Dow Nosedives Despite Walmart, Cisco Earnings Beats

1 hr 52 min ago

The Dow Jones Industrial Average fell 0.84%, or 291 points, as rising bond yields tanked equities, despite better-than-expected earnings reports from two Dow components.

Cisco Systems (CSCO) shares closed 3.3% higher after its earnings report showed that product orders were up 30% in the quarter, reflecting double-digit increases in all customer markets. The networking provider also reported earnings and revenue that topped company guidance, though its outlook for the 2024 fiscal year was lower than analysts expected. 

Chevron (CVX) shares gained 0.7% after Mizuho Securities and UBS raised their price targets for the stock. The energy sector was the only sector to rise today up 1.1%. 

Dow components in the materials and healthcare sectors also fared well. 3M (MMM) and Dow Inc. (DOW) shares gained 1%, while Johnson & Johnson (JNJ) added 1% and Merck & Co. (MRK) rose 0.2%. 

Walgreens Boots Alliance (WBA) shares dropped 3.6%, dropping a second day following the revival of a lawsuit accusing the pharmacy retail chain of defrauding Virginia’s Medicaid program. Pharmacy stocks were shaken by Blue Shield of California’s announcement that it would no longer use CVS Health Corp. (CVS) as its pharmacy benefit manager. 

Intel (INTC) gave up 2.8% as the chipmaker continued to drop in the wake of its failed acquisition of Tower Semiconductor. Shares of the chipmaker have declined nearly 8% this week. 

Shares of Walmart (WMT) dropped 2.2% despite forecasting a 4% to 4.5% full-year sales increase, reporting a 24% increase in online sales, and beating analyst estimates for earnings and revenue.

Apple (AAPL) shares dropped 1.5% on a report that smartphone sales in 2023 could be the lowest in a decade.

-Terry Lane

Homebuilders Hit Hard by Mortgage Rates at Two-Decade Highs

2 hr 57 min ago

Shares of homebuilders sank Thursday after mortgage rates rose to their highest level in over 20 years, according to data from Freddie Mac. 

Surging Treasury yields have caused rates on home loans to soar, with the average rate on a 30-year fixed-rate mortgage reaching 7.09% on Thursday. And while a strong labor market and resilient consumer spending are encouraging signs for the U.S. economy, they also make a return to pandemic-era low interest rates unlikely any time soon. 

Shares of homebuilders D.R. Horton Inc. (DHI), Lennar Corp. (LEN), and PulteGroup Inc. (PHM) were all down 4% in late afternoon trading.

Midday Market Movers

4 hr 30 min ago

Chegg Inc. (CHGG): The educational technology company’s shares jumped 12% after its board approved a $200 million increase to the company’s share repurchase program. 

Cisco Systems Inc. (CSCO): Shares of the software company gained 4% after it beat analysts’ sales and earnings estimates last quarter.

Chevron Corp. (CVX): The oil company’s shares gained 2% after having its price target raised to $209 from $205 by both Mizuho and UBS. Mizuho also upgraded the stock to Buy from Neutral.

Pinterest Inc. (PINS): Shares rose 3% after two board members voluntarily left the board of rival Nextdoor Holdings Inc. (KIND) in response to the Justice Department’s concerns about simultaneous directorships of competing companies. 

CVS Health Group (CVS): Shares of the healthcare company plummeted 9% after Blue Shield of California dropped CVS Caremark as its pharmacy benefit manager for non-specialty drugs. 

ResMed Inc. (RMD): Shares of the medical device maker dropped 5% as shares of competitor Philips NV (PHG) climbed 4% on news the holding company Exor is taking a 15% stake in the company.

Food and Online Sales Surge Powers Walmart’s Profit and Earnings in the Second Quarter

6 hr 17 min ago

Walmart (WMT), the biggest U.S. retailer by revenue, beat profit and sales estimates thanks to strong grocery and ecommerce sales, while its discount-oriented business model shielded it from a broader slowdown in discretionary spending.

Operating income came in at $7.3 billion, up 6.7% from the same quarter last year, based off $161.6 billion in revenue, which rose 5.7% from a year ago and exceeded estimates of $160.3 billion. Earnings per share (EPS) came in at $2.92, up 55.3% from the year-ago quarter and far above expectations of $1.88.

The company raised its full-year guidance and now expects net sales will rise between 4% and 4.5%, with full-year adjusted EPS projected in a range of $6.36 to $6.46. That is up from 3.5% and a range of $6.10 to $6.20, respectively.

Despite the beat, Walmart shares fell 1.3% Thursday morning. They’re up just a little less than 14% so far this year, outpacing the broader S&P 500 consumer staples sector, which is flat for the year.

