Stock market today: Stocks slide amid weak manufacturing data, GameStop rallies after return of 'Roaring Kitty'
06/03/2024 23:54
US stocks are looking to build on their strong performance in May as hopes for rate cuts revive and the meme stock mania roars back.
US stocks slid on Monday to kick off a volatile first trading day of June.
The tech-heavy Nasdaq Composite (^IXIC) turned negative by afternoon trading, down roughly 0.2%, while the benchmark S&P 500 (^GSPC) also lost steam to fall about 0.5%. The Dow Jones Industrial Average (^DJI) dropped around 1%, or nearly 400 points.
A weaker-than-expected reading on the manufacturing sector pushed the major averages lower as investors debate the future path of Fed rate cuts. Bond yields also moved to the downside, with the 10-year Treasury yield (^TNX) falling about 10 basis points to trade near 4.41%.
Meanwhile, a surge in GameStop (GME) shares grabbed the spotlight, firing up speculation again of a return to a 2021-style meme rally. The stock skyrocketed over 100% at one point in early trading after a Reddit post apparently by Keith Gill — aka "Roaring Kitty" — showed a big bet by the influential trader. Fellow meme darling AMC's (AMC) shares shot up as much as 27% alongside the move.
Shares of GME, which were briefly halted for volatility, pared gains to about 30%.
Overall, stocks are looking to build on their strong performance in May, which saw all three major gauges break records during the month.
Read more: How does the labor market affect inflation?
The May jobs report and other labor prints later this week will test investor sentiment on the Fed's path. Traders have stepped up bets on a Fed cut in September compared with a week ago, per the CME FedWatch tool.
Live11 updates
Nasdaq turns negative, yields sink
US stocks turned negative on Monday with the tech-heavy Nasdaq Composite (^IXIC) giving up earlier gains to fall about 0.2%. The benchmark S&P 500 (^GSPC) fell about 0.6% in afternoon trading while the Dow Jones Industrial Average (^DJI) sank 1%, or about 400 points.
A weaker-than-expected reading on the manufacturing sector pushed bond yields lower, with the 10-year Treasury yield (^TNX) falling about 10 basis points to trade near 4.41% as investors debate the future path of Fed rate cuts.
Oil, meanwhile, dropped after OPEC+ extended its production cuts into 2025 but also said it will start to unwind some of its cuts in the fall.
NYSE technical error results in volatility halts, inaccurate stock prices
A technical glitch on the New York Stock Exchange (NYSE) early Monday resulted in multiple incorrect stock prices and volatility halts.
Yahoo Finance's Ines Ferré reports:The glitch impacted several stocks, most notably a 99.9% drop in the price of Warren Buffett's Berkshire Hathaway (BRK-A) A-shares.
Berkshire Hathaway (BRK-B) B-shares, which trade at 1/1,500th the price of the A-shares, were down as much as 1.1% on Monday and appeared largely unaffected by the error, though volatility was pronounced in both issues as A-shares reopened for trading near 11:35 a.m. ET.
"A technical issue with industry-wide price bands published by the CTA SIP triggered halts in a number of stocks listed on the NYSE Group exchanges this morning," read a NYSE statement emailed shortly after 11 a.m. Eastern Time.
Traders and floor officials react to technical issues on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., June 3, 2024. REUTERS/Brendan McDermid (REUTERS / Reuters) Price bands prevent outsized volatility or extreme movements in an individual stock. The NYSE said the impacted stocks have since reopened or are in the process of reopening, and the issue was resolved.
Chipotle (CMG) stock was temporarily halted for volatility about 14 minutes after the market opened, even though the stock was down only 1.2%.
Horace Mann Educators (HMN) and Franco-Nevada Corp (FNV), a gold-focused royalty and streaming company, were also temporarily halted.
Monday's technical glitch comes days after the disappearance of live calculations for the S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) for about an hour.
About a week ago, the NYSE began settling stocks in one business day to comply with a new rule from the Securities and Exchange Commission, with the time between a trade and settlement decreased from two days to one day.
Spotify will raise subscription prices...again
Spotify (SPOT) stock rose as much as 4% in early trading on Monday after the streaming giant announced another round of price hikes for its US subscription plans.
Prices will rise between $1 to $3 beginning in July, the company said Monday.
Family plans will see the largest increase, with prices rising to $19.99 per month from $16.99. Duo plans, which allow two users to share an account, will increase by $2 to $16.99. And Spotify Premium subscriptions will now cost $11.99 a month, an increase of $1 a month.
Spotify boosted the cost of certain subscription plans last summer. The company previously hinted at plans to raise prices after last year's various price hikes "had minimal impacts on growth."
"So that we can continue to invest in and innovate on our product features and bring users the best experience, we occasionally update our prices," the company said in a blog post announcing the hikes.
The news comes after Spotify turned a profit in the first quarter and beat on most of its key metrics. It also guided to higher revenue and operating income for the current quarter.
Over the past year, Spotify has committed to price increases in addition to multiple rounds of layoffs and other initiatives to improve profitability. The company said it will be more intentional about future investments after spending billions on its push into the crowded podcast market.
GameStop soars after 'Roaring Kitty' reveals $175 million position in retailer
Is meme stock mania back in action? Yahoo Finance's Ines Ferré reports:
GameStop stock (GME) rose as much as 75% on Monday after user "DeepF***ingValue" on Reddit, an account believed to be tied to individual investor Keith Gill — who ignited the meme stock rally back in 2021 — posted a screenshot on Reddit late Sunday that purported to show they'd built a nearly $175 million position in the video game retailer.
