Stock market news today: US stocks slip ahead of Alphabet, Tesla results
07/24/2024 03:08
A marquee earnings day brings Big Tech results, in focus as investors assess the future of this year's rally.
US stocks slipped on Tuesday as investors weighed early reports on a marquee earnings day, with Big Tech results in focus.
The benchmark S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) dropped about 0.2% and 0.1%, respectively, with the tech-heavy Nasdaq Composite (^IXIC) finishing the session just below the flatline.
Markets have been digesting a rotation away from the megacaps that have fueled this year's rally. Small caps have benefitted as a result with the Russell 2000 (^RUT) up 3% over the past two days.
The wait is on for Alphabet (GOOGL, GOOG) and Tesla (TSLA) results due after the bell, with the market watching for signs of continuing growth from the first pair of the "Magnificent Seven" behemoths.
Earlier in the trading session, investors assessed earnings from General Motors (GM) and Coca-Cola (KO) with shares closing down about 6% for GM while Coca-Cola finished the day flat.
Read more: 32 charts that tell the story of markets and the economy right now
Meanwhile, volatility around the US presidential election has ebbed over the past two days. Vice President Kamala Harris is projected to have secured delegate backing to become the Democratic presidential nominee, helping settle any remaining nerves over President Joe Biden's withdrawal from the race.
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Stocks slip ahead of Big Tech earnings
US stocks slipped on Tuesday as investors awaited the kickoff to Big Tech earnings.
The benchmark S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) dropped about 0.2% and 0.1%, respectively, with the tech-heavy Nasdaq Composite (^IXIC) finishing the session just below the flatline.
Markets have been digesting a rotation away from the megacaps that have fueled this year's rally. Small caps have benefitted as a result with the Russell 2000 (^RUT) up 3% over the past two days.
Here comes the start of Big Tech earnings...
Tesla (TSLA) and Alphabet (GOOGL, GOOG) will report earnings after the bell today.
Our team at Yahoo Finance has the scoop on what to expect:
As reported by Yahoo Finance's Pras Subramanian, Tesla stock is still essentially flat for the year despite a steep early-year sell-off. But recent enthusiasm behind a Tesla robotaxi, shareholder approval of Musk’s controversial pay package, and new growth in Tesla’s energy business has sent shares on a steep rise — nearly 38% in the past month.
But a pushback of Tesla’s robotaxi reveal has given investors pause. Musk all but confirmed last week that Tesla would be delaying its robotaxi reveal, which was slated for Aug. 8.
“Requested what I think is an important design change to the front, and extra time allows us to show off a few other things,” Musk tweeted in reply to a post regarding changes and a delay to the robotaxi.
With a robotaxi date in limbo, investors expect Tesla and Musk to give an update on the car's debut.
As for the quarter itself, Tesla is expected to report Q2 revenue of $24.59 billion per Bloomberg consensus, higher than the $21.30 billion it reported in Q1, but a shade lower than the $24.93 Tesla reported a year ago. The street expects Tesla to post adjusted EPS of $0.60 on adjusted net income of $2.15 billion and operating profit of $1.88 billion, per Bloomberg.
Google parent company Alphabet will be another key name to watch after the bell.
Yahoo Finance's Dan Howley points out the tech giant is coming off of an impressive first quarter during which it announced it initiated its first dividend of $0.20 per share and authorized stock repurchases of $70 billion.
Alphabet shares are up 30% year to date. Shares of rivals Microsoft (MSFT) and Amazon (AMZN) are up 18% and 22% year to date, respectively. All three companies are pouring money into building out their generative AI capabilities, spending lavishly on data centers capable of powering the AI models they offer via their cloud service platforms.
For the quarter, analysts are anticipating earnings per share of $1.85 on revenue of $84.35 billion, according to data compiled by Bloomberg. That would be a major jump from the same period last year when the company reported earnings per share of $1.44 on revenue of $74.6 billion.
Wall Street expects advertising revenue to top $64.5 billion, up from $58.1 billion last year. That includes year-over-year increases in Google Search & other, YouTube ads, and Google Network revenue, pointing to a positive advertising environment. A beat by Alphabet could also buoy shares of ad business rival Meta (META).
Comcast expects to clinch 11-year NBA media rights deal
Comcast (CMCSA) said Tuesday it's confident it will clinch an 11-year NBA media rights deal, despite Warner Bros. Discovery's (WBD) TNT Network exercising its matching rights the day prior.
Warner Bros. has aired a portion of games through its TNT network since 1989. It reportedly shells out $1.2 billion annually for the rights, which expire at the end of next season. The company revealed Monday it has matched a media rights bid to continue airing NBA games, but it's unclear if the league will continue the partnership.
