The S&P 500 Index ($SPX) (SPY) Monday closed up +0.32%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.38%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.36%. 

US stock indexes Monday settled moderately higher, with the S&P 500 and Nasdaq 100 posting 2-week highs.  Stocks rose Monday on Q1 earnings optimism, positive corporate news, and lower bond yields.  Tesla closed up more than +15% after Bloomberg reported the company passed key data-security and privacy requirements in China and will partner with Baidu to deploy its Full-Self Driving feature.  Also, Domino’s Pizza closed up more than +4% after reporting stronger-than-expected Q1 income from operations.  In addition, Apple closed up more than +2% after Bernstein upgraded the stock to outperform.

The weakness in megacap technology stocks Monday limited gains in the overall market as the megacap stocks gave back some of last week’s sharp gains. 

Q1 earnings results have been mostly better than expected, a supportive factor for stocks.  Q1 earnings are now expected to climb +4.7% from a year ago, compared with the pre-earnings season estimate of +3.8%.  According to data compiled by Bloomberg Intelligence, about 81% of the S&P 500 companies that have already reported have beaten Q1 earnings estimates. 

The markets will focus on the results of the Tue/Wed FOMC meeting and comments from Fed Chair Powell on just how long the Federal Reserve is willing to wait before cutting interest rates.  Recent US price data signals stubborn underlying inflation that has pushed back rate cut expectations.  Also, earnings results on Tuesday from Amazon.com and on Thursday from Apple will provide market direction. 

The US Apr Dallas Fed manufacturing outlook survey unexpectedly fell -0.1 to -14.5, weaker than expectations of an increase to -11.2.

The markets are discounting the chances for a -25 bp rate cut at 2% for the next FOMC meeting on April 30-May 1 and 13% for the following meeting on June 11-12.

Overseas stock markets on Monday settled mixed.  The Euro Stoxx 50 closed down -0.51%.  China's Shanghai Composite rose to a 7-month high and closed up +0.79%.  Japan's Nikkei Stock Index did not trade with Japanese markets closed for the Showa Day holiday.

Interest Rates

June 10-year T-notes (ZNM24) on Monday closed up +12 ticks.  The 10-year T-note yield fell -4.3 bp to 4.620%.  T-notes prices Monday settled moderately higher. Strength in European government bonds Monday provided carryover support to T-notes.  Also, short covering ahead of the Tue/Wed FOMC meeting and post-meeting comments from Fed Chair Powell boosted T-note prices.  T-notes fell back from their best levels Monday afternoon when the Treasury said its net borrowing for April-through-June will be $243 billion, well above a January estimate of $202 billion, signaling increased sales of government debt this quarter.  

European government bond yields Monday moved lower.  The 10-year German bund yield fell -4.3 bp at 2.532%.  The 10-year UK gilt yield fell -3.2 bp at 4.292%.

The Eurozone Apr economic confidence indicator unexpectedly fell -0.6 to 95.6, weaker than expectations of an increase to 96.7.

German Apr CPI (EU harmonized) rose +2.4% y/y, stronger than expectations of +2.3% y/y.

ECB Governing Council member Wunsch said the ECB should be cautious about the signal that a second consecutive interest rate cut in July would send to investors as "cutting again in July would be interpreted by markets to mean that we're going to cut every meeting, and that would lead to repricing that might go too far." 

ECB Governing Council member Knot said the ECB should proceed with caution after a probable rate cut in June, with quarterly data on wages likely to be key in determining further moves.

US Stock Movers

Tesla (TSLA) closed up more than +15% to lead gainers in the S&P 500 and Nasdaq 100 after Bloomberg reported the company passed key data-security and privacy requirements in China and will partner with Baidu to deploy its Full-Self Driving feature. 

Boeing (BA) closed up more than +3% to lead gainers in the Dow Jones Industrials after raising $10 billion in a bond sale that attracted strong demand and allows the company to ease some of its financial strains by refinancing part of its debt load.

