Market Performance
The stock market had a mixed showing today ahead of influential earnings news after the close.
- Dow Jones Industrial Average: +0.5%
- Russell 2000: +0.6%
- S&P 500: -0.5%
- Nasdaq Composite: -1.3%
The S&P 500 and Nasdaq Composite were weighed down by losses in growth stocks, mega-cap names, and semiconductor-related shares. The Russell 3000 Growth Index logged a 1.1% decline, the Vanguard Mega Cap Growth ETF (MGK) fell 1.3%, and the PHLX Semiconductor Index (SOX) registered a 3.9% loss.
Notable Stock Movements
NVIDIA (NVDA 103.73, -7.86, -7.0%) was among the top laggards. Dow components Merck (MRK 115.25, -12.53, -9.8%) and Procter & Gamble (PG 161.70, -8.23, -4.8%) were also influential losers after reporting earnings.
Meanwhile, F5 Networks (FFIV 200.66, +23.07, +13.0%), Stanley Black & Decker (SWK 106.05, +9.62, +10.0%), and PayPal (PYPL 64.00, +5.06, +8.6%) were top-performing S&P 500 components after their quarterly reports.
Market Breadth
Market breadth favored advancers by a 3-to-2 margin at the NYSE, but decliners had a 4-to-3 lead over advancers at the Nasdaq.
S&P 500 Sector Performance
The performance of the S&P 500 sectors also reflected mixed action:
- Information Technology: -2.2% (weakest showing)
- Financial Sector: +1.2%
Economic Data
The equity and bond markets didn't react much to this morning's better-than-expected consumer confidence index for July. The 10-year note yield declined four basis points to 4.14%, and the 2-year note yield declined three basis points to 4.36%. This price action was ahead of tomorrow's release of the latest FOMC Statement, expected to set the stage for a rate cut in September.
Year-to-Date Performance
- Nasdaq Composite: +14.2%
- S&P 500: +14.0%
- Russell 2000: +10.7%
- S&P Midcap 400: +10.7%
- Dow Jones Industrial Average: +8.1%
Today's Economic Data
- May FHFA Housing Price Index: 0.0% (Prior revised to 0.3% from 0.2%)
- May S&P Case-Shiller Home Price Index: 6.8% (Consensus: 6.8%; Prior revised to 7.3% from 7.2%)
- July Consumer Confidence: 100.3 (Consensus: 99.8; Prior revised to 97.8 from 100.4)
- June JOLTS - Job Openings: 8.184 million (Prior revised to 8.230 million from 8.140 million)
The key takeaway from the consumer confidence report is that consumers are starting to notice slowing labor market conditions, yet their overall assessment of the current labor market situation remains quite strong.
Looking Ahead
Wednesday's economic calendar features:
Guru Stock Picks
Fairholme Fund has made the following transactions:
Fairholme Focused Income Fund has made the following transactions:
Warren Buffett has made the following transactions:
- Reduce in BAC by 1.88%
Today's News
Microsoft (MSFT, Financial) shares fell nearly 7% in extended hours trading after reporting fiscal fourth-quarter results. Despite topping expectations with $2.95 per share earnings and a 15% revenue increase to $64.7B, Azure growth was weaker-than-expected. Azure revenue grew 29% year-over-year, missing the company’s forecast of 30%-31% growth. Total cloud-related revenue was $36.8B, slightly below the $36.84B estimate. Office Commercial revenue rose 12%, and Dynamics 365 saw a 19% increase.
Pinterest (PINS, Financial) stock slid 15% following its second-quarter earnings report. The company beat revenue and profit expectations with $853.7M in revenue and a 46% increase in non-GAAP net income to $207.2M. However, its third-quarter guidance disappointed, forecasting 16%-18% growth, below analyst expectations of $909.5M. The company also projected adjusted operating expenses to rise 17%-20%.
