Market Performance
Stocks rallied today, resulting in significant gains for the major indices:
- S&P 500: +2.3%
- Russell 2000: +2.4%
- Nasdaq Composite: +2.9%
- Dow Jones Industrial Average: +1.8%
Economic Data
The positive momentum followed a favorable weekly jobless claims report at 8:30 ET. Initial claims dropped by 17,000 to 233,000, alleviating recession worries. This sentiment contributed to the rebound.
Market rates increased after the data release, further reflecting reduced recession concerns:
- 10-yr note yield: Rose from 3.93% to 4.00%
- 2-yr note yield: Rose from 3.95% to 4.04%
Additionally, the U.S. Treasury completed the week's note and bond auctions with a notably poor 30-year bond auction, which had the largest tail in nearly a year.
Sector and Stock Performance
Mega caps, growth stocks, and semiconductor shares significantly influenced index performance. Eli Lilly (LLY) was a standout, surging 9.5% to 845.31 after a strong earnings report and better-than-expected FY24 guidance.
The Vanguard Mega Cap Growth ETF (MGK) rose 2.9%, the Russell 3000 Growth Index gained 3.0%, and the PHLX Semiconductor Index (SOX) jumped 6.9%.
Overall, broad buying activity benefited many stocks. All 11 S&P 500 sectors closed higher, and 29 of the 30 Dow components saw gains.
Year-to-Date Performance
- S&P 500: +11.5%
- Nasdaq Composite: +11.0%
- S&P Midcap 400: +5.6%
- Dow Jones Industrial Average: +4.7%
- Russell 2000: +2.8%
Today's Economic Data
- Weekly Continuing Claims: 1.875 million (revised from 1.877 million)
- Weekly Initial Claims: 233K (consensus 242K, revised from 250K)
- June Wholesale Inventories: 0.2% (consensus 0.2%, revised from 0.6%)
The key takeaway is that the decline in initial jobless claims, a leading indicator, is helping to ease recession concerns.
Guru Stock Picks
Diamond Hill Capital has made the following transactions:
Today's News
Trade Desk (TTD, Financial) provided an optimistic forecast for the current quarter, surpassing Wall Street estimates and beating consensus for both top and bottom lines in its second-quarter earnings report. The company's shares rose 6.6% in after-hours trading, closing at $88.27 before the report. Trade Desk expects to generate revenue of at least $618M in the third quarter and adjusted EBITDA of about $248M, exceeding Bloomberg's consensus estimates. The company's customer retention remained over 95%, and its adjusted EBITDA for Q2 was $242M, translating to a 41% margin, significantly higher than Bloomberg's estimate of $225.8M.
Paramount Global (PARA, Financial) saw its stock rise in initial post-market reaction to its second-quarter earnings, despite a double-digit decline in TV Media operations. The company's overall revenue dropped 11% to $6.81B, worse than the 5% decline expected by analysts. Paramount highlighted progress in its streaming investments and adjusted profitability, with adjusted operating income before depreciation and amortization rising 43% to $867M. Paramount's streaming operation also turned profitable on an adjusted basis, contributing to significant earnings growth driven by its DTC segment.
Capri Holdings Limited (CPRI, Financial) fell in post-market trading after reporting a 13.2% year-over-year decline in total revenue for its fiscal first quarter, ending June 29. The company's retail sales declined in the low-double-digits due to softening global demand for fashion luxury goods. Versace's revenue was down 15.4% compared to a year ago, with retail sales increasing by high-single-digits but wholesale revenue decreasing by double-digits. Jimmy Choo's revenue fell 5.5%, primarily driven by softening demand.
Akamai Technologies (AKAM, Financial) exceeded estimates in its second-quarter 2024 financial results, with double-digit revenue growth in its security and compute segments. The company reported non-GAAP earnings per share of $1.58, above the consensus estimate of $1.53, and revenue of $980M, surpassing the $977.56M estimate. For the current quarter, Akamai expects earnings per share of $1.56 to $1.62 and revenue of $988M to $1.01B, both above estimates.
