S&P futures vs fair value: +13.00. Nasdaq futures vs fair value: +47.00.
The S&P 500 futures are up 13 points, trading 0.2% above fair value. Nasdaq 100 futures are up 47 points, also trading 0.2% above fair value. The Dow Jones Industrial Average futures are up 74 points, trading 0.2% above fair value.
There's a positive trend in early trading after last week's turbulent market. Pre-open gains in big companies are adding to this positive trend.
This week will have important economic data releases:
- July Producer Price Index on Tuesday
- July Consumer Price Index on Wednesday
- July Retail Sales report on Thursday
The 10-year note yield is up one basis point to 3.95%, and the 2-year note yield is up one basis point to 4.05%.
In corporate news:
- Starbucks (SBUX, Financial) is up 2.3% after activist investor Starboard Value took a stake.
- KeyCorp (KEY, Financial) is up 17.9% after a strategic minority investment from Scotiabank (BNS).
- Walt Disney (DIS, Financial) is up 0.2% after unveiling expansions at its Parks and Resorts at D23.
- Intel (INTC) is up 0.5% despite postponing an innovation event amid job cuts.
- Cisco (CSCO, Financial) is down 0.1% as it plans to eliminate thousands of jobs.
- Tesla (TSLA, Financial) is down 0.2% after stopping orders for the least expensive CyberTruck while offering a premium model.
Reviewing overnight developments:
Today's News
As market volatility begins to stabilize, Goldman Sachs highlights the Magnificent 7 stocks—Apple (AAPL, Financial), Alphabet (GOOG) (GOOGL), Amazon (AMZN), Meta (META), Microsoft (MSFT, Financial), Nvidia (NVDA), and Tesla (TSLA, Financial)—as better hedging options compared to the S&P 500. The trading desk notes that these stocks trade at a volatility discount and offer "cheaper protection." Nvidia's valuation looks balanced historically, with its 24-month PE resetting to 25x from 35x.
The U.S. Securities and Exchange Commission is probing B. Riley Financial (RILY) for possibly not disclosing risks tied to its assets. Riley expects a non-cash markdown of $330M-$370M related to its investment in Franchise Group (FRG) and a Vintage Capital loan receivable, leading to a suspension of its common stock dividend. Riley's stock plummeted 42% in premarket trading on Monday.
Goldman Sachs has initiated coverage of select packaged food companies, giving Conagra (CAG), General Mills (GIS), and Mondelez (MDLZ) a Buy rating while rating Hershey (HSY) and Kraft Heinz (KHC) as Sell. Conagra is highlighted as the top pick due to its well-positioned frozen and snack food portfolio, aligning with current consumption trends and limited exposure to private labels.
Bank of America reports a rebound in cloud consumption data for July, spotlighting Datadog (DDOG), MongoDB (MDB), and Snowflake (SNOW). Datadog saw a 5.2% year-over-year increase in engaged visits in July, recovering from a 9.2% decline in June. MongoDB also showed positive growth, indicating a continued healthy demand.
Wedbush Securities states that AI monetization has expanded beyond a few companies, citing strong results from Microsoft (MSFT, Financial) and AMD (AMD). The firm recommends looking at Apple (AAPL, Financial), Amazon (AMZN), Alphabet (GOOG) (GOOGL), ServiceNow (NOW), Palantir (PLTR), and Microsoft as core barometers for AI investment.
Wolfe Research downgraded Qualcomm (QCOM) due to concerns over its Apple (AAPL, Financial) business. There are fears that Apple's internal modem development could impact Qualcomm's revenue. Despite the stock not being expensive, any loss of Apple-related revenue poses a significant headwind not fully accounted for in analyst estimates.
Samsung (OTCPK:SSNLF) confirmed that testing of its high-bandwidth memory chips by Nvidia (NVDA) is proceeding as planned, despite conflicting media reports. The HBM3E chips are crucial for AI applications, and their successful testing could significantly impact Nvidia's AI processors.
Revance Therapeutics (RVNC) shares surged over 85% after Crown Laboratories agreed to acquire the company for $6.66 per share in cash. The transaction, valued at $924M, is expected to close by year-end, subject to shareholder approval. Upon completion, Revance will be wholly owned by Crown.
Scotiabank (BNS) plans to acquire a 14.9% stake in KeyCorp (KEY, Financial) for $2.8B. The investment will be made in two stages, with the initial 4.9% stake closing in Q4 2024 and the remaining 10% in 2025. The deal is expected to boost KeyCorp's capital and earnings, with its stock surging 13% on the news.
A fire involving a Mercedes-Benz electric vehicle (OTCPK:MBGYY) in South Korea has led to discussions about new industry regulations. Officials are considering requiring EV makers to disclose their battery brands, as over 600 such fires have occurred in underground parking lots in the past decade.
GuruFocus Stock Analysis
- A Stellar Quarter for Kinsale Capital by Renato Neves
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