Applied Materials (AMAT) Stock Sinks As Market Gains: Here's Why

The S&P 500 Index Thursday closed up +0.74%, the Dow Jones Industrials Index closed unchanged, and the Nasdaq 100 Index closed up +1.54%.

Stocks on Thursday extended their post-election rally, with the S&P 500, the Dow Jones Industrials, and the Nasdaq 100 posting new all-time highs. Stocks are climbing on speculation President-elect Trump will boost corporate profits through tax cuts and reduced regulation. The strength of chip stocks also boosted the overall market, led by a +4% jump in ARM Holdings Plc after it reported Q2 earnings and revenue above consensus. JPMorgan Chase fell more than -4% to weigh on the Dow Jones Industrials after being downgraded to underperform at Baird.

Stock indexes raced to their highs Thursday afternoon when the FOMC, as expected, lowered the fed funds target range by -25 bp to 4.50%-4.75% from 4.75%-5.00% and said risks to goals remain "roughly in balance."

Thursday’s US economic news was mixed. Weekly jobless claims and Sep consumer credit rose less than expected, but Q1 nonfarm productivity rose less than expected, and Q1 unit labor costs rose more than expected.

US weekly initial unemployment claims rose +3,000 to 221,000, showing a stronger labor market than expectations of 222,000.

US Q3 nonfarm productivity rose +2.2%, weaker than expectations of +2.5%. Q1 unit labor costs rose +1.9%, stronger than the expectations of +1.0%.

US Sep consumer credit rose +$6.002 billion, weaker than expectations of +$12.173 billion.

Fed Chair Powell said that while inflation has moved closer to the Fed's goal, core inflation is still "somewhat elevated." He added, "We don't think it's a good time to be doing a lot of forward guidance," and "we don't know what the timing or substance" of economic policy changes will be going forward.

Global equity markets have carryover support from Thursday’s +2% jump in China’s Shanghai Composite stock index to a 4-week high on signs of strength in China’s economy that is positive for global growth prospects. Today’s news showed China Oct exports rose +12.7% y/y, stronger than expectations of +5.0% y/y and the biggest increase in 2-1/4 years. However, China's imports fell -2.3% y/y, weaker than expectations of -2.0% y/y.

Of the companies in the S&P 500 that have released Q3 earnings so far, 78% surpassed estimates. According to Bloomberg Intelligence, companies in the S&P 500 are expected to report an average +4.3% y/y increase in quarterly earnings in Q3, down from the +7.9% y/y growth consensus seen in July.

The markets are discounting the chances at 71% for a -25 bp rate cut at the December 17-18 FOMC meeting.

Overseas stock markets Thursday settled mixed. The Euro Stoxx 50 closed up +1.07%. China's Shanghai Composite Index climbed to a 4-week high and closed up +2.57%. Japan's Nikkei Stock 225 fell back from a 3-week high and closed down -0.25%.

Interest Rates

December 10-year T-notes (ZNZ24) Thursday closed up by +20.5 ticks. The 10-year T-note yield fell -12.0 bp to 4.312%. Dec T-notes rallied Thursday after the FOMC cut the fed funds target range by -25 bp. T-notes also rose on short covering from bond dealers covering short hedges they placed on T-notes during this week’s quarterly refunding, where the Treasury auctioned $125 billion of T-notes and T-bonds.

Gains in T-notes were limited after weekly US jobless claims rose less than expected, which is a sign of labor market strength that is hawkish for Fed policy. Also, Q1 nonfarm productivity rose less than expected and Q1 unit labor costs rose more than expected, bearish factors for T-notes. In addition, Thursday’s rally in the S&P 500 to a new record high curbed some safe-haven demand for T-notes.

European government bond yields on Thursday were mixed. The 10-year German bund yield climbed to a 3-1/2 month high of 2.498% and finished up +4.0 bp to 2.445%. The 10-year UK gilt yield fell -6.4 bp to 4.498%.

Eurozone Sep retail sales rose +0.5% m/m, stronger than expectations of +0.4% m/m, and Aug was revised upward to +1.1% m/m from the previously reported +0.2% m/m.

