Shares end higher than Nvidia’s earnings

The S&P 500 Index ($SPX) (SPY) closed +0.25% on Tuesday, the Dow Jones Industrials Index ($DOWI) (DIA) closed +0.17% and the Nasdaq 100 Index ($IUXX) (QQQ) closed Tuesday. +0.21%.

U.S. stock indexes closed moderately higher on Tuesday as they consolidated just below all-time highs hit last week. Stock gains were muted Tuesday after comments from Fed Governor Waller and Atlanta Fed President Bostic, who said they favor waiting for inflation to fall before cutting rates. A drop in T-note yields Tuesday was supportive for stocks.

Fed Governor Waller said he needs “a few more” months of good inflation data before he can start cutting rates.

Atlanta Fed President Bostic reiterated his view that inflation will continue to fall slowly and that the Fed could likely start cutting rates in the fourth quarter.

Markets are looking ahead to the minutes of the Wednesday, April 30-May 1 FOMC meeting to see how close the Fed is to a rate cut. Also, earnings results from Nvidia and Analog Devices will be examined on Wednesday to gauge demand for semiconductor chips. In addition, big-box retailer Target’s earnings results will be scoured Wednesday for clues to consumer spending.

Overall, the positive first quarter earnings results are good for stocks. First-quarter earnings are expected to rise +7.1% year-over-year, well above the +3.8% estimate before earnings season. About 81% of S&P 500 reporting companies beat first-quarter earnings estimates, according to data compiled by Bloomberg Intelligence.

Markets are discounting the chances of a rate cut from -25 bps to 5% for the June 11-12 FOMC meeting and 25% for the next meeting on July 30-31.

Ethereum (^ETHUSD) rose more than +5% to a two-month high on Tuesday, adding to Monday’s +13% surge on speculation that the US will soon have exchange-traded funds (ETFs) approve investing directly in Ether, the second largest. cryptocurrency token. Bloomberg reported that the U.S. Securities and Exchange Commission (SEC) has contacted at least one exchange and at least one potential spot Ether ETF issuer to update related 19b-4 filings, a sign that the chances of approval by the SEC could rise.

Foreign stock markets fell lower on Tuesday. The Euro Stoxx 50 fell to a 1-1/2 week low, closing -0.54%. China’s Shanghai Composite closed with a loss of -0.42%. Japan’s Nikkei stock index closed -0.31%.

Interest rates

June 10-year T-notes (ZNM24) closed +4.5 ticks on Tuesday. The yield on ten-year T-notes fell by 3.1 bp to 4.412%. June T-notes edged higher on Tuesday, thanks to a transfer of support from the strength of European government bonds. Also, a rally in Canadian bonds kept T-note prices higher after the Canadian core CPI rose less than expected in April. T-note gains were limited after Fed Governor Waller and Atlanta Fed President Bostic said they preferred to wait for inflation to fall before cutting rates.

Interest rates on European government bonds are falling today. The yield on German 10-year government bonds fell by 1.9 bp to 2.509%. The yield on 10-year UK government bonds fell by 1.8 bp to 4.150%.

Eurozone labor costs rose in the first quarter from +3.4% annualized in the fourth quarter to +4.9% annualized.

Germany’s April PPI fell to -3.3% y/y from -2.9% y/y in March, weaker than expectations of -3.1% y/y.

US stock movers

Tesla (TSLA) closed over +6% ahead of leaders in the Nasdaq 100, as a coalition of Tesla shareholders urges peers to reject a $56 billion pay package for CEO Musk and oppose the re-election of directors Kimbal Musk and James Murdoch to vote. saying that the board is not serving the best interests of the company.

Macy’s (M) closed over +5% after raising its full-year adjusted EPS estimate from a previous estimate of $2.45-$2.85 to $2.55-$2.90.

Eli Lilly (LLY) closed up over +2% to hit an all-time high after receiving approval in China for its tirzepatide drug to treat type 2 diabetes. It also formed a partnership with Atkis Oncology to develop tumor-targeted radiopharmaceuticals.

AstraZeneca Plc (AZN) closed up over +2% after saying it expects to generate $80 billion in total revenues by 2030 through “significant growth” in its existing portfolio in oncology, biopharmaceuticals and rare diseases.

International Business Machines (IBM) closed up more than +2% on leaders in the Dow Jones Industrials after it said it was expanding its partnership with Salesforce for AI and data ecosystems.

Lam Research (LRCX) closed up over +2% after approving a $10 billion share buyback authorization and a 10-to-1 stock split.

Progressive (PGR) closed over +1% after Morgan Stanley called the stock a “top pick” in terms of attractive valuation.

Nordson (NDSN) closed more than -9% as leading losers in the S&P 500 after reporting second-quarter revenue of $650.6 million, weaker than the consensus of $661.4 million, and third-quarter revenue forecast from $645 million to $670 million, well below the S&P 500 consensus. $705.3 million.

Keysight Technologies ( KEYS ) closed more than -8% lower after forecasting third-quarter adjusted earnings per share of $1.30-$1.36, below the $1.45 consensus.

Walgreens Boots Alliance (WBA) closed down more than -6% and led to the biggest losers in the Nasdaq 100, after a Wall Street Journal article reported that the US retail apocalypse is overtaking national drugstore chains, with Walgreens losing hundreds stores close.

Cybersecurity stocks were under pressure Tuesday after Palo Alto Networks forecast fourth-quarter billings of $3.43 billion to $3.48 billion, the midpoint below the $3.47 billion consensus. As a result, Palo Alto Networks (PANW) closed down over -3%. Fortinet (FTNT) and Zscaler (ZS) also closed more than -1% lower.

Amer Sports (AS) closed more than -7% lower after forecasting a second-quarter loss per share of -4 cents to -8 cents, a wider loss than the consensus of -5 cents.

AutoZone (AZO) closed up over -3% after third-quarter comparable sales rose +1.9%, weaker than the +3.3% consensus.

Globe Life (GL) closed down more than -2% after receiving a preliminary, informal inquiry from the SEC requesting information about recent short-seller reports making allegations about the company.

Earnings reports (22-05-2024)

Analog Devices Inc (ADI), NVIDIA Corp (NVDA), Petco Health & Wellness Co Inc (WOOF), Snowflake Inc (SNOW), Synopsys Inc (SNPS), Target Corp (TGT), TJX Cos Inc/The (TJX), VF Corp (VFC), Williams-Sonoma Inc (WSM).

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As of the date of publication, Rich Asplund had (neither directly nor indirectly) any positions in the securities mentioned in this article. All information and data in this article are for informational purposes only. For more information, please review the Barchart 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.