Market Overview
The stock market showed mixed action at the index level, with limited moves in either direction. The S&P 500 traded up as much as 0.5% and as low as 0.5% today. This mixed action was influenced by volatile moves in some mega-cap names and hesitation ahead of tonight's presidential debate and tomorrow's release of the August Consumer Price Index at 8:30 ET.
Key Movers
- Apple (AAPL 220.11, -0.80, -0.4%) traded below yesterday's close throughout the session after disclosing it expects to record a one-time income tax charge of up to approximately $10 billion in its fiscal Q4 due to losing a back-tax ruling in the EU Court of Justice.
- The Dow Jones Industrial Average (-0.2%) lagged behind the S&P 500 and Nasdaq Composite (+0.8%) due to significant declines in its large bank components.
- JPMorgan Chase (JPM 205.56, -11.25, -5.2%) was the worst performer in the DJIA, followed by Goldman Sachs (GS 467.13, -21.44, -4.4%). JPMorgan suggested expectations for 2025 net interest income are too high, while Goldman Sachs projected a 10% decline in Q3 trading revenue.
- Other bank stocks also traded down in response to these headlines and Ally Financial (ALLY 32.67, -6.99, -17.6%) reporting intensified credit challenges.
Sectors Performance
The SPDR S&P Bank ETF (KBE) settled 0.9% lower, and the S&P 500 financial sector closed 1.0% lower. The energy sector was the only other S&P 500 sector to register a decline, falling 1.9% amid decreasing oil prices. WTI crude oil futures dropped 4.1%, or $2.81, to $65.85 per barrel.
Treasuries
Treasuries settled with gains ahead of tomorrow's release of the August CPI. The 10-year yield dropped five basis points to 3.65%, and the 2-year yield settled six basis points lower at 3.61%. Additionally, the $58 billion 3-year note sale met strong demand.
Year-to-Date Performance
- S&P 500: +15.2% YTD
- Nasdaq Composite: +13.4% YTD
- Dow Jones Industrial Average: +8.1% YTD
- S&P Midcap 400: +6.0% YTD
- Russell 2000: +3.5% YTD
Economic Data
Today's economic lineup featured the NFIB Small Business Optimism Survey, which dropped to 91.2 in August from 93.7.
Guru Stock Picks
HOTCHKIS & WILEY has made the following transactions:
- Add in ECVT by 26.37%
Today's News
GameStop Corp. (GME, Financial) experienced a significant drop in post-market trading after reporting disappointing second-quarter sales numbers. The company's revenue fell by 31.2% year-over-year to $798.3 million. While hardware and accessories sales increased to 56.5% of total sales, software sales declined to 26.0%, and collectibles revenue rose to 17.5%. GameStop also reported a net income loss of $17.5 million for Q2, an improvement from the $53.3 million loss a year ago. Despite these challenges, the company managed to reduce its cost of sales to 70.6% of total sales.
Bank of America’s (BAC, Financial) CEO Brian Moynihan commented on Warren Buffett (Trades, Portfolio)'s decision to sell BofA stocks, expressing uncertainty about the rationale behind the move. Buffett, who is BofA's largest shareholder with an 11% stake, made significant investments in the bank during the 2011 financial crisis and increased his shares by 2.5% in 2019. Moynihan noted that they cannot directly ask Buffett for his reasons.
Apple (AAPL, Financial) announced a major upgrade to its AirPods Pro earbuds, integrating hearing aid technology. This move caused shares of European hearing aid developers like Amplifon, Demant, GN Store Nord, and Sonova Holding to drop. Apple's entry into the hearing aid market aims to offer a more affordable alternative to traditional prescription hearing aids, pending regulatory clearances.
Peter Thiel, Chairman of Palantir Technologies (PLTR, Financial), has filed to sell up to $1 billion worth of Palantir shares through his investment vehicle Rivendell 7 LLC. The Rule 10b5-1 plan allows for the sale of approximately 28.6 million shares by the end of 2025. Additionally, Bank of America raised its price target for Palantir to $50 from $30 after the company was included in the S&P 500.
Annaly Capital Management (NLY, Financial) declared a $0.65 per share quarterly dividend, maintaining its forward yield at 12.81%. The dividend is payable on October 31 to shareholders of record as of September 30.
UBS analysts have updated their list of U.S. stocks that would benefit from different election outcomes. They see a 40% probability of a win by Vice President Kamala Harris with a divided Congress and a 35% probability of a "red sweep" with a Trump victory. Investors are advised to consider adding exposure to gold and the Swiss franc to hedge against election-related volatility.
AT&T (T, Financial), Amazon (AMZN, Financial), and Spotify (SPOT, Financial) were listed as top TMT stocks to own for 2024 by UBS analysts. AT&T is expected to sustain EBITDA growth, Amazon is well-positioned for GMV growth, and Spotify is the best choice among media stocks according to UBS.
Dell Technologies (DELL, Financial) announced plans to reduce overall headcount throughout fiscal 2025 as part of cost-cutting measures. The company expects fiscal 2025 revenue to be between $95.5 billion and $98.5 billion.
Dave & Buster's (PLAY, Financial) reported Q2 non-GAAP EPS of $1.12, beating estimates by $0.26. However, revenue of $557.1 million missed expectations by $3.55 million. The company generated $101.8 million in operating cash flow during the quarter.
Goldman Sachs downgraded Morgan Stanley (MS, Financial) to Neutral from Buy, citing risks to the bank's earnings growth. The analyst pointed to a 3% downside risk to Morgan Stanley's 2025 estimated net interest income for its wealth division.
Altimmune (ALT, Financial) shares rose after presenting mid-stage results for its obesity candidate, pemvidutide, at a European medical event. The drug preserved lean mass and showed a beneficial effect on visceral adipose tissue in overweight and obese patients.
Shares of AbbVie (ABBV, Financial) fell as UnitedHealth (UNH) announced plans to remove AbbVie's Humira from some of its formulary lists in favor of biosimilars like Amgen's (AMGN) Amjevita. This decision follows similar moves by Cigna and CVS Health.
Petco Health and Wellness Company (WOOF, Financial) reported Q2 non-GAAP EPS of -$0.02, beating estimates by $0.01, with revenue of $1.52 billion. For fiscal Q3 2024, the company expects net revenue of approximately $1.5 billion and adjusted EPS of -$0.03 to -$0.04.
SLB (SLB, Financial) announced that its lithium project achieved a 96% recovery rate from brine, marking a technical milestone. The company aims to process lithium for batteries at a commercial scale with less environmental impact.
AT&T (T, Financial) CEO John Stankey emphasized the importance of high-quality network infrastructure and fiber technology at the Goldman Sachs Communacopia + Technology Conference. Stankey believes fiber will be crucial for future communications infrastructure.
GuruFocus Stock Analysis
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