Advanced Micro Devices (AMD, Financial) reported Q2 Non-GAAP EPS of $0.69, beating estimates by $0.01, and revenue of $5.84B, surpassing expectations by $120M. The Data Center segment revenue hit a record $2.8 billion, up 115% year-over-year, driven by AMD Instinct GPU shipments and EPYC CPU sales. Client segment revenue increased 49% year-over-year, while Gaming segment revenue fell 59%. AMD expects Q3 revenue of approximately $6.7 billion, indicating a 16% year-over-year growth.
Arista Networks (ANET, Financial) shares dipped 4.95% despite reporting Q2 Non-GAAP EPS of $2.10, beating estimates by $0.16, and revenue of $1.69B, which surpassed expectations by $40M. The company projected Q3 revenue between $1.72 billion and $1.75 billion, aligning with consensus estimates. Non-GAAP gross margin improved to 65.4% from 61.3% in the previous year.
Interactive Brokers' (IBKR) weekly list highlighted significant net stock buying activity in Nvidia (NVDA, Financial) and other tech names. Nvidia remained the top spot for the second week, while Tesla (TSLA, Financial) was second. Despite the tech selloff, Nvidia's stock has slid more than 12% since mid-July, reflecting broader market trends.
Starbucks Corporation (SBUX, Financial) gained in postmarket trading after reporting a 3% drop in global comparable store sales for Q3, missing the consensus estimate of -2.7%. The average ticket rose 2%, but transaction count fell 5%. Total revenue decreased 1.1% year-over-year to $9.1 billion. North American comparable sales fell 2%, with a 3% increase in average ticket offset by a 6% drop in transactions. Operating margin contracted to 21.0% from 21.7% due to increased wages and benefits.
Lumen Technologies (LUMN, Financial) stock soared ~77%, extending its 13-day winning streak. The surge followed an agreement with Corning (GLW) to allocate 10% of its global fiber capacity to Lumen's new AI-enabled data center network. Lumen's stock has rebounded 154% since July 11 after a sharp decline in the first half of the year.
W.P. Carey (WPC, Financial) trimmed its guidance for adjusted FFO per share by 2 cents due to two large transactions falling through. Q2 adjusted FFO per share was $1.17, slightly above estimates, but revenue of $389.7M missed expectations. The REIT's liquidity remains at an all-time high, positioning it to close active deals towards the end of the year.
Qorvo (QRVO, Financial) shares fell 5.5% in extended trading after reporting fiscal first-quarter results. The company earned an adjusted $0.87 per share, beating expectations, with revenue up 36.2% year-over-year to $886.7M. Qorvo benefited from the integration of Anokiwave and expects fiscal second-quarter earnings between $1.75 and $1.95 per share on sales of $1B-$1.05B.
First Solar (FSLR, Financial) reported Q2 GAAP EPS of $3.25, beating estimates by $0.54, with revenue of $1B, up 23.3% year-over-year. The company maintained its 2024 guidance, expecting net sales of $4.4B to $4.6B and earnings per diluted share of $13.00 to $14.00. First Solar continues to benefit from strong demand and strategic investments.
STAG Industrial (STAG, Financial) reported Q2 FFO of $0.61, beating estimates by $0.02, with revenue of $189.78M, up 10.5% year-over-year. The company produced Cash NOI of $148.4 million for the quarter and acquired ten buildings for $225.6 million. STAG continues to expand its portfolio and enhance its financial performance.
Mondelēz (MDLZ) reported Q2 Non-GAAP EPS of $0.86, beating estimates by $0.07, while revenue of $8.34B missed by $110M. The company expects organic net revenue growth at the upper end of 3% to 5% and high single-digit adjusted EPS growth for 2024. Free cash flow is projected to exceed $3.5 billion.
Match Group (MTCH) reported Q2 GAAP EPS of $0.48, in line with expectations, and revenue of $864.06M, up 4.2% year-over-year. Payers declined 5% to 14.8 million, while RPP increased 9% to $19.05. The company continues to focus on user engagement and revenue growth.
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