Market Overview
The stock market started strong, building on yesterday's rebound. However, gains quickly faded, and major indices settled with declines. The initial upside was driven by momentum from the previous session and eased concerns about the unwinding of carry trade positions. Bank of Japan's Deputy Governor Uchida stated that the bank will not raise rates during market instability, causing the yen to weaken against the dollar (USD/JPY +1.9% to 147.10).
Market Performance
The subsequent downturn was driven by growth concerns. The afternoon retreat was broad and orderly. The S&P 500, which was up as much as 1.7% at its high, closed 0.8% lower. The equal-weighted S&P 500 was up 1.5% at its intraday high but settled with a 0.7% decline.
Notable Stocks
- Amgen (AMGN) dropped 5.0% to 312.50 after reporting earnings.
- Walt Disney (DIS) fell 4.5% to 85.96. Although its streaming business generated positive operating income for the first time, demand for its theme parks is weakening.
- Airbnb (ABNB) declined 13.4% to 113.01 after indicating slowing demand from U.S. guests.
Sectors
Seven of the S&P 500 sectors closed lower, with four declining more than 1.0%. Consumer discretionary (-1.4%) and information technology (-1.4%) were the worst performers, dragged down by losses in mega-cap constituents. Utilities (+0.6%) and energy (+0.5%) sectors led the pack.
Bond Market
The 10-year note yield settled eight basis points higher at 3.97%, and the 2-year note yield settled two basis points higher at 4.00%. Today's $42 billion 10-year note auction was poorly received.
Guru Stock Picks
Azvalor Iberia FI has made the following transactions:
Chris Davis has made the following transactions:
Bestinfond has made the following transactions:
First Eagle Investment has made the following transactions:
- Add in IPGP by 5.25%
Michael Dell has made the following transactions:
- Reduce in LTH by 22.45%
Today's News
Nvidia (NVDA, Financial) experienced a significant drop of more than 5%, contributing to the overall decline in the tech sector. The fall came after a disappointing $42 billion 10-year Treasury note auction, which saw a lower bid-to-cover ratio than the previous auction. This led to a rise in the 10-year Treasury yield, adversely affecting tech stocks.
Warner Bros. Discovery (WBD, Financial) saw its stock slide by 7% in after-hours trading following its second-quarter earnings release. The company reported revenues that were about 4% below expectations, with total revenues for the quarter ending June 30 dropping by 6% to $9.71 billion. The net loss widened significantly to $9.99 billion due to a $9.1 billion noncash goodwill impairment and other accounting effects. Despite the poor financials, CEO David Zaslav highlighted the company's streaming momentum, with 3.6 million net subscriber additions.
Robinhood Markets (HOOD, Financial) reported a strong second quarter, with GAAP EPS of $0.21 beating estimates by $0.06. Revenue increased by 40.3% year-over-year to $682 million, driven by a 69% rise in transaction-based revenues. Options and cryptocurrencies were the standout performers, with revenues increasing by 43% and 161%, respectively. Net interest revenues also grew by 22% year-over-year.
Applovin (APP, Financial) announced its Q2 results with GAAP EPS of $0.89 and revenue of $1.08 billion, marking a 44% year-over-year increase. The company provided strong financial guidance for Q3 2024, with total revenue expected to range between $1,115 million and $1,135 million and an adjusted EBITDA margin of 57%.
Energy Transfer (ET, Financial) posted Q2 GAAP EPS of $0.35, missing estimates by $0.01. Revenue for the quarter was $20.73 billion, up 13.2% year-over-year but missing expectations by $770 million. Distributable cash flow attributable to partners increased significantly to $2.04 billion, compared to $1.55 billion in the same period last year.
Occidental Petroleum (OXY, Financial) reported Q2 Non-GAAP EPS of $1.03, beating estimates by $0.26. The company generated $1.3 billion in free cash flow before working capital and maintained its full-year production guidance. This performance came despite the expected divestiture of 15 Mboed in the fourth quarter.
Blue Bird (BLBD, Financial) saw its Q3 Non-GAAP EPS of $0.91 beat estimates by $0.40. Revenue for the quarter was $333.4 million, up 13.3% year-over-year. The company also raised its full-year guidance for net revenue and adjusted EBITDA, citing strong business transformation results.
Super Micro Computer (SMCI, Financial) CEO Charles Liang noted that the company does not expect to see meaningful volume of Nvidia's Blackwell GPUs until the quarter ending in March 2025. This delay has led Super Micro to project revenue of only $26 billion to $30 billion for fiscal year 2025.
Digital Realty Trust (DLR, Financial) declared a quarterly dividend of $1.22 per share, maintaining its forward yield at 3.26%. The dividend is payable on September 30, with a record date of September 13.
IonQ (IONQ, Financial) reported Q2 GAAP EPS of -$0.18, beating estimates by $0.04. Revenue for the quarter was $11.4 million, up 106.5% year-over-year. The company raised its full-year revenue guidance to between $38 million and $42 million, citing strong bookings and technological advancements.
Digital Turbine (APPS, Financial) posted Q1 Non-GAAP EPS of $0.07, beating estimates by $0.03, with revenue of $117.99 million. Despite a year-over-year decline of 19.4%, the company provided a positive outlook for fiscal 2025, expecting revenue between $540 million and $560 million.
GuruFocus Stock Analysis
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