Stocks plunged at Monday's open as an unwinding yen-carry trade and negative headlines for Nvidia and Apple added to recession fears, triggering a global rout. But as the yen rebounded and U.S. economic data eased worries, stocks and bond yields rebounded. A market rally attempt is underway, though it hasn't been confirmed. The key indexes were down for the week as of Thursday.
Palantir Technologies, Fortinet, Eli Lilly, Exelixis, Shopify and SharkNinja were earnings winners.
Stock Market Rally
A market rally attempt is underway, though the Dow Jones, S&P 500, Russell 2000 and Nasdaq were down modestly Thursday as they slash losses from Monday's global sell-off. Treasury yields hit a 52-week low before rebounding to nearly 4%. Recession fears eased while yen-carry trade unwinding calmed down and even AI worries faded somewhat.
Economic Data Eases Concerns
Recession fears subsided, as a retreat in initial jobless claims and solid service-sector survey data stemmed a seeming panic sparked by the July jobs report. New claims for unemployment benefits fell 17,000 to 233,000 in the week through Aug. 3. The bigger-than-expected decline was centered on Texas, backing the argument that the impact of Hurricane Beryl, which hit Houston on July 8, temporarily made the labor market look weaker than it is. The ISM's service sector activity index jumped 2.6 points to 51.4, bouncing back above the 50 neutral level. Subindexes on current business output, new orders and employment each rose about five points to 54.5, 52.4 and 51.1, respectively. A separate services-sector gauge from S&P Global dipped 0.3 point to a still-healthy 55. The combination of weak manufacturing and solid services activity points to about 2.2% GDP growth, S&P said.
Palantir Soars On Earnings, Microsoft Alliance
Palantir Technologies reported second quarter EPS of 9 cents a share, up 80% from a year earlier. Revenue rose 27% to $678 million a fourth straight quarter of accelerating growth. Both topped views. Commercial revenue is leading the way for Palantir, which also guided up on Q3 revenue. Meanwhile, Microsoft and Palantir will partner to sell artificial intelligence-based data analytics products and services to U.S. defense and intelligence agencies. PLTR surged in a huge upside reversal week.
Datadog reported Q2 earnings per share rose 48% while revenue jumped 27% to $645 million, both beating. The monitoring and analytics platform for developers gave mixed guidance. But shares jumped.
Dynatrace reported fiscal Q1 EPS rose 22% with revenue up 20% to $392.2 million, both beating. Annual recurring revenue rose 20% to $1.54 billion, slightly topping. Dynatrace guided in line for Q2 revenue. Shares reversed sharply higher for the week.
HubSpot reported Q2 EPS jumped 40% with revenue up 20% to $637.2 million, comfortably beating. The web marketing software guided in line for Q3. said. Analysts expected HubSpot earnings of $1.64 on sales of $619.3 million. Shares rose modestly after hitting a 2024 low earlier in the week.
Cybersecurity
Fortinet earnings rose 50%, easily beating views and with growth accelerating for a second straight quarter. Revenue edged past forecasts with an 11% gain to $1.43 billion. Flat billings at $1.54 billion, slightly topped. Shares gapped higher. CyberArk reported Q2 adjusted EPS of 54 cents vs. 3 cents a year earlier, easily beating. Revenue rose 28% to $224.7 million, topping. Shares jumped. Qualys earnings grew 20%, beating, while an 8% revenue rise to $148.7 mil was in line. But billings and Q3 revenue guidance came in light. Shares tumbled.
Google Loses Antitrust Case
U.S. District Judge Amit Mehta ruled that Google-parent Alphabet has violated antitrust laws by unfairly trying to dominate the internet search advertising market, a big win for the Justice Department. However, a second phase of the trial must now take place, most likely this fall, to determine any remedies. Alphabet's payments to Apple, which makes Google the default search engine on iPhones, were under scrutiny in the antitrust lawsuit. Apple reportedly gets more than $20 billion annually in the search deal. Mehta could ban the payments totally or require that consumers get more search options. Google will likely appeal any court decision.
