Stock Indexes Wrap: AMD, Super Micro Sink Chip Stocks; Meta, Microsoft Follow Amazon Higher
May 01, 2024 04:12 PM EDT
The Dow
Johnson & Johnson (JNJ) rose 4.5% after proposing a $6.5 billion settlement that would resolve nearly all outstanding talc ovarian cancer lawsuits it faces.
Amazon (AMZN) climbed 2.2% after reporting better-than-expected first-quarter earnings on the back of growth in its cloud computing and advertising businesses.
3M (MMM) climbed 2.1%, continuing to advance after yesterday’s better-than-expected earnings report.
The S&P 500
Pfizer (PFE) surged 6.1% after reporting a smaller-than-anticipated decline in first-quarter revenue and earnings.
Regional banks advanced after Fed Chair Jerome Powell called further rate hikes “unlikely.” Comerica (CMA) gained 2.1%, Fifth Third Bancorp (FITB) rose 1.8% and Citizens Financial (CFG) advanced 1.7%.
CVS Health (CVS) sank 16.8% after missing earnings estimates and lowering its full-year guidance amid surging health care costs.
Starbucks (SBUX) tumbled 15.9% after reporting same-store sales declined in the first quarter, causing its earnings to fall short of estimates.
Norwegian Cruise Line Holdings (NCLH) slid 15% after its first-quarter revenue missed estimates, overshadowing its raised full-year profit outlook.
Super Micro Computer (SMCI) slumped 14% after reporting quarterly revenue that missed analysts’ estimates despite more than doubling from the year-ago quarter.
Estée Lauder (EL) dropped 13.2% after lowering its full-year sales forecast, citing macroeconomic headwinds, especially in China.
Kraft Heinz (KHC) slid 6% after its first-quarter earnings fell short of Wall Street’s expectations.
Yum! Brands (YUM) reported lower-than-expected sales and profit for the first quarter, sending its shares down 4.2%.
The Nasdaq 100
Big tech followed Amazon higher. Meta (META) added 2.1% and Microsoft (MSFT) rose 1.5%.
Advanced Micro Devices (AMD) shed 9% after a disappointing forecast for full-year data center revenue overshadowed better-than-expected quarterly earnings.
Semiconductor stocks were dealt a blow by AMD and Super Micro’s earnings reports. Broadcom (AVGO) fell 4.4%, while Nvidia (NVDA) shed 3.9% and ASML Holding (ASML) lost 2.3%.
Kraft Heinz Stock Drops As Higher Prices Eat Into Demand
May 01, 2024 03:14 PM EDT
Higher prices weighed on demand for Kraft Heinz (KHC) products, and shares dropped over 5% Wednesday after the food and beverage giant reported first-quarter results that missed analysts’ estimates.
Kraft Heinz reported first-quarter revenue of $6.41 billion, down 1.2% from a year ago and missing analysts’ estimates. Diluted earnings per share (EPS) came in at 66 cents, down 2.9% from a year earlier and also missing forecasts.
Sales fell in all three of the company’s reported regional segments. They were down in North America by 1.2% to $4.83 billion, 0.2% lower to $855 million in International Developed Markets, and fell 2.1% to $728 million in Emerging Markets.
Kraft Heinz said its volume/mix slid 3.2 percentage points (pps) overall, with a decline of 3.7 pps in North America and 3.8 pps in International Developed Markets, while they advanced 1.4 pps in Emerging Markets.
Kraft Heinz shares were down 5.6% at $36.46 Wednesday afternoon, sending them into negative territory for 2024.
Fed Holds Interest Rate Steady To Fight Still-Too-High Inflation
May 01, 2024 02:32 PM EDT
Members of the central bank’s policy committee voted unanimously Wednesday to keep the crucial fed funds rate in its current range of 5.25% to 5.50%. Officials held the rate at its highest since 2001 to fight inflation that’s run too high for comfort in the first few months of 2024.
“In recent months, there has been a lack of further progress toward the Committee’s 2% inflation objective.” the Federal Open Market Committee said in a statement, adding language that was absent from the statement the group made when it previously met in March.