Gill is also known as Roaring Kitty on X and YouTube. The user posted the screenshot Sunday night on Reddit's Superstonk subreddit.
The screenshot showed holdings of 5 million GameStop shares purchased at an average price of $21.274, a position worth $115.7 million as of Friday's closing price of $23.14. GameStop shares traded hands at $38 each in early trading Monday before they were temporarily halted for volatility.
The account also appears to own 120,000 options contracts that expire on June 21. These contracts confer the right to buy GameStop shares at $20 each, a position worth $65.7 million as of Friday's close.
Shares of GME were briefly halted for volatility shortly after the opening bell.
Monday's rally comes after GameStop surged 180% over a span of two days back in mid-May after "Roaring Kitty" posted for the first time on X, formerly known as Twitter, since 2021.
Last month's rally was short-lived, as analysts warned the meme action this time around was a far cry from the level of retail inflows seen in 2021.
Still, GameStop capitalized on the phenomenon. Last month, the company sold 45 million shares, bringing in around $930 million in proceeds.
ISM report shows further contraction in manufacturing activity
Fresh data out Monday showed a mixed reading on activity in the manufacturing sector in May.
The Institute for Supply Management's manufacturing PMI indicated the manufacturing sector moved further into contraction in May, while a measure from S&P Global showed manufacturing activity increased more than initially thought in May.
The ISM's manufacturing PMI registered a reading of 48.7 in May, down from a reading of 49.2 and lower than the 49.5 economists expected, according to Bloomberg data.
"US manufacturing activity continued in contraction after growing in March, the first expansion for the sector since September 2022," Timothy Fiore, chair of the ISM's manufacturing business survey committee, said in the company's release. "Demand was soft again, output was stable, and inputs stayed accommodative."
Fiore added: "Demand remains elusive as companies demonstrate an unwillingness to invest due to current monetary policy and other conditions."
S&P Global's own manufacturing PMI reading out on Monday showed US manufacturing activity hit a reading of 51.3, up from a prior reading of 50.9 while new orders in the sector returned to growth.
Nasdaq, S&P 500 rise at the open
Markets opened mostly higher on Monday to kick off the first trading day of June.
The tech-heavy Nasdaq Composite (^IXIC) and benchmark S&P 500 (^GSPC) rose about 0.8% and 0.4%, respectively, while the Dow Jones Industrial Average (^DJI) hovered around the flatline.
A surge in GameStop (GME) shares grabbed the spotlight, firing up speculation again of a return to a 2021-style meme rally. Shares of GME were halted for volatility after climbing about 64% higher shortly after the opening bell.
Ford CEO to Yahoo Finance on EV profits
Ford (F) CEO Jim Farley told me in a new episode of Yahoo Finance's Opening Bid podcast that he has a date in mind when Ford will make money from EVs.
But he didn't want to share it with me during a sit-down in Detroit! Ford is slated to lose about $5 billion in its EV division this year.
I did appreciate, though, that Farley is focused on running a profitable EV business, and that includes streamlining costs and pulling back on aggressive EV plant buildout timelines.
You can watch the full episode below or listen in on all major podcast platforms such as Spotify, Apple, Amazon, Pandora, and iHeartMedia.
Nvidia keeps on rolling sentiment wise
Nvidia (NVDA) shares are getting a 3% pop premarket after another well-received presentation from founder Jensen Huang, this time at Computex in Taipei.
The most important thing was Nvidia unveiling its next generation of AI chips, dubbed Rubin. This is impressive stuff, as Nvidia just announced new AI chips in March.
"Net-net, we view all four announcements as great depiction of Nvidia's efforts to lean on its existing AI accelerator dominance to establish a robust presence in what is for the company a mostly untapped combined accelerated computing total addressable market of $1 trillion plus going from AI networking to the largely CPU-centered server market," Citi analyst Atif Malik said in a client note.
Unsurprisingly, Malik maintained a Buy rating on Nvidia shares.
Catch up on Nvidia via Yahoo Finance's recent exclusive interview with Huang.
The vibe around software stocks after Salesforce shocker
Salesforce (CRM) earnings last week really left a bad taste in the mouth of tech bulls.
So much so that they voiced their concerns at a closely watched Jefferies tech conference in Newport Beach, Calif., late last week.
Here are a couple of key takeaways from Jefferies tech analyst Brent Thill:
"Macro headwinds persist. Investor sentiment in the software space remains negative as companies call out the tough macro environment. The weakness was broad-based across front-office, back-office, large enterprises, and small businesses. Workday (WDAY) and Salesforce both highlighted weak growth in EMEA."
"AI crowding out. Despite the long-term industry tailwinds surrounding AI, investor concerns surrounded near-term budget shifts away from software as companies focus on semis and hardware."
Reminder on June for stocks
June is the second-worst-performing month of the year for the S&P 500 over the last 15 years.
Helpful chart from BTIG this morning.
June is often a challenging period for markets. (BTIG) GameStop explodes
And so starts the week...
GameStop stock (GME) is up 85% premarket (it was up as much as 103%) as meme overlord Keith Gill appeared to disclose a $116 million position in the video game retailer on Reddit. It was his first post in three years.
Note the post couldn't be verified, similar to one made from his account on X, formerly known as Twitter, a couple of weeks ago.
All I can say is be careful with this one!
If anything, the real play is to do some research on Reddit (RDDT) given the heightened activity on the platform. Start your fact-finding mission here.
