What you need to know…

The S&P 500 Index ($SPX) (SPY) today is up +0.03%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.34%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.11%.

U.S. stock indexes this morning are mixed.  An increase in global bond yields weighs on the overall market on concern that central banks will have to keep raising interest rates after France and Spain reported an unexpected acceleration in consumer prices.  However, stocks recovered most of their losses as mostly weaker-than-expected U.S. economic news today may prompt the Fed to slow its pace of tightening. 

Higher bond yields today are bearish for stocks, with the 10-year T-note yield up +3.5 bp to 3.949%.  A jump in European government bond yields is undercutting T-note prices, as the 10-year German bund yield rose to an 11-year high today at 2.712%, and the 10-year UK gilt yield rose to a 4-month high of 3.896%.

Today’s economic news was mostly weaker than expected. The Feb MNI Chicago PMI unexpectedly fell -0.7 to 43.6, weaker than expectations of an increase to 45.5. Also, the Conference Board U.S. Feb consumer confidence index unexpectedly fell -3.1 to 102.9, weaker than expectations of a rise to 108.5.  In addition, the Feb Richmond Fed manufacturing survey unexpectedly fell -5 to a 2-3/4 year low of -16, weaker than expectations of an increase to -5.  On the positive side, the Dec S&P CoreLogic composite-20 home price index rose +4.65% y/y, weaker than expectations of +4.80% and the slowest pace of increase in nearly 2-1/2 years.

Positive corporate news is supportive of the overall market.  Dentsply Sirona is up more than +8% after reporting better-than-expected Q4 adjusted EPS.  Also, Applied Materials is up more than +4% after the company unveiled a new chipmaking machine, and Advanced Auto Parts is up more than +4% after forecasting stronger-than-expected 2023 net sales.  In addition, Target is up more than +2% after reporting Q4 sales above the consensus.

On the negative side, Norwegian Cruise Line Holdings Ltd is down more than -12% after reporting a wider-than-expected Q4 adjusted loss per share.  Also, Universal Health Services is down more than -9% after forecasting 2023 adjusted EPS below the consensus.  In addition, Dish Network is down more than 7% after Bank of America downgraded the stock two notches.

Overseas stock markets are mixed.  The Euro Stoxx 50 today is down -0.05%.  China’s Shanghai Composite stock index closed up +0.66%, and Japan’s Nikkei Stock Index closed up +0.08%. 

Today’s stock movers…

Cruise line operators are under pressure today, with Norwegian Cruise Line Holdings Ltd (NCLH) down more than -12% to lead losers in the S&P 500 after reporting a Q4 adjusted loss per share of -$1.04, a steeper loss than the consensus of -87 cents.  Carnival (CCL) is down -5%, and Royal Caribbean Cruises (RCL) is down more than -2%.

Universal Health Services (UHS) is down more than -9% after forecasting 2023 adjusted EPS of $9.50-$10.50, weaker than the consensus of $10.74. 

Dish Network (DISH) is down more than -7% after Bank of America downgraded the stock two notches to underperform from buy. 

Merck & Co (MRK) is down more than -2% to lead losers in the Dow Jones Industrials after it said two Phase 3 trials evaluating Keytruda in combination with pemetrexed plus platinum-based chemotherapy for metastatic nonsquamous non-small cell lung cancer fell short of meeting their primary endpoints.

Goldman Sachs (GS) is down more than -2% after the company said at its Investor Day conference that it would take another two years to just break even on its new division Platform Solutions, and that it’s grappling with a “complicated credit environment.” 

Keurig Dr Pepper (KDP) is down nearly -2% to lead losers in the Nasdaq 100 after a block of the company’s shares was offered at $34.55 to $35.00 apiece from Morgan Stanley, below Monday’s closing price of $35.37.

Union Pacific Railroad (UNP) is down more than -2% after the Environmental Protection Agency ordered the company to assess the potential contamination in and around a former wood-preserving facility in Houston. 

Sempra Energy (SRE) is down more than -2% after reporting Q4 revenue of $3.46 billion, below the consensus of $3.77 billion.

