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Stocks Mixed Ahead of FOMC Minutes

Barchart - Wed May 25, 9:53AM CDT
Stocks-Money-Rates - Wall Street Sign NYSE

What you need to know…

The S&P 500 Index ($SPX) (SPY) this morning is up by +0.30%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.17%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.42%. 

U.S. stock indexes this morning are modestly higher.  An +11% jump in Nordstrom is lifting the overall market after it raised its 2023 revenue forecast and eased concerns about a slowdown in consumer spending. Target and Walmart were slammed earlier last week after cutting their growth estimates. 

Also, energy stocks are climbing as the price of natural gas today jumped more than +5% to a 14-year high.  Stock investors are waiting to see the May 3-4 FOMC meeting minutes later today to gauge how hawkish the Fed is likely to be in raising interest rates over the course of this year.

Stocks this morning initially moved lower on global growth concerns after Chinese Premier Li Keqiang said China’s economic difficulties are worse than in 2020.  Also, stocks were under pressure after U.S. April core capital goods orders rose less than expected.

Chinese Premier Li Keqiang said today that "economic indicators in China have fallen significantly, and difficulties in some aspects and to a certain extent are greater than when the epidemic hit us severely in 2020."

U.S. Apr capital goods new orders nondefense ex-aircraft rose +0.3% m/m, slightly weaker than expectations of +0.5% m/m.

Today’s stock movers…

Energy companies are rallying today after the price of natural gas jumped more than +5% to a 14-year high.  Valero Energy (VLO) is up more than +4%, and Marathon Oil (MRO) and Coterra Energy (CTRA) are up more than +3%.  Also, Phillips 66 (PSX), Diamondback Energy (FANG), and Marathon Petroleum (MPC) are up more than +2%.

Homebuilders are moving higher today, led by a +4% gain in Toll Brothers (TOL) after it reported Q2 revenue of $2.28 billion, above the consensus of $2.10 billion.   Also, DR Horton (DHI), Lennar (LEN), and PulteGroup (PHM) are all up more than +3%.

Intuit (INTU) is up more than +4% today to lead gainers in the S&P 500 and Nasdaq 100 after raising its full-year revenue forecast to $12.63 billion-$12.67 billion from a previous estimate of $12.17 billion-$12.30 billion, well above the consensus of $12.32 billion.

Nordstrom (JWN) is up more than +11% today after reporting Q1 net sales of $3.47 billion, above the consensus of $3.26 billion, and raised its 2023 revenue forecast tup up +6% to +8% from a previous estimate of +5% to +7%.  Urban Outfitters (URBN) also rallied more than +10% on the Nordstrom news.

ServiceNow (NOW) is up more than +4% today after the company raised its financial targets at an analyst day event, and Mizuho Securities said the company “expressed bullishness on its growth prospects.” 

Raymond James Financial (RJF) is down more than -3% today to lead losers in the S&P 500 after it reported client assets under administration for April of $1.18 trillion, a -6% decline m/m.

Dick’s Sporting Goods (DKS) is down more than -3% after cutting its full-year adjusted EPS forecast to $9.15-$11.70 from a previous estimate of $11.70-$13.10, weaker than the consensus of $12.65.

Across the markets…

June 10-year T-notes (ZNM22) this morning are up +11 ticks, and the 10-year T-note yield is down -2.9 bp at 2.722%.  Jun T-notes this morning climbed to a 1-1/4 month high, and the 10-year T-note yield dropped to a 1-1/4 month low of 2.706%.  Early weakness in stocks today boosted the safe-haven demand for T-notes. T-notes rose to their highs this morning after U.S. Apr capital goods new orders were weaker than expected.  Supply pressures may limit the upside in T-notes as the Treasury later today will auction $48 billion of 5-year T-notes and $22 billion of 2-year floating-rate notes as part of this week’s auction package of $159 billion of T-notes and floating-rate notes.

The dollar index (DXY00) this morning is up +0.43%.  The dollar today is moderately higher as a slide in stocks boosts the liquidity demand for the dollar.  The dollar also found support from weakness in the yuan after Chinese Premier Li Keqiang said China’s economic difficulties are worse than in 2020. A decline in T-note yields today is a bearish factor for the dollar after the 10-year T-note yield fell to a 1-1/4 month low.

EUR/USD (^EURUSD) today is down -0.64%.  EUR/USD today is under pressure after the ECB’s bi-annual Financial Stability Review said the Eurozone's financial system needs to brace for the possibility of another correction in asset markets.  Also, comments from ECB Governing Council member Rehn today weighed on the euro when he said the upside risks to inflation have "clearly" increased, and the ECB is set to cut its economic forecasts next month. 

In its bi-annual Financial Stability Review, the ECB said the Eurozone's financial system needs to brace for the possibility of another correction in asset markets as the conflict in Ukraine continues and monetary stimulus is withdrawn to combat record inflation.

German Jun GfK consumer confidence rose +0.6 to -26.0, weaker than expectations of -25.5.

The France May consumer confidence indicator unexpectedly fell -1 to a 7-1/2 year low of 86, weaker than expectations of an increase to 89.

USD/JPY (^USDJPY) today is up +0.30%.  The yen is falling back today on dovish comments from BOJ Governor Kuroda, who said the manifestation of pent-up demand by Japanese households has been limited so far, and a recovery in demand has been slower than in the U.S. and Europe.  Lower Japanese government bond yields are also weighing on the yen after the 10-year JGB government bond yield fell to a 1-1/2 month low today at 0.205%. 

June gold (GCM22) this morning is down by -15.0 (-0.80%), and July silver (SIN22) is down by -0.203 (-0.92%).  Precious metals today are under pressure from a stronger dollar.  Also, long liquidation in precious metals is undercutting prices ahead of this afternoon’s release of the minutes of the May 3-4 FOMC meeting.  Lower T-note yields today are limiting losses in gold.