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Stocks waver after key data as Micron slips

June 27, 2024
Arzu

U.S. stocks were little changed on Thursday, after chipmaker Micron’s ( MU ) outlook put a dent in tech-rally optimism, as investors assessed fresh economic data ahead of the Federal Reserve’s key inflation reading.

The S&P 500 (^GSPC) hugged the flatline after Wednesday’s rally, falling short of a new all-time high. The Dow Jones Industrial Average (^DJI) rose 0.2%, while the tech-heavy Nasdaq Composite (^IXIC) oscillated between positive and negative territory.

Shares have struggled following Micron’s sales forecast for the current quarter, which met expectations but failed to satisfy investors expecting better performance from AI-connected companies.

The polish surrounding AI has helped propel the S&P 500 to a 15% gain this year. But there are growing concerns that the rally could be at risk if a handful of tech companies driving most of those gains cap off already lofty expectations.

Shares of memory maker Micron fell more than 6% in early trading. Nvidia ( NVDA ) fell more than 2%, reviving fears of a return to the selloff that rocked markets last week.

Investors weighed a fresh batch of economic data ahead of Friday’s PCE inflation print, which could influence the central bank’s thinking on the timing of interest rate cuts.

The initial weekly jobless claims reading was 233,000, down 6,000 from the previous week. According to Labor Department data. The print came in below consensus expectations of 235,000. But persistent jobless claims have risen sharply since late 2021, making it longer for the unemployed to find work.

Real gross domestic product (GDP) grew by 1.4% year-on-year in the first quarter of 2024. Third evaluation The Bureau of Economic Development released Thursday morning. The print was slightly higher than the previous estimate of 1.3%.

Inflation could loom large in the first debate between President Joe Biden and former President Donald Trump on Thursday night.

On the corporate front, shares of Levi Strauss ( LEVI ) fell more than 15% after the jeans retailer missed second-quarter earnings. Investors will look to Nike’s ( NKE ) quarterly results after the bell for more clues to consumer resilience.

long live7 updates

  • Purdue Pharma’s ruling makes it more difficult for owners of insolvent companies to avoid liability

    Alexis Keenan of Yahoo Finance reports:

    New Supreme Court Rule It raised the $6 billion opioid settlement, making it more difficult for any company owners to use federal bankruptcy proceedings to protect themselves from legal risk.

    Controversy – Harrington v. Purdue – Bankrupt OxyContin manufacturer Purdue Pharma and the company’s billionaire owners, the Sackler family.

    A key question in the case was whether or not Purdue’s bankruptcy proceedings could be used to protect the Sacklers’ personal fortune from future opioid-related liabilities.

    In a 5-4 ruling, the court said no provision in U.S. bankruptcy law allowed the type of deal the Sacklers and the company were trying to reach.

    Read more here.

  • With just a few years left until retirement, 55-year-olds aren’t saving enough

    Yahoo Finance Senior Columnist Kerry Hannon reports:

    Fifty-five-year-old Americans have average retirement savings of less than $50,000.

    That’s bleak news for older Gen Xers who are only a decade away from retirement — and far from the goal of saving eight times your annual income at this age.

    “A lot of people are left behind, and that has important long-term implications for retirement.” David Blanchett, head of retirement research at PGIM DC Solutions, told Yahoo Finance. “It’s not easy. We always find ourselves wanting to spend money today rather than saving for this thing that’s going to happen in 10 or 20 or 30 years.

    The future doesn’t just look bleak. They’re buzzing now: A third of 55-year-olds say they have trouble saving $400 for an emergency, compared with 19% of 65-year-olds and 15% of 75-year-olds. Adults, according to Survey from Prudential Financial.

    Read more here.

  • Pending home sales decline in May

    High home prices and high mortgages keep prospective buyers out of the housing market.

    Pending home sales — a forward-looking indicator of home sales based on contract signings — fell 2.1% in May from the previous month, according to National Institute of Realtors data. Year-over-year, they fell 6.6%, data released Thursday showed.

