The market showed mixed action on this quadruple witching options expiration day, leading to above-average volume. Market breadth reflected a slight negative skew for most of the session, but advancers had an 11-to-10 lead over decliners at the NYSE and Nasdaq by the close.
The lack of conviction today stemmed from a sense that stocks are due for a pullback. Mixed feelings at the index level were driven by varied action in the mega cap space.
Declines were seen in:
- NVIDIA (NVDA) 126.57, -4.21, -3.2%
- Meta Platforms (META) 494.78, -6.92, -1.4%
- Broadcom (AVGO) 1658.63, -75.93, -4.4%
- Apple (AAPL) 207.49, -2.19, -1.0%
- Eli Lilly (LLY, Financial) 883.88, -2.11, -0.2%
Gains were registered in:
- Amazon (AMZN) 189.08, +2.98, +1.6%
- Alphabet (GOOG) 180.26, +2.55, +1.4%
- Microsoft (MSFT) 449.78, +4.08, +0.9%
S&P 500 sector performance was mixed. None of the sectors moved more than 0.7% in either direction except the consumer discretionary sector, which rose 1.0%, and the information technology sector, which fell 0.8%, due to their respective mega cap components.
Treasuries saw some early gains, but those gains were relinquished after the release of stronger-than-expected preliminary June S&P Global U.S. Manufacturing and Services PMI readings. These overshadowed an existing home sales report for May that was close to expectations.
The 2-yr note yield was unchanged from yesterday, and up five basis points for the week, at 4.73%. The 10-yr note yield settled unchanged today at 4.26%, which is up five basis points this week.
Year-to-date performance:
- Nasdaq Composite: +17.8% YTD
- S&P 500: +14.6% YTD
- S&P Midcap 400: +5.4% YTD
- Dow Jones Industrial Average: +3.9% YTD
- Russell 2000: -0.3% YTD
Reviewing today's economic data:
- June S&P Global US Manufacturing PMI - Prelim 51.7; Prior 51.3
- June S&P Global US Services PMI - Preliminary 55.1; Prior 54.8
- May Existing Home Sales 4.11 mln; Prior 4.14 mln
- The key takeaway from the report is that there was a pickup in inventory of homes for sale; however, inventory overall remains constrained, which is leading to ongoing price gains that continue to pose affordability pressures, along with elevated mortgage rates, for prospective buyers.
- May Leading Indicators -0.5%; Prior -0.6%
Looking ahead, there is no US economic data of note on Monday. Tuesday's calendar features:
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Today's News
Eli Lilly (LLY, Financial) announced that its drug tirzepatide, marketed as Mounjaro and Zepbound, met its primary goals in a phase 3 trial for obstructive sleep apnea (OSA). The drug showed a mean reduction of up to 62.8% in the apnea-hypopnea index, significantly reducing the number of breathing interruptions per hour of sleep compared to a placebo. Additionally, a secondary endpoint showed disease resolution in 43% and 51.5% of participants in two separate studies. Tirzepatide has Fast Track status from the FDA for treating moderate-to-severe OSA with obesity, and Eli Lilly has submitted an application for this additional indication.
AeroVironment (AVAV, Financial) shares dropped 7% after the U.S. State Department approved a $300 million sale of rival Anduril Industries' Altius 600M-V unmanned aerial vehicles to Taiwan. This sale includes 291 Altius 600M-V systems and associated support. Additionally, AeroVironment received approval for a smaller $60 million sale of 720 Switchblade 300 drones. Both sales await U.S. Congress approval. AeroVironment's stock fell nearly 16% over two days after reaching an all-time high.
Albemarle Corporation (ALB, Financial) saw a modest gain of 0.93% on Friday, breaking a ten-day losing streak. Despite this, the stock has lost 59.4% over the past year and 26.4% in the last month. Year-to-date, Albemarle has underperformed the broader S&P 500, which rose 14.75% compared to Albemarle's 35% loss. Analysts have mixed ratings on the stock, with some recommending a strong buy while others suggest holding or selling.
Block (SQ, Financial) led Seaport Research Partners' EBIT-to-volumes (ETV) metric for fintech companies, with 67 basis points in Q1 2024. PayPal (PYPL, Financial) and Shift4 Payments (FOUR) followed with 0.35% and 0.27%, respectively. BILL Holdings (BILL) had the lowest ETV at 0%, indicating it needs to focus on more profitable volume growth. PayPal and Shift4 Payments consistently generate positive EBIT for each dollar of volume.
Omega Healthcare (OHI, Financial) closed in the green for the seventh consecutive day, gaining nearly 3% over the last six trading sessions. The REIT closed at $33.01, just below its 52-week high of $34.77, and has gained 7.7% in the past year. Analysts have given the stock a "Buy" rating, with strong momentum and valuation prospects.
Virgin Galactic Holdings (SPCE, Financial) saw a 6.83% increase in its stock price on Friday, breaking a six-day losing streak during which it lost 48%. The company recently announced a 1-for-20 reverse stock split to meet the NYSE's minimum per share bid price requirement. Despite the recent gains, the stock has lost 92.13% in value over the past year.
HubSpot (HUBS, Financial) gained 2.4% amid speculation of a third bidder for the company. Earlier reports suggested that Amazon (AMZN) and Google (GOOGL) were interested in acquiring HubSpot. HubSpot's advisers are now attempting a formal auction process.
Marvell Technology (MRVL, Financial) declared a $0.06/share quarterly dividend, maintaining its previous payout. The dividend will be payable on July 31 to shareholders of record as of July 12. Marvell is also noted for its potential to dominate the custom AI chip market alongside Broadcom.
Bristol-Myers Squibb (BMY, Financial) received FDA approval to expand the label for its lung cancer therapy Krazati to include patients with colorectal cancer. The drug, acquired through the $4.8 billion Mirati acquisition, will now be used in combination with cetuximab for treating KRASG12C-mutated colorectal cancer.
Archer Aviation (ACHR, Financial) announced plans for an air mobility network in the San Francisco Bay Area, causing its stock to rise 18%. The company signed a memorandum of understanding with Kilroy Realty to use its Kilroy Oyster Point campus as a critical hub. The network aims to replace long drives with short flights, connecting various Bay Area locations.
Iteris (ITI, Financial) filed a prospectus for a mixed shelf offering of up to $150 million. This filing is not an offer to sell these securities but indicates the company's intention to raise capital for general corporate purposes.
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