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📊 Mortgage Rates ~7.5% (Again)

📊 Mortgage Rates ~7.5% (Again)

Ticker Tea
April 17, 2024

Yesterday’s trading session saw mixed movements across major indices. The S&P 500 dipped slightly, influenced by hawkish remarks from Fed officials which drove the 10-year T-note yield to a five-month high (~4.66%). 30-year mortgage rates are back to ~7.5%, increasing ~50bps in 30 days. If the current pace continues, we’ll be reaching the 2023 highs (~8%) in no time.

The delta in mortgage rates in just ~30 days
— Ticker Tea (@theTickerTea)
9:56 PM • Apr 16, 2024

Powell emphasized the need for patience with restrictive monetary policies, suggesting a wait-and-see approach based on economic data and the inflation trajectory.

On a brighter note, robust first-quarter earnings from UnitedHealth Group and Morgan Stanley offered some uplift to the market mood and raised hopes for this earnings season. Additionally, gains in semiconductor stocks provided a boost to the technology sector.

Economic data presented a mixed picture with a significant drop in March housing starts (1.321M vs 1.48M est) and building permits (1.458M vs 1.514M est), although manufacturing production exceeded expectations .

Geopolitical tensions in the Middle East and signs of a slowing economic recovery in China added layers of uncertainty, but no major updates worth noting.

Some notable headlines from y’day 👇

» UnitedHealth Group (UNH) climbed over +5% after Q1 revenue reached $99.8 billion, surpassing expectations. (chart)

» ASML Holding NV (ASML) and KLA Corp (KLAC) led Nasdaq 100 chip stocks, each closing up over +2%, with Nvidia (NVDA) and others also rising more than +1%. (chart)

» Morgan Stanley (MS) increased more than +2% after its Q1 wealth management revenue of $6.88 billion beat estimates. (chart)

» Live Nation Entertainment (LYV) dropped more than -7% amid news of an impending DOJ antitrust complaint against its Ticketmaster operations. (chart)

» Bank of America (BAC) declined more than -3% following higher than anticipated Q1 net charge-offs of $1.50 billion. (chart)

» Tesla (TSLA) decreased over -2% as two senior executives left during significant job cuts. (chart)

» Johnson & Johnson (JNJ) lost over -2% in the Dow after Q1 sales of $21.38 billion slightly missed the consensus. (chart)

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» Federal Reserve Chair Jerome Powell indicates that interest rate cuts may be delayed further due to ongoing high inflation, suggesting that rates could remain steady to ensure inflation targets are met. Despite recent economic resilience and job growth, the persistence of inflation pressures could keep borrowing costs elevated longer than anticipated. (link)

» Red Lobster is contemplating a Chapter 11 bankruptcy filing as it grapples with high labor costs and burdensome lease agreements. The iconic seafood chain seeks restructuring to maintain operations and stabilize its financial situation amidst ongoing debt discussions. (link)

» LVMH's ($LVMUY) sales growth has decelerated, marking its slowest first-quarter pace since 2016, as high-end consumers cut back on expenditures like Louis Vuitton handbags and Hennessy Cognac. While Sephora showcased robust growth, the wines and spirits division faced a downturn, reflecting a broader cautious spending trend among luxury shoppers. (link)

» Tesla's ($TSLA) market valuation dipped below $500 billion as the company grapples with weak sales, strategic shifts, and executive departures, driving its stock down 37% this year. Recent job cuts and the decision to pivot from a budget EV model to a robotaxi project have intensified investor concerns over the company’s growth outlook. (link)

» J.B. Hunt ($JBHT) reported a significant miss in first-quarter earnings with EPS at $1.22 against a forecasted $1.53, impacted by a higher tax rate and soft demand. Operational challenges, including higher wages and insurance costs, contributed to weaker performance across its intermodal and brokerage units. (link)

» Citigroup ($C) surpassed EPS expectations with $1.58 per share in Q1 2024, beating estimates but marking a 28% decline from the previous year. Despite the earnings beat, the bank faced revenue reductions and worsening credit quality, with a notable decrease in loans and deposits. (link)

» Bank of America ($BAC) reported an 18% drop in first-quarter profits, driven by higher deposit costs which outstripped gains from asset yields and modest loan growth. Amidst broader banking sector challenges due to persistent high interest rates, the bank's key revenue source, net interest income, saw a significant contraction. (link)

» Amazon's ($AMZN) Prime service reached a new milestone with 180 million U.S. members, marking an 8% increase from last year, as the platform's rapid delivery and broad product range continue to attract consumers despite rising competition. The growth follows a period of stagnation post-pandemic, suggesting a robust recovery driven by sustained consumer interest in the benefits of Prime membership. (link)