Another tweak to the statement: What in March read, “The Committee judges that the risks to achieving its employment and inflation goals are moving into better balance,” became in May, “The Committee judges…and inflation goals have moved toward better balance over the past year.”
Estée Lauder Tumbles After Warning Economic Headwinds Will Hurt Sales
May 01, 2024 01:54 PM EDT
Estée Lauder (EL) shares dropped in intraday trading Wednesday after the cosmetics company lowered its full-year revenue guidance citing macroeconomic pressures, especially in China.
The maker of Clinique, Aramis, and its eponymous beauty products brands projected full-year sales will decline 2% to 3%, compared to its previous estimate of a drop of 1% to a gain of 1%. The company pointed to “ongoing macroeconomic headwinds,” which included “continued softness in overall prestige beauty in mainland China, and geopolitical volatility in some areas around the world.”
Estée’s revenue guidance overshadowed better-than-expected results for the third quarter of its 2024 fiscal year. Diluted EPS came in at 91 cents, more than double the 43 cents reported in the year-ago period and above estimates compiled by Visible Alpha. Revenue rose 4.9% to $3.94 billion, also better than expected.
The company also boosted and narrowed its outlook for adjusted earnings per share (EPS) to $2.14 to $2.24, up from the earlier forecast of $2.08 to $2.23.
Estée Lauder shares were down 11.9% at $129.25 Wednesday following the release, plunging them into negative territory for the year.
Johnson & Johnson Jumps on $6.5B Talc Settlement Proposal
May 01, 2024 01:19 PM EDT
Johnson & Johnson (JNJ) shares rose Wednesday after the company announced a plan that would resolve nearly all pending litigation over claims that its talc powder caused ovarian cancer.
The plan that Johnson & Johnson proposed Wednesday includes roughly $6.5 billion that would be paid out over 25 years, which the company said is more than claimants would be able to recover through trials.
The company said in a press release that the settlement would resolve 99.75% of all pending talc lawsuits, with the remaining suits focused on mesothelioma and not ovarian cancer.
Johnson & Johnson shares were up 4.3% Wednesday, though they have still lost about 3% of their value this year.
Starbucks Stock Plunges After Declining Same-Store Sales Weaken 2024 Outlook
May 01, 2024 12:20 PM EDT
Starbucks (SBUX) posted quarterly earnings and revenue that came up short of Wall Street expectations amid an unexpected decline in both U.S. and international same store sales, news that sent the coffee chain’s shares sharply lower Wednesday.
The Seattle-based company late Tuesday reported fiscal second-quarter adjusted earnings of 68 cents per share, whereas analysts had called for 79 cents a share. Net sales in the period fell 2% to $8.56 billion from a year earlier and came in below the $9.13 billion Street estimate.
The company’s same-store sales fell 4% in the quarter, driven by a 6% decline in cafe traffic. Analysts had expected same-store sales growth of 1%. Regionally, same-store sales decreased 3% in the U.S. and 6% internationally. In China—Starbucks’ second largest market—the metric contracted 11% on the back of the average ticket shrinking 8%.
Looking ahead, the company trimmed its 2024 revenue growth guidance to the low single digits, down from its earlier forecast of 7% to 10%. It sees global and U.S. same-store sales growth ranging from low single digits to flat, below its prior projection of 4% to 6%.
Starbucks shares were down 17% at $73.72 around midday Wednesday, bringing the stock’s 12-month losses to nearly 36%.
Mag 7 Stock Gains Account for Majority of Short Interest Growth
May 01, 2024 11:47 AM EDT
Short interest on Mag 7 stocks is at historic highs, but short sellers are feeling the pain, according to data from S3 Partners.
Cumulatively, $127 billion worth of Mag 7 shares are sold short, representing about 12% of the U.S. stock market’s short interest. Total Mag 7 short interest has increased by 17%, or $18 billion, this year. But just $7 billion of that increase is from additional shorts; the remaining $11 billion is derived from shares sold short increasing in value.