German trade data was better than expected as Sep exports fell -1.7% m/m, stronger than expectations of -2.4% m/m. Also, Sep imports rose +2.1% m/m, stronger than expectations of +0.6% m/m.

German Sep industrial production fell -2.5% m/m, weaker than expectations of -1.0% m/m.

As expected, the Bank of England (BOE) cut its benchmark interest rate by -25 bp to 4.75% from 5.00%. BOE Governor Bailey said we can't cut rates "too quickly or by too much" and that interest rates are likely to fall "gradually from here."

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 14% for a -50 bp rate cut at the same meeting.

US Stock Movers

ARM Holdings Plc rose more than +4% to lead chip stocks higher after reporting Q2 revenue of $844 million, stronger than the consensus of $810.9 million. Also, Intel closed up more than +4% to lead gainers in the Dow Joines Industrials. In addition, Applied Materials , Advanced Micro Devices , Marvell Technology , and Lam Research closed up more than +3%. Finally,

Nvidia , KLA Corp , NXP Semiconductors NV , and Broadcom closed up more than +2%.

EPAM Systems closed up more than +14% to lead gainers in the S&P 500 after reporting Q3 revenue of $1.17 billion, better than the consensus of $1.15 billion, and forecasting Q4 revenue of $1.21 billion-$1.22 billion, well above the consensus of $1.15 billion.

Warner Bros Discovery closed up more than +11% after reporting Q3 total subscribers of 110.5 million, well above the consensus of 109.01 million.

McKesson is up more than +10% after reporting Q2 adjusted EPS of $7.07, better than the consensus of $6.88, and raising its 2025 adjusted EPS forecast to $32.40-$33.00 from a previous forecast of $31.75-$32.55, stronger than the consensus of $32.00.

Vistra Corp closed up more than +7% after it boosted its full-year ongoing operations adjusted Ebitda forecast to $5.00 billion-$5.20 billion from a prior forecast of $4.55 billion-$5.05 billion.

Take-Two Interactive Software closed up more than +7% after reporting Q2 net bookings of $1.47 billion, above the consensus of $1.44 billion.

Ralph Lauren closed up more than +6% after raising its 2025 revenue growth estimate to +3% to +4% from a previous estimate of +2% to +3%, above the consensus of +2.92%.

Lyft closed up more than +22% after reporting Q3 gross bookings of $4.11 billion, stronger than the consensus of $4.08 billion, and forecasting Q4 gross bookings of $4.28 billion-$4.35 billion, well above the consensus of $4.23 billion.

Match Group closed down more than -17% to lead losers in the S&P 500 after reporting Q3 revenue of $895.5 million, below the consensus of $900.9 million, and forecasting Q4 revenue of $865 million-$875 million, weaker than the consensus of $905.9 million.

MercadoLibre closed down more than -16% to lead losers in the Nasdaq 100 after reporting Q3 adjusted Ebitda of $714.0 million, well below the consensus of $927.7 million.

Corteva closed down more than -5% after cutting its full-year net sales forecast to $17.0 billion-$17.2 billion from a previous forecast of $17.2 billion-$17.5 billion, weaker than the consensus of $17.21 billion.

Rockwell Automation closed down more than -5% after forecasting 2025 adjusted EPS of $8.60-$9.80, well below the consensus of $10.57.

JPMorgan Chase closed down more than -4% to lead losers in the Dow Jones Industrials after Baird downgraded the stock to underperform from neutral with a price target of $200.

Steris Plc closed down more than -5% after reporting Q2 healthcare revenue of $944.2 million, below the consensus of $944.8 million, and Q2 life sciences revenue of $127.9 million, weaker than the consensus of $130.7 million.

KeyCorp closed down more than -4% after Citigroup downgraded the stock to neutral from buy with a price target of $19.

Earnings Reports (11/8/2024)

Advanced Drainage Systems Inc (WMS), Baxter International Inc (BAX), CNH Industrial NV (CNH), Dillard's Inc (DDS), Flowers Foods Inc (FLO), Fortrea Holdings Inc (FTRE), Lamar Advertising Co (LAMR), NRG Energy Inc (NRG), Paramount Global (PARA), RB Global Inc (RBA).

