Stock Indexes Wrap: Semiconductor, AI Stock Send Nasdaq Higher; JPMorgan Weighs on Dow

May 20, 2024 04:13 PM EDT

The Dow

Microsoft (MSFT) gained 1.2% after the tech giant unveiled a new line of personal computers equipped with AI chips and the company’s CoPilot AI software. 

Tech stocks followed Microsoft higher, with Intel (INTC) gaining 0.9% and Apple (AAPL) rising 0.6%. 

JPMorgan Chase (JPM) fell 4.5% after CEO Jamie Dimon hinted that the company had begun to prepare for his retirement. That overshadowed the firm’s raising its full-year net interest income forecast to $91 billion from $90 billion. 

The S&P 500

Norwegian Cruise Line Holdings (NCLH) jumped 7.6% after it raised its current-quarter earnings outlook for the second time this month, citing strong demand. Competitors Carnival Corp (CCL) and Royal Caribbean (RCL) gained 7.3% and 4.1%, respectively. 

Electronics manufacturer Jabil (JBL) added 5.3% after announcing several leadership changes, including a new CEO and CFO. 

Applied Materials (AMAT) rose 3.7% as several firms raised their price targets on the stock following last week’s earnings report. Peers Lam Research (LRCX) and KLA Corp (KLA) each advanced about 3.3%.

Nvidia (NVDA) gained 2.5% ahead of its quarterly earnings report after markets close on Wednesday. 

Johnson Controls (JCI) added 2.3% after Bloomberg reported activist investor Elliott Investment Management had taken an approximately $1 billion stake in the company.

Discount retailers slipped after advancing last week following better-than-expected earnings from Walmart (WMT). Dollar Tree (DLTR) slid 3.3% Monday, while TJX Companies (TJX) fell 2.4%. 

Target (TGT) shed 2.1% after cutting prices on thousands of items in a bid to draw in cost-conscious consumers.

Lowe’s (LOW) slipped 0.8% ahead of its earnings report before the opening bell on Tuesday. 

The Nasdaq 100

Chip stocks advanced, led by Marvell Technology (MRVL), up 3.6%, and Micron (MU), up 3%. 

Palo Alto Networks (PANW) ticked up 1.9% before reporting earnings after markets closed. 

Tesla (TSLA) shed 1.5% after Chinese rival Li Auto (LI) reported earnings well below analysts’ estimates, a sign the electric vehicle price war in the world’s largest auto market has taken a toll on carmakers’ profits.

What You Need To Know Ahead of Palo Alto Networks’ Earnings Report Monday

May 20, 2024 03:24 PM EDT

Palo Alto Networks (PANW) is set to report earnings for its fiscal third quarter after the bell on Monday, with investors likely watching sales amid concerns about reduced customer spending. The cybersecurity company could also provide updates on its “platformization” strategy in its efforts to become a “one-stop shop” for cybersecurity.

Analysts project Palo Alto Networks’ revenue to be $1.97 billion for the third quarter of 2024, down from the previous quarter but up from $1.72 billion in the same period in 2023, according to estimates compiled by Visible Alpha.

Net income is expected to be $143.3 million, a significant drop from the second quarter but up from $107.8 million in the third quarter of fiscal 2023. Analysts anticipate diluted earnings per share (EPS) of 40 cents, compared with 31 cents in the same period a year earlier.

Read more about what to expect from Palo Alto Networks’ earnings report.

–Naomi Buchanan

Gold Price Reaches Record High Amid Expectations of Fed Rate Cuts

May 20, 2024 02:38 PM EDT

The spot price of gold reached a record high above $2,450 per ounce early Monday morning, before sliding to $2,435.28 in the afternoon as markets continued to digest economic data from last week that raised hopes the Federal Reserve could move to cut interest rates, though Fed officials cautioned they may need more data on inflation before cutting rates.

Scheduled comments this week from several Fed officials could impact the price of gold in the days to come.

Purchases by China’s central bank could help sustain gold’s rise in price, with the World Gold Council (WGC) recently reporting China’s central bank was one of the top buyers of gold in the first quarter compared to other central banks.

Concerns about geopolitical risks in the Middle East and Eastern Europe could also impact the price of gold, raising demand for traditional “safe haven” assets. The death of Iranian President Ebrahim Raisi and worries about his death’s implications in the Middle East was another factor that drove the price of gold higher Monday, The Wall Street Journal reported.

–Aaron McDade

Hims & Hers Soars on Release of Wegovy Challenger

May 20, 2024 01:33 PM EDT

Shares of Hims & Hers Health (HIMS) surged on Monday after the online pharmacy said it was jumping on the weight-loss bandwagon. 