That’s saddled short sellers with big mark-to-market losses. Nvidia (NVDA) short positions have suffered losses of nearly $10 billion this year. Meta (META) and Amazon (AMZN) short positions are down $2.3 billion and $2.1 billion, respectively.
Tesla (TSLA), down more than 27% year-to-date, and Apple (AAPL), down 11%, have been the only profitable Mag 7 short positions so far this year.
And yet short sellers are sticking to their guns. Apple and Amazon are the only stocks in the group on which traders have pared their shorts.
Super Micro Computer Stock Slumps After Revenue Miss
May 01, 2024 11:03 AM EDT
Super Micro Computer (SMCI) shares slumped Wednesday morning after the server and data storage provider missed analysts’ expectations for revenue in the third quarter of its fiscal year.
The artificial intelligence (AI) hardware maker reported revenue of $3.85 billion, more than doubling from $1.28 billion in the year-ago quarter but missing analysts’ expectations of $3.93 billion. Diluted earnings per share came in at $6.56, up from $1.53 in the year-ago quarter and above estimates compiled by Visible Alpha.
Super Micro Computer raised its full-year revenue guidance to $14.7 billion to $15.1 billion, up from $14.3 billion to $14.7 billion previously, saying it expects to gain market share as it ramps up new solutions.
Super Micro Computer shares were down 16% at $720.75 Wednesday morning. Still, the stock has risen about 150% so far this year.
CVS Stock Plummets on Earnings Miss, Lowered Guidance
May 01, 2024 10:04 AM EDT
CVS Health (CVS) shares tumbled 18% in early trading Wednesday after the retail pharmacy giant posted first-quarter results that missed analysts’ estimates and lowered its guidance for the full year.
CVS reported first-quarter revenue of $88.44 billion, up 3.7% from a year earlier, but below the $89.33 billion analysts expected, according to estimates compiled by Visible Alpha. Net income and diluted earnings per share (EPS) declined from the year-ago period and also missed estimates, with CVS reporting $1.12 billion in profit or 88 cents per share, down from $2.14 billion or $1.65 per share a year ago.
Profits were hit as CVS struggled with a rise in Medicare utilization, as well as the impact of a decline in the company’s Medicare Advantage star rating. CVS saw health care costs increase to $27.8 billion in the first quarter, compared to $20.45 billion in the first quarter of 2023.
The company lowered its projected full-year EPS to at least $5.64, down from at least $7.06 previously.
With Wednesday’s losses, CVS shares have shed about 30% of their value so far this year.
Stocks Making the Biggest Moves Premarket
May 01, 2024 09:20 AM EDT
Gains:
- Pinterest (PINS): Shares of the social media company jumped 14% after it reported a smaller-than-expected loss in the first quarter on higher advertising revenue and user growth.
- Cameco (CCJ): Shares of the uranium miner rose more than 5% after the Senate passed a bill to ban the import of enriched uranium from Russia, one of America’s largest foreign suppliers.
- Amazon (AMZN): Shares of the e-commerce giant climbed about 2% after it topped first-quarter earnings estimates on robust data center and advertising growth.
Losses:
- Starbucks (SBUX): The coffeehouse chain’s shares tumbled more than 13% after missing first-quarter earnings estimates amid a slowdown in sales.
- CVS Health (CVS): Shares of the pharmacy chain and Aetna owner slid 12% after reporting rising Medicare utilization and soaring health care costs weighed on first-quarter profit.
- Advanced Micro Devices (AMD): Shares of the chipmaker fell more than 5% after raising its full-year data center revenue guidance, but less than Wall Street had expected.
Stock Futures Slip Ahead of Fed Rate Decision
May 01, 2024 08:37 AM EDT
Futures contracts connected to the Dow Jones Industrial Average were down 0.2% in premarket trading on Wednesday.
S&P 500 futures were off about 0.3%.
Nasdaq 100 futures were 0.5% lower about an hour before markets opened.
Read More: S&P 500, Nasdaq Fall Back to Earth After Post-Fed Rally