Albemarle (ALB) closed up more than +7% after a weekend article in Barron’s said the stock could turn around now that it has put a lid on additional expansions.

Domino’s Pizza (DPZ) closed up more than +5% after reporting Q1 income from operations of $210.4 million, above the consensus of $197.9 million. 

Apple (APPL) closed up more than +2% after Bernstein upgraded the stock to outperform from market perform with a price target of $195. 

Heartland Financial USA (HTLF) closed up more than +14% after UMB Financial agreed to acquire the company for about $2 billion or $45.74 a share. 

Laboratory Corp of America Holdings (LH) closed up more than +2% after it received FDA approval for its companion diagnostic for use with Pfizer’s BEQVEZ to treat hemophilia B.

AT&T (T) closed up more than +1% after Barclays upgraded the stock to overweight from equal weight with a price target of $20.

Franklin Resources (BEN) closed down more than -6% to lead losers in the S&P 500 after reporting Q2 adjusted EPS of 56 cents, below the consensus of 57 cents. 

Megacap technology stocks retreated Monday and weighed on the overall market on some giveback from last week’s sharp gains.  Alphabet (GOOGL) closed down more than -3% to lead losers in the Nasdaq 100.  Also, Meta Platforms (META) closed down more than -2%.  In addition, Microsoft (MSFT) closed down more than -1%.  

Intel (INTC) closed down more than -1% to lead losers in the Dow Jones Industrials, adding to last Friday’s -9% plunge after forecasting weaker-than-expected Q2 revenue.

Dollar Tree (DLTR) closed down more than -2% after Truist Securities said efforts to rebuild the company’s distribution center in Marietta, Oklahoma after it was damaged by a tornado over the weekend will require “a significant amount of tie and money.”

AON Plc (AON) closed down more than -1% as the average price targets by analysts on the stock have fallen by -4.8% since the company reported earnings last Friday.

Southwest Airlines (LUV) closed down nearly -1% after Jeffries downgraded the stock to underperform from hold with a price target of $20.

Earnings Reports (4/30/2024)

3M Co (MMM), Advanced Micro Devices Inc (AMD), Air Products and Chemicals Inc (APD), Amazon.com Inc (AMZN), Amcor PLC (AMCR), American Electric Power Co Inc (AEP), American Tower Corp (AMT), Archer-Daniels-Midland Co (ADM), Boston Properties Inc (BXP), Caesars Entertainment Inc (CZR), CenterPoint Energy Inc (CNP), Clorox Co/The (CLX), Coca-Cola Co/The (KO), Corning Inc (GLW), Diamondback Energy Inc (FANG), Eaton Corp PLC (ETN), Ecolab Inc (ECL), Edison International (EIX), Eli Lilly & Co (LLY), Essex Property Trust Inc (ESS), Extra Space Storage Inc (EXR), Gartner Inc (IT), GE HealthCare Technologies Inc (GEHC), Hubbell Inc (HUBB), Illinois Tool Works Inc (ITW), Incyte Corp (INCY), Invitation Homes Inc (INVH), Leidos Holdings Inc (LDOS), Marathon Petroleum Corp (MPC), Martin Marietta Materials Inc (MLM), McDonald's Corp (MCD), Molson Coors Beverage Co (TAP), Mondelez International Inc (MDLZ), ONEOK Inc (OKE), PACCAR Inc (PCAR), PayPal Holdings Inc (PYPL), Prudential Financial Inc (PRU), Public Service Enterprise Grou (PEG), Public Storage (PSA), Republic Services Inc (RSG), Skyworks Solutions Inc (SWKS), Starbucks Corp (SBUX), Stryker Corp (SYK), Super Micro Computer Inc (SMCI), Sysco Corp (SYY), Trane Technologies PLC (TT), UDR Inc (UDR), Zebra Technologies Corp (ZBRA).

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