Market Performance
The major indices closed with solid losses despite an underlying positive bias today. The market-cap weighted S&P 500 fell 0.6% while the equal-weighted S&P 500 closed 0.5% higher. Selling in some of the weightiest stocks picked up in the last half hour of trading, driving the afternoon deterioration that left the major indices near their lows of the day.
Key Stock Movements
- NVIDIA (NVDA, Financial) dropped 3.8% following a Bloomberg report that the US is slowing the issuing of Middle East licenses for AI chip makers.
- Microsoft (MSFT) fell 3.4%.
- Alphabet (GOOG) declined 2.2%.
- Meta Platforms (META) decreased 1.5%.
- Salesforce (CRM, Financial) slid 20% on disappointing guidance.
S&P 500 Sector Performance
Losses in the aforementioned names led their respective S&P 500 sectors to close with solid declines:
- The information technology sector fell 2.5%.
- The communication services sector logged a 1.1% loss.
The remaining nine sectors closed with gains ranging from 0.1% to 1.5%. The only sectors to close more than 1.0% higher were the rate-sensitive real estate (+1.5%) and utilities (+1.4%) sectors, benefitting from a drop in market rates.
Market Rates and Economic Data
The movement in market rates contributed to the underlying upside bias in equities, along with some hopeful anticipation in front of the PCE Price Indexes tomorrow, which is the Fed's preferred gauge on inflation.
- The 2-yr note yield fell five basis points to 4.93%.
- The 10-yr note yield declined seven basis points to 4.55%.
The price action in Treasuries follows a slate of economic data this morning, including:
- A downward revision to Q1 GDP.
- A widening in the goods deficit in April.
- An ugly 7.7% decline in pending home sales in April.
- Some otherwise decent initial jobless claims figures.
Mixed Earnings News from Retailers
- Best Buy (BBY) rose 13.4%.
- Foot Locker (FL) gained 15.0%.
- Kohl's (KSS) slid 22.9%.
- Dollar General (DG) declined 8.1%.
Technical Issues
Separately, the CME Group index pricing for the Dow Jones Industrial Average and S&P 500 briefly froze around 10:41 ET, but began updating as usual around 12:00 ET.
Year-to-Date Performance
- Nasdaq Composite: +11.5% YTD
- S&P 500: +9.8% YTD
- S&P Midcap 400: +6.0% YTD
- Russell 2000: +1.5% YTD
- Dow Jones Industrial Average: +1.1% YTD
Reviewing Today's Economic Data
- April Adv. Intl. Trade in Goods: -$99.4 bln (Prior was revised to -$92.3 bln from -$91.8 bln)
- April Adv. Retail Inventories: 0.7% (Prior was revised to 0.1% from 0.3%)
- April Adv. Wholesale Inventories: 0.2% (Prior -0.4%)
- Weekly Initial Claims: 219K (consensus 219K); Prior was revised to 216K from 215K
- Weekly Continuing Claims: 1.791 mln; Prior was revised to 1.787 mln from 1.794 mln
The key takeaway from the report is that there wasn't any notable change in initial jobless claims. They continue to comply with a generally solid labor market, the idea of which will comply with the market's soft landing outlook.
- Q1 GDP - Second Estimate: 1.3% (consensus 1.3%); Prior 1.6%
- Q1 GDP Deflator - Second Estimate: 3.0% (consensus 3.1%); Prior 3.1%
The key takeaway from the report is the weakening in consumer spending activity, yet it should be noted that the 2.0% growth was in-line with average for the prior eight quarters. In other words, spending was weaker than the fourth quarter, but not weak enough to alter the market's soft landing outlook.
Guru Stock Picks
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Today's News
Salesforce (CRM, Financial) saw its stock plummet, marking its worst intraday performance in nearly two decades, following quarterly results and guidance that missed expectations. This significant drop weighed heavily on Wall Street's blue-chip gauge, contributing to a lower close for U.S. stocks on Thursday.
Dell Technologies (DELL, Financial) experienced a sharp 13% decline in extended-hours trading despite fiscal first-quarter results that were largely in line with expectations. The IT giant reported adjusted earnings of $1.27 per share on $22.24 billion in revenue. However, investor sentiment was negatively impacted, leading to the substantial drop.
Nvidia (NVDA, Financial) and AMD (AMD, Financial) faced pressure after U.S. officials slowed licenses for sending large-scale AI accelerators to the Middle East. Nvidia's shares fell 2.8%, while AMD saw a 1% rise, reflecting concerns over national security reviews and the potential impact on their business operations.
Marvell Technology (MRVL, Financial) shares fell nearly 3.5% in extended trading after reporting fiscal first-quarter results and guidance that were generally in line with expectations. The company projected second-quarter revenue of $1.25 billion, slightly above analysts' expectations, but investor response was lukewarm.
Costco (COST, Financial) reported a Q3 GAAP EPS of $3.78, beating estimates by $0.10, and revenue of $58.52 billion, which surpassed expectations by $520 million. Despite positive sales growth and a strong performance in e-commerce, shares dipped slightly by 1.09% in post-market trading.
Ulta Beauty (ULTA, Financial) reported Q1 GAAP EPS of $6.47, beating estimates by $0.19, on revenue of $2.7 billion. However, the company updated its outlook for fiscal 2024, lowering its revenue and comparable sales expectations, which led to a cautious investor response.
MongoDB (MDB, Financial) shares plummeted by 24.08% despite beating Q1 Non-GAAP EPS estimates by $0.14 and reporting revenue of $450.56 million. The company's Q2 and 2025 outlooks fell short of consensus expectations, leading to a significant drop in stock price.
Zscaler (ZS, Financial) posted a Q3 Non-GAAP EPS of $0.88, surpassing estimates by $0.23, and revenue of $553.2 million, beating expectations by $17.11 million. The company provided an optimistic Q4 and 2024 outlook, which was well-received by investors.
Medical Properties Trust (MPW, Financial) declared a $0.15/share quarterly dividend, maintaining its forward yield of 12.01%. The dividend is payable on July 9 to shareholders of record as of June 10. The announcement comes amid ongoing discussions about the company's value and strategic moves.
SentinelOne (S) reported Q1 Non-GAAP EPS of $0.00, beating estimates by $0.05, with revenue of $186.36 million, up 39.7% year-over-year. The company showed significant growth in annualized recurring revenue and improved operating margins, reflecting strong operational performance.
Summit Therapeutics (SMMT) saw its stock surge after its lead asset, ivonescimab, outperformed Merck’s (MRK) Keytruda in a late-stage trial for non-small cell lung cancer. This significant milestone led to a threefold increase in Summit's stock value.
NetApp (NTAP) reported Q4 Non-GAAP EPS of $1.80, narrowly beating expectations, with revenue of $1.67 billion. The company provided a positive outlook for fiscal year 2025, focusing on growth in all-flash and cloud storage services, which resonated well with investors.
Asana (ASAN) reported Q1 Non-GAAP EPS of -$0.06, beating estimates by $0.02, with revenue of $172.4 million. The company expects to be free cash flow positive for the full year and provided a solid financial outlook for fiscal 2025.
Microsoft (MSFT) faced scrutiny from lawmakers over cybersecurity concerns, with senators expressing serious concern about the Pentagon's potential upgrade to Microsoft's E5 license. This issue contributed to a 2.4% drop in Microsoft shares during midday trading.
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