Market Performance
The Dow Jones Industrial Average (+0.1%), the S&P 500 (+0.3%), and the Nasdaq Composite (+0.8%) closed with gains. This price action led the Nasdaq to a fresh all-time high, driven by outsized gains in mega cap names.
Mega Cap Winners
- Apple (AAPL 216.75, +6.13, +2.9%)
- Amazon.com (AMZN 197.20, +3.95, +2.0%)
- Microsoft (MSFT 456.73, +9.78, +2.2%)
- Tesla (TSLA 209.86, +11.98, +6.1%) - Reacting to solid June deliveries from Chinese EV makers before reporting Q2 deliveries tomorrow.
Market Breadth
There was an underlying negative bias driving today's trade. Declining issues led advancing issues by a 2-to-1 margin at the NYSE and by a 3-to-2 margin at the Nasdaq. The equal-weighted S&P 500 logged a 0.8% decline, the Russell 2000 registered a 0.9% loss, and the S&P Mid Cap 400 fell 1.0%.
Interest Rates
The downside bias was driven by a jump in Treasury yields following a below-consensus ISM Manufacturing Index for June. The 10-yr note yield settled 14 basis points higher at 4.48% and the 2-yr note yield jumped five basis points to 4.77%.
Sector Performance
Mega cap names fueled upside moves in their respective S&P 500 sectors today while cyclical sectors underperformed.
- Biggest Losers:
- Materials sector (-1.6%)
- Industrials sector (-1.1%)
- Rate-sensitive real estate sector (-1.0%)
- Utilities sector (-0.7%)
- Top Performers:
- Information technology sector (+1.3%)
- Consumer discretionary sector (+0.7%)
- Financial sector (+0.2%)
Year-to-Date Performance
- Nasdaq Composite: +19.1% YTD
- S&P 500: +14.8% YTD
- S&P Midcap 400: +4.3% YTD
- Dow Jones Industrial Average: +3.9% YTD
- Russell 2000: +0.2% YTD
Economic Data
- June ISM Manufacturing Index: 48.5% (consensus 49.1%); Prior 48.7%
The key takeaway from the report is that each component remained in a state of contraction -- except prices, which slowed from the prior month -- signaling a state of subdued activity for the manufacturing sector that fits with a slowing economy.
- May Construction Spending: -0.1% (consensus 0.1%); Prior revised to 0.3% from -0.1%
The key takeaway from the report was the drag in private residential spending driven by a decline in new single-family construction at a time when overall housing inventory has been constrained due to a lack of inventory for existing homes.
- June S&P Global US Manufacturing PMI - Final: 51.6; Prior 51.7
Looking Ahead
Tuesday's economic data is limited to the May job openings report (prior 8.059 million) at 10:00 ET.
Guru Stock Picks
Harbor Capital Appreciation Fund has made the following transactions:
Today's News
Paramount Global (PARA, Financial) is reportedly in discussions to merge its struggling streaming service, Paramount+, with a partner streamer. Potential partners include Warner Bros. Discovery (WBD, Financial) and Comcast's (CMCSA, Financial) Peacock, as per recent reports. The merger aims to stabilize churn and create a more competitive base against giants like Netflix (NFLX, Financial) and Disney+ (DIS, Financial). Paramount's co-CEO Chris McCarthy also hinted at the possibility of partnering with a tech platform due to the company's large content scale.
IBM (IBM, Financial) and Microsoft (MSFT, Financial) have announced a cybersecurity collaboration aimed at helping clients modernize their security operations and protect hybrid cloud environments. This partnership is expected to leverage both companies' strengths in cloud computing and cybersecurity to offer robust security solutions.
Hawaiian Electric (HE, Financial) saw a significant drop of 9.3% following reports that the Federal Bureau of Alcohol, Tobacco, Firearms and Explosives completed its investigation into the Maui wildfires. The findings will be included in a report by the Maui Fire Department, which has yet to set a release date.
NextEra Energy Partners (NEP, Financial) dropped 6.7% after RBC Capital downgraded the stock to Sector Perform from Outperform, cutting the price target to $30 from $38. Analyst Shelby Tucker cited insufficient growth from wind repowerings and looming liabilities as reasons for the downgrade, suggesting that the partnership might need to cut its dividend significantly.
Morgan Stanley raised its earnings estimates and price target for Nvidia (NVDA, Financial) due to "robust" data checks from Taiwan and China. The firm remains confident about Nvidia's near-term performance, despite acknowledging that the current Hopper cycle is nearing its end.
Walgreens Boots Alliance (WBA, Financial) fell 4% after J.P. Morgan cut its price target from $30 to $20 while maintaining an overweight rating. The bank adjusted its estimates to reflect persistent headwinds that the company is expected to face into FY25.
Wells Fargo added Tesla (TSLA, Financial) to its Q3 Tactical Ideas List, predicting a near-term decline. The firm expects declining delivery growth due to lower demand and diminishing returns from price cuts, estimating a 14% year-over-year decline in FY24 deliveries.
Bank OZK (OZK, Financial) declared a $0.40 per share quarterly dividend, marking a 2.6% increase from the previous dividend. The forward yield stands at 3.92%, with the dividend payable on July 19 for shareholders of record as of July 12.
Oppenheimer listed four industrial stocks as great buys, including Uber Technologies (UBER, Financial), XPO (XPO, Financial), Republic Services (RSG, Financial), and Knife River Corp. (KNF, Financial). The sector is seen as tactically attractive, with a bullish slope indicating near-term buying opportunities.
Home improvement stocks like Home Depot (HD, Financial) and Lowe’s (LOW, Financial) were under pressure after construction spending in May was unexpectedly soft, down 0.1% from the previous month. The data weighed down other stocks in the category, including Floor & Decor Holdings (FND, Financial) and LL Flooring Holdings (LL, Financial).
Datadog (DDOG, Financial) continued its upward trend, closing 0.6% higher at $130.5. The stock has gained more than 10% in the last six sessions and is up 12% over the past month. Analysts remain cautiously optimistic about the company's future performance.
GuruFocus Stock Analysis
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