:max_bytes(150000):strip_icc()/MarketBlogImage-final-6ac06c7b9250446a8e86c566b11e02e1.png "Markets News, June 21, 2024: Nasdaq, S&P 500 Dip as Nvidia, Chip Rally Lose Steam")
Stock Indexes Wrap: Nvidia, Chipmakers Lag as Other Tech Giants Advance
3 hr 34 min ago
The Dow
The index’s tech components were mostly higher even as an AI sell-off weighed on the broader IT sector. Intel (INTC) gained 1.5%, while Salesforce (CRM) rose 1.3% and Microsoft (MSFT) gained 0.9%.
Boeing (BA) ticked up 0.3% amid reports it was nearing a deal to acquire supplier Spirit AeroSystems (SPR).
American Express (AXP) inched 0.1% higher after acquiring restaurant reservation company Tock.
JPMorgan Chase (JPM) and Goldman Sachs (GS) slid after U.S. regulators identified “shortcomings” in their respective living wills. Goldman lost 1.7% and JPMorgan shed 1.2%.
Apple (AAPL), in the green most of the day, tumbled 1% in the session’s final minutes, possibly a byproduct of today’s triple witching or a major index fund’s monumental rebalancing.
S&P 500
FactSet Research (FDS) gained 3.8% after reporting better-than-expected quarterly results and raising its full-year guidance.
Gilead (GILD) rosę 3.2%, gaining for a second day after announcing its injectable lenacapavir was 100% effective in preventing HIV infection in women.
Nvidia (NVDA) fell 3.2%, slipping for a second day after briefly surpassing Microsoft as the world’s most valuable company on Tuesday.
Hewlett Packard Enterprise (HPE) slid 2.8%, following Nvidia and other AI-related stocks lower. Chip giants Broadcom (AVGO) and Micron (MU) shed 4.4% and 3.2%, respectively.
Capital One Financial (COF) slipped 1% amid reports it had settled a lawsuit with Walmart (WMT) related to their credit card partnership.
Nasdaq 100
Alphabet (GOOGL) rose 1.9% to close at a record high.
Amazon (AMZN) gained 1.6%, bringing it about $30 billion away from a $2 trillion market cap.
Chipotle Stock Stalls Ahead of 50-for-1 Split
5 hr 3 min ago
Shares in fast-casual restaurant chain Chipotle Mexican Grill (CMG) were flat Friday afternoon following a 6.2% decline on Thursday, their largest daily percentage loss since last July.
Given that the stock has gained more than 40% since the start of the year and has more than doubled since the start of 2023, institutional investors may be booking some profits ahead of a 50-for-1 stock split that takes effect next Wednesday.
Since finding support around the 200-day moving average (MA) in October last year, CMG shares have continued to trend sharply higher, with buyers stepping in to buy pullbacks to the 50-day MA.
Although the price broke above a period of consolidation to a new record high earlier this week, Thursday was a wide-ranging day and the close below the breakout point on the highest trading volume since late March indicates a potential bull trap.
Moreover, as the stock made a higher high this week, the relative strength index (RSI) made a lower high, creating a bearish divergence, a signal that suggests weakening momentum.
Read more about where the stock may find buying support heading into next week’s split.
Stocks To Watch Friday
6 hr 3 min ago
FactSet Research Systems (FDS) shares rose as the financial data provider reported better-than-anticipated earnings and lifted its outlook on higher revenues from institutional asset managers, asset owners, partners, and corporates.
Shares of Sarepta Therapeutics (SRPT) soared after the Food and Drug Administration (FDA) gave the biotech’s treatment for a rare muscle disease in children expanded approval. The decision also boosted shares of Catalent (CTLT), which has a contract with Sarepta to manufacture the drug.
Shares of Boeing (BA) supplier Spirit AeroSystems (SPR) surged following reports that Boeing is near a deal to buy the company. Boeing shares edged higher as well.
Capital One Financial (COF) shares lost ground after the financial firm settled a lawsuit brought by Walmart (WMT) over their credit card partnership. Walmart shares were higher.
Shares of American Express (AXP) fell as the credit card provider purchased the Tock restaurant reservation system for $400 million from Squarespace (SQSP). Squarespace shares advanced.
Allstate (ALL) shares dropped after the insurer estimated its catastrophic losses in May at $1.4 billion, nearly three times greater than in April.
Narrowing Breadth Raises Risk of S&P 500 Pullback
7 hr 19 min ago
The S&P 500 has set record after record in the past month, but pop the hood and things aren’t looking quite so good.
The advance-decline (A/D) line, a measure of market breadth, has been declining since the end of May, even as the S&P 500 has soared to new heights, according to a note from LPL Financial Friday.
Together, a soaring S&P 500 and declining A/D line, as shown in the chart from LPL Financial below, can be cause for concern on Wall Street. It indicates gains by a handful of large stocks are masking softness among smaller stocks, potentially signaling weakening investor sentiment.