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. For more information please view the Barchart Disclosure Policyhere.

The S&P 500 Index today is up +0.65%, the Dow Jones Industrials Index is up +0.07%, and the Nasdaq 100 Index is up +1.22%.

Stocks today are moderately higher, with the S&P 500, the Dow Jones Industrials, and the Nasdaq 100 posting new all-time highs. Stocks today added to their post-election gains on speculation President-elect Trump will boost corporate profits through his pro-growth policies. The strength of chip stocks is also boosting the overall market, led by a +5% jump in ARM Holdings Plc after it reported Q2 earnings and revenue above consensus. Today’s US economic news was mixed. Weekly jobless claims rose less than expected, but Q1 nonfarm productivity rose less than expected, and Q1 unit labor costs rose more than expected.

US weekly initial unemployment claims rose +3,000 to 221,000, showing a stronger labor market than expectations of 222,000.

US Q3 nonfarm productivity rose +2.2%, weaker than expectations of +2.5%. Q1 unit labor costs rose +1.9%, stronger than the expectations of +1.0%.

Global equity markets have carryover support from today’s +2% jump in China’s Shanghai Composite stock index to a 4-week high on signs of strength in China’s economy that is positive for global growth prospects. Today’s news showed China Oct exports rose +12.7% y/y, stronger than expectations of +5.0% y/y and the biggest increase in 2-1/4 years. However, China's imports fell -2.3% y/y, weaker than expectations of -2.0% y/y.

The markets are focused on (1) the results of the FOMC meeting today (-25 bp rate cut expected) and post-meeting comments from Fed Chair Powell, and (2) Q3 corporate earnings results with nearly 20% of the S&P 500 companies scheduled to report this week.

Of the companies in the S&P 500 that have released Q3 earnings so far, 78% surpassed estimates. According to Bloomberg Intelligence, companies in the S&P 500 are expected to report an average +4.3% y/y increase in quarterly earnings in Q3, down from the +7.9% y/y growth consensus seen in July.

The markets are discounting the chances at 100% for a -25 bp rate cut at today's FOMC meeting and at 0% for a -50 bp rate cut at that meeting.

Overseas stock markets today are mixed. The Euro Stoxx 50 is up +1.13%. China's Shanghai Composite Index climbed to a 4-week high and closed up +2.57%. Japan's Nikkei Stock 225 fell back from a 3-week high and closed down -0.25%.

Interest Rates

December 10-year T-notes (ZNZ24) today are up +16 ticks. The 10-year T-note yield is down -7.1 bp to 4.361%. Dec T-notes are moderately higher on expectations for the FOMC later today to cut the fed funds target range by -25 bp. T-notes are also climbing on some short covering from bond dealers covering short hedges they placed on T-notes during this week’s quarterly refunding, where the Treasury auctioned $125 billion of T-notes and T-bonds.

Gains in T-notes are limited after weekly US jobless claims rose less than expected, which is a sign of labor market strength that is hawkish for Fed policy. Also, Q1 nonfarm productivity rose less than expected and Q1 unit labor costs rose more than expected, bearish factors for T-notes. In addition, today’s rally in the S&P 500 to a new record high has curbed some safe-haven demand for T-notes.

European government bond yields today are mixed. The 10-year German bund yield climbed to a 3-1/2 month high of 2.498% and is up +1.3 bp to 2.417%. The 10-year UK gilt yield is down -7.5 bp to 4.487%.

Eurozone Sep retail sales rose +0.5% m/m, stronger than expectations of +0.4% m/m, and Aug was revised upward to +1.1% m/m from the previously reported +0.2% m/m.

German trade data was better than expected as Sep exports fell -1.7% m/m, stronger than expectations of -2.4% m/m. Also, Sep imports rose +2.1% m/m, stronger than expectations of +0.6% m/m.

German Sep industrial production fell -2.5% m/m, weaker than expectations of -1.0% m/m.

