Stocks end mixed Thursday, following from the worst day for the S&P 500 and the Nasdaq in nearly two years, as investors continued to dump megacap tech stocks and pare risky bets in markets all over the world.
The Dow Jones Industrial Average finished up 81.20 points, or 0.20%, to finish the session at 39,935.07, the S&P 500 lost 0.51% to 5,399.22, while the tech-heavy Nasdaq slipped 0.93% to end the day at 17,181.72.
Adam Turnquist, chief technical strategist for LPL Financial, said that "volatility came back with a vengeance this week as selling pressure in the mega cap space dragged down the broader market."
“Counterbalancing weakness in these heavyweight names poses a challenge for the rest of the market,” he said. “As the saying goes, what goes up tends to come down, and that adage applies to both price action and sentiment in markets. Enthusiasm surrounding artificial intelligence (AI) witnessed a bit of a reality check yesterday.”
Gross domestic product increased at a 2.8% annualized rate last quarter, the Commerce Department's Bureau of Economic Analysis said in its advance estimate of second-quarter GDP, which was double the 1.4% growth pace in the first quarter.
“The trajectory remains robust for capital spending related to artificial intelligence,” said LPL Financial Chief Economist Jeffrey Roach. “We see this as an ongoing opportunity for investors. However, the trajectory for consumer spending, especially on services, will likely soften throughout Q3."
"Growth rebounded from the weak numbers in Q1 but today’s release does not change expectations that the Fed will cut rates at least two times this year as inflation decelerates," he said.
Updated at 1:41 PM EDT
Friday earnings slate - by Liam Elias
Bristol Myers Squibb (BMY) is expected to report second quarter earnings of $1.5 per share on revenues of $10.64 billion, a 6% slide from last year, as the drugmaker continues to concentrate on its oncology portfolio while markets focus on the hyper-growth potential of GLP-1 weight loss treatments from Eli Lilly (LLY) and Novo Nordisk (NVO) .
Bristol-Myers, which is also slashing costs and reducing headcount, is down 14% for the year, compared to a near 40% advance for larger rival Eli Lilly.
Colgate-Palmolive (CL) is also set to publish its second quarter update, with the Street looking for a bottom line of 80 cents per share on revenues of $4.62 billion. Pricing power remains key for the consumer products group, which is up more than 20% for the year, as is the group’s growing marketing spend as it seeks to boost volume growth amid fading inflation pressures.
3M (MMM) , which has yet to benefit from the recent rally in U.S. industrials, will post its first quarterly earnings update since former CEO Mike Roman was ousted earlier this spring to make way for new chief Bill Brown.
3M is likely to see sales fall more than 50% from last year to around $5.42 billion in the second quarter, with a bottom line of $1.55 per share as continues to face myriad legal risks from product lawsuits. The group reached a $10.3 billion settlement with the U.S. government in June over its use of so-called ‘forever chemicals’.
#earnings for the week of July 22, 2024https://t.co/hLn2sKQhEY$TSLA $CMG $GOOGL $VZ $VRT $SPOT $AAL $ENPH $F $UPS $CLF $GE $NOW $GM $T $V $IBM $VKTX $LVS $NUE $KO $FCX $NEM $LW $APH $CLS $DXCM $TXN $SAP $NXPI $NEE $LMT $BMY $ABBV $CB $HAS $SKX $TFC $TXRH $STX $COF $CMCSA… pic.twitter.com/0NSui0AIgP
— Earnings Whispers (@eWhispers) July 19, 2024
Bounce back
Stocks are staring to power higher into the late morning session, with the S&P 500 rising 26 points, or 0.5% and the Nasdaq clawing back 45 points from last night's sell-off.
The Dow was last marked 300 points to the upside, as well, while the Russell 2000 last marked 1.7% higher on the session to take its one-month gain past 10%.
Flash #PMI data showed the US leading the developed world expansion in July as the eurozone lagged behind, suggesting the strong US #GDP expansion seen in Q2 has persisted at the start of Q3. #FOMC #USD #SPX. More at https://t.co/OrkzQt8Evn pic.twitter.com/S7xfGsK4B7
— Chris Williamson (@WilliamsonChris) July 25, 2024
Updated at 10:28 AM EDT
Nvidia correction
Nvidia (NVDA) shares extended their two-day slump in early trading, falling another 4% to take the stock to the lowest levels since late May, amid the ongoing selloff in megacap tech names.
Nvidia, which slipped into correction territory last week, are just a few points away from a 'bear market' slump, generally defined a 20% decline from their recent peak. The stock hit an all-time closing high of $135.58 on June 18.
While my fund has taken a hit this week, $NVDA analysis over the past month was spot on! 🎯
— Peter DiCarlo (@pdicarlotrader) July 25, 2024
Like we said, trend is still bullish, but money was coming out! I think the low we see is $100 before bouncing and testing $130+ by end of summer pic.twitter.com/JIF78ep0Mu
Updated at 9:38 AM EDT
Flat open
The stronger-than-expected second quarter GDP data, paired with easing inflation pressures, is adding to bets that a September Fed rate cut can support stocks following the recent tech-lead selloff.
The S&P 500 was last marked 1, or 0.03%, while the Nasdaq slipped 46, or 0.27%. The Dow, meanwhile, added around 75 points in the openings minutes of trading.
