Stock Indexes Wrap: Big Tech Leads Indexes Higher as Nvidia, AI Darlings Lag

July 05, 2024 04:16 PM EDT

The Dow

Tech stocks led the index on Friday, with Intel (INTC) gaining 2.5%. Apple (AAPL) and Microsoft (MSFT) advanced 2.2% and 1.5%, respectively, to close at record highs. 

Financials lagged, including JPMorgan Chase (JPM), down 1.3%, and Travelers Co. (TRV), down 0.9%. 

S&P 500

Meta (META) surged 5.9%, leading the relatively broad tech rally. Alphabet (GOOGL) climbed 2.6%. 

Advanced Micro Devices (AMD) added 4.9% after New Street Research named it a top pick in its review of AI stocks. 

Paramount (PARA) rose 3.1%, continuing to climb after reports earlier this week that its merger talks with Skydance Media were back on. 

Gold miner Newmont (NEM) gained 2.4% as the price of gold advanced, buoyed by a slipping U.S. dollar and possibly central bank purchases. 

Tesla (TSLA) advanced 2.1%, finally erasing its year-to-date losses, which at one point exceeded 42%.

Netflix (NFLX) advanced 1.2% as the Motion Picture Association-Canada went to bat for it and other streamers on Thursday by filing to force a judicial review of a proposed tax on streaming revenues that would be used to pay for local news. 

Southwest Airlines (LUV) slid 5.7% as markets continued to digest the “poison pill” it adopted earlier this week. 

Several stocks touted in recent months as AI plays stumbled on Friday, including First Solar (FSLR), down 3.9%, and utility Vistra (VST), down 2.6%. 

Nvidia (NVDA) shed 1.9% as New Street downgraded it to neutral from buy in its previously mentioned AI roundup, citing valuation concerns and high Street expectations. 

Nasdaq 100

Arm Holdings (ARM) led the index higher, surging 7.7%. 

The best-performing semiconductor stocks of late missed out on Friday’s rally. Micron (MU) slipped 3.8% and Broadcom (AVGO) shed 1.5%. 

Retail Investors Are Dialing Back Buying Ahead of Earnings Season

July 05, 2024 03:08 PM EDT

Retail traders haven’t been upping their investments ahead of the coming earnings season the way they have in past quarters.

“Although investors typically become more active before earnings reports, trying their luck with their favorite stocks, we are not seeing signs of this trend,” Vanda Research, which tracks retail investment flows, said in a report earlier this week.

The firm pointed to Nvidia (NVDA), whose shares are up more than 150% year-to-date but have leveled off over the last month, as one example. “The peak of retail bullishness for NVDA seems to be behind us,” the firm said.

Retail investors have been “heavily overweight” in Tesla (TSLA) shares, but traders could finally engage in some profit-taking with the share price up nearly 50% over the past three months.

However, “if the stock continues to gain positive momentum, we expect retail investors to rotate back into TSLA and support the stock” until at least the $250 level, Vanda wrote.

–Andrew Kessel

Bitcoin Falls as Mt. Gox Repayment Roils Crypto Market

July 05, 2024 02:22 PM EDT

Prices for major cryptocurrencies, as well as shares of Coinbase Global (COIN) and MicroStrategy (MSTR), slumped Friday as collapsed crypto site Mt. Gox began paying back creditors.

Nobuaki Kobayashi, the trustee for the Mt. Gox bankruptcy estate, said that the estate “made repayments in Bitcoin and Bitcoin Cash to some of the rehabilitation creditors through a part of the Designated Cryptocurrency Exchanges etc. in accordance with the Rehabilitation Plan.”

He noted that other creditors would be “promptly” repaid when certain conditions were met, among them that they can be made “safely and securely.”

The anticipation of the Mt. Gox news, which Kobayashi signaled last month would happen in July, had already begun to roil the crypto market.

Today’s announcement sent bitcoin tumbling as low as $54,000, its lowest since February.

–Bill McColl

Can AI Enthusiasm Sustain the Magnificent 7’s Momentum?

July 05, 2024 01:30 PM EDT

Enthusiasm for artificial intelligence (AI) has driven six of the Magnificent 7 stocks to record highs in recent weeks.

Looking to the second half of the year, experts warn investors’ lofty expectations for the group—made up of Microsoft (MSFT), Amazon (AMZN), Meta (META), Apple (AAPL), Alphabet (GOOGL), Nvidia (NVDA) and Tesla (TSLA)—could become more difficult to meet, raising questions about how long big tech’s AI-fueled momentum can last.

Steve Sosnick, the chief strategist at Interactive Brokers, in an interview with Investopedia expressed concern about AI’s long development timelines, which means returns on big tech companies’ AI spending could be years away.

Goldman Sachs analysts project that Nvidia, Meta, Alphabet, Amazon, Microsoft, and Apple will see second-quarter earnings grow 30% year-over-year. Disappointments, the analysts said, are “likely to be heavily punished.”

That could take a toll on the broader market. In the first half of the 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’re going to live or die with them,” said Sosnick.

–Naomi Buchanan

Macy’s Stock Soars on Reported Increased Takeover Offer

July 05, 2024 12:31 PM EDT

Shares of Macy’s (M) soared in intraday trading Friday on indications activist investor Arkhouse Management and partner Brigade Capital Management have again sweetened their offer for the biggest U.S. department store chain.

