Stock index roundup: Semiconductor stocks weigh on Nasdaq as oil, defense stocks rise
3 hours 59 minutes ago
Dow
Chevron (CVX) rose 2.2%, part of the energy sector, which rose about 2% on Thursday.
Johnson & Johnson (JNJ) shares rose 1.5% after the company said Phase 3 clinical trials of its Crohn’s disease drug Tremfya showed positive results.
Honeywell (HON) rose 0.6% after it said it would buy defense contractor CAES Systems for $1.9 billion.
Apple (AAPL) fell 2.2% after surging last week. The company’s shares may be under pressure from a rebalancing at major index funds that will require them to sell more than $10 billion in Apple shares this week.
S&P 500
Gilead Sciences (GILD) reported encouraging results from a Phase 3 trial of its latest HIV prevention drug, sending shares up 8.5%.
Accenture (ACN) rose 7.3% after reporting slightly better-than-expected quarterly profit amid solid growth in AI-related orders, while IT services company EPAM Systems (EPAM) rose 6.8%.
Oil companies were among the index’s best performers, with Hess Corporation (HESS) up 2.7% and Exxon Mobil (XOM) up 2.2%.
Defense companies rose on Honeywell’s CAES contract, with Northrop Grumman (NOC) up 2.1% and Leidos (LDOS) up 1.5%.
Darden Restaurants (DRI) rose 1.5% after its adjusted quarterly profit beat expectations.
Jabil (JBL) fell 11.5% after the company warned of continued “softness” in some of the tech markets it serves.
Nvidia (NVDA) fell 3.5%, relinquishing the title of the world’s most valuable company after taking the title from Microsoft (MSFT) on Tuesday.
Kroger (KR) fell 3.3% after the company said it would suspend share buybacks as part of an effort to reduce leverage in anticipation of its acquisition of rival Albertsons (ACI).
Nasdaq 100
Amazon (AMZN) rose 1.7% after Anthropic, an OpenAI competitor backed by Amazon, rolled out a more advanced version of its Claude chatbot.
Semiconductor stocks fell after a big rally on some encouraging earnings reports and buzz about AI investments. Micron (MU) fell 6.1%, Qualcomm (QCOM) dropped 5.2%, and Broadcom (AVGO) fell 4%.
Gilead shares surge after positive results from HIV drug study
4 hours 43 minutes ago
Biotech company Gilead Sciences (GILD) soared more than 8% in intraday trading Thursday after the company said a Phase 3 clinical trial found its injectable lenacapavir to be 100% effective in preventing HIV infection in women.
Gilead noted that the results were so positive that an independent Data Monitoring Committee (DMC) recommended the company end the blinded phase of the study and offer lenacapavir to all participants.
The trial found zero cases of HIV infection among 2,134 women who received the treatment, compared with several cases in women taking Gilead’s current HIV drugs, Truvada and Descovy. Truvada was the first pre-exposure prophylaxis (PrEP) treatment approved by the Food and Drug Administration (FDA).
Gilead’s shares rose 8.5% in late trading on Thursday on the news. Despite Thursday’s gains, the company’s shares are still down nearly 16% so far this year.
–Bill McCall
Honeywell Expands Defense Portfolio with $1.9B CAES Systems Acquisition
5 hours 26 minutes ago
Shares of conglomerate Honeywell International (HON) rose on Thursday after the company said it would buy aerospace and defense company CAES Systems Holdings from private equity firm Advent International for about $1.9 billion.
Honeywell said the all-cash transaction “strengthens Honeywell’s defense technology solutions across land, sea, air and space, including new electromagnetic defense solutions for end-to-end radio frequency (RF) signal management.”
The company added that the acquisition will strengthen its existing platforms, such as the F-35 fighter jet and the Navy’s development of the SPY-6 radar, improving its position in several key areas.
Honeywell said it expects the transaction to close in the second half of 2024 and be accretive to adjusted earnings per share (EPS) “during the first full year of ownership.”
Honeywell shares were up 1% to $215 on Thursday afternoon, their highest price in nearly a year and a half.
–Bill McCall
Semiconductor stocks sell off after big rally in 2024
6 hours 8 minutes ago
Semiconductor stocks sold off on Thursday after a big rally fuelled by surging demand for artificial intelligence infrastructure.
Micron (MU) shares were down more than 5% on Thursday afternoon. The stock had risen nearly 60% in the three months leading up to Tuesday’s close. The stock got a boost earlier this week after Bank of America raised its price target, calling the company “the leading U.S. memory company.”
Broadcom (AVGO) shares rose 27% in the month before Thursday’s trading began when the company reported quarterly earnings and better-than-expected sales. The stock has risen 27% in the month before Thursday’s trading. The stock’s rally this year, from about $1,100 in January to $1,500 before the earnings report, was one reason the chipmaker followed Nvidia’s lead and announced a 10-for-1 stock split on the earnings call. The company’s shares fell more than 3% on Thursday.
And Nvidia, which on Tuesday overtook Microsoft as the world’s largest company, fell as much as 4% on Thursday, though its shares had recovered slightly by mid-afternoon to trade down less than 2%.
Kroger halts share buybacks as it seeks approval for Albertsons acquisition
7 hours 45 minutes ago
Kroger (KR) reported first-quarter earnings that beat analyst expectations and announced it would suspend share buybacks while it waits for regulatory approval for its $24.6 billion acquisition of rival Albertsons (ACI).
Kroger reported sales of $45.27 billion, up 0.2% from a year ago and beating analyst estimates. Same-store sales, excluding gasoline, rose 0.5%. Kroger added that digital sales grew more than 8% and delivery and pickup options grew double digits.