As expected, the Bank of England (BOE) cut its benchmark interest rate by -25 bp to 4.75% from 5.00%. BOE Governor Bailey said we can't cut rates "too quickly or by too much" and that interest rates are likely to fall "gradually from here."

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 17% for a -50 bp rate cut at the same meeting.

US Stock Movers

ARM Holdings Plc is up more than +6% to lead chip stocks higher after reporting Q2 revenue of $844 million, stronger than the consensus of $810.9 million. Also, Intel is up more than +3% to lead gainers in the Dow Joines Industrials. In addition, Applied Materials , Advanced Micro Devices , Marvell Technology , and Broadcom are up more than +2%. Finally, Nvidia , KLA Corp , and Lam Research are up more than +1%.

EPAM Systems is up more than +14% after reporting Q3 revenue of $1.17 billion, better than the consensus of $1.15 billion, and forecasting Q4 revenue of $1.21 billion-$1.22 billion, well above the consensus of $1.15 billion.

Warner Bros Discovery is up more than +15% to lead gainers in the S&P 500 and the Nasdaq 100 after reporting Q3 total subscribers of 110.5 million, well above the consensus of 109.01 million.

Vistra Corp is up more than +10% after it boosted its full-year ongoing operations adjusted Ebitda forecast to $5.00 billion-$5.20 billion from a prior forecast of $4.55 billion-$5.05 billion.

McKesson is up more than +10% after reporting Q2 adjusted EPS of $7.07, better than the consensus of $6.88, and raising its 2025 adjusted EPS forecast to $32.40-$33.00 from a previous forecast of $31.75-$32.55, stronger than the consensus of $32.00.

Take-Two Interactive Software is up more than +5% after reporting Q2 net bookings of $1.47 billion, above the consensus of $1.44 billion.

Ralph Lauren is up more than +5% after raising its 2025 revenue growth estimate to +3% to +4% from a previous estimate of +2% to +3%, above the consensus of +2.92%.

Lyft is up more than +27% after reporting Q3 gross bookings of $4.11 billion, stronger than the consensus of $4.08 billion, and forecasting Q4 gross bookings of $4.28 billion-$4.35 billion, well above the consensus of $4.23 billion.

Match Group is down more than -17% to lead losers in the S&P 500 after reporting Q3 revenue of $895.5 million, below the consensus of $900.9 million, and forecasting Q4 revenue of $865 million-$875 million, weaker than the consensus of $905.9 million.

MercadoLibre is down more than -14% to lead losers in the Nasdaq 100 after reporting Q3 adjusted Ebitda of $714.0 million, well below the consensus of $927.7 million.

Corteva is down more than -6% after cutting its full-year net sales forecast to $17.0 billion-$17.2 billion from a previous forecast of $17.2 billion-$17.5 billion, weaker than the consensus of $17.21 billion.

Rockwell Automation is down more than -4% after forecasting 2025 adjusted EPS of $8.60-$9.80, well below the consensus of $10.57.

JPMorgan Chase is down more than -3% to lead losers in the Dow Jones Industrials after Baird downgraded the stock to underperform from neutral with a price target of $200.

KeyCorp is down more than -3% after Citigroup downgraded the stock to neutral from buy with a price target of $19.

Earnings Reports (11/7/2024)

Air Products and Chemicals Inc (APD), Airbnb Inc (ABNB), Akamai Technologies Inc (AKAM), Arista Networks Inc (ANET), Axon Enterprise Inc (AXON), Becton Dickinson & Co (BDX), Consolidated Edison Inc (ED), Corpay Inc (CPAY), Duke Energy Corp (DUK), EOG Resources Inc (EOG), EPAM Systems Inc (EPAM), Evergy Inc (EVRG), Expedia Group Inc (EXPE), Fortinet Inc (FTNT), Halliburton Co (HAL), Hershey Co/The (HSY), Insulet Corp (PODD), Kenvue Inc (KVUE), Mettler-Toledo International Inc (MTD), Moderna Inc (MRNA), Molson Coors Beverage Co (TAP), Monster Beverage Corp (MNST), Motorola Solutions Inc (MSI), News Corp (NWSA), PG&E Corp (PCG), Ralph Lauren Corp (RL), Rockwell Automation Inc (ROK), Solventum Corp (SOLV), Tapestry Inc (TPR), TransDigm Group Inc (TDG), Viatris Inc (VTRS), Vistra Corp (VST), Warner Bros Discovery Inc (WBD).

