The S&P 500 Index ($SPX) (SPY) Thursday closed down -0.74%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -1.53%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.44%. 

US stock indexes Thursday settled moderately lower, with the S&P 500 falling to a 1-week low and the Dow Jones Industrials falling to a 2-week low.  Stocks gave up an early rally and turned lower after the 10-year T-note yield jumped to a 1-week high when US weekly initial unemployment claims fell more than expected and the May S&P manufacturing PMI unexpectedly moved into expansion territory, dampening expectations of Fed rate cuts.

Stock indexes on Thursday initially moved higher, with the S&P 500 and Nasdaq 100 posting new record highs as Nvidia surged more than +9% after reporting stronger-than-expected quarterly earnings. Nvidia’s blowout earnings boosted market sentiment and expectations that the global artificial intelligence boom will continue. 

Generally positive Q1 earnings results are supportive of stocks. Q1 earnings are expected to climb +7.1% y/y, well above the pre-earnings season estimate of +3.8%. According to data compiled by Bloomberg Intelligence, about 81% of reporting S&P 500 companies have beaten Q1 earnings estimates. 

US weekly initial unemployment claims fell -8,00 to 215,000, showing a stronger labor market than expectations of 220,000.

The US Apr Chicago Fed national activity index fell -0.19 to -0.23, weaker than expectations of +0.13.

The US May S&P manufacturing PMI unexpectedly rose +0.9 to 50.9, stronger than expectations of a decline to 49.9.

US Apr new home sales fell -4.7% m/m to 634,000, weaker than expectations of 678,000.

The US May Kansas City Fed manufacturing activity survey rose 6 to a 5-month high of -2, stronger than expectations of -7.

The markets are discounting the chances for a -25 bp rate cut at 0% for the June 11-12 FOMC meeting and 10% for the following meeting on July 30-31.

Overseas stock markets Thursday settled mixed. The Euro Stoxx 50 closed up +0.25%. China's Shanghai Composite fell to a 3-week low and closed down -1.33%. Japan's Nikkei Stock Index closed up +1.26%. 

Interest Rates

June 10-year T-notes (ZNM24) Thursday closed down -10 ticks. The 10-year T-note yield rose +4.9 bp to 4.471%. June T-notes Thursday fell to a 1-week low, and the 10-year T-note yield rose to a 1-week high of 4.496%. T-notes were under pressure Thursday from weakness in European government bonds. Also, signs of strength in the US labor market are hawkish for Fed policy and bearish for T-notes after weekly jobless claims fell more than expected. T-note prices fell further after the May S&P manufacturing PMI unexpectedly rose into expansion territory. T-notes recovered from their worst levels after inflation expectations declined when the 10-year breakeven inflation rate fell to a 1-week low of 2.314%.

European government bond yields on Thursday moved higher. The 10-year German bund yield rose to a 3-1/2 week high of 2.611% and finished up +6.2 bp at 2.596%. The 10-year UK gilt yield rose to a 2-1/2 week high of 4.277% and ended up +2.7 bp at 4.259%.

The ECB reported that Eurozone negotiated wages in Q1 increased +4.7% y/y from +4.5% y/y in Q4, which matched a record.

The Eurozone May S&P manufacturing PMI rose +1.7 to a 15-month high of 47.4, stronger than expectations of 46.1. The May S&P composite PMI rose +0.6 to 52.3, stronger than expectations of 52.0 and the fastest pace of expansion in a year.

The Eurozone May consumer confidence index rose +0.4 to a 2-1/4 year high of -14.3, slightly weaker than expectations of -14.2.

US Stock Movers

Live Nation Entertainment (LYV) closed down more than -7% to lead losers in the S&P 500 after Bloomberg reported that the US Justice Department and a group of states will sue the company for antitrust violations related to Ticketmaster’s unrivaled control of concert ticket sales. 

Boeing (BA) closed down more than -7% to lead losers in the Dow Jones Industrials after CFO West said the company's cash burn in Q2 will be similar or even worse than in Q1 when it ran through almost $4 billion as it struggles to get production back on track.   

GlobalFoundries (GFS) closed down more than -8% to lead losers in the Nasdaq 100 after holder Mubadala Technology Investments offered $950 million of shares via Morgan Stanley and Bank of America Securities. 

Comerica (CMA) closed down more than -5% after the Comptroller of the Currency said it found unsafe or unsound practices, “including those relating to the bank’s risk governance framework and internal controls.”

Medtronic Plc (MDT) closed down more than -5% after executives said on an earnings call that they expect gross margins to be flat year-over-year for fiscal 2025, citing currency pressures. 

Arista Networks (ANET) closed down more than -4% after Nvidia discussed its networking ambitions in an earnings call, potentially increasing competition for Arista Networks.

Monro (MNRO) closed down more than -11% after reporting Q4 comparable sales rose +0.1%, weaker than the consensus of +2.23%. 

VF Corp (VFC) closed down more than -2% after reporting Q4 revenue of $2.37 billion, weaker than the consensus of $2.41 billion.

Nvidia (NVDA) closed up more than +9% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q1 revenue of $26.0 billion, above the consensus of $24.69 billion, and forecasting Q2 revenue of $28.0 billion-plus or minus 2%, stronger than the consensus of $26.8 billion.  

International Paper (IP) closed up more than +4% after Jeffries upgraded the stock to buy from hold with a price target of $57.

Dell Technologies (DELL) closed up more than +4% after Evercore ISI added the stock to its tactical outperform list with a price target of $165.

Ralph Lauren (RL) closed up more than +3% after reporting Q4 total comparable sales were up +6.0%, stronger than the consensus of +4.34%.

Synopsys (SNPS) closed up more than +2% after reporting Q2 revenue of $1.46 billion, better than the consensus of $1.44 billion, and raising its full-year revenue forecast to $6.09 billion-$6.15 billion from a previous estimate of $6.06 billion-$6.12 billion, above the consensus of $6.09 billion. 

Freshpet (FRPT) closed up more than +2% after Redburn upgraded the stock to buy from neutral with a price target of $168. 

Cencora (COR) closed up more than +1% after boosting its full-year adjusted EPS forecast to $13.35-$13.55 from $13.30-$13.50, the midpoint stringer than the consensus of $13.44.

Take-Two Interactive Software (TTWO) closed up more than +1% after Bank of America upgraded the stock to buy from neutral with a price target of $185. 

Earnings Reports (5/24/2024)

Autodesk Inc (ADSK), Booz Allen Hamilton Holding Co (BAH), Buckle Inc/The (BKE), Children's Place Inc/The (PLCE), Guess? Inc (GES), Luna Innovations Inc (LUNA), Ocean Biomedical Inc (OCEA), Park Aerospace Corp (PKE), RH (RH).

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