The stock market rally continued, with the Nasdaq tumbling with the Dow Jones, Russell 2000 and many non-tech sectors, notable financials and housing, kept surging, at least to start the week Chip stocks were big losers on ASML guidance, possible new China export curbs and Donald Trump's Taiwan comments, with strong Taiwan Semiconductor earnings not providing much lift.
CrowdStrike plunged as an update glitch triggered a massive global IT outage Friday. Eli Lilly, Novo Nordisk and Charles Schwab were big losers. UnitedHealth and Intuitive Surgical were earnings winners.
Stock Market Sees Big Swings
The Nasdaq fell sharply, suffering its worst one-day loss since 2022 on Wednesday. The S&P 500 also retreated after hitting fresh record highs early in the week. The Dow Jones and Russell 2000 had strong gains, but came off mid-week peaks. Chip stocks were big losers on a variety of headwinds. Eli Lilly and CrowdStrike also tumbled.
Economic Data Firms Up
Better-than-expected retail sales showed that it's too soon to count out American consumers, especially higher-income groups that have enjoyed big wealth gains. June retail sales were flat but defied views for a forecast. Sales ex autos and gas climbed 0.8%, crushing views. May sales were revised up as well. Meanwhile, housing starts topped expectations, rising 3% from May's upwardly revised figure to a 1.353 million annual rate. However, single-family starts came in light. Based on consumer spending and factory output data, S&P Global raised its tracking estimate of Q2 GDP growth to 2.5% from 2.1% a week ago, which would be an acceleration from 1.4% in Q1.
Geopolitics Hits Chip Stocks
Geopolitical concerns savaged semiconductor stocks. News reports said the U.S. might increase trade restrictions on chip gear sales to China. Also, former President Donald Trump suggested that Taiwan pay the U.S. for defending it from China. Meanwhile, chip-equipment giant ASML beat second-quarter estimates but guided low on Q3 sales. Taiwan Semiconductor Manufacturing, the world's largest contract chipmaker, topped estimates for Q2 and guided above views for Q3 thanks to robust AI chip demand. TSMC also nudged up its planned capital expenditures.
Global IT Outages Slam CrowdStrike
A CrowdStrike update glitch caused a global IT outage early Friday via Microsoft cloud servers, causing massive disruptions worldwide. Flights grinded to a halt, while financial systems, hospitals, media outlets and more faced significant issues. CrowdStrike says it wasn't a cyberattack, and deployed a fix. But CRWD stock plunged Friday, adding to a big weekly sell-off. Some cybersecurity rivals rose. Microsoft fell slightly Friday.
UnitedHealth Soars On Earnings, Politics
UnitedHealth topped second-quarter estimates on Tuesday, posting 11% EPS growth to $6.80 on 6% revenue growth to $98.855 billion. The Dow Jones giant kept full-year guidance steady amid the mounting cost of the cyberattack on its Change Healthcare unit. UNH stock, already in rally mode on bets that ex-President Trump and his pro-business views will return to the White House, surged to record highs. Analysts see UnitedHealth as best-positioned to capitalize on Medicare Advantage growth.
Netflix Gives Soft Sales Guide
Internet television network Netflix added 8.05 million subscribers in the second quarter, topping estimates for 4.53 million, to end June at 277.65 million worldwide. Earnings jumped 48% while revenue grew 17% to $9.56 billion. For Q3, Netflix guided up on EPS but slightly lower on sales.
Investment Bank Growth Strong
Goldman Sachs and Morgan Stanley topped Q2 views. Goldman on Monday reported a 180% earnings jump, helped by easy comparisons, with net revenue rising 17% to $12.73 billion. Morgan StanleyMS on Tuesday delivered a 47% EPS gain on a 12% revenue rise. However, net interest income fell 17% for the quarter. MS stock is trading in a cup base buy zone. Both stocks rose, paring gains, but closing in buy zones.
Bank Of America, Regional Banks Beat
Bank of America earnings declined 6% but topped views, while revenue climbed 1% to $25.4 billion. Superregionals PNC Financial and U.S. Bancorp. Auto lending giant Ally Financial easily topped Q2 views but revenue fell 4%, just missing. The stocks rose, but pared gains.
Intuitive Surgical Jumps
Intuitive Surgical jumped Friday after the robotic surgery behemoth reported adjusted EPS climbed 25% while revenue rose 14% to $2.01 billion in sales. Procedures completed using Intuitive Surgical's bread-and-butter system, da Vinci, jumped 17% year over year, also beating.
D.R. Horton Beats, Upbeat
D.R. Horton reported better than expected third-quarter earnings and revenue on Thursday, with modest gains of 5% and 2%, respectively. The homebuilder also increased its full-year view on home deliveries. DHI stock surged on earnings, breaking out.
Schwab Tumbles On Net Interest Miss
Charles Schwab and Interactive Brokers modestly beat headline estimates for the second quarter. Schwab's EPS fell 3% while revenue edged up 0.7% to $4.69 billion, the first gain in five quarters. But the financial services giant missed on net interest margin and warned it will shrink to grow. Shares plunged. Interactive Brokers earnings rose 33%, with growth accelerating for a second straight quarter. Revenue climbed 23% to $1.23 billion. Customer accounts and margin loans both surged. Shares edged lower, hitting resistance at the 50-day line.
Medical Giants Beat Views
Johnson & Johnson and Abbott Laboratories beat second-quarter expectations. J&J's earnings grew 10% while sales rose 4% to $22.45 billion. The Dow giant cut its full-year EPS outlook, citing recent acquisitions. Abbott Labs' EPS climbed 6% while organic sales grew 9% to $10.38 billion, buoyed by medical devices. Abbott raised its full-year earnings outlook and effectively its sales target. but JNJ stock rose solidly, above its 200-day line, while Abbott hit a seven-month low.
Oil Service Giants Report
SLB and Halliburton reported second-quarter earnings and revenue Friday. SLB reported an 18% EPS gain with sales up 13% to $9.14 billion, both beating. International growth is offsetting North America weakness. Halliburton reported Q2 EPS up 4%, meeting views, while flattish revenue of $5.83 billion slightly missed. SLB stock jumped. Halliburton gapped down on earnings Friday, but still rose for the week.
In Brief
Roche surged after the drugmaker said patients who took its oral obesity treatment for four weeks lost 6.1% more body weight than placebo recipients. The news hit Eli Lilly and Novo Nordisk, while shares of Viking Therapeutics and Structure Therapeutics suffered double-digit percentage losses. Lilly, Viking and Structure are all working on oral obesity drugs.
Novartis beat Q2 views with a 21% EPS gain and an 11% sales rise to $12.51 billion. But shares tumbled as the drug giant said it would stop work on g a cancer treatment that would block a protein created by the KRAS gene. Amgen and Bristol Myers Squibb already have approved drugs in this space, while Merck, Roche and Eli Lilly are testing drugs that block KRAS.
United Airlines on Tuesday reported earnings fell 18%, but beat estimates of $3.93 per share. Total revenue rose 5.7% to $14.98 billion, just missing. Fuel costs rose while revenue per seat mile fell. United maintained its full-year adjusted earnings guidance of $9 to $11 per share. UAL stock rose for the week.
Textron reported a 5.5% EPS gain, slightly beating, while revenue rose 3% to $3.53 billion, but just missed expectations. The maker of Cessna aircraft, Bell helicopters and more has seen slowing top- and bottom-line growth in the last two quarters.
Blackrock reported Q2 EPS rose 12% while revenue grew 8% to $4.805 billion, both beating views. Shares hit a record high but erased gains.
