Nasdaq Falls as Tech Stocks Lag; Treasury Yields, Gold Climb
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Stock Indexes Wrap: Health Insurers, Airlines Soar as Tech, Semiconductors Continue to Trail
April 18, 2024 04:16 PM EDT
The Dow
UnitedHealth Group (UNH) rose 3%, leading the index for a third straight day after fellow health insurer Elevance Health beat earnings estimates, helping to assuage fears higher medical costs would crimp insurers’ earnings.
Travelers Companies (TRV) ticked up 1.9%, recovering some of the losses suffered yesterday after it missed earnings estimates amid surging catastrophe losses.
Tech stocks led the index’s laggards. Microsoft (MSFT) and Intel (INTC) both fell 1.8%, while Salesforce (CRM) slid 1.6%.
The S&P 500
Genuine Parts (GPC) soared 11.2% after it raised its full-year earnings guidance following a better-than-expected first quarter.
United Airlines (UAL) rose 5.5%, getting a boost from an earnings beat from Alaska Airlines (ALK). United surged 17% yesterday after topping first-quarter earnings estimates and issuing current-quarter guidance well ahead of Wall Street’s estimates.
Discover Financial Services (DFS) climbed 3.6% as investors shrugged off an $800 million charge related to card misclassifications that led to a 68% decline in first-quarter profit. Capital One (COF), which is in the process of acquiring Discover, also rose 3.6%.
Elevance Health (ELV) rose 3.3% after raising its full-year earnings forecast and beating earnings estimates thanks to premium rate hikes. Health insurance peers Centene (CNC) and CVS Health (CVS) ticked up 2.4% and 1.3%, respectively.
D.R. Horton (DHI) gave up early gains to close just 0.1% higher, despite the homebuilder raising its full-year revenue guidance following a first-quarter earnings beat.
Las Vegas Sands (LVS) fell 8.6% after its first-quarter revenue in Macao, a key market for the casino operator, disappointed. Peers Wynn Resorts (WYNN) and Caesars Entertainment (CZR) each fell 1.4%.
Equifax (EFX) shed 8.5% after its current-quarter revenue forecast fell short of Wall Street’s expectations.
The Nasdaq 100
Meta (META) gained 1.5% after it launched Meta AI, its chatbot competitor to ChatGPT and Alphabet’s Gemini.
Nvidia (NVDA) ticked up 0.8% after slumping nearly 4% yesterday amid a chip stock sell-off following disappointing sales figures from chipmaking equipment company ASML Holding. Advanced Micro Devices (AMD), which also fell yesterday, inched 0.7% higher.
Chipmaker Micron (MU) fell 3.8% despite reports it would be awarded more than $6 billion in federal grants to construct plants in New York and Idaho.
Tesla (TSLA) fell 3.6% as investors and analysts expressed concern the electric vehicle maker may ditch efforts to introduce a low-cost, mass-market model in favor of developing a fleet of autonomous robotaxis.
ASML (ASML) slid 2.1%, extending yesterday’s losses. Peers Applied Materials (AMAT) and Lam Research (LRCX) fell 2.8% and 2.6%, respectively.
Semiconductor stocks like Onsemi (ON) and Qualcomm (QCOM) were weighed down by Taiwan Semiconductor Manufacturing Co. (TSM), which trimmed its forecast for chip industry growth in 2024. Shares of TSMC fell 4.9%.
Cryptocurrencies Surge Ahead of Bitcoin Halving
April 18, 2024 03:24 PM EDT
Cryptocurrencies including bitcoin and ethereum climbed higher on Thursday as markets prepared for this year’s bitcoin halving, which is expected to take place as early as Friday.
Bitcoin traded above $63,000 Thursday afternoon while ethereum rose above $3,050. Though even with Thursday’s gains, the coins remain far off their recent highs.
Bitcoin halving, which reduces the reward miners receive for processing transactions on the blockchain, has historically been a boon for prices. But this halving is a little different. Bitcoin surged to a record high last month as investors poured money into spot bitcoin ETFs in anticipation of interest rate cuts and the upcoming halving.
Hopes that the Federal Reserve will cut interest rates anytime soon have since faded amid a slew of strong economic reports, but bitcoin is more accessible than ever thanks to brand new bitcoin ETFs.