LPL Financial
Lately, the stocks driving the S&P 500’s returns have been the $3 trillion tech giants Microsoft (MSFT), Apple (AAPL), and Nvidia (NVDA), all of which surged to all-time highs in recent weeks. They have been joined by a cadre of smaller mega caps, including Broadcom (AVGO), Oracle (ORCL), and Adobe (ADBE), buoyed by earnings reports that demonstrated strong demand for their AI offerings.
But the rest of the market has languished. As of Thursday’s close, Information Technology (+10.7%) was the only sector to have outperformed the S&P 500 (+3.7%) so far this month. The only sectors within one percentage point of the broader index were Consumer Discretionary (+3.3%) and Communication Services (+2.7%), sectors dominated by AI giants Amazon (AMZN), Alphabet (GOOGL), and Meta (META).
The A/D line divergence noted earlier does not, LPL Financial’s Chief Technical Strategist Adam Turnquist points out, mean the bull market is over, “but it does point to elevated risk the broader market could be due for a potential pause or pullback.”
FactSet Stock Rises on Q3 Profit Beat, Raised Guidance
8 hr 27 min ago
FactSet Research Systems (FDS) shares advanced Friday after the financial data provider posted significantly better-than-expected profit and boosted its full-year guidance on higher revenues from institutional asset managers, asset owners, partners, and corporates.
The company posted fiscal 2024 third-quarter adjusted earnings per share (EPS) of $4.37, well above analysts’ consensus estimate of $3.90 compiled by Visible Alpha. Revenue rose 4.3% year-over-year to $552.7 million, basically in line with forecasts. Organic revenue was up 4.5%.
Adjusted operating margin jumped to 39.4% from 36.0% a year earlier, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $239.9 million, an increase of 16.9%.
The company’s Annual Subscription Value (ASV) plus professional services came in at $2.22 billion, 4.7% higher. The number of FactSet users climbed by 1,662 to 208,140. The company noted the gains came from all firm types except banking, and was driven mainly by wealth clients.
FactSet lifted its full-year adjusted EPS outlook to a range of $16.00 to $16.40, up from the previous $15.60 to $16.00. However, it sees revenue of $2.18 billion to $2.19 billion, down from the earlier $2.20 billion to $2.21 billion.
FactSet shares rose 3% but are down more than 10% so far this year.
Sarepta Therapeutics Soars on Expanded Approval for Its Muscular Dystrophy Drug
9 hr 30 min ago
Sarepta Therapeutics (SRPT) shares soared Friday, a day after the Food and Drug Administration (FDA) allowed expanded use of the biotech’s treatment for a rare muscle disease in children, which especially affects boys.
The company said its drug, Elevidys, was given traditional approval for patients who are at least 4 years old and suffer from Duchenne muscular dystrophy (DMD) with a confirmed mutation in the DMD gene and can walk.
Sarepta said regulators granted accelerated approval for use in those who cannot walk, and continued approval “may be contingent upon verification of clinical benefit in a confirmatory trial.” The company added that a Phase 3 study to make that confirmation is currently underway.
The FDA gave accelerated approval for the gene-therapy medicine in 4- and 5-year-olds last year, despite some questions about its efficacy.
Sarepta shares surged 40%, bringing their year-to-date gain to almost 80%.
Gold Regains Luster as Investors Eye Rate Cut—Watch These Key Price Levels
10 hr 57 min ago
Gold remains in focus on Friday after climbing more than 1% Thursday to a two-week high, as recent lackluster economic data has boosted hopes among investors that the Federal Reserve will be in a position to cut interest rates later this year.
U.S. government reports last week indicated that inflation is moderating, while data on Tuesday this week showed slowing retail sales. The data paint a picture of cooling economic activity, indicating that the Fed’s policy of high interest rates to combat inflationary pressures has worked as intended.
According to the CME FedWatch Tool, which forecasts rate movements based on fed funds futures trading data, market participants are currently pricing in a 66% chance of a September rate cut.
Investors typically view a decline in interest rates as a positive catalyst for gold prices as it puts downward pressure on the Greenback, making the dollar-priced commodity cheaper for buyers who are using foreign currencies, helping to stimulate demand. Lower rates also reduce the opportunity cost of holding non-yielding assets, such as gold, compared to lower risk investments like fixed-income securities.
Taking a look at the weekly chart, the yellow metal’s price broke out from a year-long trading range in early March. After initially continuing to trend higher, the price has consolidated within a narrow rectangle pattern since mid-April, potentially indicating a short pause in momentum before another move to the upside.
If the gold price breaks above the rectangle’s top trendline to a new record high, investors can determine a price target using the measuring principle. To do this, we calculate the distance of the move that preceded the pattern in dollars and add that amount to the breakout point. In this case, we add $448 to $2,414 that projects a price target of $2,862. Conversely, If the price breaks down from the rectangle, keep an eye on the $2,080 level, an area likely to find support from the prior trading range’s top trendline.
Stock Futures Mixed
11 hr 31 min ago
Dow futures were flat in premarket trading Friday.
S&P futures were down 0.2%.
Nasdaq futures were down 0.2%.
