Markets Today: Stocks Under Pressure from Higher T-Note Yields

Morning Markets

December E-Mini S&P 500 futures (ESZ23) are down -0.07%, and Dec Nasdaq 100 E-Mini futures (NQZ23) are down -0.02%. 

Stock index futures are slightly lower as higher T-note yields offset some positive corporate news. T-note yields are moving higher ahead of today’s $16 billion auction of 20-year T-bonds.  Meanwhile, Microsoft is up more than +2% in pre-market trading after hiring OpenAI cofounders Sam Altman and Greg Brockman to lead its artificial intelligence (AI) team. 

An upbeat outlook for the holiday spending season shows confidence in the economy and is supportive of stocks.  A survey from Deloitte shows consumers plan to spend an average of $567 during Black Friday and Cyber Monday shopping events, up +13% from last year.  Also, the National Retail Federation projects that 182 million people are planning to shop from Thanksgiving Day through Cyber Monday, the most since 2017. 

The markets are discounting a 0% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 2% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024.  The markets are then discounting a +27% chance for a -25 bp rate cut at the March 19-20, 2024, FOMC meeting and a 74% chance for that same -25 bp rate cut at the Apr 30-May 1, 2024 FOMC meeting. 

U.S. and European government bond yields today are higher.  The 10-year T-note yield is up +4.1 bp at 4.476%.  The 10-year German bund yield is up +3.5 bp at 2.623%.  The 10-year UK gilt yield is up +4.6 bp at 4.150%. 

Overseas stock markets are mixed.  The Euro Stoxx 50 is down -0.10%.  China’s Shanghai Composite Index closed up +0.46%.  Japan’s Nikkei Stock Index closed down -0.59%.

The Euro Stoxx 50 today fell back from a 3-1/4 month high and is slightly lower.  Some negative corporate news is weighing on the overall market, with Bayer AG plunging more than -17% after it halted a Phase III trial investigating asundexian compared to apixaban due to a lack of efficacy and after a Missouri jury ordered its Monsanto unit to pay more than $1.5 billion in a trial related to its Roundup weed killer.  Also, Julius Baer Group Ltd tumbled -12% after the Swiss bank warned of a profit decline amid rising loan-loss provisions.  On the positive side, Italian bank stocks rallied after Moody’s Investors Service lifted its rating outlook on Italy’s debt to stable from negative.

ECB Governing Council member Wunsch said the ECB may have to raise interest rates again if investor bets on monetary easing undermine the central bank's policy stance since the markets are taking an "optimistic" view by discounting the possibility of further rate hikes and expecting a rate cut by the ECB as soon as April.

China’s Shanghai Composite today closed moderately higher.  Gains in tech heavyweights Tencent Holdings and Alibaba Group Holdings boosted the overall market after both stocks tumbled last Friday following Tencent’s disappointing earnings report.  Also, Chinese real estate developers rose after authorities vowed to meet the sector’s “reasonable” funding needs.  In addition, Chinese airline stocks rose after JPMorgan Chase said their business outlook appears favorable in 2024 amid tight supply and an anticipated boost in flight activity.

The yuan rallied to a 3-1/2 month high against the dollar today after China’s commercial banks kept their benchmark lending rates unchanged.  The yuan also strengthened after the PBOC boosted its daily reference rate to the strongest since August. 

Japan’s Nikkei Stock Index today fell back from a 33-year high and closed moderately lower.  Japanese stocks today initially rallied due to an extended period of yen weakness that boosted the earnings prospects of exporters.  Also, solid corporate earnings underpinned stocks, as well as corporate governance reforms championed by the Tokyo Stock Exchange.  In addition, Panasonic rallied more than +5% today to boost the overall market after it agreed to sell part of its automotive systems unit.  However, Japanese stocks gave up their gains and turned lower, led by losses in exporter stocks after the yen rallied to a 1-1/4 month high against the dollar.

Pre-Market U.S. Stock Movers

Bristol-Meyers Squibb (BMY) tumbled more than -4% in pre-market trading after saying the FDA will review Phase 3 data supporting the Supplemental Biologics Application for its Abecma drug to treat multiple myeloma. 

Uber (UBER) dropped more than -2% in pre-market trading after proposing to offer $1.2 billion aggregate principal amount of convertible senior notes due 2028. 

Chegg (CHGG) fell more than -3% in pre-market trading after Morgan Stanley downgraded the stock to underweight with a price target of $9.

KB Home (KBH) slid over -1% in pre-market trading after Wedbush downgraded the stock to neutral from outperform.  

Wingstop Inc (WING) fell more than -1% in pre-market trading after Northcoast Research downgraded the stock to neutral from buy. 

Ryan Specialty Holdings (RYAN) slid more than -1% in pre-market trading after Goldman Sachs downgraded the stock to neutral from buy.

Microsoft (MSFT) is up more than +2% in pre-market trading after hiring OpenAI cofounders Sam Altman and Greg Brockman to lead a new advanced AI research team. 

Boeing (BA) rose more than +1% in pre-market trading after Deutsche Bank upgraded the stock to a buy with a price target of $270.

Equifax (EFX) gained nearly +1% in pre-market trading after Citigroup initiated coverage on the stock with a buy recommendation and a price target of $243. 

Arm Holdings Plc (ARM) rose nearly +1% in pre-market trading after Wells Fargo Securities initiated coverage on the stock with a recommendation of overweight and a price target of $70.

Palantir Technologies (PLTR) climbed more than +1% in pre-market trading after Wilian O’Neill reinstated coverage of the stock with a buy recommendation. 

Earnings Reports (11/20/2023)

Agilent Technologies Inc (A), BellRing Brands Inc (BRBR), Central Garden & Pet Co (CENT), Core & Main Inc (CNM), Enanta Pharmaceuticals Inc (ENTA), Fidelis Insurance Holdings Ltd (FIHL), Keysight Technologies Inc (KEYS), Mueller Water Products Inc (MWA), Presto Automation Inc (PRST), Zoom Video Communications Inc (ZM).

More Stock Market News from Barchart

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 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.

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