Read more about what you need to know ahead of the bitcoin halving.
Alaska Air Overcomes January Midair Incident as Travel Demand Surges
April 18, 2024 02:20 PM EDT
Shares of Alaska Air Group (ALK) took off in intraday trading Thursday after the airline posted better-than-expected results and guidance as travel demand boomed, helping to offset the effects of a January flight emergency.
The carrier reported a first-quarter adjusted loss of $116 million, or $0.92 per share, with revenue rising 1.6% to $2.23 billion. Both beat estimates.
Alaska Air’s results were impacted by a midair incident on Jan. 5 in which a door plug on a Boeing (BA) 737 Max 9 jet blew out, leading to a temporary grounding of some of the airline’s planes. Earlier this month, Alaska Air announced that Boeing had paid $160 million in compensation during the first quarter for lost revenue from the Flight 1282 incident, and in this report noted the total was actually $162 million. The carrier has indicated it expects further payments from Boeing in the future.
The airline noted it sees current quarter earnings per share (EPS) in the range of $2.20 to $2.40, above analysts’ forecasts.
Alaska Air Group shares climbed 4.6% Thursday to $44.68, their highest level since August.
Why Nvidia Chip Maker TSMC Is Falling Despite Posting Q1 Earnings Beat
April 18, 2024 01:16 PM EDT
American depositary receipts (ADRs) of Taiwan Semiconductor Manufacturing Company (TSM) fell in intraday trading Thursday after the chip maker’s comments in an earnings call lowering projections for everything apart from artificial intelligence (AI)-related semiconductors offset higher-than-forecast results.
TSMC reported first-quarter revenue of 592.64 billion New Taiwan dollars ($18.87 billion), above estimates compiled by Visible Alpha of TWD583.95. The company reported TWD225.49 billion in net income, along with a diluted earnings per share (EPS) of TWD8.70 ($1.38 per ADR), compared to the TWD214.07 billion and TWD8.25 per share analysts expected.
While noting that demand for its technology to power AI technology remains high, TSMC executives said they are projecting semiconductor revenue overall to rise 10% year-over-year in 2024, compared to prior projections of at least 10% growth.
The company specified chips for the automotive industry as its only sector that might face declines year-over-year, although it noted that demand for smartphone and PC chips is growing slower than expected.
TSMC ADRs were trading down 4.7% at $132.53 Thursday afternoon, but are up 50% in the past year on investor enthusiasm for companies that power AI.
Tesla Stock Slides to More Than 1-Year Low as Deutsche Bank Downgrades on “Thesis-Changing” Robotaxi Pivot
April 18, 2024 12:33 PM EDT
Tesla shares slid to their lowest in more than a year on Tuesday after Deutsche Bank analysts downgraded the stock, citing uncertainty around its plans to refocus its growth efforts on autonomous vehicles.
Deutsche Bank analysts led by Emmanuel Rosner downgraded Tesla to “hold” from “buy” on Thursday and lowered their price target by nearly 35%.
“Our longer-term Buy rating was predicated on the next-gen vehicle priced at $25k coming late next year, which would allow the company to reaccelerate volume, margins and FCF, and potentially come to dominate the Western EV market,” Deutsche Bank analysts wrote on Thursday.
Whether that low-cost model is being made at all was called into question earlier this month when Reuters reported the electric vehicle maker had canceled its plans to release a low-cost, mass-market model. Tesla will instead focus on self-driving robotaxis, according to Reuters, which cited “three sources familiar with the matter and company messages” reviewed by the outlet.
CEO Elon Musk quickly took to the social network X to deny the report. That denial was followed up by an announcement later in the day that the company would unveil its Robotaxi on August 8.
The analysts noted that, while a Tesla-owned and operated fleet of robotaxis could more than make up for the profit lost by delaying or canceling its low-cost model, the plan poses significant technological and regulatory challenges. Plus, “a pushout of Model 2 efforts creates the risk of no new vehicle in Tesla’s consumer lineup for the foreseeable future, which would put continued downward pressure on its volume and pricing for many more years, and likely require material downward earnings and FCF estimate revisions for 2026+.”
