Dj The Race To Remove 'Forever Chemicals' From Clothing Ahead Of Bans

The S&P 500 Index Tuesday closed down -0.39%, the Dow Jones Industrials Index closed down -0.61%, and the Nasdaq 100 Index closed down -0.43%. Dec E-mini S&P futures (ESZ24) are down -0.48%, and Dec E-mini Nasdaq futures (NQZ24) are down -0.51%.

Stock indexes on Tuesday settled moderately lower, with the Dow Jones Industrials falling to a 3-1/2 week low. Chip stock weakness on Tuesday weighed on the overall market. Also, healthcare companies that own pharmacy benefit management units retreated Tuesday after Pfizer CEO Bourla said President-elect Trump is “very committed” to pharmacy benefit management (PBM) reform.

Tuesday’s US Nov retail sales report was stronger than expected, showing a resilient economy with strong consumer spending. However, it may also push the Fed to signal fewer interest rate cuts next year when they update their quarterly dot-plot forecasts on Wednesday.

US Nov retail sales rose +0.7% m/m, stronger than expectations of +0.6% m/m. Nov retail sales ex-autos rose +0.2% m/m, weaker than expectations of +0.4% m/m.

US Nov manufacturing production rose +0.2% m/m, weaker than expectations of +0.5% m/m.

The US Dec NAHB housing market index was unchanged from Nov at 46, weaker than expectations of an increase to 47.

The FOMC is expected to cut the fed funds target range by -25 bp after the Tue/Wed policy meeting. The markets will scour post-meeting comments on Wednesday from Fed Chair Powell for clues to the future direction of Fed policy. The markets are also awaiting key inflation data on Friday with the Nov core PCE price index, the Fed’s preferred inflation gauge, to see if policymakers can continue cutting interest rates. (Nov core PCE expected to rise to +2.9% y/y from +2.8% y/y in Oct).

The markets are discounting the chances at 95% for a -25 bp rate cut at the December 17-18 FOMC meeting.

Overseas stock markets today are mixed. The Euro Stoxx 50 fell to a 1-1/2 week low and closed down -0.09%. China's Shanghai Composite Index fell to a 1-1/2 week low and closed down -0.73%. Japan's Nikkei Stock 225 closed down -0.24%.

Interest Rates

March 10-year T-notes (ZNH25) Tuesday closed up +1.5 ticks. The 10-year T-note yield fell -0.8 bp to 4.389%. Mar T-notes Tuesday recovered from a 3-1/2 week low and moved slightly higher, and the 10-year T-note yield fell back from a 3-1/2 week high of 4.438%. Short covering emerged in T-notes Tuesday to push prices higher on weaker-than-expected US economic reports on Nov manufacturing production and the Dec NAHB housing market index.

On Tuesday, T-notes initially moved lower on carryover pressure from a fall in 10-year UK Gilts to a 1-month low. Also, weak demand for the Treasury’s $13 billion 20-year T-bond auction weighed on prices as the auction had a bid-to-cover ratio of 2.50, weaker than the 10-auction average of 2.59.

European government bond yields on Tuesday were mixed. The 10-year German bund yield fell -1.7 bp to 2.230%. The 10-year UK gilt yield climbed to a 1-month high of 4.532% and finished up +8.2 bp to 4.524%.

The German Dec ZEW expectations of economic growth index unexpectedly rose +8.3 to a 4-month high of 15.7, stronger than expectations of a decline to 6.9.

The German Dec IFO business climate index fell -0.9 to a 4-1/2 year low of 84.7, weaker than expectations of 85.5.

ECB Governing Council member Rehn said, "The direction of the ECB's monetary policy is clear," as interest rates will continue to head lower as inflation starts to stabilize around its 2% goal.

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its January 30 policy meeting and a 10% chance for a 50 bp rate cut at the same meeting.

US Stock Movers

Chip stock weakness Tuesday weighed on the overall market. Marvell Technology closed down more than -9% to lead losers in the Nasdaq 100. Also, Broadcom closed down more than -4%, and Intel closed down more than -2%. In addition, ARM Holdings Plc , Analog Devices , Nvidia , Microchip Technology , and Advanced Micro Devices closed down more than -1%.

Healthcare companies that own pharmacy benefit management units retreated Tuesday after Pfizer CEO Bourla said President-elect Trump is “very committed” to reform pharmacy benefit management (PBM). As a result, Humana closed down more than -10% to lead losers in the S&P 500, and CVS Health closed down more than -5%. Also, UnitedHealth Group closed down more than -3% to lead losers in the Dow Jones Industrials. In addition, Cigna Group closed down more than -2%.