    The Midwest and South recorded a drop in contract signings in May from the previous month. North East and West regions recorded gains. All regions across the country recorded losses in operations on a year-on-year basis.

    “The market is in an interesting phase with rising inventory and subdued demand,” NAR Chief Economist Lawrence Yun said in a statement. “Supply and demand dynamics suggest home price appreciation will ease in the coming months. Inevitably, more inventory in a job-creating economy will lead to more home buying, especially when mortgage rates fall.”

    Mortgage rates are at their lowest average in three months, but that’s still not enough to attract buyers. About 95% of mortgage borrowers have interest rates below current market rates, and nearly 80% have rates more than 2 percentage points above market rates, according to Goldman Sachs data.

    Looking ahead, Yun expects “moderately low mortgage rates, higher home sales and stabilizing home prices.”

  • Walgreens gets 24% lower guidance due to “challenging” pharmacy trends, weak consumer

    Walgreens shares fell 24% to their lowest level since 1997 after the drugstore chain cut its fiscal 2024 revenue guidance, citing “challenging pharmacy industry trends and a worse-than-expected U.S. consumer environment.”

    “Our customers have become increasingly selective and price-sensitive in their purchases,” Walgreens Boots Alliance CEO Tim Wentworth said during the company’s earnings call Thursday morning.

    Management noted that 25% of the company’s stores do not currently contribute to the long-term strategy and that “changes are imminent.”

    Walgreens said it plans to close a “significant portion” of its underperforming stores over the next three years.

    It expects adjusted earnings per share for the year to come in between $2.80 and $2.95, with a range of $3.20 to $3.35.

  • Netflix helps push Meta Nasdaq into green territory

    Communications stocks lifted the Nasdaq Composite (^IXIC) into positive territory with a 0.3% gain shortly after the market opened on Thursday.

    Netflix ( NFLX ) and Meta ( META ) both advanced more than 1%, helping the tech heavyweights lift from just below the flatline.

    The S&P 500 (^GSPC) rose 0.2%, while the Dow Jones Industrial Average (^DJI) was little changed.

    Meanwhile, shares of chip giant Nvidia ( NVDA ) sparked a broader market rally this year as Micron’s ( MU ) sales forecast failed to woo investors with the AI ​​craze.

  • Stocks waver at open as investors weigh economic data, Micron caps tech rally

    Stocks opened slightly lower on Thursday as investors weighed economic data released earlier in the day.

    The S&P 500 (^GSPC) was little changed, while the Dow Jones Industrial Average (^DJI) fell 0.1%. The tech-heavy Nasdaq Composite ( ^IXIC ) fell slightly below the flatline.

    Real gross domestic product (GDP) grew by 1.4% year-on-year in the first quarter of 2024. Third evaluation The Bureau of Economic Development released Thursday morning. The print was slightly higher than the previous reading of 1.3%, but shows slower growth after 2022.

    The initial weekly jobless claims reading was 233,000, down 6,000 from the previous week. According to Labor Department data.

    On the corporate front, chipmaker Micron’s ( MU ) sales forecast for the current quarter met expectations, but failed to satisfy investors looking for better performance from AI-connected companies. Shares fell about 4% in early trading. AI chip company Nvidia ( NVDA ) also fell nearly 1% at the open.

  • Why Levi’s quarter bothers me

    Shares of Levi’s ( LEVI ) fell 15% in the premarket following earnings.

    I think it deserves it for two reasons.

    First, sales in China were down 10% from the previous year. I have been in conversation with many latecomers who have recently visited China. One theme is that Chinese consumers are feeling the dark side and are not spending as much as in years past. That sentiment is affecting demand for Levi’s jeans, Starbucks ( SBUX ) coffee and — according to General Mills’ ( GIS ) earnings call yesterday — Haagen-Dazs ice cream.

    It is difficult to see the inflection point in China.

    The same goes for Levi’s wholesale or supermarket business. Sales were down 4% from the previous year. The company’s commentary suggests that wholesale demand will not pick up until 2025.

    I plan to raise some of my concerns with Levi’s CFO Harmit Singh today at 10:30 a.m. ET on Yahoo Finance. To the music!

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