Market Performance
The major indices traded lower through most of the session, pressured by emerging concerns about growth. However, mega cap stocks rebounded in the afternoon trade, leaving the indices near session highs. The S&P 500 and Nasdaq Composite each closed 0.2% higher, while the Dow Jones Industrial Average rose 0.4%.
Mega Cap Stocks
- NVIDIA (NVDA, Financial) was a standout winner, closing higher after Elon Musk indicated that NVDA purchases by Tesla (TSLA, Financial) are expected to be $3-4 billion this year.
- Microsoft (MSFT, Financial) and Apple (AAPL, Financial) also contributed to the afternoon improvement.
NVDA was down 0.8% at its low, MSFT was down 0.9% at its worst level, and AAPL showed a 0.5% decline earlier. The market showed resilience to selling efforts before the rebound in mega cap stocks, supporting the afternoon rally. The S&P 500 was down 0.5% at its low of the day.
Small Cap Stocks
Small cap stocks underperformed their larger peers throughout the session. The Russell 2000 declined 1.3%, affected by slowdown worries and weakness in energy, materials, and bank stocks. These losses led the S&P 500 materials (-1.2%), energy (-1.0%), and financials (-0.4%) sectors to underperform, logging the steepest declines among the 11 sectors. Meanwhile, the real estate (+1.0%), consumer staples (+0.9%), and information technology (+0.4%) sectors led the pack.
Treasury Yields
Treasury yields are lower again in response to this morning's data, which showed a decrease in April job openings to 8.059 million from a revised 8.355 million in March. The 10-yr note yield settled seven basis points lower at 4.34%, and the 2-yr note yield fell five basis points to 4.77%.
Year-to-Date Performance
- Nasdaq Composite: +12.3% YTD
- S&P 500: +10.9% YTD
- S&P Midcap 400: +5.0% YTD
- Dow Jones Industrial Average: +2.7% YTD
- Russell 2000: +0.3% YTD
Today's Economic Data
- April Factory Orders: 0.7% (consensus 0.6%); Prior revised to 0.7% from 1.6%
- April JOLTS - Job Openings: 8.059 million; Prior revised to 8.355 million from 8.488 million
The key takeaway from the report is that business spending rebounded modestly to start the second quarter following a decline in March.
Today's News
CrowdStrike (CRWD, Financial) reported Q1 Non-GAAP EPS of $0.93, surpassing expectations by $0.04. The company's revenue also exceeded forecasts, reaching $921.04M, a 33% year-over-year increase. Annual Recurring Revenue grew to $3.65 billion, with $211.7 million added in the quarter. For Q2, CrowdStrike projects revenue between $958.3M and $961.2M, with Non-GAAP EPS expected to be between $0.98 and $0.99.
GameStop (GME, Financial) investor Keith Gill, known as Roaring Kitty, is under investigation by Massachusetts securities regulators for his recent trading activities. The scrutiny follows concerns about potential stock manipulation after his recent purchases of GameStop shares. Additionally, Morgan Stanley's E*Trade is contemplating removing him from their platform.
Paramount Global (PARA, Financial) shares fell 4.5% after reports surfaced that Shari Redstone is dissatisfied with Skydance Media's reduced offer for the family's controlling stake. The valuation of the merger was lowered to $4.75 billion from $5 billion. Paramount has rescheduled its planned employee town hall to June 25 amid ongoing speculation about a possible transaction.
HP Enterprise (HPE, Financial) shares rose 8% in extended-hours trading following fiscal Q2 results that beat expectations. The company reported adjusted EPS of $0.42 and revenue of $7.2B, driven by a significant increase in AI revenue. For Q3, HPE expects earnings between $0.43 and $0.48 per share and revenue between $7.4B and $7.8B.
Apple (AAPL, Financial) shares closed 0.2% higher at $194.35, marking the seventh consecutive day of gains. Despite a 24% gain in the broader S&P 500 Index over the past 12 months, Apple's stock has gained only 8%. Analysts remain divided, with a majority rating it as a Buy or Hold.
United Airlines (UAL, Financial) is reducing its staffing plans for the year, planning to hire 10,000 new employees instead of the previously announced 15,000. This decision follows a series of safety mishaps and increased scrutiny from the Federal Aviation Administration, which has limited the carrier's ability to add new routes and approve pilots for Boeing (BA) aircraft.
Tesla (TSLA, Financial) saw a slight uptick in trading after CEO Elon Musk clarified reports that Nvidia (NVDA, Financial) H100 chips were prioritized for X AI over Tesla. Musk explained that the chips would have otherwise remained unused. He also mentioned that the Gigafactory in Texas is nearing completion and will house 50K H100s for FSD training.
Microsoft (MSFT, Financial) has invested in Touchcast, a startup focused on caching generative AI queries to improve efficiency. Touchcast is raising $100M from venture backers and deploying its technology across Microsoft's Azure cloud data centers. The initiative aims to reduce the power and energy required for AI models to generate responses.
Viking Therapeutics (VKTX, Financial) shares declined despite announcing promising data from its Phase 2b trial for VK2809 in treating non-alcoholic steatohepatitis (NASH). The company's cautious stance on the drug's future development, pending FDA feedback, contributed to the stock's downturn.
Guidewire Software (GWRE, Financial) reported Q3 Non-GAAP EPS of $0.26, beating expectations by $0.13. Revenue for the quarter was $240.68M, a 16% year-over-year increase. The company has provided a positive outlook for Q4 and the full fiscal year, with expected ARR between $856M and $864M.
GuruFocus Stock Analysis
- Bad News Is Good News? by Wade W. Slome, CFA, CFP
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