects.  Enphase Energy (ENPH) closed down more than -12% to lead losers in the S&P 500.  Also, Shoals Technologies Group (SHLS) closed down by more than -15%, and SolarEdge Technologies (SEDG) and Sunpower (SPWR) closed down by more than -9%.  In addition, NextEra Energy (NEE) closed down more than -6% 

Dover (DOV) closed down more than -7% Thursday after it forecast full-year adjusted EPS of $8.45-$8.65, the midpoint below the consensus of $8.57.

Equifax (EFX) closed down more than -8% Thursday after cutting guidance on full-year adjusted EPS to $8.00-$8.30 from a prior forecast of $8.50-$8.80.

Airline stocks rallied Thursday after United Airlines Holdings forecasted a profit for this year, and the CEO said that the demand environment is the “strongest it’s been in my 30 years in the industry.”  As a result, United Airlines Holdings (UAL) closed up more than +9% to lead gainers in the S&P 500.  Also, American Airlines Group (AAL) closed up more than +3%, and Alaska Air Group (ALK),  Southwest Airlines (LUV), and Delta Air Lines (DAL) are up more than +2%.   

Tesla (TSLA) closed up more than +3% Thursday to lead gainers in the Nasdaq 100 after it reported Q1 adjusted EPS of $3.22, well above the consensus of $2.27. 

Dow Inc. (DOW)  closed up more than +2% Thursday to lead gainers in the Dow Jones Industrials after reporting Q1 operating Ebitda of $3.17 billion, well above the consensus of $2.86 billion. 

CSX Corp (CSX) closed up more than +2% Thursday after reporting Q1 revenue of $3.41 billion, above the consensus of $3.31 billion.

Across the markets…

June 10-year T-notes (ZNM22) on Thursday closed down by -24 ticks, and the 10-year T-note yield rose +8.1 bp to 2.913%.  Jun T-note prices Thursday closed moderately lower but stayed above Wednesday’s 3-1/4 year nearest-futures low, and the 10-year T-note yield held just below Wednesday’s 3-1/4 year high of 2.977%.

Signs that the Fed may be aggressive in tightening monetary policy weighed on T-note prices Thursday after hawkish comments from Fed Chair Powell, and San Francisco Fed President Daly, signaled the Fed favors raising interest rates by 50 bp at the May FOMC meeting.  Another bearish factor for T-notes was a jump in inflation expectations after the 10-year T-note breakeven inflation rate Thursday rose to a record high of 3.038%.