Stock Index Roundup: Big Tech Companies Lead Stock Indexes, But Nvidia and AI darlings lag
July 5, 2024, 4:16 PM EDT
Dow
Tech stocks led the index on Friday, with Intel (INTC) rising 2.5%, while Apple (AAPL) and Microsoft (MSFT) rose 2.2% and 1.5%, respectively, to close at all-time highs.
Financial stocks were weaker, with JPMorgan Chase (JPM) down 1.3% and Travelers Company (TRV) down 0.9%.
S&P 500
Meta (META) surged 5.9%, leading a broader tech rally, while Alphabet (GOOGL) rose 2.6%.
Advanced Micro Devices (AMD) rose 4.9% after New Street Research named the company a top pick in its review of AI stocks.
Paramount (PARA) rose 3.1%, extending its gains after reports earlier this week that merger talks with Skydance Media had resumed.
Gold miner Newmont (NEM) rose 2.4% as gold prices rose, helped by a weaker U.S. dollar and the possibility of central bank gold purchases.
Tesla (TSLA) rose 2.1%, finally erasing its year-to-date losses that had at one point exceeded 42%.
Netflix (NFLX) rose 1.2% after the Motion Picture Association of Canada filed a lawsuit on Thursday for the company and other streamers to force a judicial review of a proposed tax on streaming revenues that would go towards paying for local news.
Southwest Airlines (LUV) fell 5.7% as the market continued to digest the “poison pill” implemented earlier this week.
Several AI stocks that have been in the spotlight in recent months fell on Friday, including First Solar (FSLR), down 3.9%, and utility company Vistra (VST), down 2.6%.
Nvidia (NVDA) fell 1.9% after New Street downgraded it to Neutral from Buy in its aforementioned AI roundup, citing valuation concerns and High Street expectations.
Nasdaq 100
Arm Holdings (ARM) jumped 7.7%, leading the index higher.
The semiconductor stocks that had been the strongest recently missed out on Friday’s gains, with Micron (MU) down 3.8% and Broadcom (AVGO) down 1.5%.
Retail investors hold back on purchases ahead of earnings season
July 5, 2024, 3:08 PM EDT
Individual investors are not increasing their investments ahead of the upcoming earnings season as they have in past quarters.
“While investors typically become active ahead of earnings releases to try their luck with their favorite stocks, there are no signs of this trend,” Vanda Research, which tracks retail investor flows, said in a report earlier this week.
As an example, the firm pointed to Nvidia (NVDA), which is up more than 150% this year but has been flat over the last month. “NVDA’s retail bull market appears to have peaked,” it said.
Retail investors had been “heavily overweight” Tesla (TSLA) stock, but with the stock’s price up nearly 50% over the past three months, traders are finally able to lock in profits.
But, Vanda wrote, “If the stock continues to perform well, we expect retail investors to rally back into TSLA and support the stock price at least until it reaches the $250 level.”
-Andrew Kessel
Mt. Gox repayments disrupt cryptocurrency market, Bitcoin falls
July 5, 2024, 2:22 PM EDT
Prices of major cryptocurrencies, as well as shares of Coinbase Global (COIN) and MicroStrategy (MSTR), plummeted on Friday after the collapsed crypto exchange Mt. Gox began paying back creditors.
Nobuaki Kobayashi, Mt. Gox’s bankruptcy trustee, said, “In accordance with the rehabilitation plan, we have repaid some of our rehabilitation creditors in Bitcoin and Bitcoin Cash through some designated virtual currency exchanges, etc.”
He also noted that other creditors would be repaid “promptly” if certain conditions were met, including that they be repaid “safely and securely.”
Anticipation of the Mt. Gox news, which Kobayashi suggested would happen in July last month, has already begun to rattle the cryptocurrency market.
Today’s announcement sent Bitcoin plummeting to $54,000, its lowest since February.
-Bill McCall
Can enthusiasm for AI sustain ‘The Magnificent Seven’s’ momentum?
July 5, 2024, 1:30 PM EDT
The artificial intelligence (AI) craze has propelled six of the seven most powerful stocks to new all-time highs in recent weeks.
Looking ahead to the second half of the year, experts have warned that the group, which includes Microsoft (MSFT), Amazon (AMZN), Meta (META), Apple (AAPL), Alphabet (GOOGL), Nvidia (NVDA), and Tesla (TSLA), may have a harder time meeting investor expectations, raising questions about how long big tech companies’ AI momentum can last.
Steve Sosnick, chief strategist at Interactive Brokers, said: Investopedia He expressed concern about the long development timeline for AI, which means that it could be years before big tech companies see a return on their AI investments.
Goldman Sachs analysts expect second-quarter profits from Nvidia, Meta, Alphabet, Amazon, Microsoft and Apple to rise 30% from a year ago. Disappointing expectations “are likely to be hard-hitting,” the analysts said.
That could have a knock-on effect across the market: In the first half of this year, the performance of Nvidia, Meta, Alphabet, Amazon and Microsoft accounted for 62% of the S&P 500’s return.
“For better or worse, we live or die with them,” Sosnick said.
-Naomi Buchanan
Macy’s stock price soars on reports of increased takeover bid
July 5, 2024, 12:31 PM EDT
Macy’s (M) shares surged in midday trading Friday on signs that activist investor Arkhouse Management and its partner Brigade Capital Management had once again turned around their takeover bid for the largest U.S. department store chain.