"Our expectation is that soon, an 11-year rights deal between ourselves and the NBA will be announced," Comcast president Michael Cavanagh said during the company's second quarter earnings call. "We don't believe that the resolution of matching rights will affect the package that we expect to be awarded."
Cavanagh said the package will include 100 regular-season games, which will air across NBC and Peacock. That's "more than any other media partner and more regular-season games than each existing partner has under the current rights deal," the executive said.
For playoffs, NBC will have the exclusive rights to the first- and second-round games each year on its national platforms. It will also host six NBA conference final series over the course of the deal, "which is more playoff games on average each year than any other media partner."
Peacock, meanwhile, will exclusively stream about 50 national regular season and postseason games.
In total, the NBA has reportedly secured a media rights package worth around $76 billion over 11 years — a bullish sign when it comes to the importance of sports to both streamers and traditional broadcast and cable providers.
"Sports as a cornerstone will ensure that Peacock is relevant," MoffettNathanson analyst Craig Moffett wrote in reaction to the results. "They have a place at the table in the consolidation to come. We observed last quarter that Peacock is blessed to have Comcast’s strong balance sheet behind it."
Peacock losses narrowed to $348 million in the quarter, down from $651 million in the year-ago period and $639 million in the first quarter of 2024. The streamer also grew its subscriber base by 38% year over year to 33 million, although subscribers dipped by about 500,000 on a quarter-over-quarter basis amid recent price hikes.
"Adding the NBA will mean an even longer path to profitability," Moffett noted. "But for now, the losses at Peacock are, thankfully, getting smaller."
One chart shows what's driving the Trump trade
As investors grew more confident over the past month that former President Donald Trump will win the 2024 election, certain pockets of the stock market have outperformed.
The "Trump trade," as some on Wall Street have dubbed the move, has been headlined by bets on energy companies, increased mergers and acquisitions, and higher bond yields, a sign investors are betting on a continued higher-inflation regime under a Trump presidency.
A submission from Oxford Economics lead US economist Bernard Yaros in volume three of the Yahoo Finance Chartbook helps explain why. Yaros work shows the most inflationary outcome for the 2024 election cycle would be a Trump victory and a Republican sweep of both the House and the Senate.
"The inflationary impact is greatest in a 'full-blown Trump' scenario where a Republican trifecta doubles down on tax cuts, higher defense spending, and tariffs," Yaros told Yahoo Finance. "Even in a 'limited Trump' scenario, where a Republican trifecta doesn’t loosen fiscal policy or raise tariffs to the same extent, inflation is still meaningfully higher."
US spot ether ETFs make market debut
Exchange-traded funds that hold ether (ETH-USD) began their first day of trading Tuesday following final approval from regulators the day prior.
But despite the debut, ether prices dropped 1.5% in afternoon trading.
Yahoo Finance's Jennifer Schonberger and David Hollerith report:
The Securities and Exchange Commission gave the green light Monday to BlackRock (BLK), Fidelity, Franklin Templeton, Grayscale, and 21 Shares, the companies said.
The moves could make ether, the world’s second-largest cryptocurrency, a potential staple in 401(k)s, IRAs, and pension plans and grant the digital asset more mainstream acceptance.
"This is exemplary of Fidelity's rich history and commitment to meeting the evolving needs of our customers," Fidelity's head of digital asset management, Cynthia Lo Bessette, said in a press release.
The approvals come roughly six months after the SEC permitted many of these same money managers to launch ETFs that hold bitcoin (BTC), the world’s largest cryptocurrency.
The new development is the latest example of the recent success the crypto industry is having in Washington as it pushes for friendlier regulation and greater freedom to launch new products.
It comes just days before the Republican nominee for president, Donald Trump, offers his stamp of approval when he speaks before the Bitcoin 2024 conference in Nashville this weekend.
Republican presidential nominee and former President Donald Trump holds a campaign rally in Grand Rapids, Mich., July 20, 2024. (REUTERS/Tom Brenner) (REUTERS / Reuters) Trump and many in his party have embraced digital assets as they seek to draw a contrast with the Biden administration, which led a crackdown on many of the industry’s major players following a market meltdown in 2022.
The GOP said in its 16-page party platform last week that "Republicans will end Democrats’ unlawful and unAmerican Crypto crackdown."
Trump, who in the past has called bitcoin a "scam," referred to cryptocurrencies as "amazing" in an interview with Bloomberg published last week.
