Market Overview
The three major indices showed little change from their previous closing levels:
- S&P 500: +0.1%
- Nasdaq Composite: +0.1%
- Dow Jones Industrial Average: -0.1%
- Russell 2000: -1.1%
This mixed performance was due to a wait-and-see mentality ahead of this week's significant events. About 35% of S&P 500 components are reporting earnings, including four of the five largest stocks in the index. Microsoft (MSFT) reports results after Tuesday's close, Meta Platforms (META, Financial) after Wednesday's close, and Amazon.com (AMZN) and Apple (AAPL) after Thursday's close.
Individual Stock Performances
- Microsoft (MSFT): $426.73, +1.46, +0.3%
- Meta Platforms (META, Financial): $465.71, +0.01, +0.0%
- Amazon.com (AMZN): $183.20, +0.70, +0.4%
- Apple (AAPL): $218.24, +0.28, +0.1%
- McDonald's (MCD): $261.42, +9.42, +3.7% (despite disappointing quarterly results)
- Tesla (TSLA, Financial): $232.10, +12.30, +5.6%
Sector Performance
- Consumer Discretionary: +1.4% (boosted by gains in Amazon and Tesla)
- Communication Services: +0.9%
- Information Technology: -0.3%
- Financials: -0.2%
Upcoming Events
This week features the July FOMC Statement on Wednesday and the July Employment Situation report on Friday.
Treasury Market
The U.S. Treasury announced it expects to borrow $740 billion in Q3, $106 billion less than anticipated in April. Q4 borrowing is expected to reach $565 billion. The Treasury market showed little reaction, with the 10-year note yield declining two basis points to 4.18% and the 2-year note yield remaining unchanged at 4.39%.
Year-to-Date Performance
- Nasdaq Composite: +15.7%
- S&P 500: +14.5%
- Russell 2000: +10.3%
- S&P Midcap 400: +10.4%
- Dow Jones Industrial Average: +7.6%
Economic Data
No significant U.S. economic data was released today. Looking ahead to Tuesday's economic lineup:
Guru Stock Picks
Smead Value Fund has made the following transactions:
Today's News
Nvidia (NVDA, Financial) and Meta Platforms (META, Financial) CEOs, Jensen Huang and Mark Zuckerberg, are set to discuss the future of artificial intelligence at SIGGRAPH 2024. Their talks will explore how accelerated computing and generative AI are transforming industries. This event comes as Nvidia's stock remained relatively flat, down 0.3% in afternoon trading on Monday. Meanwhile, semiconductor company Arm Holdings (ARM, Financial) saw a significant drop of 4.7% ahead of its first-quarter financial results on Wednesday, with other semiconductor stocks like Marvell (MRVL, Financial) and Intel (INTC, Financial) also slipping.
Truist Securities reviewed Tesla’s (TSLA, Financial) latest autonomous driving software, noting that while there were some impressive advancements, issues remain. Analyst William Stein highlighted that the new version still falls short of achieving full autonomy. For example, during a test drive, the Model Y accelerated through an intersection prematurely, requiring manual intervention to avoid an accident. Another issue arose when the vehicle failed to properly respond to a police officer's hand signals.
Welltower (WELL, Financial) reported Q2 FFO of $1.05, beating estimates by $0.05, although its revenue of $1.82 billion missed by $80 million. The company saw a notable 11.3% year-over-year growth in same-store NOI, driven by a 21.7% increase in its Senior Housing Operating portfolio. Additionally, the Board announced a 10% increase in the quarterly dividend per share, reflecting strong financial performance and growth prospects. The 2024 net income guidance was revised upwards, indicating confidence in future performance.
Medical Properties Trust (MPW, Financial) disclosed that its largest tenant, Steward Health Care, may receive $30 million from Massachusetts to support six hospitals transitioning to new owners. The funds will also help keep two other Steward-run hospitals operational for another month. Steward has been working to sell all its hospitals after filing for Chapter 11 bankruptcy in May. The potential state aid was revealed in an emergency motion filed in Steward's bankruptcy case.
Sprouts Farmers Market (SFM, Financial) reported Q2 Non-GAAP EPS of $0.94, beating expectations by $0.16, with revenue of $1.89 billion, an 11.8% year-over-year increase. The company also provided a positive outlook for the third quarter and the full year 2024, forecasting comparable store sales growth and adjusted earnings per share higher than consensus estimates. The company plans to open approximately 35 new stores and expects capital expenditures between $225 million and $245 million.
Symbotic (SYM, Financial) reported Q3 GAAP EPS of -$0.02, missing estimates by $0.02, but its revenue of $491.86 million, a 57.7% year-over-year increase, beat expectations by $28.05 million. The company’s cash, cash equivalents, and marketable securities decreased by $81 million from the prior quarter. For the fourth quarter, Symbotic expects revenue between $455 million and $475 million, and adjusted EBITDA between $28 million and $32 million. Shares dropped 12.42% following the report.
Amkor Technologies (AMKR, Financial) issued a weaker-than-expected outlook for the third quarter, projecting net revenue between $1.79 billion and $1.89 billion, with the midpoint below analyst expectations. Gross margins are expected to range from 14% to 16%, while net income is anticipated to be between $0.42 and $0.56 per share, below the expected $0.64 per share. Despite this, Amkor reported Q2 results that exceeded expectations, buoyed by packaging and test services.
PayPal (PYPL, Financial) is set to report Q2 earnings, with investors eager to see if new CEO Alex Chriss has made progress in reigniting growth. The company is expected to earn an adjusted EPS of $0.99, down from $1.08 in Q1. Analysts have revised the full-year adjusted EPS estimate to $4.16, up from the company's April guidance of approximately $3.83. However, consensus estimates have dropped significantly over the past three to six months.
J.M. Smucker (SJM) is exploring a potential sale of its Voortman Bakery unit, which could be valued at over $350 million. The company is working with Goldman Sachs to gauge interest for the cookie and wafer brand, which it acquired as part of its $5.6 billion purchase of Hostess Brands last year. Hostess had previously acquired Voortman in January 2020 for $320 million.
AMD (AMD) and Intel (INTC, Financial) are set to report their Q2 results this week. Barclays noted that while Intel has a lower bar to clear, AMD has likely over-corrected. Despite some anticipated weaknesses in PCs, Xilinx, and gaming segments, AMD's expectations for the MI300 are achievable, according to Barclays.
NuScale Power (SMR) shares fell 19.1% after a critical report from Hunterbrook Capital suggested an ongoing SEC investigation into the company. NuScale, however, denied any knowledge of such an investigation and accused Hunterbrook of sensationalizing information to manipulate the stock market. The company has seen its market capitalization more than triple over the past year due to its advancements in small modular reactor technology.
F5 (FFIV) reported strong Q3 earnings, with EPS of $3.36 on revenue of $695 million, both surpassing expectations. The company also provided an optimistic outlook for Q4, expecting EPS between $3.38 and $3.50 and revenue between $720 million and $740 million. As a result, F5's stock soared 12% in post-market trading.
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