CarMax closed down more than -3% on earnings concerns as analysts estimate the company’s revenue declined -1.8% in the latest quarter from the same period a year earlier, while US automobile dealer sales rose +1.8% in the first two months of Q4. CarMax will report earnings on Thursday.

Pacs Groups closed down more than -7% after JPMorgan Chase downgraded the stock to neutral from overweight.

Affirm Holdings closed down more than -2% after announcing it offered $750 million of 5-yeat convertible bonds due 2029.

Palantir Technologies closed down more than -1% on signs of insider selling after an SEC filing showed CFO Glazer sold $23.1 million of shares last Thursday.

Essex Property Trust closed down more than -1% after JPMorgan Chase downgraded the stock to underweight from neutral.

Match Group closed down more than -1% after Jeffries downgraded the stock to hold from buy with a price target of $32.

Pfizer closed up more than +4% to lead gainers in the S&P 500 after reaffirming its 2024 guidance and forecasting 2025 adjusted EPS of $2.80-$3.00, the midpoint above the consensus of $2.89.

Fox Corp closed up more than +4% after Guggenheim Securities raised its price target on the stock to $55 from $50.

Tesla closed up more than +3% to lead gainers in the Nasdaq 100 after Mizuho Securities upgraded the stock to outperform from neutral with a price target of $515.

VF Corp closed up more than +5% after Argus Research upgraded the stock to buy from hold with a price target of $25.

Cloudflare Inc closed up more than +3% after Stifel upgraded the stock to buy from hold with a price target of $136.

ON Semiconductor closed up more than +1% after Denso said it would strengthen its relationship with the company to support driver assistance technologies and plans to acquire an undisclosed amount of ON Semiconductor shares on the open market as part of the collaboration.

EPAM Systems closed up more than +1% after Barclays upgraded the stock to overweight from equal weight with a price target of $290.

Quest Diagnostics closed up more than +1% after Morgan Stanley upgraded the stock to overweight from equal weight.

Earnings Reports (12/18/2024)

Birkenstock Holding Plc (BIRK), General Mills Inc (GIS), Jabil Inc (JBL), Lennar Corp (LEN), Micron Technology Inc (MU), Toro Co/The (TTC).

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.

• S&P Futures Slip Ahead of U.S. Retail Sales Data and FOMC Meeting
• Stocks Set to Open Higher as Investors Await Fed Meeting and Key U.S. Inflation Data
• FOMC, GDP and Other Can't Miss Items This Week
• Nasdaq Futures Climb as Broadcom Provides a Boost

The S&P 500 Index today is down -0.49%, the Dow Jones Industrials Index is down -0.67%, and the Nasdaq 100 Index is down -0.51%. Dec E-mini S&P futures (ESZ24) are down -0.51%, and Dec E-mini Nasdaq futures (NQZ24) are down -0.48%.

Stock indexes today are moderately lower, with the Dow Jones Industrials posting a 3-1/2 week low. Chip stock weakness today is weighing on the overall market. Also, healthcare companies that own pharmacy benefit management units are retreating today after Pfizer CEO Bourla said President-elect Trump is “very committed” to pharmacy benefit management (PBM) reform. In addition, energy stocks are under pressure today with the price of WTI crude oil down more than -1%.

Today’s US Nov retail sales report was stronger than expected, showing a resilient economy with strong consumer spending. However, it may also push the Fed to signal fewer interest rate cuts next year when they update their quarterly dot-plot forecasts on Wednesday.

US Nov retail sales rose +0.7% m/m, stronger than expectations of +0.6% m/m. Nov retail sales ex-autos rose +0.2% m/m, weaker than expectations of +0.4% m/m.

US Nov manufacturing production rose +0.2% m/m, weaker than expectations of +0.5% m/m.

The US Dec NAHB housing market index was unchanged from Nov at 46, weaker than expectations of an increase to 47.

The FOMC is expected to cut the fed funds target range by -25 bp after the Tue/Wed policy meeting. The markets will scour post-meeting comments on Wednesday from Fed Chair Powell for clues to the future direction of Fed policy. The markets are also awaiting key inflation data on Friday with the Nov core PCE price index, the Fed’s preferred inflation gauge, to see if policymakers can continue cutting interest rates. (Nov core PCE expected to rise to +2.9% y/y from +2.8% y/y in Oct).

The markets are discounting the chances at 99% for a -25 bp rate cut at the December 17-18 FOMC meeting.