Dentsply Sirona (XRAY) is up more than +8% to lead gainers in the S&P 500 after reporting Q4 adjusted EPS of 46 cents, above the consensus of 32 cents, and forecast 2023 adjusted EPS of $1.80-$2.00, stronger than the consensus of $1.84.

Applied Materials (AMAT) is up more than +4% to lead gainers in the Nasdaq 100 after the company unveiled a new chipmaking machine that reduces the time customers spend on lithography, the process of using light to burn lines into silicon. 

Advanced Auto Parts (AAP) is up more than +4% after forecasting 2023 net sales of $11.40 billion-$11.60 billion, above the consensus of $11.34 billion. 

Target (TGT) is up more than +2% after reporting Q4 sales of $30.98 billion, better than the consensus of $30.46 billion. 

International Game Technology (IGT) is up more than +2% after reporting Q4 revenue of $1.09 billion, better than the consensus of $1.03 billion.

Zoom Video Communications (ZM) is up more than +1% after reporting Q4 adjusted EPS of $1.22, well above the consensus of 80 cents, and forecast 2025 adjusted EPS of $4.11-$4.18, stronger than the consensus of $3.53.

Across the markets…

March 10-year T-notes (ZNH23) today are down -7 ticks, and the 10-year T-note yield is up +3.3 bp at 3.947%.  Mar 10-year T-notes this morning are moderately lower, and the 10-year T-note yield climbed to a 3-1/2 month high of 3.981%. Negative carryover from a jump in European government bond yields is undercutting T-mote prices.  Today’s economic news that showed an unexpected acceleration of inflation in Spain and France pushed the 10-year German bund yield to an 11-year high of 2.712% and the 10-year UK gilt yield to a 4-month high of 3.896%. 

The dollar index (DXY00) today is down by -0.03%.  The dollar index today is slightly lower on mostly weaker-than-expected U.S. economic news.  Higher T-note yields today are limiting losses in the dollar. 

EUR/USD (^EURUSD) today is down by -0.02%.  The euro today gave up an early advance and is slightly lower after ECB Governing Council member Vujcic said Eurozone price growth appears to be "quite persistent" and it will "take time" for officials to bring it down.  EUR/USD today initially moved higher after an unexpected acceleration in French, and Spanish consumer prices pushed the 10-year German bund yield up to an 11-year high of 2.712%.

The German Jan import price index eased to 6.6% y/y from 12.6% y/y in Dec, the slowest pace of increase in nearly two years.

France's Feb CPI (EU harmonized) unexpectedly rose +0.2 to a record high 7.2% y/y, stronger than expectations of no change at 7.0%.

Span Feb CPI (EU harmonized)  unexpectedly rose +0.2 to 6.1% y/y, stronger than expectations of a decline to 5.7% y/y.

USD/JPY (^USDJPY) today is down by -0.04%.  The yen today rebounded from a 2-1/4 month low against the dollar and is slightly higher.  A weaker dollar today sparked some short covering in the yen.  Higher T-note yields today initially weighed on the yen after the 10-year T-note yield climbed to a 3-1/2 month high

Today’s Japanese economic news was mixed for the yen.  On the positive side, Jan retail sales rose +1.9% m/m, stronger than expectations of +0.4% m/m and the largest increase in 2-1/2 years.  Conversely, Jan industrial production fell -4.6% m/m, weaker than expectations of -2.9% m/m and the biggest decline in 8 months.

April gold (GCJ3) this morning is up +8.8 (+0.48%), and March silver (SIH23) is up +0.125 (+0.60%).  Precious metals prices this morning are moderately higher.  A weaker dollar today is supportive of metals prices.  Also, signs of persistent inflation in Europe boosted demand for gold as an inflation hedge after Jan consumer prices in France and Spain unexpectedly accelerated.  Higher global bond yields today are limiting gains in gold.  Also, continued liquidation of gold holdings in ETFs weighs on prices after gold holdings fell to a new 2-3/4 year low last Friday.

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