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. For more information please view the Barchart Disclosure Policyhere.

The S&P 500 Index today is up +0.36%, the Dow Jones Industrials Index is up +0.11%, and the Nasdaq 100 Index is up +0.84%.

Stocks today are moderately higher, with the S&P 500, the Dow Jones Industrials, and the Nasdaq 100 posting new all-time highs. Stocks today added to their post-election gains on speculation President-elect Trump will boost corporate profits. The strength of chip stocks is also boosting the overall market, led by a +2% jump in Qualcomm after it forecasted Q1 revenue above consensus. Today’s US economic news was mixed. Weekly jobless claims rose less than expected, but Q1 nonfarm productivity rose less than expected, and Q1 unit labor costs rose more than expected.

US weekly initial unemployment claims rose +3,000 to 221,000, showing a stronger labor market than expectations of 222,000.

US Q3 nonfarm productivity rose +2.2%, weaker than expectations of +2.5%. Q1 unit labor costs rose +1.9%, stronger than expectations of +1.0%.

Global equity markets have carryover support from today’s +2% jump in China’s Shanghai Composite stock index to a 4-week high on signs of strength in China’s economy that is positive for global growth prospects. Today’s news showed that China Oct exports rose +12.7% y/y, stronger than expectations of +5.0% y/y and the biggest increase in 2-1/4 years. However, China's imports fell -2.3% y/y, weaker than expectations of -2.0% y/y.

The markets are focused on (1) the results of the FOMC meeting today (-25 bp rate cut expected) and post-meeting comments from Fed Chair Powell, and (2) Q3 corporate earnings results with nearly 20% of the S&P 500 companies scheduled to report this week.

Of the companies in the S&P 500 that have released Q3 earnings so far, 78% surpassed estimates. According to Bloomberg Intelligence, companies in the S&P 500 are expected to report an average +4.3% y/y increase in quarterly earnings in Q3, down from the +7.9% y/y growth consensus seen in July.

The markets are discounting the chances at 100% for a -25 bp rate cut at today's FOMC meeting and at 0% for a -50 bp rate cut at that meeting.

Overseas stock markets today are mixed. The Euro Stoxx 50 is up +0.83%. China's Shanghai Composite Index climbed to a 4-week high and closed up +2.57%. Japan's Nikkei Stock 225 fell back from a 3-week high and closed down -0.25%.

Interest Rates

December 10-year T-notes (ZNZ24) today are up +9 ticks. The 10-year T-note yield is down -3.9 bp at 4.392%. Dec T-notes are moderately higher on expectations for the FOMC later today to cut the fed funds target range by -25 bp. T-notes are also climbing on some short covering from bond dealers covering short hedges they placed on T-notes during this week’s quarterly refunding, where the Treasury auctioned $125 billion of T-notes and T-bonds.

Gains in T-notes are limited after weekly US jobless claims rose less than expected, which is a sign of labor market strength that is hawkish for Fed policy. Also, Q1 nonfarm productivity rose less than expected and Q1 unit labor costs rose more than expected, bearish factors for T-notes. In addition, today’s rally in the S&P 500 to a new record high has curbed some safe-haven demand for T-notes.

European government bond yields today are mixed. The 10-year German bund yield climbed to a 3-1/2 month high of 2.498% and is up +6.0 bp at 2.465%. The 10-year UK gilt yield is down -2.7 bp at 4.536%.

Eurozone Sep retail sales rose +0.5% m/m, stronger than expectations of +0.4% m/m, and Aug was revised upward to +1.1% m/m from the previously reported +0.2% m/m.

