Market Overview
Today, major indices initially surged to new records before closing with slight losses. The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all showed early gains but ended the day lower due to a late pullback influenced by a need for a market cooldown and a slight rise in market rates. The 10-year note yield increased to 4.38% and the 2-year note to 4.79%. Market breadth was mixed, ending more negatively with decliners outpacing advancers by a margin of 11-to-10 on both the NYSE and Nasdaq.
Sector Performance
The majority of the S&P 500 sectors saw declines, with none dropping more than 0.8%. The consumer discretionary sector led the losses, falling by 0.8%, followed by the materials sector, which dropped by 0.7%. In contrast, the consumer staples sector was the sole gainer, rising by 1.5%, buoyed by a significant increase in Walmart's (WMT, Financial) shares, which surged 7.0% following strong earnings results and positive future outlook. Meanwhile, Cisco (CSCO, Financial) experienced a 2.7% decline after its earnings failed to impress investors.
Economic Data Insights
Recent economic reports show mixed signals:
- Jobless claims decreased to 222,000, indicating ongoing economic strength as they remain below levels typically associated with a slowdown.
- Housing starts rose by 5.7% but did not meet expectations, and building permits fell by 3.0%, reflecting challenges in the housing market due to high rates and prices.
- Import prices rose by 0.9%, suggesting persistent inflationary pressures above the Federal Reserve's target.
- The Philadelphia Fed Index indicated a slowdown in manufacturing growth in May, aligning with a broader slowdown narrative.
- Industrial production remained unchanged, with capacity utilization slightly below the long-term average, highlighting a dip in manufacturing output.
Global Markets and Commodities
In international markets, European indices mostly fell with the DAX down 0.8% and the CAC decreasing by 0.6%, while Asian markets saw gains with the Nikkei up 1.4%. Commodity prices varied, with crude oil increasing, natural gas slightly up, but gold and copper experiencing declines.
Guru Stock Picks
David Rolfe has made the following transactions:
Today's News
U.S. stocks experienced a momentous day as the Dow (DJI) briefly crossed the 40,000-point threshold for the first time, marking a significant milestone despite closing slightly lower. The surge was initially fueled by a strong performance from Walmart (WMT, Financial) following its earnings report and anticipation of Federal Reserve rate cuts. However, gains were tempered by the end of the trading session, with the Dow closing down by 0.10%.
Reddit (RDDT, Financial) announced a strategic partnership with Microsoft-backed (MSFT) OpenAI, integrating Reddit’s vast content with ChatGPT. This collaboration aims to enhance AI features on the Reddit platform and establishes OpenAI as a new advertising partner, potentially reshaping user interaction and content accessibility on the social media site.
Faraday Future Intelligent Electric (FFIE, Financial) saw its shares skyrocket by 157%, driven by a high short interest and speculative trading. The electric vehicle company’s stock has surged over 4,000% over the week, prompted by compliance with Nasdaq’s listing rules and significant investment in its technology and patent portfolio.
On the executive front, New York Community Bancorp (NYCB, Financial) announced the upcoming departure of its COO, Julie-Ann Signorille-Browne, set for May 24. This leadership change could influence the company’s operational strategies going forward.
Cracker Barrel Old Country Store (CBRL, Financial) revealed plans to cut its dividend by over 80% to prioritize investments in restaurant renovations and menu optimization. This strategic shift aims to rejuvenate its brand and improve customer experience amidst a challenging economic environment.
GameStop (GME, Financial) experienced a volatile trading day, with shares initially climbing before plunging by 25.68%, reflecting the ongoing influence of meme stock dynamics and speculative trading on its stock price.
Applied Materials (AMAT, Financial) reported strong fiscal second-quarter results, surpassing expectations with robust semiconductor sales. The company remains optimistic about its growth prospects amidst expanding global technology demands.
Amgen (AMGN, Financial) received FDA approval for its cancer therapy, Imdelltra, for patients with advanced small cell lung cancer, marking a significant advancement in its oncology portfolio.
First Solar (FSLR, Financial) stands to benefit from new U.S. tariffs on bifacial solar panels and other measures aimed at protecting domestic solar manufacturing from foreign competition, particularly from China.
Valero Energy (VLO, Financial) faced a downgrade from Argus Research, citing peaked demand growth and refining margins in the near term, which could impact its profitability and stock performance.
Altria Group (MO, Financial) continued its upward trajectory, marking its eighth consecutive session of gains, as investors responded positively to its consistent performance and strategic initiatives.
Tesla (TSLA, Financial) received approval from the local council in GrĂĽnheide, Germany, for the expansion of its Gigafactory, which is set to significantly increase its production capacity and operational efficiency in Europe.
Cannabis stocks rallied following the U.S. Department of Justice’s proposal to reclassify marijuana as a schedule III drug, reflecting its accepted medical use and potentially easing regulatory restrictions on its distribution and research.
McDonald’s (MCD, Financial) is expanding its CosMc's restaurant concept in Texas, focusing on specialty beverages and snacks, which represents its strategic diversification within the fast-food industry.
GuruFocus Stock Analysis
- Netflix: A Resilient Giant by Yiannis Zourmpanos
- Shopify's FCF Margins Could Push It Higher by Mark Hake, CFA
- Why PepsiCo Looks Like a Better Dividend Play Than Coca-Cola by DM Martins' Research
- Cisco Systems: Beware the Value Trap by Bernard Zambonin
