Market Overview
The stock market exhibited mixed action today. There wasn't a lot of conviction from buyers or sellers after the holiday weekend. This led the major indices to trade above and below prior closing levels, reacting to the price action in mega-cap stocks and Treasuries.
Major Indices Performance
- Dow Jones Industrial Average closed more than 200 points lower.
- Nasdaq Composite (+0.6%) closed at a fresh record high, above 17,000 for the first time, thanks to a late surge of buying activity in mega-cap stocks.
- S&P 500 was little changed from yesterday, but the index had been down as much as 0.4% earlier.
Key Stocks
NVIDIA (NVDA 1139.01, +74.32, +7.0%) provided some support to the broader market today due to the notion that xAI's $6 billion capital raise will benefit the AI chipmaker. Other top-performing mega caps that participated in the afternoon move higher included Amazon (AMZN 182.15, +1.40, +0.8%) and Meta Platforms (META 479.92, +1.70, +0.4%). Apple (AAPL 189.99, +0.01, +0.01%) had been trading up as much as 1.6% at its high, but shares were left out of the late surge.
S&P 500 Sector Performance
The information technology sector was one of only three S&P 500 sectors to close with a gain, benefitting from the upside move in NVDA and gains in other mega caps.
Treasury Yields
The activity in Treasuries kept pressure on equities through the session. The 2-yr note yield settled three basis points higher at 4.98% and the 10-yr note yield rose eight basis points today to 4.54%. This price action was in response to a stronger-than-expected Consumer Confidence report for May, and today's $69 billion 2-yr note and $70 billion 5-yr note sale, which met weak demand.
Year-to-Date Performance
- Nasdaq Composite: +13.4% YTD
- S&P 500: +11.2% YTD
- S&P Midcap 400: +6.3% YTD
- Dow Jones Industrial Average: +3.1% YTD
- Russell 2000: +2.0% YTD
Overnight Developments
- March FHFA Housing Price Index: 0.1%; Prior: 1.2%
- March S&P Case-Shiller Home Price Index: 7.4% (consensus: 7.0%); Prior: 7.3%
- May Consumer Confidence: 102.0 (consensus: 96.0); Prior revised to 97.5 from 97.0
The key takeaway from the report is that consumers are feeling good about labor market conditions, which is important as that typically translates into increased spending activity.
Looking Ahead
Market participants will receive the weekly MBA Mortgage Applications Index at 7:00 ET tomorrow. Wednesday's calendar also features the release of the Fed's Beige Book at 2:00 ET and the results of a $44 billion 7-yr Treasury note auction will be released at 1:00 ET.
Today's News
Prothena (PRTA, Financial) announced that Bristol Myers Squibb (BMY, Financial) has exercised its option to exclusively license its drug candidate PRX019 for development as a potential treatment for neurodegenerative diseases. Under the agreement, Prothena will receive $80 million upfront and be eligible for up to $617.5 million in various milestone payments, plus tiered royalties on future net sales.
Energy Transfer (ET, Financial) has agreed to acquire WTG Midstream Holdings from affiliates of Diamondback Energy (FANG, Financial), Stonepeak, and the Davis Estate for approximately $3.25 billion. The acquisition includes $2.45 billion in cash and about 50.8 million newly issued Energy Transfer common units. WTG's assets include a 6,000-mile pipeline network and eight processing plants with a total capacity of 1.3 billion cubic feet per day.
Digital Turbine (APPS, Financial) reported Q4 Non-GAAP EPS of $0.12, beating estimates by $0.04. However, revenue of $112.22 million missed expectations by $5.47 million, marking a 19.9% year-over-year decline. The company expects revenue for fiscal 2025 to be between $540 million and $560 million, with adjusted EBITDA between $85 million and $95 million. Shares fell by 12.59% following the report.
CAVA Group (CAVA, Financial) posted Q1 GAAP EPS of $0.12, beating estimates by $0.08, and revenue of $259.01 million, which was a 27.5% year-over-year increase. The company opened 14 new CAVA restaurants, bringing the total to 323, a 22.8% increase year-over-year. CAVA also raised its 2024 outlook, expecting 50 to 54 new restaurant openings and same-store sales growth of 4.5% to 6.5%.
Google Fiber, a service from Alphabet (GOOGL, Financial), announced the appointment of John Abbot as its first chief financial officer. Abbot will oversee finance, strategy, analytics, and accounting at Google Fiber. This move comes as Alphabet is reportedly seeking outside investment for Google Fiber.
UPS (UPS, Financial) continued its downward trend, closing in the red for the seventh consecutive day. The stock has lost 7.1% over the last six trading sessions and 18% in value over the past 12 months. The company received a "Hold" rating from Seeking Alpha's Quant rating system, with high marks for profitability but low for momentum and growth prospects.
Microchip Technology (MCHP, Financial) announced its intention to offer $1.1 billion in convertible senior notes due 2030. The company plans to use the proceeds to pay for capped call transactions and repay existing debt. An option to purchase an additional $150 million aggregate principal amount of the notes may also be granted to the initial purchasers.
Box (BOX, Financial) posted stronger-than-expected fiscal Q1 results, with adjusted EPS of $0.39 on $264.7 million in revenue. Remaining performance obligations rose by 3% to $1.212 billion. The company highlighted its focus on operational discipline, which resulted in record non-GAAP gross margin and free cash flow growth of 14% year-over-year.
Merck (MRK, Financial) declared a quarterly dividend of $0.77 per share, consistent with previous payouts. The dividend will be payable on July 8 to shareholders of record as of June 17.
HEICO (HEI, Financial) reported Q2 GAAP EPS of $0.88, beating estimates by $0.06, and revenue of $955.4 million, a 38.9% year-over-year increase. The company saw its EBITDA rise by 35% to $252.4 million. This marks the fifteenth consecutive quarter of sequential growth in net sales for HEICO's Flight Support Group.
Baidu (BIDU) shares extended their losing streak to seven days, closing 0.52% lower at $99.76. The stock has lost 16% over the last 12 months. Despite this, 24 out of 36 analysts rate the stock as a Strong Buy, reflecting continued optimism among the Wall Street community.
Hess (HES) shareholders approved the company's $53 billion sale to Chevron (CVX). The approval comes despite some controversy and recommendations from proxy service ISS for shareholders to abstain from the vote due to the deal's valuation.
Celsius Holdings (CELH) experienced a sharp decline, with shares down 13.16% as analysts noted a slowdown in year-over-year sales growth based on Nielsen retail data. Morgan Stanley highlighted potential challenges due to difficult sales comparisons over the next several quarters.
Farmland Partners (FPI) appointed Susan Landi as chief financial officer and treasurer, succeeding James Gilligan. This staffing change is part of the company's efforts to reduce expenses and improve shareholder returns.
GuruFocus Stock Analysis
- My 'Do Nothing' Stocks Have Averaged a 14% Return by John Dorfman
- BlackRock: A Wide-Moat Opportunity by Blue Chip Portfolios
- Rivian's Valuation Is Starting to Make Sense by Bernard Zambonin
