U.S. stocks mixed at close of trade; Dow Jones Industrial Average down 0.28%

US benchmark equity indexes closed mixed Tuesday amid escalating tensions between Russia and Ukraine as traders awaited Nvidia's latest quarterly financial results.

The Nasdaq Composite rose 1% to 18,987.5, while the S&P 500 increased 0.4% to 5,917. The Dow Jones Industrial Average fell 0.3% to 43,268.9. Technology led the gainers among sectors, while energy and financials saw the biggest drops.

Ukraine has attacked a Russian weapons arsenal with US-made missiles, CNN reported, citing two US officials. The Biden administration recently granted permission to Ukraine to use longer-range American weapons against targets in Russia, according to the report.

The US 10-year yield fell 2.2 basis points to 4.39%, while the two-year rate was little changed at 4.28%.

Chip-making giant Nvidia is scheduled to report its fiscal third-quarter results Wednesday. Truist expects revenue to jump nearly 83% year over year. The company is likely running a "significant" backlog indicating solid demand, the brokerage said in a Tuesday note to clients.

Nvidia shares closed 4.9% higher, the top gainer on the Dow and among the best on the S&P 500 and the Nasdaq.

Super Micro Computer shares surged 31%, the best performer on the S&P 500 and the Nasdaq. Late Monday, the artificial intelligence server maker said that it appointed BDO USA as its independent auditor and that it had submitted a plan to the Nasdaq Stock Market requesting more time as it seeks to regain compliance with the exchange's continued listing requirements.

Walmart raised its full-year outlook Tuesday as the retail giant reported stronger-than-expected fiscal third-quarter results amid gains across all segments. Its shares rose 3%, the second-best performer on the Dow.

Lowe's fiscal third-quarter sales fell less than projected, while the home improvement retailer raised its full-year top-line outlook. The company's shares dropped 4.6%, among the steepest declines on the S&P 500, amid softness in do-it-yourself bigger-ticket discretionary demand in the third quarter.

Incyte was the worst performer on the S&P 500, down 8.3%. Late Monday, the company said it will pause enrollment in the phase 2 study of MRGPRX2 in chronic spontaneous urticaria amid "certain in-vivo preclinical toxicology findings." Incyte said data from a phase 2 study into cholestatic pruritus doesn't support further development.

West Texas Intermediate crude oil rose 0.7% to $69.66 a barrel Tuesday.

In economic news, US housing starts declined more than expected last month as gains in multi-family projects were more than offset by a fall in the single-family component, government data showed.

Hurricanes Helene and Milton "dragged down" starts in the South by more than projected, though a rebound is expected as rebuilding in the areas most affected by the storms gets underway, Oxford Economics said.

Gold gained 0.8% to $2,635.50 per troy ounce, while silver rose 0.3% to $31.32 per ounce.

The S&P 500 Index Tuesday closed up +0.40%, the Dow Jones Industrials Index closed down -0.28%, and the Nasdaq 100 Index closed up +0.71%.

Stocks on Tuesday recovered from early losses and settled mixed, with the Dow Jones Industrials falling to a 1-1/2 week low. The broader market rebounded Tuesday, led by a +4% jump in Nvidia ahead of an expected stellar earnings report after the close on Wednesday. Market expectations are for Nvidia to report record Q3 revenue of $33.25 billion and forecast 2025 revenue of $126.58 billion. Also, strength in the Magnificent Seven technology stocks sparked a recovery in the broader market. In addition, strong earnings results from Walmart were supportive for the overall market Tuesday after Walmart climbed +3% after reporting stronger-than-expected Q3 adjusted EPS and raising its full-year adjusted EPS forecast.

Stocks on Tuesday initially opened lower as an escalation of the Ukraine-Russian war sparked risk-off sentiment in equity markets and liquidation of stocks. Markets were rattled after Ukraine forces reportedly carried out their first missile strikes on a border region in Russia using Western-supplied missiles. Also, Russian President Putin approved an updated nuclear doctrine that expands the conditions for Russia to use atomic weapons, including in response to a conventional attack on its soil. The ramped-up war risks fueled flight to safety into government bonds, knocking the 10-year T-note yield to a 1-week low and increasing safe-haven demand for gold, pushing gold prices to a 1-week high.

Weaker-than-expected US housing news was also negative for stocks after Oct housing starts fell -3.1% m/m to 1.311 million, weaker than expectations of 1.334 million. Also, Oct building permits, a proxy for future construction, unexpectedly fell -0.6% m/m to 1.416 million versus expectations of an increase to 1.435 million.

