What you need to know…
Stocks this morning are moderately higher as lower T-note yields sparked a rally in mega-cap technology stocks. The overall market also garnered support from today’s stronger-than-expected U.S. economic news, including weekly jobless claims and the Q2 GDP revision.
Market sentiment also received a boost today after China took new steps to bolster economic growth. China stepped up its stimulus measures with 1 trillion yuan ($146 billion) of funding focused largely on infrastructure spending.
Today’s U.S. economic news was supportive of stocks. Weekly initial unemployment claims unexpectedly fell -2,000 to 243,000, showing a stronger labor market than expectations of an increase to 252,000. Also, U.S. Q2 GDP was revised slightly higher to -0.6% (q/q annualized) from the previously reported -0.7%.
Fed comments today were hawkish for Fed policy and bearish for stocks. Kansas City Fed President George said the Fed has not yet raised interest rates to levels that are weighing on the economy and may have to take them above 4% for a time. Also, Atlanta Fed President Bostic said if U.S. economic data remains strong and inflation doesn’t clearly soften, “then it may make a case for another 75 bp rate hike” at the September FOMC meeting.
Today’s stock movers…
Lower T-note yields today are giving technology stocks a boost. Advanced Micro Devices (AMD), Marvell Technology (MRVL), and Datadog (DDOG) are up more than +4%. Qualcomm (QCOM), Micron Technology (MU), Align Technology (ALGN), and Crowdstrike Holdings (CRWD) are up more than +3%. Amazon.com (AMZN), Alphabet (GOOG), Nvidia (NVDA), Meta Platforms (META), and Broadcom (AVGO) are up more than +2%
Cruise stocks are moving higher today for a second day after Jeffries equity research said Wednesday that ticket prices for cruises were “stabilizing at higher levels,” suggesting the companies have pricing power. Carnival (CCL) is up more than +5%, and Norwegian Cruise Lines (NCLH) and Royal Caribbean Cruises (RCL) are up more than +4%.
NetApp (NTAP) is up more than +6% to lead gainers in the S&P 500 after reporting Q1 adjusted EPS of $1.20, stronger than the consensus of $1.10. The company forecasted Q2 adjusted EPS of $1.28-$1.38, with a midpoint above the consensus of $1.32.
Autodesk (ADSK) is up more than +4% today after reporting Q2 net revenue of $1.24 billion, better than the consensus of $1.22 billion, and raised its full-year net revenue estimate to $4.99 billion-$5.04 billion from a prior estimate of $4.96 billion-$5.06 billion.
Snowflake (SNOW) is up more than +17% today after reporting Q2 revenue of $497.2 million, above the consensus of $467.9 million, and raised its full-year product revenue estimate to $1.91 billion-$1.92 billion from a previous estimate of $1.89 billion-$1.90 billion.
U.S.-listed Chinese stocks are climbing today after China stepped up its stimulus measures with 1 trillion yuan ($146 billion) of funding focused largely on infrastructure spending. JD.com (JD) is up more than +6% to lead gainers in the Nasdaq 100. Baidu (BIDU), Pinduoduo (PDD), and Alibaba Group Holding (BABA) are up more than +5%. NetEase (NTES) is up more than +3%.
Dollar Tree (DLTR) is down more than -10% today to lead losers in the S&P 500 and Nasdaq 100 after reporting Q2 net sales of $6.77 billion, below the consensus of $6.79 billion and cutting its 2012 EPS forecast to $7.10-$7.40 from a prior estimate of $7.80-$8.20, well below the consensus of $8.17.
Splunk (SPLK) is down more than -8% today after reporting Q2 annual recurring revenue of $3.33 billion, weaker than the consensus of $3.42 billion.
Salesforce (CRM) is down more than -6% today after cutting its 2023 revenue forecast to $30.9 billion-$31.0 billion from a prior forecast of $31.7 billion-$31.8 billion, weaker than the consensus of $31.74 billion.
Across the markets…
Sep 10-year T-notes (ZNU22) today are up +2 ticks, and the 10-year T-note yield is down -0.4 bp at 3.100%. Sep T-notes this morning recovered from early losses and moved slightly higher, and the 10-year T-note yield fell back from an 8-week high of 3.126%. A rally in European government bond prices today sparked short-covering in T-notes. The 10-year German bund yield T-note yield fell back from an 8-week high of 1.38% and is down -3.3 bp at 1.337%. Bund prices rallied after UBS said the Eurozone is already in a “shallow” recession.
Sep T-note prices today initially matched Wednesday’s 8-week low on the better-than-expected U.S. unemployment claims and GDP reports. Also, supply pressures are negative for T-note prices as the Treasury later today will auction $37 billion of 7-year T-notes. In addition, an increase in inflation expectations is bearish for T-notes after the 10-year breakeven inflation rate rose to a 2-1/4 month high today of 2.668%
The dollar index (DXY00) this morning is down -0.08%. The dollar is slightly lower as strength in stocks has reduced the liquidity demand for the dollar. Also, lower T-note yields are weighing on the dollar. In addition, the dollar was under pressure from strength in the yuan after China boosted stimulus measures.
EUR/USD (^EURUSD) today is trading slightly lower on Eurozone economic concerns. UBS said today that the Eurozone economy is already in a “shallow” recession, and today’s economic news showed the German Aug IFO business climate index fell -0.2 to a 2-year low of 88.5. In addition, soaring energy prices may further weigh on the Eurozone economy and EUR/USD after German electricity prices for next year surged +17% today to a record 750 euros a megawatt-hour and French electricity prices jumped +12% to a record 880 euros a megawatt-hour. Losses in the euro were limited by today’s news that German Q2 GDP was revised higher.
UBS said the Eurozone is already in a “shallow” recession triggered by surging energy prices that will last through year-end. UBS predicts Eurozone Q3 GDP will contract -0.1% (q/q annualized) in Q3 and -0.2% in Q4.
The German Aug IFO business climate index fell -0.2 to a 2-year low of 88.5, although stronger than expectations of 86.8.
German Q2 GDP was revised upward to +0.1% q/q and +1.8% y/y from the previously reported unchanged q/q and +1.5% y/y.
USD/JPY (^USDJPY) today is up +0.16%. Lower T-note yields today are giving the yen a boost. Also, short-covering in the yen is pushing prices higher ahead of Fed Chair Powell’s speech Friday at the Fed’s annual symposium at Jackson Hole, Wyoming.
Japanese economic news today supported the yen after Japan July PPI services prices rose +2.1% y/y, unchanged from June and weaker than expectations of an increase of +2.2% y/y.
October gold (GCV22) is up +6.0 (+0.34%), and September silver (SIU22) is up +0.093 (+0.49%). Precious metals this morning are moderately higher. A weaker dollar today is bullish for metals prices. Lower global bond yields today are also supportive of gold prices. Silver also garnered support today on signs of stronger economic growth that is positive for industrial metals demand after U.S and German Q2 GDP reports were revised higher.
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