The company said in a press release Monday that it would begin offering GLP-1 injections similar to Novo Nordisk’s (NVO) Wegovy and Eli Lilly’s (LLY) Zepbound. Injections, the company said, would start at $199/month, more than 85% less than Wegovy’s $1,350 monthly price tag.

Hims & Hers said its partnership with a US manufacturer of generic drugs would enable patients to access Wegovy and Ozempic’s active ingredient “without navigating the shortages and costs that are currently limiting access to the branded medications.”

The popularity of GLP-1s has turbocharged Novo Nordisk and Eli Lilly’s sales in the last year and propelled them into the ranks of the world’s most valuable companies. Novo Nordisk, shares of which have risen more than 50% in the past year, had a market capitalization of about $584 billion Monday afternoon, making it larger than Tesla (TSLA). Eli Lilly’s market cap of more than $740 billion ranked it eighth among the S&P 500’s largest companies. Its shares have risen more than 75% in the last 12 months.

Hims & Hers shares were up about 30% Monday afternoon, bringing their year-to-date return to 112%.

Li Auto Sinks on Q1 Profit Slump

May 20, 2024 12:32 PM EDT

American depositary receipts (ADRs) of Li Auto (LI) tumbled in intraday trading Monday after the Chinese electric vehicle manufacturer posted a 36% year-over-year drop in first-quarter net income as it lowered car prices.

The company said its profit attributable to shareholders was 592.6 million yuan ($82.0 million), versus CNY929.7 million in the same period last year, and well below analysts’ forecasts of CNY1.63 billion.

Revenue was up, however, by 36% at CNY25.63 billion, including a 32% jump in vehicle sales to CNY24.3 billion.

“The increase in revenue from vehicle sales over the first quarter of 2023 was mainly attributable to the increase in vehicle deliveries, partially offset by the lower average selling price due to different product mix and pricing strategy changes between two quarters,” the company said in a press release.

Li Auto ADRs were down more than 12% early in the afternoon on Monday.

–Fatima Attarwala

Norwegian Cruise Lines Leads S&P 500 on Raised Guidance

May 20, 2024 11:34 AM EDT

Norwegian Cruise Line Holdings (NCLH) was the best-performing stock in the S&P 500 Monday morning after the Miami-based cruise operator raised its full-year guidance amid strong demand. 

Norwegian on Monday raised its adjusted earnings per share forecast to $1.42 from $1.32. The company also upped its net yield forecast to 7.2% from 6.4%, as well as its forecast for adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), which was raised to $2.3 billion from $2.25 billion.

Monday’s update is the second such increase to Norwegian’s earnings guidance this year. The company raised its outlook for all three of the metrics above when it reported first-quarter earnings at the beginning of the month.

“We have continued to see strong demand and record bookings,” said chief financial officer Mark Kempa in a press release. 

Shares of Norwegian were up more than 7% Monday morning. Competitors Royal Caribbean (RCL) and Carnival (CCL) each traded more than 5% higher.  

Johnson Controls Stock Rises As Elliott Reportedly Takes $1 Billion-Plus Stake

May 20, 2024 10:19 AM EDT

Shares in Johnson Controls International (JCI) moved higher in early trading Monday after Bloomberg reported late Sunday that activist investor Elliott Investment Management has taken a significant stake in the industrial conglomerate.

According to people familiar with the matter, the New York-based hedge fund has built a position in the company valued at over $1 billion, though the intentions for taking the stake couldn’t be immediately learned, the report said.

Since bottoming out in late October last year, the Johnson Controls share price has trended mostly higher, with the 50-day moving average (MA) crossing above the 200-day MA in March to form a bullish golden cross buy signal. More recently, investors promptly stepped in to buy the dip below the 50-day MA, suggesting underlying strength in the stock. 

Following the news that Elliott has taken a significant stake in the company, it’s worth keeping an eye on a key area of chart resistance around $70 that has been in play since early last year. A convincing close above this technically important area could lead to a retest of the stock’s all-time high (ATH) at $81.77 set in December 2021.

Johnson Controls shares were up 2.9% Monday morning, bringing their year-to-date return to 23%.

–Timothy Smith

Stock Futures Tick Up

May 20, 2024 09:03 AM EDT

Futures contracts connected to the Dow Jones Industrial Average were effectively flat Monday morning.

S&P 500 futures rose 0.1%.

Nasdaq 100 futures were up about 0.2%.