German trade data was better than expected as Sep exports fell -1.7% m/m, stronger than expectations of -2.4% m/m. Also, Sep imports rose +2.1% m/m, stronger than expectations of +0.6% m/m.

German Sep industrial production fell -2.5% m/m, weaker than expectations of -1.0% m/m.

As expected, the Bank of England (BOE) cut its benchmark interest rate by -25 bp to 4.75% from 5.00%. BOE Governor Bailey said we can't cut rates "too quickly or by too much" and that interest rates are likely to fall "gradually from here."

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 16% for a -50 bp rate cut at the same meeting.

US Stock Movers

Qualcomm is up more than +2% to lead chip stocks higher after forecasting Q1 revenue of $10.5 billion-$11.3 billion, stronger than the consensus of $10.54 billion, and its board approved a new $15 billion stock repurchase plan. Also, Applied Materials and NXP Semiconductors NV are up +2%. In addition, Advanced Micro Devices , KLA Corp , Marvell Technology , Analog Devices , Intel , and Broadcom are up more than +1%.

EPAM Systems is up more than +17% to lead gainers in the S&P 500 after reporting Q3 revenue of $1.17 billion, better than the consensus of $1.15 billion, and forecasting Q4 revenue of $1.21 billion-$1.22 billion, well above the consensus of $1.15 billion.

Warner Bros Discovery is up more than +12% to lead gainers in the Nasdaq 100 after reporting Q3 total subscribers of 110.5 million, well above the consensus of 109.01 million.

McKesson is up more than +8% after reporting Q2 adjusted EPS of $7.07, better than the consensus of $6.88, and raising its 2025 adjusted EPS forecast to $32.40-$33.00 from a previous forecast of $31.75-$32.55, stronger than the consensus of $32.00.

Vistra Corp is up more than +6% after it boosted its full-year ongoing operations adjusted Ebitda forecast to $5.00 billion-$5.20 billion from a prior forecast of $4.55 billion-$5.05 billion.

Take-Two Interactive Software is up more than +4% after reporting Q2 net bookings of $1.47 billion, above the consensus of $1.44 billion.

Moderna is up more than +3% after reporting Q3 Covid-19 vaccine revenue of $1.8 billion, which is stronger than the consensus of $1.2 billion.

Lyft is up more than +29% after reporting Q3 gross bookings of $4.11 billion, stronger than the consensus of $4.08 billion, and forecasting Q4 gross bookings of $4.28 billion-$4.35 billion, well above the consensus of $4.23 billion.

Match Group is down more than -15% to lead losers in the S&P 500 after reporting Q3 revenue of $895.5 million, below the consensus of $900.9 million, and forecasting Q4 revenue of $865 million-$875 million, weaker than the consensus of $905.9 million.

MercadoLibre is down more than -16% to lead losers in the Nasdaq 100 after reporting Q3 adjusted Ebitda of $714.0 million, well below the consensus of $927.7 million.

Corteva is down more than -5% after cutting its full-year net sales forecast to $17.0 billion-$17.2 billion from a previous forecast of $17.2 billion-$17.5 billion, weaker than the consensus of $17.21 billion.

Rockwell Automation is down more than -3% after forecasting 2025 adjusted EPS of $8.60-$9.80, well below the consensus of $10.57.

JPMorgan Chase is down more than -2% to lead losers in the Dow Jones Industrials after Baird downgraded the stock to underperform from neutral with a price target of $200.

Earnings Reports (11/7/2024)

Air Products and Chemicals Inc (APD), Airbnb Inc (ABNB), Akamai Technologies Inc (AKAM), Arista Networks Inc (ANET), Axon Enterprise Inc (AXON), Becton Dickinson & Co (BDX), Consolidated Edison Inc (ED), Corpay Inc (CPAY), Duke Energy Corp (DUK), EOG Resources Inc (EOG), EPAM Systems Inc (EPAM), Evergy Inc (EVRG), Expedia Group Inc (EXPE), Fortinet Inc (FTNT), Halliburton Co (HAL), Hershey Co/The (HSY), Insulet Corp (PODD), Kenvue Inc (KVUE), Mettler-Toledo International Inc (MTD), Moderna Inc (MRNA), Molson Coors Beverage Co (TAP), Monster Beverage Corp (MNST), Motorola Solutions Inc (MSI), News Corp (NWSA), PG&E Corp (PCG), Ralph Lauren Corp (RL), Rockwell Automation Inc (ROK), Solventum Corp (SOLV), Tapestry Inc (TPR), TransDigm Group Inc (TDG), Viatris Inc (VTRS), Vistra Corp (VST), Warner Bros Discovery Inc (WBD).