Overseas stock markets today are mixed. The Euro Stoxx 50 fell to a 1-1/2 week low and is down -0.04%. China's Shanghai Composite Index fell to a 1-1/2 week low and closed down -0.73%. Japan's Nikkei Stock 225 closed down -0.24%.

Interest Rates

March 10-year T-notes (ZNH25) today are up +3 ticks. The 10-year T-note yield is down -1.6 bp to 4.381%. Mar T-notes today recovered from a 3-1/2 week low and moved higher, and the 10-year T-note yield fell back from a 3-1/2 week high of 4.438%. Short covering emerged in T-notes today to push prices higher on weaker-than-expected US economic reports on Nov manufacturing production and the Dec NAHB housing market index.

Today, T-notes initially moved lower on carryover pressure from a fall in 10-year UK Gilts to a 1-month low. Also, supply pressures are undercutting T-note prices as the Treasury will auction $13 billion of reopened 20-year T-bonds later today.

European government bond yields today are mixed. The 10-year German bund yield is down -2.1 bp to 2.226%. The 10-year UK gilt yield climbed to a 1-month high of 4.532% and is up +7.5 bp to 4.517%.

The German Dec ZEW expectations of economic growth index unexpectedly rose +8.3 to a 4-month high of 15.7, stronger than expectations of a decline to 6.9.

The German Dec IFO business climate index fell -0.9 to a 4-1/2 year low of 84.7, weaker than expectations of 85.5.

ECB Governing Council member Rehn said, "The direction of the ECB's monetary policy is clear," as interest rates will continue to head lower as inflation starts to stabilize around its 2% goal.

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its January 30 policy meeting and an 8% chance for a 50 bp rate cut at the same meeting.

US Stock Movers

Chip stock weakness today is weighing on the overall market. Marvell Technology is down more than -8% to lead losers in the Nasdaq 100. Also, Broadcom is down more than -4%, and ARM Holdings Plc is down more than -3%. In addition, Nvidia is down more than -2%, and Advanced Micro Devices is down more than -2%.

Healthcare companies that own pharmacy benefit management units are retreating today after Pfizer CEO Bourla said President-elect Trump is “very committed” to reform pharmacy benefit management (PBM). As a result, Humana is down more than -4% and UnitedHealth Group is down more than -3% to lead losers in the Dow Jones Industrials. Also, CVS Health and Cigna Group are down more than -3%.

Affirm Holdings is down more than -4% after announcing it was offering $750 million of 5-yeat convertible bonds due 2029.

Palantir Technologies is down more than -2% on signs of insider selling after an SEC filing showed CFO Glazer sold $23.1 million of shares last Thursday.

Today’s -1% fall in WTI crude oil prices weighs on energy stocks. APA Corp is down more than -5%. Also, Schlumberger , Haliburton , and ConocoPhillips are down more than -2%. In addition, Devon Energy , Chevron , Exxon Mobil , and Valero Energy are down more than -1%.

Pacs Groups is down more than -7% after JPMorgan Chase downgraded the stock to neutral from overweight.

Essex Property Trust is down more than -1% after JPMorgan Chase downgraded the stock to underweight from neutral.

Match Group is down more than -1% after Jeffries downgraded the stock to hold from buy with a price target of $32.

Pfizer is up more than +4% to lead gainers in the S&P 500 after reaffirming its 2024 guidance and forecasting 2025 adjusted EPS of $2.80-$3.00, the midpoint above the consensus of $2.89.

Tesla is up more than +3% after Mizuho Securities upgraded the stock to outperform from neutral with a price target of $515.

ON Semiconductor is up more than +2% after Denso said it will strengthen its relationship with the company to support driver assistance technologies and plans to acquire an undisclosed amount of ON Semiconductor shares on the open market as part of the collaboration.

Cloudflare Inc is up more than +2% after Stifel upgraded the stock to buy from hold with a price target of $136.

Fox Corp is up more than +2% after Guggenheim Securities raised its price target on the stock to $55 from $50.

VF Corp is up more than +1% after Argus Research upgraded the stock to buy from hold with a price target of $25.

Nordson is up more than +1% after Seaport Global Securities upgraded the stock to buy from neutral with a price target of $250.

Earnings Reports (12/17/2024)

Amentum Holdings Inc (AMTM), Critical Metals Corp (CRML), HEICO Corp (HEI), Worthington Enterprises Inc (WOR).

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.

• S&P Futures Slip Ahead of U.S. Retail Sales Data and FOMC Meeting
• Stocks Set to Open Higher as Investors Await Fed Meeting and Key U.S. Inflation Data
• FOMC, GDP and Other Can't Miss Items This Week
• Nasdaq Futures Climb as Broadcom Provides a Boost