Of the 90% of companies in the S&P 500 that have released Q3 earnings so far, 75% surpassed the estimates, slightly below the 3-year average. According to Bloomberg Intelligence, companies in the S&P 500 have reported an average +8.5% y/y increase in quarterly earnings in Q3, more than double the preseason forecast.

The markets are discounting the chances at 56% for a -25 bp rate cut at the December 17-18 FOMC meeting.

Overseas stock markets Tuesday settled mixed. The Euro Stoxx 50 tumbled to a 3-month low and closed down -0.82%. China's Shanghai Composite Index recovered from a 2-week low and closed up +0.67%. Japan's Nikkei Stock 225 Index closed up +0.51%.

Interest Rates

December 10-year T-notes (ZNZ24) Tuesday closed up +7 ticks. The 10-year T-note yield fell -3.2 bp to 4.382%. Dec T-notes Tuesday rallied to a 1-week high, and the 10-year T-note yield fell to a 1-week low of 4.336%. T-notes moved higher Tuesday on positive carryover from a rally in European government bonds. Also, T-notes rose on increased safe-haven demand from the escalation of the Ukraine-Russian conflict after reports said Ukraine carried out its first strike within Russian territory using Western-supplied missiles. T-notes added to their gains Tuesday on the weaker-than-expected US Oct housing starts and building permits reports.

European government bond yields Tuesday moved lower. The 10-year German bund yield fell to a 3-week low of 2.269% and finished down -3.6 bp to 2.338%. The 10-year UK gilt yield fell to a 2-week low of 4.386% and finished down -2.3 bp to 4.442%.

ECB Governing Council member Panetta said, "Restrictive monetary conditions are no longer necessary, and the ECB needs to normalize its monetary-policy stance and move to neutral or even expansionary territory, if necessary."

ECB Governing Council member Muller said the ECB will likely reduce interest rates by a quarter-point at its December 18-19 meeting.

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 18% for a -50 bp rate cut at the same meeting.

US Stock Movers

Super Micro Computer closed up more than +31% to lead gainers in the S&P 500 and Nasdaq 100 after it hired a new auditor and filed a plan to come into compliance with Nasdaq listing requirements.

Nvidia closed up more than +4% to lead gainers in the Dow Jones Industrials after Stifel raised its price target for the stock to $180 from $165.

Walmart closed up +3% after reporting Q3 adjusted EPS of 58 cents, above the consensus of 53 cents, and raised its full-year adjusted EPS forecast to $2.42-$2.47 from a previous forecast of $2.35-$2.43.

Strength in the Magnificent Seven technology stocks Tuesday supported the overall market. Netflix and Tesla closed up more than +2%. Also, Alphabet , Amazon , and Meta Platforms closed up more than +1%.

GE Vernova closed up more than +4% after agreeing to acquire Woodward’s gas turbine parts business.

United Airlines Holdings closed up more than +4% after TD Cown raised its price target on the stock to $125 from $100.

Symbotic closed up more than +27% after reporting Q4 total revenue of $576.8 million, well above the consensus of $469.9 million, and forecast Q1 total revenue of $495 million-$515 million, stronger than the consensus of $494.6 million.

BioNTech closed up more than +4% after Berenberg initiated coverage on the stock with a buy recommendation and a price target of $130.

Incyte Corp closed down more than -8% to lead losers in the S&P 500 after it said it would pause enrollment in a Phase 2 study of its MRGPRX3, which is aimed at treating chronic urticaria due to preclinical toxicology findings.

Tax preparer stocks retreated Tuesday after the Washington Post reported that the leaders of President-elect Trump’s Department of Government Efficiency discussed creating a mobile app for Americans to file their taxes for free. As a result, H&R Block closed down more than -8%, and Intuit closed down more than -5%.

Lowe’s closed down more than -4% after reporting a Q3 gross margin of 33.7%, below the consensus of 33.8%.

Medtronic Plc closed down more than -3% after forecasting Q3 EPS of $1.35-$1.37, weaker than the consensus of $1.37.

Stellantis NV closed down more than -2% after Bloomberg Intelligence said that the company’s auto inventory days had risen nearly 50% in the past year.

STMicroelectronics NV closed down more than -1% after Bloomberg Intelligence said the company may be losing market share in analog semiconductors in China to Texas Instruments.

Kraft Heinz closed down more than -1% after Piper Sandler downgraded the stock to neutral from overweight.

Earnings Reports (11/20/2024)

NVIDIA Corp (NVDA), Palo Alto Networks Inc (PANW), Snowflake Inc (SNOW), Target Corp (TGT), TJX Cos Inc/The (TJX), Williams-Sonoma Inc (WSM).

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.

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