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Dow Gains on Rebounding Tech Stocks
58 minutes ago
In anticipation of Nvidia’s quarterly earnings report after the bell, tech stocks helped lift the Dow Jones Industrial Average, which rose about 0.5%, or 184 points, Wednesday.
Though pharmaceutical giant Merck & Co. (MRK) was the Dow’s best-performing stock today, jumping 3.8%.
Intel (INTC) followed close behind as the shares of the semiconductor maker gained 3.3%. Apple (AAPL) shares added 2.2%, Microsoft (MSFT) moved up 1.4%, IBM (IBM) rose 1.4%, Salesforce (CRM) gained 1.2%, and Cisco Systems (CSCO) rose 1%. The tech sector as a whole climbed 1.9% today.
Shares of 3M (MMM) rose 1.2% after it announced that former Zimmer Biomet CEO Bryan Hanson would lead its soon-to-be-spun-off healthcare company.
Shares of Nike (NKE) fell 2.7%, marking the stock’s tenth straight losing session. Nike fell after shoe retailer Foot Locker (FL) reported a 9.4% year-over-year drop in sales last quarter as customers pulled back on discretionary purchases.
Johnson & Johnson (JNJ) shares fell 0.9% as the pharmaceutical maker continued to drop following the conclusion of its share swap for spin-off Kenvue. J&J is down 4.6% so far this week.
-Terry Lane
Nvidia Climbs Ahead of Hotly Anticipated Earnings
1 hr 31 min ago
Shares of Nvidia (NVDA) climbed 3% Wednesday ahead of the chipmaker and AI leader’s second-quarter earnings report.
Investors have been ramping up bullish bets on Nvidia after several analysts raised their price targets for the stock earlier this week in anticipation of its earnings after the bell.
The last time Nvidia reported, in May, it blew past analysts’ estimates with its earnings and second-quarter sales forecast, sending the stock soaring more than 20% the next day.
Grab Shares Jump After Narrowing Losses on Cost-Cutting Moves
1 hr 56 min ago
Singapore-based e-commerce and ride-hailing company Grab (GRAB) narrowed its losses by almost three-quarters in the three months ending June and forecast a smaller loss for the year, as cost-cutting measures paid off.
The company, one of Asia’s biggest technology startups in recent years, posted a net loss of $148 million in the second quarter, which was 74% less than its loss in the year-ago quarter. Revenue surged 77% from a year ago to $567 million, with revenue from deliveries more than doubling.
Subscriptions to GrabUnlimited, the company’s subscription program, rose 25% from the previous quarter and 43% from a year ago. GrabUnlimited subscribers had retention rates that were twice as high, on average, compared to non-subscribers, and spent almost four times more on food deliveries.
The company updated its full-year outlook and now expects a much narrower operating loss between $30 and $40 million, compared to previous estimates of $195 to $235 million.
Grab shares were over 10% higher Wednesday afternoon. They’re up 15% so far this year.
-Mack Wilowski
YCharts
Midday Market Movers
2 hr 48 min ago
Abercrombie & Fitch Co. (ANF): Shares of the apparel company gained 24% after it reported second-quarter earnings of $1.10 a share on $935 million in sales, blowing past analysts’ estimates of $0.17 per share on $842 million in revenue.
Williams-Sonoma Inc. (WSM): Shares of the furniture and home goods retailer gained 13% after it beat Wall Street’s second-quarter earnings estimate and raised its full-year operating margin forecast.
Netflix Inc. (NFLX): Shares of the streaming service gained more than 4% after research firm Antenna estimated it added 2.6 million subscribers in July, more than any other paid U.S. streaming platform. The company’s crackdown on password sharing caused new subscriptions to surge in June after months of declining subscriber numbers.
Nike Inc. (NKE): Shares of the sports apparel and shoe company fell more than 2% after footwear retailer Foot Locker (FL) cut its full-year guidance and reported a worse-than-expected decline in sales. Nike is on track for its tenth straight losing session, its longest losing streak since going public in 1980.
Victoria’s Secret & Co. (VSCO): The clothing and lingerie retailer’s shares fell more than 3% after several recent earnings reports highlighted the uncertain future retailers face as discretionary budgets and savings shrink.
