The S&P 500 Index ($SPX) (SPY) closed up +0.23% on Thursday, the Dow Jones Industrial Average ($DOWI) (DIA) closed down -0.17% and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.57%.
Equity indexes were mixed on Thursday, with the Nasdaq 100 hitting a new all-time high and the Dow Jones Industrial Average dropping to a one-week low. Stocks were supported by lower bond yields after the U.S. Producer Price Index unexpectedly fell in May. Weekly jobless claims also unexpectedly rose to a 10-month high, strengthening the prospect of a Fed rate cut later this year. Equity gains were capped by negative carryover from the Euro Stoxx 50 Index’s fall to a five-week low on Thursday.
Positive corporate news on Thursday also lifted stocks. Broadcom rose more than 12%, leading AI hardware stocks higher after it reported second-quarter adjusted net revenue that beat expectations and full-year revenue that also beat market expectations. Tesla also rose more than 3% after CEO Musk said his compensation package had been reapproved and that a proposal to move the company’s headquarters from Delaware to Texas had passed by “wide margins.”
Initial weekly U.S. jobless claims unexpectedly rose by 13,000 to a 10-month high of 242,000, signaling weaker labor market conditions than a decline to 225,000 had expected.
The U.S. Producer Price Index (PPI) final demand unexpectedly declined to +2.2% y/y from +2.3% y/y in April, below expectations of a 2.5% y/y increase. The Producer Price Index (PPI) excluding food and energy unexpectedly declined to +2.3% y/y in May from +2.5% y/y in April, below expectations of a 2.5% y/y increase.
Markets are estimating the likelihood of a 25bp cut at the FOMC meeting on July 30-31 to be 10%, and 62% at the next meeting on September 17-18.
Stocks are being supported by generally strong first-quarter earnings results. First-quarter revenue is expected to grow 7.1% year over year, well above expectations of a 3.8% increase ahead of earnings season. About 81% of S&P 500 companies beat first-quarter earnings expectations, according to data compiled by Bloomberg Intelligence.
Overseas stock markets closed lower on Thursday. The Euro Stoxx 50 fell to its lowest in five weeks, closing down -1.97%. China’s Shanghai Composite Index closed down -0.28%. Japan’s Nikkei Stock Average closed down -0.40%.
Interest level
The September 10-year Treasury note (ZNU24) closed 13 ticks higher on Thursday. The 10-year Treasury yield was down -7.8 basis points to 4.238%. September Treasury prices rose to a 2.5-month high on Thursday, while the 10-year Treasury yield fell to a 2.5-month low of 4.221%. Treasuries on Thursday extended Wednesday’s gains after a dovish economic report showed weekly jobless claims rose to a 10-month high and May producer price inflation grew less than expected. Lower inflation expectations also boosted Treasuries after the 10-year breakeven inflation rate fell to a 4.5-month low of 2.207% on Thursday. Strong demand for the Treasury Department’s $22 billion 30-year Treasury auction sent Treasury prices soaring to record highs on Thursday afternoon. The bid-to-bid ratio was 2.49, well above the 10-auction average of 2.39.
European government bond yields fell on Thursday. The 10-year German Bund yield fell to a three-and-a-half-week low of 2.461% before closing down 6.0 basis points at 2.470%. The 10-year UK Government Bond yield fell to a three-and-a-half-week low of 4.117% before closing down 0.4 basis points at 4.123%.
Eurozone industrial production unexpectedly decreased -0.1% m/m in April, compared to the expected increase of +0.2% m/m.
ECB governing council member Muller said euro zone inflation could pick up again and that “to achieve our objectives, interest rates will probably need to remain above average for some time yet.”
Swaps markets are pricing in an 8% chance of the ECB cutting rates by 25 basis points at its July 18 meeting and a 49% chance at its September 12 meeting.
US stock trends
Broadcom (AVGO) reported second-quarter adjusted net revenue of $12.49 billion, beating the consensus estimate of $12.06 billion, and full-year revenue guidance of $51 billion, beating the consensus estimate of $50.58 billion, rising more than 12% to be the top gainer on the Nasdaq 100. Other AI hardware stocks also rose on the news, with Super Micro Computer (SMCI) rising more than 12% to be the top gainer on the S&P 500, while Nvidia (NVDA) and Arista Networks (ANET) closed up more than 3%.
Tesla (TSLA) closed up more than 3% after CEO Musk reapproved his compensation package and said a proposal to move the company’s headquarters from Delaware to Texas passed by a “wide margin.”
Chipotle Mexican Grill (CMG) closed up more than 2% after Goldman Sachs initiated a buy recommendation on the stock.
Kimberly-Clark (KMB) closed up more than 2% after Bank of America Global Research raised the stock by two notches to buy from underperform with a $160 price target.
Masco Corporation (MAS) closed more than 2% higher after the company recommended shareholders reject a below-market mini-tender offer by TRC Capital Investment Corporation.
Ulta Beauty (ULTA) closed up more than 2% after Oppenheimer added the stock to its “top pick” and set a $475 price target.
eBay (EBAY) closed up more than 1% after it said it was introducing Venmo as a new payment method on the platform.
Paramount Global (PARA) fell more than 6% to be the S&P 500’s biggest loser after CreditSights said the company could be downgraded by Moody’s Ratings by the end of the year following the collapse of talks to sell the company to Skydance Media.
Generac Holdings (GNRC) closed down more than 4% after Janney Montgomery LLC downgraded the stock to neutral from buy.
General Electric (GE) closed down more than 3% after JPMorgan Chase projected second-quarter sales of $8.4 billion, below market expectations of $8.8 billion, citing supply chain constraints that are weighing on deliveries of new engines.
Dave & Buster’s Entertainment (PLAY) closed down more than 10% after reporting first-quarter revenue of $588.1 million, below the consensus estimate of $615.5 million.
Ares Management Corporation (ARES) closed down more than 2% after announcing the launch of an underwritten public offering of 2.65 million shares of Class A common stock.
Airbnb (ABNB) closed down more than 1% in signs of insider selling after SEC filings showed CEO Chesky sold $17 million worth of stock on Monday.
Earnings Report (June 14, 2024)
Anterix Inc (ATEX).
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On the date of publication, Rich Asplund did not hold (either directly or indirectly) any positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information please see Barchart’s disclosure policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
