Market Performance
The stock market opened with gains, driven by a strong performance from NVIDIA (NVDA, Financial). Shares of NVDA had been up as much as 3.8% earlier, helping the S&P 500 surpass the 5,500 level for the first time. The Nasdaq Composite also saw an early rise of 0.4% but ended the day with a 0.8% decline. Major indices hit session lows as NVDA shares turned negative for the day.
Impact of Heavily-Weighted Stocks
Declines in other heavily-weighted stocks also influenced index performance significantly. Notable declines included Apple (AAPL), down 2.2%, Broadcom (AVGO), down 3.8%, and Microsoft (MSFT), down 0.1%. Many stocks saw a pullback due to normal consolidation efforts after a strong performance earlier in the month. Decliners outnumbered advancers by an 11-to-10 margin at the NYSE and by a 4-to-3 margin at the Nasdaq.
Dow Jones Industrial Average
Despite the overall downside bias, the Dow Jones Industrial Average closed 300 points higher. A significant gain in Salesforce (CRM), which was up 4.3%, contributed to the Dow's outperformance.
S&P 500 Sectors
- Energy Sector: Led the pack, jumping 1.9% amid rising oil prices ($81.34/bbl, +0.63, +0.8%).
- Utilities and Financials Sectors: Both sectors saw gains of 0.9%.
- Information Technology Sector: The worst performer, logging a 1.6% decline due to losses in its mega-cap components.
Market Rates
Rising market rates also acted as a limiting factor. The 2-year note yield increased by three basis points to 4.73%, and the 10-year note yield climbed four basis points to 4.25%.
Today's News
Nvidia (NVDA, Financial) continued to dominate headlines as it maintained its position as the largest publicly listed firm by market capitalization. Despite a strong start, the stock reversed course to close in the red. Nvidia's market cap has reached an impressive $3.33 trillion, driven by the surging demand for its AI chips, which have seen the stock price skyrocket 174% in 2024 alone.
Starbucks (SBUX, Financial) declared a quarterly dividend of $0.57 per share, maintaining its previous payout. The forward yield stands at 2.86%, and the dividend will be payable on August 30 to shareholders of record on August 16. Starbucks continues to be a focus for investors, with analysts tipping it for a potential turnaround.
The Info Tech sector of the S&P 500 has been the top performer in 2024, with a year-to-date gain of 31.5% and a 44.6% increase over the past year. Notable tech stocks according to quantitative ratings include GoDaddy (GDDY, Financial) and Immersion Corporation (IMMR, Financial), both receiving high marks for their growth and profitability.
Goldman Sachs analysts have identified several stocks that could benefit significantly from the adoption of artificial intelligence. Companies like Pinterest (PINS, Financial) and New York Times Co. (NYT, Financial) are expected to see substantial increases in earnings due to AI-driven productivity gains.
Esperion Therapeutics (ESPR, Financial) saw a significant drop of 16% after BofA Securities downgraded the stock to underperform. Concerns over the competitiveness of its cholesterol-lowering drug, bempedoic acid, compared to Merck's new oral PCSK9 inhibitor, MK-0616, have weighed heavily on the stock.
Zoom Video Communications (ZM, Financial) snapped a six-day losing streak, closing up 3.74%. Despite recent struggles, the stock has shown some resilience, with Seeking Alpha's Quant Ratings giving it a Hold rating and high marks for profitability.
Penn Entertainment (PENN, Financial) rose 6.5% amid reports of a takeover approach by Boyd Gaming (BYD). The potential deal would require approval from Walt Disney (DIS), which has a partnership with Penn through ESPN. The news follows activist investor Donerail Group's suggestion that Penn could be worth double its current trading price in a sale.
Qualcomm (QCOM, Financial) dipped more than 5% after reports of compatibility issues with its Snapdragon processor in Samsung's new Galaxy Book 4 Edge. The laptop, running Windows 11, struggled with popular software titles, highlighting performance gaps compared to Apple's M3 chip.
Asana (ASAN, Financial) announced a new $150 million share buyback program while reiterating its guidance for the second quarter and full year. CEO Dustin Moskovitz expressed confidence in the company's long-term potential, emphasizing the transformative impact of AI on their operations.
Smith & Wesson Brands (SWBI, Financial) reported strong Q4 results with a non-GAAP EPS of $0.45, beating estimates by $0.10. Revenue also exceeded expectations, growing 9.9% year-over-year to $159.15 million. The stock gained 5.61% on the news.
TikTok attorneys have asked a U.S. court to strike down a law requiring the social media app to divest from its Chinese parent company, ByteDance. The law, signed by President Joe Biden, mandates the separation by January next year, but TikTok argues that such a split is not feasible.
Taiwan Semiconductor Manufacturing (TSM) received a price target upgrade from Bernstein to $200 from $150. Analysts noted strong demand in high-end phone and advanced nodes, with data center AI revenue rising as expected. The company is projected to exceed its 2024 guidance.
AMD (AMD) shares gained over 7% after Piper Sandler reiterated its Overweight rating. The semiconductor company is expected to have bright prospects in the second half of 2024, with new chip releases like the MI300 series driving future growth.
Netflix (NFLX) snapped a seven-day winning streak, closing down 0.97%. Despite the dip, the stock has gained 56.2% in value over the past 12 months. Analysts have given Netflix a "Hold" rating, with high marks for profitability and momentum.
Twilio (TWLO) rose 0.79%, ending a six-day losing streak. The stock has underperformed the broader market this year, but Seeking Alpha's Quant Ratings give it a Hold rating, with positive notes on profitability and growth prospects.
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