Kramer: Bond Sell-off Weighs on U.S. Index Futures
A global bond sell-off was the main topic of discussion in the markets on Tuesday and weighed on U.S. stock index futures, Jim Cramer wrote in a CNBC column. Futures on the S&P 500 and the tech-heavy Nasdaq were down ahead of the market open, while Dow Jones futures were virtually unchanged. The previous day, the S&P 500 index lost 0.5%.
The yield on 30-year U.S. Treasury bonds exceeded 5.33%, approaching a high not seen in about two decades. The yield on benchmark 10-year German government bonds reached a 15-year high, while that of comparable Japanese bonds hit a three-decade high. Kramer attributed this trend to concerns about persistent inflation, high budget deficits in the U.S. and other countries, as well as rising corporate borrowing to finance artificial intelligence development.
According to Kramer, tech stocks are particularly sensitive to rising yields, as future corporate earnings have a lower present value under such conditions. UBS raised its price target for Snowflake shares to $425 from $370. Barclays, in turn, raised its price target for CrowdStrike to $235 from $169 ahead of the company’s earnings report next week.
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Home Depot reported a quarter with results that exceeded expectations for revenue and earnings and reaffirmed its full-year guidance. The company’s same-store sales rose 1.7%—its best performance since the third quarter of 2022. Home Depot CFO Richard McPhail described the housing market as “frozen” in comments to CNBC, but the retailer’s stock rose more than 2% following the earnings report.
Among other changes in analyst recommendations: Raymond James downgraded Abercrombie & Fitch from “Buy” to “Hold,” Needham advised holding off on buying Lululemon ahead of its earnings report, and Mizuho downgraded Norwegian Cruise Line to “hold.” Cantor Fitzgerald and Mizuho simultaneously raised their price targets for Amgen while maintaining their “hold” recommendations on the company’s stock.