The Wall Street Journal The two companies reported Wednesday evening that they had increased their takeover offer for Macy’s by about $300 million to $6.9 billion. The price will be $24.80 per share for shares not already held by Arkhouse and Brigade, a 38.3% premium to Macy’s closing price on Wednesday.
The two companies initially offered Macy’s $21 a share in December, but the board rejected the offer, after which Arkhouse and Brigade launched a proxy fight that was resolved in March when Macy’s approved two directors who were backed by investors after Arkhouse and Brigade offered $24 a share.
Macy’s shares were up nearly 10% to $19.69 as of early afternoon Friday. Forecasts for 2024 are down about 2%.
-Bill McCall
Post-Tesla delivery rally erases year-to-date losses
July 5, 2024, 11:45 a.m. EDT
Tesla shares rose for the eighth consecutive trading day on Friday, bringing the electric car maker’s shares into positive territory this year after a lackluster first half of the year.
Tesla shares fell 42% from the start of the year through mid-April as the company struggled with sluggish sales and shrinking profit margins, and doubts about whether the company would invest heavily in artificial intelligence and develop a cheaper car, long a key goal of CEO Elon Musk, also weighed on the stock.
But the company’s shares have been soaring since last week as hopes began to grow that second-quarter shipments would beat expectations. On Tuesday, the bulls were proven right when the company announced that its year-over-year shipment decline was smaller than Wall Street had expected. The announcement sent the company’s shares up more than 25% this week.
Before Friday’s rally, Tesla was the only stock in the Magnificent Seven that was trading lower than it had been since the start of the year. Apple (AAPL) also started the year poorly, but by mid-May it had recovered from its first-quarter loss and has since rallied further after the launch of its AI product, Apple Intelligence.
U.S. job growth slows in June, unemployment rate rises to 4.1%
July 5, 2024, 11:00 AM EDT
Treasury yields fell on Friday after data showed U.S. job growth slowed in June and the unemployment rate rose to 4.1%, raising hopes on Wall Street that the data could give the Federal Reserve confidence to start cutting interest rates in the coming months.
U.S. employers added 206,000 jobs in June, according to data released Friday by the Bureau of Labor Statistics. Economists surveyed The Wall Street Journal and Dow Jones Newswires The employment report projected that 200,000 new jobs were added in June and the unemployment rate would remain at 4%.
The BLS also sharply revised down job gains over the past two months, dropping by 54,000 to 218,000 in May and dropping by 57,000 to 108,000 in April.
Some Fed officials have said they are watching the labor market more closely because inflation has been trending lower and a sudden change in the unemployment rate could prompt the central bank to move more quickly to cut interest rates.
-Terry Lane
Ethereum chart levels in focus as liquidation continues
July 5, 2024, 10:11 a.m. EDT
Ether (ETH), the world’s second-largest cryptocurrency by market cap, fell sharply early Friday to trade near a two-month low, part of a broader sell-off across the asset class on concerns that coins from defunct Japanese crypto exchange Mt. Gox could flood the market.
Moreover, data from the analytics site shows that the sell-off has intensified as around $180 million in Ethereum long positions have been liquidated over the past two days. Coin GlassIt was the most forced two-day sales since mid-April.
Ether has been mostly range-bound between $3,900 and $2,900 since hitting record highs in early March, forming key support and resistance levels. However, the cryptocurrency dipped below its closely watched 200-day moving average on Thursday and dipped below $2,900 on Friday morning.
The first area to watch is near the $2,600 level, which could offer support near the January peak that formed part of the cryptocurrency’s overall uptrend from October to March. A close below this level could send Ethereum falling to the $2,150 level, which forms a horizontal line connecting the price series from November to early January.
A larger retracement in the asset class could trigger a drop below the key psychological level of $2,000 towards $1,950, in which case buyers would likely emerge near the horizontal line that stretched from April to November of last year.
-Timothy Smith
Stocks that move big in pre-market trading
July 5, 2024, 9:25 a.m. EDT
Benefits:
- Teck Resources (TECK): The mining company’s shares rose nearly 4% after Canada approved Glencore’s $6.9 billion acquisition of its coal mining operations. Teck plans to use the proceeds for share buybacks and investments in its copper business.
- Tesla (TSLA): The electric car maker’s shares rose about 2% after a strong week on reports that several Chinese state-owned companies have bought the company’s vehicles. Tesla’s struggles to compete with Chinese rivals have weighed heavily on the stock this year.
loss:
- MicroStrategy (MSTR): Shares of the software company, which has bet a large chunk of its assets on Bitcoin, fell 7% on the crypto sell-off, which was weighed down by reports that the administrator for bankrupt exchange Mt. Gox has begun paying creditors nearly $9 billion in assets. Cryptocurrency exchange Coinbase (COIN) and digital trading platform Robinhood (HOOD) also fell.
- Li Auto (LI): Shares in the Chinese electric car maker fell 3% after European regulators confirmed on Thursday they would increase tariffs on Chinese-made TVs starting Friday.
Dow futures rise following S&P and Nasdaq after jobs report
July 5, 2024, 8:57 a.m. EDT
Dow futures surged Friday morning after the release of the jobs report showed the unemployment rate rose slightly in June as wage growth slowed. The data bolstered optimism that the Federal Reserve would be in a position to cut interest rates as early as September.
Stock futures little changed ahead of jobs report
July 5, 2024, 8:25 a.m. EDT
Futures contracts linked to the Dow Jones Industrial Average were down about 0.1% in premarket trading on Friday.
S&P 500 futures gave up the previous day’s gains and were flat.
Nasdaq 100 futures were steady, up about 0.1%.