SoundHound AI (SOUN, Financial) announced a Q2 Non-GAAP EPS of -$0.04, beating estimates by $0.05, with revenue of $13.46M, a 53.8% year-over-year increase, surpassing expectations by $0.37M. The company continues to show strong growth in the voice AI market.
CleanSpark (CLSK, Financial) postponed its fiscal Q3 2024 financial results initially scheduled for Thursday, citing plans to provide updated timing and webcast details later. The bitcoin miner's stock slipped 1% in after-hours trading. CleanSpark had posted an 11% monthly increase in bitcoins mined in July.
Main Street Capital (MAIN, Financial) reported Q2 net investment income of $1.07 per share, beating estimates by $0.07, with total investment income of $132.15M, a 3.6% year-over-year increase, exceeding expectations by $1.09M.
Rocket Lab (RKLB, Financial) posted a Q2 GAAP EPS of -$0.08, beating estimates by $0.02, with revenue of $106.25M, a 71.2% year-over-year increase, missing expectations by $1.06M. For the third quarter, Rocket Lab expects revenue between $100M and $105M, below the $110.54M consensus, with space systems revenue between $79M and $84M and launch services revenue of approximately $21M.
Unity Software (U, Financial) is set to report its second-quarter earnings on Thursday, August 8th, with Wall Street analysts expecting a year-over-year decline in both top and bottom lines. Analysts anticipate earnings per share of $0.14 on revenues of $441.74M. The report will mark the debut of new CEO Matthew Bromberg, who is expected to address concerns surrounding the business.
Gilead Sciences (GILD, Financial) reported Q2 Non-GAAP EPS of $2.01, beating estimates by $0.41, with revenue of $6.95B, a 5.5% year-over-year increase, surpassing expectations by $210M. The company continues to show strong performance in its key markets.
DigitalOcean (DOCN, Financial) announced Q2 Non-GAAP EPS of $0.48, beating estimates by $0.09, with revenue of $192.48M, a 13.3% year-over-year increase, exceeding expectations by $3.85M. The company provided optimistic guidance for the third quarter and full year 2024, expecting continued revenue growth and strong adjusted EBITDA margins.
Amazon (AMZN, Financial) saw significant buying activity from Ark Invest's Cathie Wood, who purchased just under 225K shares across five of her six actively managed exchange-traded funds. The bulk of the buying was done by the ARK Innovation ETF (ARKK), which fell to its lowest trading level of 2024 earlier this week. In total, Wood's firm has purchased 224,746 shares of Amazon.
Expedia (EXPE, Financial) reported Q2 Non-GAAP EPS of $3.51, beating estimates by $0.35, with revenue of $3.56B, a 6.0% year-over-year increase, exceeding expectations by $30M. The company saw a 6% increase in total gross bookings and an 11% increase in hotel bookings compared to 2023, with room nights growing at the fastest rate since Q1 2023.
DXC Technology (DXC, Financial) reported Q1 Non-GAAP EPS of $0.74, beating estimates by $0.16, with revenue of $3.24B, a 6.1% year-over-year decline, exceeding expectations by $100M. The company increased its full-year outlook for adjusted EBIT margin, non-GAAP diluted EPS, and free cash flow.
Delta Air Lines (DAL, Financial) updated on the operational disruption caused by a tech outage on July 19, resulting in approximately 7,000 flight cancellations over five days. The company is pursuing legal claims against CrowdStrike (CRWD) and Microsoft (MSFT) to recover damages totaling at least $500M. The direct revenue impact of the outage is estimated to be $380M in Q3.
Medical Properties Trust (MPW, Financial) dropped 7.6% in premarket trading after Q2 earnings met analyst estimates, but the company agreed to limit its cash dividend in a credit amendment. Q2 normalized FFO per share was $0.23, in line with expectations, while total revenue was $266.6M, slightly above estimates.
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