Lipstick Effect Spares Cosmetics Companies Retail’s Pain
3 hr 28 min ago
One bright spot in the otherwise bleak retail landscape: cosmetics.
As consumers pull back on discretionary spending amid higher prices and rising interest rates, beauty brands continue to report growing sales.
Macy’s (M), in a disappointing earnings report yesterday, noted the resilience of its beauty and cosmetics department. Luxury goods conglomerate LVMH’s “selective retail” unit, home to cosmetics retailer Sephora, was the company’s fastest-growing unit in the first half of this year.
Earlier this month, e.l.f Beauty (ELF) reported 76% sales growth in its fiscal first quarter and earnings twice what analysts had forecast.
The lipstick effect is an economic theory positing that, while consumers reduce overall spending during recessions, they increase their spending on small luxuries, like cosmetics. And this latest round of earnings appears to support that theory.
Cosmetics stocks—especially those focused on the U.S. market—have mostly prospered this year. e.l.f Beauty has surged 215% in the last 12 months, and Ulta Beauty (ULTA), which reports earnings after the bell tomorrow, hit an all-time high in April.
Meanwhile, Estée Lauder (EL)—a cosmetics company uniquely exposed to luxury and international markets—is trading at its lowest level in over 4 years as sales in China stumble.
Peloton Shares Plunge on Wider-Than-Expected Loss After Recall, Fall in Subscribers
4 hr 3 min ago
Peloton (PTON) shares tumbled over 24% Wednesday after reporting a wider-than-expected loss as falling subscriber numbers and recall costs impacted its results.
Peloton reported a net loss of $241.8 million or 68 cents per share for the quarter ended June 30, down from $1.26 billion or $3.72 a share in the same period a year ago.
The fitness equipment company said it lost 29,000 subscribers in the quarter, and costs from a recall “substantially exceeded our initial expectations” at an additional $40 million for actual costs incurred over the quarter and future recall-related expenses.
With Wednesday’s losses, Peloton shares trade at an all-time low of $5.35.
-Vivian Medithi
UPS Workers Approve $30 Billion Labor Contract, Averting Strike
5 hr 10 min ago
Workers at UPS (UPS) approved a five-year contract worth $30 billion in wage increases and other benefits, ending contentious negotiations and the threat of a strike.
Ratified by 83.6% of votes, the highest contract vote in the history of Teamsters at UPS, the deal eliminates a two-tier wage system for drivers, ends forced overtime, and adds air conditioning to new models of the company’s trucks in addition to raising wages.
The logistics giant isn’t the only one that’s faced union pressure for better wages this year. American Airlines, United Airlines, and Delta Air Lines also reached deals earlier this year that included increases in compensation. Southwest Airlines may face a potential strike from its pilots’ union, while FedEx is also negotiating a new labor contract.
UPS shares gained 1.2% Wednesday morning following the news.
-Fatima Attarwala
Foot Locker Stock Falls to 13-Year Low as Shoppers Tighten Their Purse Strings
5 hr 42 min ago
Foot Locker (FL) shares lost more than one-third of their value in early trading Wednesday after the athletic apparel retailer reported sales fell as inflation-weary shoppers spent less on the company’s apparel and footwear.
The company posted a $5 million net loss, equal to roughly 5 cents a share, compared to a $99 million profit in the same quarter last year. On an adjusted basis, the company earned a $4 million profit, which was down over 96% from $105 million in the year-ago quarter.
Sales of $1.86 billion were down by near double digits from last year’s $2.06 billion figure and underperformed estimates of $1.88 billion.
Foot Locker President and CEO Mary Dillon acknowledged a tough consumer backdrop, and said the company is “adjusting its 2023 outlook to allow it to best compete for price-sensitive consumers.”
Shares of Foot Locker traded at $15.46 late Wednesday morning, their lowest price since October 2010.
-Mack Wilowski
Bond Yields Sink on Signs of Slowing Economy
6 hr 21 min ago
Bond yields retreated Wednesday morning after data showing near-stagnant business activity in August raised hopes the Federal Reserve’s inflation-fighting interest rate hikes are coming to an end.
