The S&P 500 Index ($SPX) (SPY) today is up +0.14%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.27%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.81%.

Stocks today are mostly higher, with the S&P 500 posting a new all-time high and the Nasdaq 100 posting a 2-1/2 week high.  Better-than-expected US economic news today on Nov ISM manufacturing and Oct construction spending bolsters the outlook for a soft landing and boosts stocks.

Corporate news today is mixed for stocks.  On the positive side, Super Micro Computer is up more than +21% to lead gainers in the S&P 500 and Nasdaq after a special committee found no evidence of misconduct by management or the board.  Also, Tesla is up more than +3% after Roth Capital Partners upgraded the stock to buy from neutral.  On the negative side, Stellantis NV is down more than -6% after Bloomberg reported that CEO Tavares is unexpectedly stepping down.  Also, Upstart Holdings is down more than -12% after JPMorgan Chase downgraded the stock to underweight from neutral.

The US Nov ISM manufacturing index rose +1.9 to a 5-month high of 48.4, stronger than expectations of 47.5.

US Oct construction spending rose +0.4% m/m, stronger than expectations of +0.2% m/m.

The markets are looking ahead to Wednesday’s Nov ISM services index (expected -0.5 to 55.5).  Also, on Wednesday, Fed Chair Powell will speak in a moderated discussion at an event in New York.  Finally, the markets are awaiting Friday’s Nov nonfarm payrolls (expected +200,000) and Nov average hourly earnings (expected to ease to +3.9% y/y from +4.0% y/y in Oct). 

The markets are discounting the chances at 65% for a -25 bp rate cut at the December 17-18 FOMC meeting.

Overseas stock markets today are higher.  The Euro Stoxx 50 climbed to a 3-week high and is up +0.25%.  China's Shanghai Composite Index rose to a 1-week high and closed up by +1.13%.  Japan's Nikkei Stock 225 closed up +0.80%.

Interest Rates

March 10-year T-notes (ZNH25) today are down -10 ticks.  The 10-year T-note yield is up +5.6 bp to 4.225%.  Mar T-notes today are under pressure from an increase in corporate supply with as much as $25 billion in corporate debt offerings expected this week, which prompts bond dealers to short T-notes as a hedge against the incoming new supply. T-notes are also tracking Japanese bonds lower on hawkish comments from BOJ Governor Ueda, who said interest rate hikes from the BOJ are "nearing." T-notes extended their losses today on stronger-than-expected US economic news on Nov ISM manufacturing and Oct construction spending. 

Limiting losses in T-notes is carryover support from today’s rally in 10-year German bunds to a 2-month high after ECB Governing Council member Kazaks said the ECB Is debating a larger 50 bp rate cut at next week’s ECB meeting. 

European government bond yields today are moving lower.  The 10-year German bund yield fell to a 2-month low of 2.034% and is down -4.4 bp to 2.043%.  The 10-year UK gilt yield dropped to a 1-month low of 4.211% and is down -0.8 bp to 4.234%.

The German Nov S&P manufacturing PMI was revised downward by -0.2 to 43.0 from the previously reported 43.2.

ECB Governing Council member Kazaks said the ECB will likely cut interest rates when it meets next week and that a bigger move is currently up for debate.

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 18% for a -50 bp rate cut at the same meeting.

US Stock Movers

Super Micro Computer (SMCI) is up more than +21% to lead gainers in the S&P 500 and Nasdaq after a special committee found no evidence of misconduct by management or the board. 

Tesla (TSLA) is up more than +3% after Roth Capital Partners upgraded the stock to buy from neutral with a price target of $380. 

Cruise line operators are climbing today after Truist Securities raised their price targets on the stocks, saying that pricing for 2025 bookings has accelerated from prior checks, suggesting a significant upside to current consensus expectations.  As a result, Norwegian Cruise Line Holdings (NCLH) is up more than +4%, and Carnival (CCL) is up more than +2%.  Also, Royal Caribbean Cruises (RCL) and Viking Holdings (VIK) are up more than +1%.

The Gap (GAP) is up more than +6% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $30. 

Cloudflare (NET) is up more than +8% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $130. 

NextEra Energy Partners (NEP) is up more than +9% after Morgan Stanley double-upgraded the stock to overweight from underweight with a price target of $22. 

Akamai Technologies (AKAM) is up more than +4% after Oppenheimer & Co. upgraded the stock to outperform from peer perform with a price target of $120.

Commercial Metals (CMC) is up more than +2% after Goldman Sachs reinstated coverage on the stock with a recommendation of buy and a price target of $75. 

Marvell Technology (MRVL) is up more than +2% after announcing the expansion of its strategic partnership with Amazon Web Services through a five-year agreement.

PG&E (PCG) is down more than -5% to lead losers in the S&P 500 after offering $1.2 billion shares of convertible preferred stock.

Stellantis NV (STLA) is down more than -6% after Bloomberg reported that CEO Tavares is unexpectedly stepping down as his views on the company’s future differed from those of the board and some shareholders. 

Upstart Holdings (UPST) is down more than -12% after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $57.

NU Holdings (NU) is down more than -5% after Citigroup initiated coverage on the stock with a recommendation of sell and a price target of $11.

SentinelOne (S) is down more than -2% after Morgan Stanley downgraded the stocks to equal weight from overweight. 

LendingClub (LC) is down more than -6% after JPMorgan Chase downgraded the stock to neutral from overweight. 

Toast Inc (TOST) is down more than -2% after Goldman Sachs downgraded the stock to neutral from buy. 

Earnings Reports (12/2/2024)

Compass Minerals International (CMP), Credo Technology Group Holding (CRDO), Mondee Holdings Inc (MOND), NANO Nuclear Energy Inc (NNE), Zscaler Inc (ZS).