S&P 500 Opening Bell Heatmap (Jul. 25, 2024)$SPY -0.07%🟥$QQQ -0.23% 🟥$DJI +0.15%🟩$IWM +0.41%🟩 pic.twitter.com/k4g4LNojaO
— Wall St Engine (@wallstengine) July 25, 2024
Updated at 8:35 AM EDT
Still solid growth
The economy grew at a 2.8% clip over the three months ending in June, the Commerce Department reported, a firmer-than-expected tally that included a core PCE inflation reading of 2.9%, which topped Street forecasts.
The Labor Department also posted weekly jobless claims data showing around 235,000 Americans filed for unemployment benefits over the period ending on July 20, a 10,000 decline from the previous week.
Benchmark 10-year note yields were little-changed at 4.225% following the data releases, while 2-years notes edged higher, to 4.405%.
Overall this morning's US data was mixed:
— Matt Weller CFA, CMT (@MWellerFX) July 25, 2024
• US Advance Q1 GDP: 2.8% vs. 2.0% eyed
• Initial Jobless Claims: 235K vs. 237K anticipated
• Durable Goods Orders: -6.6% m/m vs. 0.3% expected
The more timely readings (claims & durable goods) were weaker than backward-looking GDP.
Updated at 7:36 AM EDT
American Turbulence
American Airlines (AAL) shares tumbled in premarket trading after the carrier slashed its 2024 profit forecast amid ongoing ticket pricing pressures.
The group posted mixed second quarter earnings, with a bottom line beat of $1.01 per share on revenues of $14.33 billion, but now sees full-year profits in the region of $0.70 to $1.30 per share, a near $2 decline from its prior forecast.
American Airlines shares were last marked 7.3% lower in premarket trading at $9.43 each, a level that would test the stock's pandemic low of $9.05 from May 2020.
$AAL destroyed on guidance cut (stock now almost at COVID-2020 lows) / $LUV is overhauling their entire seating system.
— Investor_NICK (@Investor_NICK_) July 25, 2024
All time high TSA numbers and these airlines are getting smoked. Airlines are such tough businesses. Truly feels like an uninvestable space. pic.twitter.com/t9a2bDwPCL
Check back for updates throughout the trading day
Stocks ended sharply lower last night, with disappointing earnings from Tesla (TSLA) and Alphabet (GOOGL) triggering big declines in their Magnificent 7 peers and dragging the Nasdaq more than 3.6% lower on the session.
CNBC's Mag7 index, which tracks the world's biggest tech companies, fell 6% on the session, with Nvidia (NVDA) down 6.8% and Meta Platforms (META) falling 5.6%.
Related: Analysts reset Google parent stock price targets after Q2 earnings
Selling flowed through into the S&P 500, as well, where megacap tech stocks carry outsized weighting in the broadest benchmark of U.S. stocks, taking the index to its lowest levels since early June.
The so-called 'risk off' trading continued in the overnight session, as well, with global oil prices slumping across the board, taking Brent crude contracts back to the $80 per barrel mark.
TheStreet
The Japanese yen, whose gains are typically associated with defensive positioning in global markets, rose to a two-and-a-half month high of 152.14 against the U.S. dollar in overnight trading.
Stocks are set to extend their slump, as well, ahead of the Commerce Department's first estimate of second quarter GDP growth and weekly jobless claims data, both of which are expected at 8:30 am Eastern time.
Related: Former Fed official changes tune on what's next for interest rates
Futures contracts tied to the S&P 500, which has given back all of its July gains over the past week, are priced for a 13 point opening bell decline while those linked to the Nasdaq suggest an 80 point pullback.
The Dow Jones Industrial Average, meanwhile, is called just 50 points lower as the ongoing rotation from tech stocks to domestic-focused companies continues to benefit the benchmark.
The Great Rotation over the Last 10 Trading Days...
— Charlie Bilello (@charliebilello) July 24, 2024
Regional Banks $KRE: +13.8%
Homebuilders $XHB: +10.4%
US Small Caps $IWM: +7.1%
Japanese Yen $FXY: +5.0%
REITs $VNQ: +4.7%
Value $IWD: +1.9%
Gold $GLD: +1.1%
Energy $XLE: +1.1%
---
US Dollar $UUP: -0.4%
US Large Caps $SPY: -3.6%…
The market's benchmark volatility gauge, the VIX index, has risen nearly 33% over the past five days and was last marked at $18.94, the highest in more than three months and a level that suggests daily swings of around 64 points for the S&P 500.
Stocks on the move include Ford Motor Co. (F) , which plunged more than 13% lower in premarket trading after the carmaker posted weaker-than-expected second quarter earnings thanks in part to surging warranty expenses.
International Business Machines (IBM) , meanwhile, jumped 4.3% after the tech and cloud group's second quarter earnings were powered by client spending on AI technologies.
Southwest Airlines (LUV) slumped 3.8% to $25.60 after teh carrier posted stronger-than-expected second quarter earnings and said it would break a 50-year tradition by ending its opening seating model over the coming months.
More Wall Street Analysts:
- Analyst revisits Nvidia stock price target after Blackwell checks
- Analysts prescribe new Walgreens stock price targets after earnings
- Analyst revises Facebook parent stock price target in AI arms race
In overseas markets, Europe's Stoxx 600 fell 1.46% in Frankfurt, with Britain's FTSE 100 down 0.83% in London amid the ongoing slump in global stocks.
Overnight in Asia, Japan's tech-rich Nikkei 225 slumped 3.3%, taking the benchmark into correction territory, as the yen surged and export stocks crumbled.
The region-wide MSCI ex-Japan index, meanwhile, was marked 0.91% into the close of trading.
Related: Veteran fund manager sees world of pain coming for stocks
