Market Overview
NVIDIA (NVDA, Financial) shares surged 9.3% to $1037.99 following impressive earnings and outlook, which also boosted semiconductor stocks and AI-related names. Despite this, the broader market experienced selling activity throughout the session. The S&P 500 and Nasdaq Composite initially traded higher but declined in the afternoon, closing near their lows with losses ranging from 0.4% to 1.5%.
Sector Performance
- Information Technology: +0.6%, benefitting from NVDA's performance.
- Real Estate: -2.2%, affected by rising rates.
- Utilities: -1.7%, also impacted by higher rates.
Ten of the 11 S&P 500 sectors closed lower, with Information Technology being the only sector in positive territory.
Treasury Yields
The 10-year note yield increased by four basis points to 4.48%, and the 2-year note yield rose by five basis points to 4.93%. The rise in rates kept the equity market in check throughout the session. Treasuries reacted to this morning's economic data, including:
- S&P Global U.S. Manufacturing PMI: increased to 50.9 from 50.0.
- S&P Global U.S. Services PMI: jumped to 54.8 from 51.3.
- April New Home Sales: weaker than expected.
Market Performance
- Nasdaq Composite: +11.4% YTD
- S&P 500: +10.4% YTD
- S&P Midcap 400: +6.1% YTD
- Dow Jones Industrial Average: +3.7% YTD
- Russell 2000: +1.1% YTD
Economic Data Review
- Weekly Initial Claims: 215K (consensus 219K); Prior revised to 223K from 222K.
- Weekly Continuing Claims: 1.794 million; Prior revised to 1.786 million from 1.794 million.
The low level of initial claims suggests a relatively solid increase in nonfarm payrolls for May.
- May S&P Global US Manufacturing PMI - Prelim: 50.9; Prior: 50.0
- May S&P Global US Services PMI - Prelim: 54.8; Prior: 51.3
- April New Home Sales: 634K (consensus 680K); Prior revised to 665K from 693K
New home sales activity languished in April due to increasing mortgage rates, raising affordability concerns for prospective buyers.
Guru Stock Picks
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Fairholme Fund has made the following transactions:
- Reduce in JOE by 0.53%
Today's News
Workday (WDAY, Financial) shares fell 7.5% in extended-hours trading after the company lowered its full-year revenue guidance. Workday now expects full-year subscription revenue to be between $7.7B and $7.725B, slightly below its previous forecast. However, the company increased its adjusted operating margin outlook to 25% from 24.5%. For the period ending April 30, Workday reported an adjusted $1.74 per share on $1.99B in revenue, with subscription revenue up 18% year-over-year to $1.815B.
Intuit (INTU, Financial) stock dropped 5.2% in after-hours trading following soft Q4 earnings guidance despite a Q3 beat. The company expects adjusted EPS of $1.80-$1.85 for the quarter ending July 31, 2024, lower than the $1.92 consensus. Revenue is projected to rise 13%-14% to $3.06B-$3.10B, compared to the $3.05B consensus. For Q3, Intuit reported adjusted EPS of $9.88, beating estimates, and revenue of $6.74B, up 12% year-over-year.
Unity Software (U, Financial) shares closed 4.2% lower at $19.60, marking their seventh straight session of losses. The video-game software company has lost 32% over the last 12 months. Unity has a Sell rating with a score of 2.01 out of 5 from Seeking Alpha's Quant Ratings, indicating concerns over its growth strategy.
Deckers Outdoor (DECK, Financial) saw its shares rise by 3.69% after reporting strong Q4 results. The company posted GAAP EPS of $4.95, beating estimates by $1.95, and revenue of $959.76M, up 21.2% year-over-year. Deckers’ 2025 outlook includes a projected net sales increase of approximately 10% to $4.7 billion and a gross margin of around 53.5%.
Lululemon Athletica (LULU, Financial) shares closed flat at $299.6 after six straight sessions of losses. The stock has lost more than 40% this year. The company recently announced the resignation of its Chief Product Officer, Sun Choe. Lululemon has been given a Hold rating by Seeking Alpha's Quant Ratings, with a score of 2.68 out of 5.
Medical Properties Trust (MPW, Financial) rose 1.7% on news that it is close to finalizing an $800 million deal to refinance debt secured against dozens of British hospitals. The refinancing is led by UK and European investment firm Song Capital with support from Aviva, Canada Life, and Phoenix Group.
Semiconductor stocks were mostly lower, even as Nvidia (NVDA, Financial) reported stellar quarterly results and guidance. Nvidia shares surged 10%, pushing its market cap past $1,000 billion. The company expects Q2 revenue to be $28B, plus or minus 2%, and adjusted gross margin around 75.5%. Nvidia earned an adjusted $6.12 per share on $26B in revenue for Q1.
International Business Machines (IBM, Financial) closed down 1.72%, snapping a six-day winning streak. The stock has gained 33.9% in the last 12 months. IBM has been rated a Hold by Seeking Alpha's Quant Ratings, with a score of 3.24 out of 5.
PagSeguro Digital (PAGS, Financial) stock gained 6% in extended-hours trading after reporting Q1 earnings and revenue that exceeded expectations. The company posted Q1 adjusted EPS of R$1.63 and revenue of R$4.31B, up 14.8% year-over-year. Total payment volume increased to R$111.7B from R$88.1B a year before.
A new study by CDC researchers found that 1 in 9 U.S. children were diagnosed with ADHD in 2022, a significant increase from 2016. The study highlights ADHD as an expanding public health concern, with 42% of diagnosed children having a mild version, 45% a moderate level, and 13% severe ADHD. About 54% of those with ADHD are taking medication.
The U.S. FDA has postponed a key meeting to determine the formula for the next set of COVID-19 vaccines amid a spike in cases linked to the newly found FLiRT variants. These variants, derived from the Omicron variant, have seen a significant increase in prevalence recently.
CVS Health (CVS, Financial) is seeking a private equity partner to help expand its primary care company, Oak Street Health. The company has engaged financial advisers to seek capital for new primary care clinics. Despite initial antitrust concerns, CVS acquired Oak Street Health in May 2023.
Virgin Galactic Holdings (SPCE, Financial) shares fell for the seventh straight session, closing at $0.90. The stock has declined about 63% year-to-date. Virgin Galactic has been rated a Strong Sell by Seeking Alpha's Quant Ratings, with a score of 1.34 out of 5.
EMCORE (EMKR, Financial) announced it will lay off approximately 40% of its workforce, expecting annualized savings of around $17M. The company plans to shut down its Alhambra, California site by Q4 2024, with restructuring charges to be recorded in Q3 2024.
Equinix (EQIX) announced the pricing of an underwritten public offering of $750 million aggregate principal amount of 5.500% Senior Notes due 2034. The net proceeds from the sale are estimated to be approximately $736 million.
Ross Stores (ROST) reported Q1 GAAP EPS of $1.46, beating estimates by $0.10, and revenue of $4.9B, up 8.9% year-over-year. The company projects comparable store sales to increase 2%-3% for the 13 weeks ending August 3, 2024.
Eli Lilly (LLY) and Novo Nordisk (NVO) have the largest market caps in Big Pharma, driven by the popularity of their GLP-1 drugs for weight-loss and diabetes management. Novo Nordisk’s semaglutide and Lilly’s tirzepatide are leading the market in this category.
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