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What you need to know…

The S&P 500 Index ($SPX) (SPY) today is down -0.05%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.31%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.23%.

Stock indexes mixed. With the earnings season nearly two-thirds complete, about 80% of the S&P 500 companies that reported results this earnings cycle have beaten estimates, well above the 10-year average of 74%, according to Bloomberg Intelligence.

M&A activity: Diamond Back Energy agreed to acquire Endeavor Energy for about $26 billion. Aldo, Gilead Sciences agreed to buy CymaBay Therapeutics for about $4.3 billion.

A negative factor for stocks is higher bond yields, as the 10-year T-note yield rose to a 3-week high on hawkish comments from Fed Governor Bowman, who said current interest rates are in a good place to keep downward pressure on inflation and that she doesn't see Fed rate cuts as appropriate "in the immediate future."

The markets are awaiting Tuesday’s U.S. Jan CPI report for direction. The consensus is for Jan consumer prices to ease to +2.9% y/y from +3.4% y/y in December. A decline in the headline CPI to the expected level of +2.9% would take out the current 2-3/4 year low of +3.0% posted in June 2023. Also, Jan CPI ex-food and energy is expected to ease to +3.7% y/y from +3.9% y/y in Dec, which would be a new 2-1/2 year low.

The markets are discounting the chances for a -25 bp rate cut at 18% for the March 19-20 FOMC meeting and 69% for the following meeting on April 30-May 1.

U.S. and European government bond yields today are mixed. The 10-year T-note rose to a 3-week high of 4.195% and is up +1.8 bp at 4.193%. The 10-year German bund yield is down -1.1 bp at 2.371%. The 10-year UK gilt yield is down -1.5 bp at 4.072%.

Overseas stock markets are higher. The Euro Stoxx 50 is up +0.28%. China’s Shanghai Composite Index and Japan’s Nikkei Stock Index are closed for holidays.

Today’s stock movers…

VF Corp (VFC) is up more than +11% to lead gainers in the S&P 500 after the company's founding family said it backs replacing two directors on the company’s board with members of Engaged Capital.

Diamondback Energy (FANG) is up more than +9% to lead gainers in the Nasdaq 100 after agreeing to buy Endeavor Energy for about $26 billion.

Mohawk Industries (MHK) is up more than +5% after Deutsche Bank upgraded the stock to buy from hold with a price target of $152.

Trimble (TRMB) is up more than +5% after reporting Q4 revenue of $932.4 million, stronger than the consensus of $910.3 million.

Lowe’s (LOW) is up more than +3% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $265 and added the stock to its Analyst Focus List as a value-stock idea.

Franklin Resources (BEN) is up more than +3% after reporting January assets under management rose +9.5% from December to $1.60 trillion.

Expedia Group (EXPE) is up more than +3% after Susquehanna Financial raised its price target on the stock to $145 from $120. reporting Q4 revenue of $981.3 million, weaker than the consensus of $990.2 million.

Corteva (CTVA) is up more than +2% after Loop Capital Markets upgraded the stock to buy from hold with a price target of $65.

Hershey Co (HSY) is down more than -2% to lead losers in the S&P 500 after Morgan Stanley downgraded the stock to underweight from equal weight with a price target of $181

Monday.com (MNDY) is down more than -9% as analysts were unimpressed with the company’s Q4 results, even though Q4 revenue of $202.6 million was better than the consensus of $197.6 million.

AstraZeneca (AZN) is down by more than -2% to lead losers in the Nasdaq 100 after Barclays cut its 2024 EPS estimate for the company by -2% following last Thursday’s weaker-than-expected earnings report.

Rivian Automotive (RIVN) is down more than -1% after Barclays downgraded the stock to equal weight from overweight.

Citigroup (C) is down more than -1% after Reuters reported that the Federal Reserve told the company to change how it measures the risk of default by counterparties in derivative transactions.

VeriSign (VRSN) is down more than -1% after CFRA downgraded the stock to sell from hold.

Salesforce (CRM) is down more than -1% to lead losers in the Dow Jones Industrials on signs of insider selling after an SEC filing showed CEO Benioff sold $4.37 million of shares last Thursday.

Across the markets…

March 10-year T-notes (ZNH24) this morning are unchanged, and the 10-year T-note yield is up +1.8 bp at 4.193%. Mar T-note prices this morning gave up an early advance, and the 10-year T-note yields rose to a 3-week high of 4.195% on hawkish comments from Fed Governor Bowman, who said it was too soon for the Fed to consider interest rate cuts. T-note prices initially moved higher on carryover support from a rally in 10-year German bunds.

Corporate supply pressures are also bearish for T-notes, with as many as ten debt offerings in the pipeline this week totaling nearly $30 billion, which will prompt bond dealers to short T-note futures as a hedge against the new supply.

The dollar index (DXY00) this morning is up by +0.08%. The dollar today is posting modest gains on weakness in the euro due to dovish comments from ECB Governing Council member Panetta. Short-covering in the dollar ahead of Tuesday’s U.S. Jan CPI report also supports the dollar.

EUR/USD (^EURUSD) this morning fell back from a 1-week high and is down by -0.16%. The euro today gave up overnight gains and turned lower on dovish comments from ECB Governing Council member Panetta who said the ECB will have to start cutting interest rates soon.

ECB Governing Council member Panetta said, "The time for reversal of the monetary policy stance of the ECB is fast approaching as macroeconomic conditions suggest that disinflation is at an advanced stage, and progress toward the ECB's 2% target continues to be rapid."

Swaps are pricing in the chances for a -25 bp rate cut by the ECB at 10% for its next meeting on March 7 and at 59% for the following meeting on April 11.

USD/JPY (^USDJPY) this morning is up by +0.02%. The yen today gave up overnight gains and is slightly lower. Central bank divergence continues to weigh on the yen as the Fed, BOE, and ECB have already raised interest rates while the BOJ continues to maintain negative interest rates. Today's trading activity in the yen may be muted with Japanese markets closed for the National Foundation Day holiday. Lower T-note yields today are supportive of the yen.

Swaps are pricing in the chances for a +10 bp BOJ rate hike at 32% for its next meeting on March 19 and at 79% for the following meeting on April 26.

April gold (GCJ24) this morning is down -11.0 (-0.54%), and Mar silver (SIH24) is down -0.014 (-0.06%). Gold and silver prices this morning are under pressure, with gold falling to a 2-week low. A stronger dollar today is undercutting metal prices. Also, long liquidation and position squaring ahead of Tuesday’s U.S Jan CPI report is weighing on precious metals.

Losses in precious metals prices are limited by to lower global bond yields today. Also, dovish comments from ECB Governing Council member Panetta sparked some buying of gold as a store of value when he said the ECB would have to start cutting interest rates soon.

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.