The stock market ended the week on a positive note, with the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite each rising by 0.6%, and the Russell 2000 gaining 1.1%. Despite pulling back from session highs, all indices logged solid gains.
The market's upward momentum was driven by strength in the semiconductor sector. The PHLX Semiconductor Index (SOX) posted a 1.3% gain.
Bank stocks lagged behind following quarterly results from JPMorgan Chase (JPM, Financial) at $204.94 (-1.2%), Citigroup (C, Financial) at $64.52 (-1.8%), and Wells Fargo (WFC, Financial) at $56.54 (-6.0%), which received negative responses despite beating earnings estimates.
The S&P 500 financial sector managed a modest 0.2% gain, closing near the bottom among the 11 sectors. The consumer discretionary sector rose by 1.0%, and information technology gained 0.9%, leading the top performers.
The equity market showed little reaction to the hotter-than-expected Producer Price Index (PPI) for June and upward revisions for May. Total PPI increased by 0.2% versus the expected 0.1%, and Core PPI rose by 0.4% compared to an expected 0.1% increase.
Treasuries also had a muted response to the data. The 10-year yield remained unchanged at 4.19%, while the 2-year note yield dropped by five basis points to 4.46%.
- Nasdaq Composite: +22.6% YTD
- S&P 500: +17.7% YTD
- S&P Midcap 400: +8.6% YTD
- Dow Jones Industrial Average: +6.1% YTD
- Russell 2000: +6.0% YTD
Today's economic data review:
- June PPI: +0.2% (expected +0.1%); prior revised to 0.0% from -0.2%. June Core PPI: +0.4% (expected +0.1%); prior revised to 0.3% from 0.0%.
- Key takeaway: The year-over-year rate for PPI and Core PPI accelerated for the fifth time in six months, with rising service prices outweighing falling goods prices in June.
- July Univ. of Michigan Consumer Sentiment - Prelim: 66.0 (expected 67.5); prior 68.2.
- Key takeaway: Little change from June as consumers remained burdened by high prices, though inflation expectations dipped slightly.
Looking ahead to Monday, the NY Fed Empire State Manufacturing Index for July will be released at 8:30 ET.
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Today's News
Arbor Realty Trust (ABR, Financial) saw a significant drop of 17% in its stock price following reports that federal prosecutors and the FBI are investigating the commercial mortgage REIT. The investigation focuses on the company's lending practices and claims about the performance of its loan book. Despite the turmoil, Arbor Realty Trust stated they are cooperating with regulatory inquiries and are confident in their operations.
EVgo (EVGO, Financial) experienced a remarkable 19% surge in its stock, marking its seventh consecutive day in the green. This rally was driven by positive delivery numbers from EV makers such as Lucid (LCID, Financial) and Tesla (TSLA, Financial), as well as a bullish analyst note. Benchmark raised its price target for EVgo by 67% to $5, citing increased charging network utilization and positive market sentiment.
Legend Biotech (LEGN, Financial) jumped 12% amid takeover speculation. The biotech firm reportedly received a takeover offer and has hired Centerview Partners to review the proposal and other options. The identity of the bidder remains unknown, and Legend Biotech did not comment on the matter. The company is set to report its Q2 results on Aug. 9.
The U.S. Justice Department is preparing a lawsuit against RealPage, a software company that provides rental pricing recommendations to landlords. The lawsuit alleges that RealPage's software enables landlords to illegally share rent data, potentially restricting supply and manipulating market prices. The civil case could be filed by the end of the summer.
Meta Platforms (META, Financial) saw a 1.7% decline in its stock after Edgewater Research highlighted ongoing weaknesses in the company's ad performance. Analysts noted that direct response campaign efficiency remains under pressure, with weaker-than-expected conversions in META's core direct-to-consumer/e-commerce channel. This trend suggests a potential weakening in consumer behavior.
Goldman Sachs has released a list of 25 top tactical stock picks for the next three months. The list identifies out-of-consensus opportunities, with analysts projecting a 9% upside for the average S&P 500 stock over the next year. The firm expects hedge funds to increase short positions in fundamentally weak companies due to declining single stock options volumes.
A bipartisan group of U.S. senators introduced the COPIED Act to counter the rise of deepfakes and protect creators from theft through generative AI. The bill aims to give creators control over their content with a provenance and watermark process. If passed, the act would require the National Institute of Standards and Technology to develop standards for the technology.
Exact Sciences (EXAS, Financial) had the highest percentage increase in shares sold short within the life sciences and diagnostics sector at the end of June. The short interest in Exact Sciences rose 67% from the end of May. Other companies with significant increases in short interest include Avantor (AVTR, Financial) and Danaher (DHR, Financial).
A recent poll of Seeking Alpha subscribers identified Amgen (AMGN, Financial) as a potential major player in the obesity market, alongside current leaders Eli Lilly (LLY, Financial) and Novo Nordisk (NVO, Financial). Despite the dominance of Lilly and Novo, more than 20% of respondents believe Amgen has significant upside potential in the development of anti-obesity drugs.
GuruFocus Stock Analysis
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