Stock Market Overview
The stock market had a somewhat lackluster session following last week's volatile price action. The S&P 500 closed less than one point above its prior closing level. The Dow Jones Industrial Average (-0.4%) and Nasdaq Composite (+0.2%) closed slightly lower and slightly higher than Friday's settlement.
Market Hesitation
The muted action was due to hesitation in front of upcoming market-moving economic releases:
- Producer Price Index (Tuesday)
- Consumer Price Index (Wednesday)
- Retail Sales (Thursday)
- Housing Starts (Friday)
S&P 500 Sector Performance
Only three of the S&P 500 sectors settled higher:
- Information Technology: +0.9%
- Energy: +0.5%
- Utilities: +0.2%
The real estate (-0.6%) and communication services (-0.6%) sectors logged the biggest declines.
Information Technology Sector
The information technology sector was boosted by gains in:
- Apple (AAPL, Financial): +0.7%
- Microsoft (MSFT, Financial): +0.2%
- NVIDIA (NVDA, Financial): +4.1%
- Broadcom (AVGO): +0.2%
Energy Sector
The energy sector reacted to a jump in oil prices ($79.91/bbl, +4.1%) due to geopolitical concerns following the recent death of Hamas political leader Ismail Haniyeh, which stirred fears of retaliation from Iran or its proxies against Israel.
Inflation Expectations
The New York Fed's Survey of Consumer Expectations showed:
- Median one- and five-year-ahead inflation expectations were unchanged in July at 3.0% and 2.8%, respectively.
- Median three-year-ahead inflation expectations declined by 0.6 percentage points to 2.3%, the lowest level since the survey started in June 2013.
Bond Market
The 10-year note yield settled three basis points lower at 3.91%, and the 2-year note yield fell three basis points to 4.02%.
Year-to-Date Performance
- S&P 500: +12.1% YTD
- Nasdaq Composite: +11.8% YTD
- S&P Midcap 400: +4.8% YTD
- Dow Jones Industrial Average: +4.4% YTD
- Russell 2000: +1.7% YTD
Economic Data Review
The Treasury Budget for July showed a deficit of $243.7 billion compared to a deficit of $220.8 billion in the same period a year ago. The July deficit resulted from outlays ($574.1 billion) exceeding receipts ($330.4 billion). The Treasury Budget data is not seasonally adjusted, so the July deficit cannot be compared to the June deficit, which was revised higher to $70.9 billion (from -$66.0 billion).
The key takeaway from the report is that the U.S. government continues to run large budget deficits, driven in part by net interest costs that are outweighing defense spending.
Upcoming Economic Data
Tuesday's economic lineup features:
Guru Stock Picks
First Eagle Investment has made the following transactions:
- Add in IPGP by 5.25%
Renaissance Technologies has made the following transactions:
Donald Smith & Co has made the following transactions:
John Rogers has made the following transactions:
- Add in MANU by 56.41%
Today's News
Nvidia's (NVDA, Financial) stock rose about 4% on Monday after UBS retained its Buy rating on the semiconductor giant, despite a delay in the availability of the company's Blackwell GPUs. UBS has a $150 price target on Nvidia's shares. Analysts noted minor adjustments to their 2025 EPS model and stated that initial Blackwell customer volume shipments would be delayed by four to six weeks, pushing them to the end of January 2025. However, the delay is expected to be mitigated by customers taking more H200 chips due to very short lead times.
Barrick Gold (GOLD, Financial) saw a 9% increase in its stock price on Monday as the company reported stronger-than-expected Q2 adjusted earnings and revenues. Net earnings rose to $370M, or $0.21/share, from $305M, or $0.17/share, in the previous year, with revenues increasing nearly 12% Y/Y to $3.16B. The company benefited from higher production at its mines and higher precious metals prices.
Shares of monday.com (MNDY, Financial) jumped about 12% on Monday after the company raised its full-year revenue outlook and reported second-quarter results that beat estimates. Revenue grew about 34% year-over-year to $236.11M, and non-GAAP EPS surged around 129.3% year-over-year to $0.94. The company achieved its first quarter of GAAP operating profitability and closed its largest deal in company history during the quarter.
Pfizer (PFE, Financial) shares traded in the red on Monday, marking the seventh consecutive day of losses. The stock closed down 0.35% at $28.45 and has fallen about 20.5% in the last 12 months. Year-to-date, the stock is down 1.49%. Analysts have mixed recommendations, with 15 out of 25 suggesting a Hold. Despite the recent downturn, some analysts believe the company's stock will rally due to progress in its pipeline of experimental drugs.
Google's (GOOG, Financial) Gemini generative artificial intelligence chatbot ranked OpenAI's GPT-4 as the most advanced large language model, followed by Google's own PaLM2. This ranking was revealed by investment firm Baird. Microsoft's (MSFT, Financial) significant investment in OpenAI and the subsequent advancements in AI models highlight the competitive landscape in the AI sector.
Real estate investment trusts (REITs) continued to lower their net asset value discount in July amid an impending REIT rally. Morgan Stanley predicts a soft landing for Wall Street and expects the Federal Reserve to start lowering interest rates soon. Many REITs have already commenced a rally in anticipation of a rate cut, with shares remaining undervalued, according to analysts.
Oppenheimer highlighted additions to its OPCO Trifecta list, recommending Russell 1000 Health Care Growth stocks. The firm sees recent S&P 500 weakness as a correction in an uptrend and expects a year-end rally. The Russell 1000 Health Care Growth section exhibits bullish trend characteristics, according to Oppenheimer.
Rumble (RUM, Financial) reported Q2 GAAP EPS of -$0.13, beating estimates by $0.02, and revenue of $22.47M, which also surpassed expectations. The company saw an increase in average global Monthly Active Users to 53 million in the second quarter, up from 50 million in the first quarter. Shares rose 8.34% as the company anticipates continued revenue growth throughout 2024.
Autodesk (ADSK, Financial) is benefiting from the virtual design and construction mindset, according to analysts at Baird. Although Procore remains the most utilized software platform in project management, Autodesk is receiving positive feedback for its cloud offerings. This trend was observed during the 2024 Technology Conference hosted by the Associated General Contractors of America.
B. Riley Financial (RILY, Financial) stock plunged 26% in Monday premarket trading after the company announced it is suspending its common dividend to focus on reducing its debt. The company estimates a Q2 net loss of $433M-$475M, primarily due to losses from its investment in Franchise Group and its Vintage Capital loan receivable. The SEC is investigating whether Riley properly disclosed risks associated with some of its assets.
GuruFocus Stock Analysis
- If Only Ben Graham Could Speak to Us by John Dorfman
- A Stellar Quarter for Kinsale Capital by Renato Neves
- Amazon Offers Attractive Growth at a Reasonable Price by Blue Chip Portfolios
