Stocks End Volatile Week On Negative Note As T-Note Yields Climb

What you need to know… The S&P 500 Index ($SPX) (SPY) on Friday closed down -0.57%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.30%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -1.22%. U.S. stock indexes Friday closed moderately lower and extended Thursday’s sharp losses.  The Nasdaq 100 Friday dropped to a 14-month low as higher T-note yields weighed on technology stocks and the overall market.  The 10-year T-note yield rose to a 3-1/2 year high of 3.127%.  Stocks are under pressure from concern that tighter Fed policy and persistent inflation will slow economic growth and lead to stagflation. Stocks indexes Friday morning briefly erased their losses and jumped into positive territory on a supportive U.S. Apr payroll report. Apr nonfarm payrolls rose more than expected, and wage pressures slowed as Apr average hourly earnings fell back from a 22-month high in March. U.S. Apr nonfarm payrolls rose +428,000, stronger than expectations of +380,000.  The Apr unemployment rate was unchanged at a 2-year low of 3.6%, showing a slightly weaker labor market than expectations for a -0.1 decline to 3.5%.  U.S. Apr average hourly earnings rose +5.5% y/y, right on expectations and slightly below March’s 22-month high of +5.6% y/y. U.S. Mar consumer credit rose by a record +$52.435 billion (data from 1905), stronger than expectations of +$25.0 billion. Hawkish comments Friday from Minneapolis Fed President Kashkari were bearish for stocks when he said the Fed would have to tighten monetary policy more than it otherwise would if supply chains stay tangled due to the war in Ukraine and lockdowns in China. Today’s stock movers… Under Armour (UAA) plunged more than -26% Friday to lead losers in the S&P 500 after reporting its fiscal 2023 revenue will take a 3% hit due to canceled orders. Illumina (ILMN) closed down more than -14% Friday to lead losers in the Nasdaq 100 after Canaccord Genuity cut its price target on the stock to $520 from $555 on continuing headwinds from China. Nike (NKE) closed down more than -3% Friday to lead losers in the Dow Jones Industrials on concern that Covid-related lockdowns in China will continue, which could hurt the company’s earnings since greater China accounted for 20% of Nike’s total revenue last quarter. Tech stocks tumbled Friday as a jump in the 10-year T-note yield to a new 3-1/2 year high hammered high-valuation technology stocks.  Zscaler (ZS) closed down more than -9%. Also, Crowdstrike Holdings (CRWD) closed down by more than -8%, and Okta (OKTA), Splunk (SPLK), and Dexcom (DXCM) closed down by more than -7%. In addition, Fortinet (FTNT) closed down by more than -6%. Dish Network (DISH) fell more than -19% Friday after reporting Q1 paid-TV subscribers fell -7.4% y/y to 10.25 million, a bigger decline than expectations of 10.50 million. News Corp (NWSA) closed down more than -13% Friday after reporting Q3 revenue of $2.49 billion, below the consensus of $2.50 billion. U.S.-listed Chinese stocks retreated Friday amid growing concerns about China’s economic growth prospects as China’s top leaders warned against questioning President Xi Jinping’s Covid Zero strategy despite mounting economic costs.  JD.com (JD) closed down by more than -6%. Also, Pinduoduo (PDD) and  Baidu (BIDU) closed down by more than -5%. In addition, Alibaba Group Holding (BABA) closed down by more than -4%, and NetEase (NTES) closed down more than -2%. NRG Energy (NRG) closed up more than +9% Friday to lead gainers in the S&P 500 after reporting Q1 adjusted Ebitda of $509 million, better than the consensus of $474.6 million. Monster Beverage (MNST) closed up more than +4% Friday to lead gainers in the Nasdaq 100 after reporting Q1 net sales of $1.52 billion, well above the consensus of $1.42 billion. Chevron (CVX) closed up more than +2% Friday to lead gainers in the Dow Jones Industrials after crude prices rallied more than +1%. EOG Resources (EOG) closed up more than +7% Friday after reporting Q1 adjusted EPS of $4.00, stronger than the consensus of $3.63. McKesson (MCK) closed up more than +5% Friday after reporting Q4 revenue of $66.10 billion, above the consensus of $63.58 billion. Across the markets… June 10-year T-notes (ZNM22) on Friday closed down by -8.5 ticks, and the 10-year T-note yield rose +8.4 bp to 3.121%. June T-notes Friday extended the week’s sell-off down to a fresh 3-1/2 nearest-futures low, and the 10-year T-note yield climbed to a 3-1/2 year high of 3.127%.  T-note prices continue to fall on the outlook for the Fed to keep raising interest rates and to begin shrinking its balance sheet next month. Higher German bund yields also weighed on T-notes as the 10-year German bund yield soared to a 7-3/4 year high Friday of 1.158%.