Diluted earnings per share (EPS) were $1.29, down from $1.32 in the year-ago quarter and below analyst expectations, but adjusted EPS of $1.43 beat expectations.
The supermarket chain said it was putting share buybacks on hold “to prioritise debt reduction” ahead of the merger, which is being challenged by regulators over concerns the deal could limit competition.
Kroger shares have risen more than 10% since the beginning of the year but were down more than 2% as of early Thursday afternoon.
–Bill McCall
Darden Restaurants, Ruth Chris sales boost results as adjusted EPS beats expectations
8 hours 30 minutes ago
Darden Restaurants (DRI) shares rose on Thursday after the company reported better-than-expected adjusted earnings, benefiting from its acquisition of Ruth’s Chris Steak House.
The company, which operates Ruth’s Chris, Olive Garden and other restaurants, reported fourth-quarter fiscal 2024 adjusted earnings per share of $2.65, beating the consensus estimate of $2.61 from analysts surveyed by Visible Alpha. Revenue rose 6.8% year over year to $2.96 billion, slightly below expectations.
Darden attributed the gain to the opening of 80 new Ruth’s Chris stores and 37 other locations, which Darden acquired last year for about $715 million.
Excluding Ruth’s Chris, same-store sales were flat compared to last year. Sales at Olive Garden, the company’s largest restaurant, were down 1.5%, and sales at fine dining restaurants were down 2.6%. Same-store sales at LongHorn Steakhouse increased 4.0%.
Darden Restaurants shares were up more than 2% midday Thursday but are down more than 5% this year.
–Bill McCall
Accenture shares soar as AI-related orders surge
8 hours 55 minutes ago
Shares of Accenture (ACN) rose on Thursday after the consulting giant reported third-quarter results that beat expectations and showed a surge in artificial intelligence (AI) orders.
Accenture reported third-quarter revenue of $16.47 billion, down from $16.56 billion in the third quarter of 2023 and below analysts’ expectations of $16.55 billion, according to estimates compiled by Visible Alpha.
However, net income attributable to the company beat expectations, with Accenture reporting profits of $1.93 billion, or $3.04 per share, beating analysts’ expectations of $1.91 billion, or $3.01 per share.
The company said its AI efforts are paying off, with more than $900 million in new generative AI bookings during the quarter, bringing Accenture’s total AI bookings to $2 billion this fiscal year.
But Accenture lowered its full-year guidance for diluted earnings per share to $11.29 to $11.44 from $11.41 to $11.64. The company had previously said it was facing an “uncertain macro environment” that was causing clients to cut back on some discretionary spending.
Accenture shares rose 7%, but are still down more than 14% so far this year.
-Aaron McDaid
Nvidia profits outperform European stock markets
9 hours 54 minutes ago
Nvidia (NVDA) shares continued to rise on Thursday, helping the AI chipmaker widen its lead over Microsoft (MSFT), which on Tuesday overtook Microsoft to become the world’s most valuable company.
Nvidia’s rise to become the world’s largest company has been astounding, to say the least. The company’s market cap tripled last year and has already doubled this year. According to a Deutsche Bank memo distributed on Thursday morning, its market cap has increased by $1 trillion in the 23 trading days since May 20. That’s more than the market cap of Warren Buffett’s famed Berkshire Hathaway (BRK.B).
And with a market capitalization of more than $3.4 trillion, Nvidia has in recent weeks become larger than the stock markets of Germany, France and the U.K. As of Thursday, the only countries with stock markets more valuable than Nvidia’s were India, Japan, China and, of course, the United States.
Analysts at Banc of America Securities wrote in a note on Thursday that it’s reasonable to expect some profit-taking in the near term, given the company’s stock price has risen sharply. But the volatility is likely to be short-lived, they wrote, as the company’s fundamentals are strong and its valuation is relatively attractive.
Adoption of AI hardware is still in its early stages, and Nvidia should benefit from robust demand as it rolls out its next-generation Blackwell system later this year. Moreover, under Bank of America’s bull scenario, Nvidia is currently trading at a price-to-earnings multiple of about 30, which is not too high compared to the overall S&P 500’s P/E ratio of 23.6 and on par with the Nasdaq 100’s ratio of 31.7.
–Colin Laidley
Dell stock in the news to provide server racks for xAI supercomputer
10 hours 21 minutes ago
Dell (DELL) shares have risen 10% over the past two sessions, rising on Thursday after Elon Musk announced that his artificial intelligence (AI) startup xAI will use the hardware giant’s server racks to build a supercomputer.
“To be exact, Dell is assembling half of the racks that will go into the supercomputer that xAI is building,” Musk said in a post on the social media platform on Wednesday. When asked about xAI’s second partner, the OpenAI co-founder replied, “SMC,” referring to AI server maker Supermicro Computer Inc. (SMCI).1
Musk’s recent comments about Dell have further increased bullish sentiment towards the company’s stock.
Dell shares have been in a long-term uptrend ever since their 50-day moving average (MA) rose above their 200-day MA, creating a golden cross chart pattern. Recently, shares fell after the server maker missed Wall Street’s quarterly expectations, but soon found buying interest around the horizontal line and the 50-day MA.
Going forward, if the stock maintains its upward momentum, investors should keep an eye on how it reacts to the all-time high (ATH) of $179.70 it reached last month. A convincing breakout above this volume-backed, technically significant level could see the stock continue to rise.
Dell shares are up nearly 6% and have more than doubled this year.
–Tim Smith
Stock futures mostly up
11 hours 36 minutes ago
Dow futures were flat in premarket trading Thursday.
S&P futures rose 0.3%.
Nasdaq futures rose 0.5%.