The Wall Street Journal reported Wednesday evening that the firms raised their bid for Macy’s by about $300 million to $6.9 billion. The price—$24.80 per share for the stock Arkhouse and Brigade don’t already own—would be a 38.3% premium to Macy’s closing price Wednesday. 

The two companies initially presented Macy’s with a $21-per-share deal in December, which the board rejected. That led Arkhouse and Brigade to launch a proxy fight that ended when Macy’s approved two board members backed by the investors, after Arkhouse and Brigade came back in March with a $24-per-share bid.

Macy’s shares were up nearly 10% at $19.69 early Friday afternoon. They are down about 2% for 2024.

–Bill McColl

Tesla’s Post-Delivery Rally Erases YTD Losses

July 05, 2024 11:45 AM EDT

Shares of Tesla rose for an eighth straight session on Friday, lifting the EV maker’s stock into positive territory for the year after a dismal first half. 

Tesla stock slumped as much as 42% between the start of the year and mid-April as the company struggled with sluggish sales and shrinking margins. Doubts about whether the company would develop a low-cost vehicle—long a primary goal of CEO Elon Musk—and invest heavily in artificial intelligence also weighed on the stock. 

But the stock has been on a tear since last week when anticipation of better-than-expected second-quarter deliveries began to build. The bulls were proved right on Tuesday when the company reported a smaller year-over-year delivery decline than Wall Street had forecast. That report powered the stock’s more than 25% gain this week. 

Before advancing Friday, Tesla was the only Magnificent Seven stock trading below its price at the start of the year. Apple (AAPL) also started the year on an off note, but had recovered its first-quarter losses by mid-May and has since charged even higher on the unveiling of its AI offering, Apple Intelligence.

US Job Growth Slowed in June as Unemployment Rate Rose to 4.1%

July 05, 2024 11:00 AM EDT

Treasury yields fell Friday after data showed U.S. job growth slowed in June, while the unemployment rate ticked up to 4.1%, raising hopes on Wall Street that the data could help give the Federal Reserve the confidence to start cutting its benchmark interest rate 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 by the Wall Street Journal and Dow Jones Newswires expected the jobs report to show 200,000 new positions added in June, with the unemployment rate staying at 4%.

The BLS also significantly lowered the job growth figures for the previous two months. The May jobs figure was cut by 54,000 to 218,000, while the April number was cut by 57,000 to 108,000.

Some Fed officials have said now that inflation is moving lower, they are looking more closely at the labor market, as sudden shifts in unemployment levels could move the central bank to act more quickly on interest rate cuts.

–Terry Lane

Watch These Ether Chart Levels Amid Rising Liquidations

July 05, 2024 10:11 AM EDT

Ether (ETH), the world’s second-largest cryptocurrency by market capitalization, fell sharply early Friday to trade near a two-month low, part of a broad sell-off across the asset class sparked by fears the market could soon be flooded with coins from defunct Japanese exchange Mt. Gox.

Moreover, selling has intensified due to Ether long position liquidations totaling nearly $180 million over the past two days, according to data from analytics site Coinglass, the highest two-day period of forced sales since mid-April.

Since topping out in early March, Ether has remained mostly rangebound between $3,900 and $2,900 to establish key support and resistance levels. However, the cryptocurrency broke beneath the closely watched 200-day moving average on Thursday and dropped below $2,900 Friday morning.

The first area to watch sits around $2,600, a region that may provide support near a peak in January that formed part of the cryptocurrency’s broader uptrend between October and March. A close beneath this level could see Ether fall to the $2,150 area, where a horizontal line connects a series of prices from November to early January.

A deeper retracement in the asset class could trigger a decline below the key $2k psychological level to $1,950, where buyers would likely emerge near a horizontal line extending from April to November last year.

–Timothy Smith

Stocks Making the Biggest Moves Premarket

July 05, 2024 09:25 AM EDT

Gains:

• Teck Resources (TECK): Shares of the mining company rose nearly 4% after Canada approved Glencore’s $6.9 billion acquisition of its coal mining business, the proceeds from which Teck expects to spend on buybacks and investments in its copper business. 
• Tesla (TSLA): The electric vehicle maker’s stock continued its winning week, rising about 2% amid reports that several Chinese state-owned firms had purchased its vehicles. Tesla’s struggle to compete with Chinese rivals has been a major overhang for the stock this year. 

Losses:

• MicroStrategy (MSTR): Shares of the software company, which has pegged much of its fortune on Bitcoin, slumped 7% amid a cryptocurrency sell-off. Crypto came under pressure from reports the custodian of bankrupt exchange Mt. Gox had begun the disbursement of nearly $9 billion in assets to creditors. Crypto exchange Coinbase (COIN) and digital trading platform Robinhood (HOOD) were also lower. 
• Li Auto (LI): Shares of the Chinese electric vehicle maker slid 3% after European regulators confirmed on Thursday that they were raising tariffs on Chinese TVs effective Friday. 

Dow Futures Join S&P, Nasdaq in the Green After Jobs Data

July 05, 2024 08:57 AM EDT

Dow futures jumped into positive territory Friday morning after the release of jobs data showed the unemployment rate ticked up slightly in June as wage growth slowed. The data boosted optimism that the Federal Reserve will be in a position to cut interest rates as early as September.

Stock Futures Little Changed Ahead of Jobs Data

July 05, 2024 08:25 AM EDT

Futures contracts connected to the Dow Jones Industrial Average were off about 0.1% in premarket trading on Friday.

S&P 500 futures were flat after giving up earlier gains.

Nasdaq 100 futures were holding steady up about 0.1%.