Weight-Loss Leaders Diverge
Diabetes and weight-loss behemoths Eli Lilly and Novo Nordisk had divergent second-quarter earnings reports last week. Lilly's EPS growth accelerated to 86%, easily beating. Revenue jumped 36% to $11.3 billion on booming sales for diabetes drug Mounjaro and obesity fighter Zepbound. Lilly raised its full-year outlook. Novo reported 24% sales growth, but "continued pricing pressure" weighed on Wegovy and Ozempic. Sales of those two drugs still rocketed 69% and 30%, respectively. LLY stock rebounded. Novo tumbled on its results, but later slashed losses.
Biotechs Mixed
Amgen, Ligand Pharmaceuticals, Halozyme Therapeutics, TG Therapeutics and Exelixis topped second-quarter sales expectations. But Dow giant Amgen fell as EPS missed, while Ligan earnings fell vs. a year earlier. Halozyme jumped on a 5% sales gain and 23% EPS jump. TG Therapeutics reported a surprise profit while sales of its multiple sclerosis drug, Briumvi, beat forecasts and grew 350% to $72.6 million. Exelixis delivered a 171% EPS jump as sales grew 36%. TG and Exelixis, which both raised guidance, skyrocketed.
Disney Streaming Turns A Profit
Disney reported fiscal Q3 EPS jumped 35%, comfortably beating, with revenue up about 4% to $23.16 billion, eking past views. Both reflected accelerated growth for a second straight quarter. The Dow giant's combined streaming businesses posted a profit for the first time, a quarter ahead of schedule. Disney also said it'll raise prices for Hulu, Disney+ and ESPN+ starting Oct. 17. Theme park and other experiences revenue rose 2%, but Disney such revenue falling modestly in Q4. Shares fell to a 2024 low.
Uber, Lyft Take Different Paths
Uber Technologies earnings per share leapt 52% while sales increased 16% to $10.7 billion, both beating. The global ride-hailing and delivery app giant guided up on current-quarter earnings but lower on bookings. Shares still jumped. Lyft, meanwhile, swung to its first quarterly GAAP profit, of 1 cent per share. Sales increased 41% to $1.44 billion, just ahead of expectations. But the U.S.-centric ride-hailing play guided low on current-quarter bookings and earnings. Shares plunged.
News In Brief
Shopify reported adjusted EPS jumped 86%, comfortably beating, while revenue climbed 21% to $2 billion, squeaking by views. Q2 gross merchandise volume also topped. For Q3, Shopify expects "revenue to grow at a low-to-mid-twenties percentage rate on a year-over-year basis." Shares jumped.
Vital Farms crushed views with a 140% EPS gain while revenue swelled 38.5% to $147.39 million. It was third straight quarter of accelerating sales growth for the premium and specialty egg producer. Vital Farms guided EPS and sales estimates higher, but warned of higher capital spending in 2025-2026. Shares plunged.
Reddit narrowed its Q2 losses to $10 million, or 6 cents per share, from $41 million a year earlier. Sales grew 54% to $281 million, ahead of views. The social media player also beat views with its Q3 revenue forecast of $300 million. Shares of the 2024 IPO whipsawed.
AppLovin earnings soared 305% per share, easily beating. Revenue gained 44% to $1.08 billion, in line. The mobile app marketing platform guided higher than views for revenue in the current quarter.
SharkNinja smashed Q2 estimates and raised its full-year guidance. The kitchen and household device maker's earnings jumped 51%. Sales rose 385 to $1.25 billion, the third straight quarter of accelerating growth.
Super Micro Computer missed analyst estimates for its fiscal fourth quarter and offered mixed guidance for the current period. The data center specialist took a profit hit as it ramped production of liquid-cooled systems for AI computer racks. Super Micro also announced a 10-for-1 stock split, effective on Oct. 1. Shares dived.
Caterpillar earnings unexpectedly rose 8%, buoyed by buybacks that reduced shares outstanding. Revenue fell 3.7% to 16.69 billion, essentially in line. The Dow heavyweight rose.