The yields on every Treasury with a maturity of 2 years or more fell to their lowest levels since last week, with the 30-year slipping 10 basis points to a low of 4.307% and the 10-year falling as much as 12 bps to 4.213%. Bond yields move inversely to their price, and bond prices are affected by investors’ expectations of future interest rates.
European bond prices rose as well Wednesday after the EU’s Purchasing Managers’ Index also showed business activity in the bloc stalling in August.
U.S. Business Activity Falls to a 6-Month Low
7 hr 18 min ago
S&P Global’s flash U.S. Composite Purchasing Managers’ Index fell to a six-month low of 50.4 in August from a reading of 52 last month.
Both subindexes—the services index and the manufacturing index—fell from last month, with the manufacturing index slipping to 47.5, a two-month low, from 50.2. A reading under 50 indicates activity contracted.
The services index slipped to 51 from 52.3 in July, the index’s lowest reading since February.
“Subdued client demand drove the slowdown across the economy, as total new orders declined for the first time in six months,” according to an S&P Global press release.
The report also noted input inflation picked back up, with higher fuel, wage, and raw material costs raising manufacturer and service provider’s expenses. Businesses were reluctant to pass those price increases on to customers, though, as they competed for increasingly price-conscious consumers.
Stocks Making the Biggest Moves in Premarket Trading
8 hr 11 min ago
Gainers:
- Urban Outfitters Inc. (URBN): Shares of the apparel retailer gained 5% after it reported record sales of $1.3 billion in the most recent quarter. Earnings of $1.10 per share were more than 70% higher than the year before.
- Manchester United Plc (MANU): Shares rose 5% after reports that Sheikh Jassim, a member of the Qatari royal family, had set a date for his £6 billion ($7.6 billion) takeover of the British soccer club.
- Nvidia Corp. (NVDA): Shares of the chipmaker and AI leader were up 0.7% before markets opened as investors await its hotly anticipated second-quarter earnings report after markets close.
Losers:
- Foot Locker Inc. (FL): Shares of the shoe retailer lost 30% after reporting second-quarter sales fell 10% year-over-year, prompting the company to cut its full-year guidance for the second time this year.
- Peloton Interactive Inc. (PTON): Shares of the at-home fitness company fell 29% after it reported a decline in paying subscribers and a wider-than-expected loss in the most recent quarter.
- Analog Devices Inc. (ADI): Shares of the chipmaker fell 5% after it reported a drop in sales in its third quarter and warned of softening demand, leading it to forecast current-quarter sales and earnings below analysts’ estimates. Shares of fellow chipmakers ON Semiconductor (ON), Microchip Technology (MCHP), and Texas Instruments (TXN) also fell premarket.
5 Things to Know Before Markets Open
8 hr 29 min ago
Here’s what investors need to know to start their day:
- Shares of Nvidia (NVDA) were up 0.6% in premarket trading as investors anticipated its second-quarter earnings report to show record revenue and a significant jump in profit.
- AMC Entertainment Holdings (AMC) shares fell 12% in premarket trading, following a 28% plunge in the prior session, as the movie theater chain prepares to end trading of its AMC Preferred Equity units on Thursday, which will be converted into common stock.
- Toll Brothers (TOL) reported third-quarter net income of $3.73 a share on revenue of $2.69 billion, ahead of the $2.85 a share of income and $2.4 billion in revenue forecasted by analysts, as high mortgage rates helped elevate demand for new home construction.
- United Parcel Service (UPS) shares traded higher by 0.7% premarket after members of the Teamsters union approved its newly negotiated labor contract with the company with 86% approval.
- The S&P flash services Purchasing Managers Index (PMI) is expected to show U.S. services sector activity ticking upward in August, with the index rising to 52.5 from the previous reading of 53.2. The data will be released at 9:45 a.m. ET.
-Terry Lane
Stock Futures Give Up Some Gains Premarket
8 hr 51 min ago
Futures contracts tied to the Dow Jones Industrial Average gained a little more than 0.1% Wednesday morning.
S&P 500 futures rose 0.2%.
And Nasdaq 100 futures contracts gained a little over 0.2%.
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