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. For more information please view the Barchart Disclosure Policyhere.

The S&P 500 Index today is up +0.95%, the Dow Jones Industrials Index is up +0.88%, and the Nasdaq 100 Index is up +1.08%.

Stocks are climbing today, supported by some positive corporate news. Chip stocks are moving higher, led by a +9% jump in GlobalFoundries after it reported better-than-expected Q3 net revenue and forecasted Q4 net revenue above consensus. Also, Palantir Technologies is up more than +22% after reporting stronger-than-expected Q3 revenue and raising its full-year adjusted operating profit estimate.

Stocks are also seeing support on soft-landing prospects after today’s news that the Oct ISM services index unexpectedly rose +1.1 to a 2-1/4 year high of 56.0, stronger than expectations of a decline to 53.8.

Global equity markets have some positive carryover from signs of strength in China’s economy that sparked a rally in Chinese stocks. The Shanghai Composite Index jumped more than +2% today to a 3-1/2 week high after the China Oct Caixin services PMI rose +1.7 to 52.0, stronger than expectations of 50.5.

On the negative side, Archer-Daniels-Midland is down more than -7% after canceling its quarterly earnings call and saying it will amend previous financial statements after finding additional accounting issues. Also, NXP Semiconductors NV is down more than -6% after forecasting Q4 revenue below the consensus.

Today's US trade news was negative for stocks as the Sep trade deficit was -$84.4 billion, wider than expectations of -$84.0 billion and the largest deficit in nearly 2-1/2 years, a negative factor for Q3 GDP.

The markets are focused on (1) today’s US presidential election, where polls are showing the election a toss-up and official results may not be known for several days, (2) the results of this week’s FOMC meeting on Wednesday and Thursday (expected a -25 bp rate cut) and post-meeting comments from Fed Chair Powell, and (3) Q3 corporate earnings results with nearly 20% of the S&P 500 companies scheduled to report this week.

Of the companies in the S&P 500 that have released Q3 earnings so far, 78% surpassed estimates. According to Bloomberg Intelligence, companies in the S&P 500 are expected to report an average +4.3% y/y increase in quarterly earnings in Q3, down from the +7.9% y/y growth consensus seen in July.

The markets are discounting the chances at 97% for a -25 bp rate cut at the November 6-7 FOMC meeting and at 0% for a -50 bp rate cut at that meeting.

Overseas stock markets today are higher. The Euro Stoxx 50 is up +0.05%. China's Shanghai Composite Index climbed to a 3-1/2 week high and closed up +2.32%. Japan's Nikkei Stock 225 closed up +1.11%.

Interest Rates

December 10-year T-notes (ZNZ24) today are down -12 ticks. The 10-year T-note yield is up +6.9 bp to 4.354%. Dec T-notes today are trading lower, pressured by the stronger-than-expected Oct ISM services index, a hawkish factor for Fed policy. Also, today’s strength in stocks has reduced safe-haven demand for T-notes. In addition, supply pressures are weighing on T-notes as the Treasury will auction $42 billion of 10-year T-notes later today as part of this week’s $125 billion T-note and T-bond auctions for the November quarterly refunding.

Losses in T-notes are limited by expectations that the FOMC will cut interest rates by 25 bp on Thursday. Also, uncertainty about the outcome of today’s US presidential election has boosted some safe-haven demand for T-notes.

European government bond yields today are moving higher. The 10-year German bund yield is up +2.3 bp to 2.418%. The 10-year UK gilt yield is up +6.2 bp to 4.520%.

