Market Today: Nvidia's Q2 Results and CrowdStrike's Strong Performance Highlight Tech Sector

Market Recap

The stock market closed with losses, but major indices climbed off session lows before the close. The S&P 500 settled 0.6% lower, and the Nasdaq Composite closed down 1.1% from yesterday. The index deterioration coincided with mega caps and semiconductor-related shares building on initial losses ahead of influential earnings news.

Sector Performance

- **PHLX Semiconductor (SOX)**: Logged a 1.8% loss. - **Vanguard Mega Cap Growth ETF (MGK)**: Fell 1.1%. - **Invesco S&P 500 Equal Weight ETF (RSP)**: Closed modestly lower, down 0.3%.The price action in semiconductor shares and mega caps affected the information technology sector, which declined 1.3%.

Notable Stock Performances

- **Super Micro Computer (SMCI, Financial)**: Declined sharply by 19.0% to 443.49. The company delayed its annual 10K filing for the fiscal year ended June 30, 2024, to complete its assessment of internal controls over financial reporting. - **Bath & Body Works (BBWI)**: Dropped 7.0% to 32.29 following quarterly results. - **J.M Smucker (SJM)**: Fell 4.6% to 114.73 after quarterly results.

Positive Sector Performances

- **Financial Sector**: Gained 0.3%, boosted by many bank stocks. - **SPDR S&P Bank ETF (KBE)**: Logged a 0.8% gain. - **SPDR S&P Regional Banking ETF (KRE)**: Settled 0.9% higher. - **Berkshire Hathaway (BRK.B)**: Contributed to the sector's performance with a 0.9% gain, briefly topping a $1 trillion market cap.- **Health Care Sector**: Increased by 0.1%.

Market Volume and Yields

Volume remained below average at the NYSE due to light participation ahead of Labor Day. The 10-year note yield settled one basis point higher at 3.84%, and the 2-year note yield settled three basis points lower at 3.87%.

Year-to-Date Performance

- S&P 500: +17.2% - Nasdaq Composite: +17.0% - S&P Midcap 400: +10.0% - Dow Jones Industrial Average: +9.0% - Russell 2000: +8.0%

Economic Data Review

- **Weekly MBA Mortgage Applications Index**: 0.5%; Prior -10.1%

Upcoming Economic Data (Thursday)

- **8:30 ET**: - Q2 GDP - second estimate (prior 2.8%) - Q2 GDP Deflator - second estimate (prior 2.3%) - Weekly Initial Claims (prior 232,000) - Continuing Claims (prior 1.863 mln) - Advance July goods trade balance (prior -$96.6 bln) - Advance July Retail Inventories (prior -$96.8 bln) - Advance Retail Inventories (prior 0.7%) - Advance Wholesale Inventories (prior 0.2%) - **10:00 ET**: July Pending Home Sales (consensus 1.2%; prior 4.8%) - **10:30 ET**: Weekly natural gas inventories (prior +35 bcf)

Overseas Market Performance

- **Europe**: - DAX: +0.6% - FTSE: -0.0% - CAC: +0.2% - **Asia**: - Nikkei: +0.1% - Hang Seng: -1.0% - Shanghai: -0.4%

Commodities

- **Crude Oil**: -1.02 @ 74.59 - **Natural Gas**: +0.02 @ 2.10 - **Gold**: -15.90 @ 2538.00 - **Silver**: -0.76 @ 29.22 - **Copper**: -0.09 @ 4.21

SMCI,BBWI,SJM,BRK.B,KBE,KRE

Guru Stock Picks

Warren Buffett has made the following transactions:

• Reduce in BAC by 2.66%

Fairholme Fund has made the following transactions:

• Reduce in JOE by 0.82%

Today's News

Nvidia (NVDA, Financial) reported impressive fiscal second-quarter results with a 122% year-over-year revenue increase to $30 billion, surpassing expectations by $1.31 billion. The company's data center revenue reached a record $26.3 billion, up 16% from Q1 and 154% from the previous year. Nvidia's Q3 outlook also exceeded expectations, forecasting $32.5 billion in revenue. Despite these strong results, Nvidia shares fell 2% in extended trading.

In a notable influence on the broader market, Nvidia's (NVDA, Financial) earnings report had a significant impact on the S&P 500, with a one-day effect of 54 basis points. The company's market cap of $3.2 trillion and its 6.7% weight in the S&P 500 underscore its critical role in the AI chip market and overall market performance.

CrowdStrike (CRWD, Financial) saw its shares rise 3.4% in extended trading after reporting second-quarter results that exceeded expectations. The cybersecurity company earned $1.04 per share on an adjusted basis, with revenue hitting $963.9 million. Subscription revenue accounted for $918.3 million, while professional services contributed $45.6 million. The company slightly adjusted its full-year guidance, reflecting resilience despite last month's global outage.

Salesforce (CRM, Financial) reported fiscal second-quarter results that topped expectations, with shares rising 1.6% in extended trading. The cloud computing giant earned an adjusted $2.56 per share, with revenue increasing 8.4% year-over-year to $9.33 billion. The company also announced a change in management and highlighted record-high operating margins.

Affirm (AFRM, Financial) reported a Q4 GAAP EPS of -$0.14, beating expectations by $0.30, and revenue of $659.18 million, a 47.9% year-over-year increase. The company provided a positive financial outlook for the next quarter, with revenue expected to range between $640 million to $670 million.

Okta (OKTA, Financial) posted strong Q2 results, with non-GAAP EPS of $0.72 beating expectations by $0.11, and revenue of $646 million, a 16.2% year-over-year increase. The company's subscription revenue grew 17% year-over-year, and it achieved record profitability, including GAAP profitability for the first time.

Super Micro Computer (SMCI, Financial) experienced a significant drop, losing 25% of its value after announcing it would not be able to file its annual 10-K report on time. The delay is due to the need for more time to complete the assessment of its internal controls over financial reporting.

HP (HPQ, Financial) missed its Q3 Non-GAAP EPS expectations by $0.03, reporting $0.83 per share, but beat revenue expectations with $13.52 billion, a 2.4% year-over-year increase. The company also increased its share repurchase authorization to $10 billion and provided a mixed outlook for Q4.

CVS Health (CVS, Financial), UnitedHealth Group (UNH, Financial), and Cigna Group (CI, Financial) were warned by the U.S. House Committee on Oversight and Accountability to correct statements made during a committee hearing on pharmacy benefit managers or face possible legal action. The committee's findings contradicted the executives' claims about PBM business practices.

Telegram CEO Pavel Durov was charged by French authorities with complicity in various crimes committed through the messaging platform. The charges include 12 counts, and Durov was taken into custody over the weekend.

Veeva Systems (VEEV) reported Q2 Non-GAAP EPS of $1.62, beating expectations by $0.09, with revenue of $676.2 million, a 14.6% year-over-year increase. The company maintained growth despite macroeconomic uncertainties.

Nutanix (NTNX) posted Q4 Non-GAAP EPS of $0.27, beating expectations by $0.07, with revenue of $547.95 million, a 10.9% year-over-year increase. The company provided a positive outlook for fiscal 2025, expecting revenue between $2.435 billion to $2.465 billion.

GuruFocus Stock Analysis

• Why Nu Holdings Still Has Room to Run by Muslim Farooque
• Will Nvidia Continue to Dominate? by Yiannis Zourmpanos
• Salesforce Is a Resilient CRM Leader With Strong Growth and an Attractive Valuation by Lucas Wong
• Apple's High Valuation: A Bull Trap in the Making? by Sheraden Frances