Tesla has struggled to maintain growth amid rising costs and sluggish EV demand, which has taken a hit from high interest rates. Earlier this month the company reported its first decline in quarterly deliveries since 2020.
The company said in an internal memo earlier this week that it would lay off more than 10% of its global workforce, a decision Deutsche Bank analysts speculate could be connected to the delayed or canceled Model 2.
Equifax Stock Drops After Revenue Guidance Misses Expectations
April 18, 2024 11:19 AM EDT
Credit-rating company Equifax (EFX) issued current-quarter guidance that came in below Wall Street’s expectation amid falling mortgage inquiries, sending its stock down more than 4% Thursday morning.
The company, which assesses borrowers’ credit quality for lenders, said it expects current-quarter revenue of between $1.41 billion and $1.43 billion, with the top portion of that forecast missing analysts’ expectations of $1.44 billion.
Equifax reiterated its full-year revenue outlook of $5.72 billion and adjusted earnings of $7.35 per share, adding that its guidance “reflects an expectation of a decline of about 11% in our 2024 U.S. mortgage-credit inquiries.”
The Equifax share price initially tracked higher after the 50-day crossed above the 200-day moving average in late December to form a bullish golden cross pattern, but has more recently undergone a retracement, with declines outpacing the broader financial sector.
Investors should keep a close eye on the $222 level, an area where the price may find support from a multi-month horizonal line and the 200-day moving average. A convincing close below this important technical level on Thursday could see lower support tested at $190 and $162.
Homebuilder D.R. Horton’s Stock Gains on Earnings Beat, Raised Revenue Guidance
April 18, 2024 10:40 AM EDT
D.R. Horton (DHI) shares climbed Thursday after reporting second-quarter results that surpassed expectations, as the company kicks off a stretch of homebuilder earnings over the next few weeks.
The homebuilder posted net income of $1.17 billion, for a diluted earnings per share (EPS) of $3.52, on total revenue of $9.11 billion, all above estimates compiled by Visible Alpha.
The market for D.R. Horton’s services picked up in the quarter compared to the same period last year, with homebuilding revenue up 13% to $8.5 billion from $7.5 billion, and a 15% increase in homes closed, with 22,548 this year compared with 19,664 in the year-ago period.
“We are well-positioned with our affordable product offerings and flexible lot supply,” D.R. Horton’s board chair Donald Horton said in a statement.
Horton said that while interest and mortgage rates remain high, the company’s net sales orders increased 46% from the first quarter, and 14% from last year’s second quarter, leading D.R. Horton to raise its full-year guidance for homes closed and revenue.
D.R. Horton shares were 3% higher Thursday morning at $150.05. With Thursday’s gains, shares were down just 1% from the start of 2024.
Stocks Making the Biggest Moves Premarket
April 18, 2024 09:27 AM EDT
Gains:
- Alaska Air Group (ALK): Shares rose more than 3% after the airline reported revenue ahead of analyst estimates, helping it to deliver a narrower-than-expected loss in the first quarter.
- D.R. Horton (DHI): Shares of the homebuilder rose more than 3% after reporting better-than-expected revenue and earnings.
- Micron (MU): Shares of the chipmaker rose nearly 2% amid reports it would receive more than $6 billion in federal grants to build factories in New York and Idaho.
Losses:
- Infosys (INFY): Shares of the tech consultancy and outsourcing company tumbled more than 7% after reporting disappointing first-quarter revenue and announcing it would acquire in-tech, a German engineering research firm.
- Tesla (TSLA): Shares of the electric vehicle maker fell more than 2% after Deutsche Bank downgraded the stock to hold due to the delay of a new, more affordable model.
- Taiwan Semiconductor Manufacturing Co. (TSM): Shares of the chipmaking giant slipped nearly 2% despite its quarterly results topping Wall Street’s estimates on the top and bottom lines.
U.S. Stock Futures Tick Up as Chip Stocks Rebound
April 18, 2024 08:57 AM EDT
Futures contracts connected to the Dow Jones Industrial Average were up 0.2% in premarket trading on Thursday.
S&P 500 futures were also 0.2% higher.
Nasdaq 100 futures also traded 0.2% higher a little under an hour before markets opened.
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Read More: Nasdaq Falls as Tech Stocks Lag; Treasury Yields, Gold Climb