French Sep manufacturing production fell -0.8% m/m, a smaller decline than expectations of -1.3% m/m.

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 17% for a -50 bp rate cut at the same meeting.

US Stock Movers

GlobalFoundries is up more than +9% to lead gainers in the Nasdaq 100 and lead chip stocks higher after reporting Q3 net revenue of $1.74 billion, stronger than the consensus of $1.73 billion, and forecasting Q4 net revenue of $1.80-$1.85 billion, with the midpoint above the consensus of $1.80 billion. Also, Intel is up more than +2% to lead gainers in the Dow Jones Industrials. In addition, Nvidia , Lam Research , Applied Materials , Broadcom , KLA Corp , and Marvell Technology are up more than +2%.

Palantir Technologies is up more than +22% to lead gainers in the S&P 500 after reporting Q3 revenue of $725.5 million, stronger than the consensus of $703.7 million, and raising its full-year adjusted operating profit estimate to $1.05 billion-$1.06 billion from a previous estimate of $966 million-$974 million, well above the consensus of $970.5 million.

Cummins Inc is up more than +8% after reporting Q3 net sales of $8.46 billion, stronger than the consensus of $8.29 billion.

Apollo Global Management is up more than +8% after reporting Q3 adjusted EPS of $1.85, higher than the consensus of $1.73.

Emerson Electric is up more than +7% after reporting Q4 net sales of $4.62 billion, above the consensus of $4.54 billion.

Louisiana-Pacific is up more than +5% after reporting Q3 net sales of $722 million, stronger than the consensus of $696.1 million.

DuPont de Nemours is up more than +5% after boosting guidance on its full-year adjusted EPS estimate to $3.90 from a previous forecast of $3.70-$3.80.

Vertex Pharmaceuticals is up more than +3% after reporting Q3 net product revenue of $2.77 billion, better than the consensus of $2.69 billion, and raising its full-year product revenue estimate to $10.8 billion-$10.9 billion from a previous estimate of $10.65 billion-$10.85 billion, stronger than the consensus of $10.76 billion.

Celanese Corp is down more than -25% to lead losers in the S&P 500 after reporting Q3 adjusted EPS of $2.44, weaker than the consensus of $2.85, and forecast Q4 adjusted EPS of $1.25, well below the consensus of $2.94.

Wynn Resorts Ltd is down more than -8% after reporting Q3 operating revenue of $1.69 billion, weaker than the consensus of $1.73 billion.

Archer-Daniels-Midland is down more than -7% after canceling its quarterly earnings call and saying it will amend previous financial statements after finding additional accounting issues.

Cleveland-Cliffs is down more than -8% after reporting Q3 revenue of $4.57 billion, weaker than the consensus of $4.74 billion.

NXP Semiconductors NV is down more than -6% after forecasting Q4 revenue of $3.0 billion-$3.2 billion, weaker than the consensus of $3.36 billion.

Hologic Inc is down more than -4% after forecasting 2025 revenue of $4.15 billion-$4.20 billion, below the consensus of $4.21 billion.

Henry Schein is down more than -3% after reporting Q3 net sales of $3.17 billion, weaker than the consensus of $3.24 billion.

Lattice Semiconductor is down more than -2% after forecasting Q4 revenue of $112 million-$122 million, below the consensus of $132.1 million.

Earnings Reports (11/5/2024)

Archer-Daniels-Midland Co (ADM), Assurant Inc (AIZ), Broadridge Financial Solutions (BR), Builders FirstSource Inc (BLDR), Cummins Inc (CMI), Devon Energy Corp (DVN), DuPont de Nemours Inc (DD), Emerson Electric Co (EMR), Expeditors International of Washington (EXPD), Gartner Inc (IT), Henry Schein Inc (HSIC), International Flavors & Fragrances (IFF), Jack Henry & Associates Inc (JKHY), Marathon Petroleum Corp (MPC), Microchip Technology Inc (MCHP), Super Micro Computer Inc (SMCI), Targa Resources Corp (TRGP), Yum! Brands Inc (YUM).

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. For more information please view the Barchart Disclosure Policyhere.