Notes from the markets
- Stocks and bonds slip on Monday
- Oil extends pivot, energy sector leads market
- TSN put volume heavy after earnings
With traders and investors awaiting the latest inflation numbers, US stocks started the new week quietly, with the S&P 500 (SPX) spending most of the day a little above or below breakeven before closing essentially unchanged. The SPX’s high-low range of 18.49 points was its narrowest since November 25, 2022 (the day after Thanksgiving).
Meanwhile, bond prices mostly slumped as yields rose. The 10-year T-note yield closed at 3.52%, its highest level since April 27.
Communication services, energy, and financials anchored the SPX’s upside (regional banks followed through on Friday’s rebound), while real estate, industrials, and health care were the biggest drags on performance.
LiveAction hits: Meat producer Tyson Foods (TSN) released earnings on Monday, and in the process landed on a few LiveAction scans—including unusual put volume:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
With TSN shares down roughly 16% mid-morning, put volume was nearly seven times average. One aside: The move highlighted something about the dynamics of inflation and the way it may play out in different areas of the market. Tyson cited falling pork and beef prices as a major factor in its quarterly loss and lowered 2023 outlook.1 In other words, what may be good inflation news for consumers may be less than optimal for certain companies and their stocks.
Market Mover Update: Tyson was far from having Monday’s heaviest put volume. That honor went to Patterson-UTI Energy (PTEN), which had prints of 16,000 contracts in the May $10 puts (vs. open interest of 16,200) and 16,000 in the May $9 puts (vs. open interest of 34,900). The stock, which fell around 15% from April 21–May 3, has bounced in recent days, although it closed lower yesterday after surrendering a sizable intraday gain (see “Traders drill down on energy options”).
June WTI crude oil futures (CLM3) extended its abrupt turnaround from last week’s nearly 18-month low, topping $73 intraday and closing up more than 2%.
From Morgan Stanley: Is the Federal Reserve ready to stop hiking rates after last week’s increase? Morgan Stanley & Co. analysts think that may be the case,2 but they also think the market’s reaction to the pause may not track historical precedent.
Today’s numbers include (all times ET): NFIB Business Optimism Index (6 a.m.).
Today’s earnings include: Ideaya Biosciences (IDYA), Piedmont Lithium (PLL), Airbnb (ABNB), Duolingo (DUOL), Electronic Arts (EA), Occidental Petroleum (OXY), Q2 (QTWO), Rivian Automotive (RIVN), SciPlay (SCPL).
1 Reuters. Tyson Foods posts surprise loss, cuts 2023 revenue forecast as beef, pork prices fall. 5/8/23.
2 MorganStanley.com. The Prospect of a Pause in Rate Hikes. 5/5/23.