-Mack Wilowski

Gold Stocks Under Pressure from Rising Dollar, Yields

6 hr 41 min ago

Shares of gold mining companies are falling along with gold futures, as the run-up in bond yields and the U.S. dollar weigh on the safe haven asset.

The VanEck Gold Miners ETF (GDX) fell 0.4% Thursday morning to its lowest level since March when gold prices soared amid banking turmoil. The ETF has lost about 13% of its value in the past month and is down 23% from its 52-week high of $35.87 in April. 

Gold futures, which climbed 12% in the month following the collapse of Silicon Valley Bank, fell 0.2% Thursday morning, and are down 4% in just the last two weeks. 

Meanwhile, the U.S. Dollar Index has risen 3% over the last month after falling to a 15-month low in mid-July. 

Ball Shares Surge as BAE System Buys Its Aerospace Operations for $5.6 Billion

7 hr 16 min ago

Ball Corporation’s (BALL) shares surged 3% in early trading on Thursday after the aluminum packaging company agreed to sell its aerospace business for $5.6 billion to BAE Systems, Britain’s largest defense company.

The price is nearly 20 times the aerospace division’s earnings before interest, taxes, depreciation, and amortization (EBITDA) for the last year. Ball said it plans to use about half of the after-tax amount of $4.5 billion to reduce its $9.7 billion debt, as part of the company’s strategy to maintain a conservative level of debt.

Ball Aerospace’s space-related programs were expected to account for about 70% of its estimated 2023 revenue of $2.2 billion, and a number of defense companies and private equity firms competed to purchase it.

Subject to the usual regulatory approvals and closing conditions, the deal is expected to be finalized in the first half of 2024.

-Fatima Attarwala

Long-Dated Treasury Yields Continue Their Climb

8 hr 4 min ago

The yield on 10-year and 30-year Treasurys continued to climb Thursday morning, with the yield on 30-year bonds rising to 4.4%, its highest since April 2008.

The yield on the 10-year Treasury closed at 4.256% yesterday, its highest point since November 2007. And yields climbed further Thursday morning to 4.298%.

Stocks Making the Biggest Moves Premarket

8 hr 55 min ago

Gainers:

• Ball Corp. (BALL): Shares of gained 4% after BAE Systems said it would buy Ball’s aerospace division for $5.5 billion. 
• Adobe Inc. (ADBE): Shares of the software company rose 2% after Bank of America upgraded the stock to Buy from Neutral and raised its price target to $630 from $575.
• Walmart Inc. (WMT): Shares of the retailer were up about 1% after it beat earnings and revenue expectations for the last quarter and raised its full-year outlook. 

Losers:

• Hawaiian Electric Industries (HE): Shares of the utility lost 32% after reports it was in talks with firms that specialize in restructuring as it grapples with possible liability for wildfires in Maui.
• Wolfspeed Inc. (WOLF): The semiconductor manufacturer’s shares fell 17% after it reported a net loss of 42 cents per share last quarter, a wider loss than the same period last year and worse than analysts were expecting.
• CVS Health Corp. (CVS): Shares sank 8% after Blue Shield of California announced it would ditch CVS Caremark as its pharmacy benefits manager for non-specialty drugs to instead use Amazon and Cost Plus Drugs. Shares of rival Cigna Group (CI) fell 6%.

5 Things to Know Before Markets Open

9 hr 24 min ago

Here’s what investors need to know to start their day:

1. Walmart (WMT) shares were up nearly 2% in pre-market trading after the retail giant reported second-quarter earnings of $1.84 a share, better than the $1.71 a share that analysts had forecast.
2. Shares of Cisco Systems (CSCO) were up nearly 3% in pre-market trading after it reported fiscal fourth-quarter results that topped earnings and revenue forecasts, attributing the results to a 30% increase in product orders.
3. Hawaiian Electric (HE) shares plunged 12% in pre-market trading after a report that it was communicating with firms that specialize in restructuring, as the utility explores options on financial and legal challenges after the deadly Maui wildfires.
4. BAE Systems will pay $5.5 billion to acquire Ball Corp’s (BALL) aerospace business, sending its shares higher by 5%.
5. Initial jobless claims for the week ending Aug. 12 fell to 239,000 from 250,000 the week before.

-Terry Lane

Futures Mostly Up as Markets Try to Rebound

9 hr 51 min ago

E-mini Dow Jones Industrial Average futures contracts were trading just above flat Thursday morning.

S&P 500 futures were more firmly in the green, rising 0.2% premarket.

Nasdaq 100 futures contracts gained 0.3%.