The price of bitcoin is up more than 6% over the past month to roughly $68,000, putting it within striking distance of an all-time high set earlier this year.
Ether has fallen 0.5% over the past five days. It has traded down in recent months and remains far off its all-time high set in November 2021.
A pending market pullback remains a 'buying opportunity'
The stock market rally of 2024 has come with limited gut-check moments for investors in the S&P 500 (^GSPC).
The benchmark index is up about 17% this year and has only seen a maximum drawdown of less than 6% so far this year.
BMO Capital Markets chief investment strategist Brian Belski pointed out in the latest volume of the Yahoo Finance Chartbook that the S&P 500 typically sees a sharper pullback in the second year of a bull market. Dating back to 1949, Belski's work shows the average drawdown in the second year of a bull market is 9.4%.
"The market's ripe for a pullback from a sentiment perspective," Belski said.
But the catch is that Belski believes that will be an "opportunity for investors," given that stocks usually bounce back by 14.5% from drawdowns in a bull market.
"Stock are going to be higher at year-end," said Belski, who sees the Federal Reserve easing interest rates leading to a "Goldilocks" era for the US economy, where growth remains steady while inflation eases.
Belski added, "It's all part of our 25-year secular bull market call, which we've had in place since 2010."
Click here to view 32 charts from the Yahoo Finance Chartbook that tell the story of markets and the economy right now.
Stocks turn positive led by Financials
Stocks turned positive in late morning trade on Tuesday.
The S&P 500 (^GSPC) was more than 0.3%, while the tech-heavy Nasdaq Composite (^IXIC) rose about 0.6%. The Dow Jones Industrial Average (^DJI) was up more than 0.1%.
Financials (XLF) were the only sector outperforming the broader S&P 500 index on Tuesday. And the rally in banks trickled down the cap spectrum to regional banks too. The S&P Regional Banking ETF (KRE) was up nearly 2%.
The small-cap Russell 2000 (^RUT) index, which is heavily influenced by regional banks, was up about 0.9% on the day.
Source: Yahoo Finance Spotify soars on record profit, strong guidance
Spotify Technology (SPOT) reported fiscal second quarter earnings on Tuesday that beat expectations as the audio giant posted record profit, gross margin, and free cash flow in the quarter on the heels of its recent "efficiency" strategy.
Revenue came in line with estimates while monthly active user metrics disappointed, both of which investors shrugged off as the stock surged more than 10% in early trading.
In June, Spotify announced it would hike the prices of its premium US subscription plans, with increases set to take effect this month. Spotify previously raised prices last summer.
On top of price adjustments, the company has committed to multiple rounds of layoffs and initiatives to boost top-line growth and improve margins, like a music-only streaming tier and audiobooks-only plan. It also introduced a higher-priced audio bundle that includes music, podcasts, and audiobooks.
The audio giant reported operating income of 266 million euros ($289 million), compared with a loss of 247 million euros in the prior-year period. This was above company guidance of 250 million euros, driven by "lower personnel and related costs and lower marketing spend."
It also guided to a strong Q3 operating income of 405 million euros ($440 million), well ahead of Wall Street consensus expectations of 298.1 million euros.
The streaming service reported net income of 274 million euros ($298 million), or earnings of 1.33 euros per share. That was well ahead of analyst expectations of earnings of 1.04 euros per share. It also compares with the year-earlier period loss of 302 million euros, or a loss of 1.55 euros a share.
Gross margins came in stronger than expected at 29.2%, beating company guidance of 28.1%. The streamer said it expects margins to tick up to 30.2% in the third quarter, primarily driven by year-over-year improvements in music and podcasting.
Spotify has previously said it expects the metric to come in between 30% and 35% over the long term amid plans to further scale its podcasting and ads business.
Revenue, meanwhile, met expectations of 3.81 billion euros ($4.14 billion) — 20% higher compared with the second quarter of 2023. The company expects revenue to hit 4 billion euros in Q3 versus the 3.4 billion euros in the year-ago period.
Wall Street analysts credited Spotify's gross margin beat and better-than-expected guidance for Q3 operating income and gross margins as key catalysts for the positive stock reaction.
General Motors shares slide after reporting second quarter results
General Motors (GM) stock fell more than 6% despite reporting second quarter results that came in better than Wall Street expected.
Yahoo Finance's Pras Subramanian has the details on the report:
GM (GM) once again posted strong second quarter results, and boosted its guidance for a second time this year as customers continue buying the Detroit-based automaker's gas-powered vehicles, trucks — and even EVs.
For the quarter, GM reported record revenue of $47.97 billion versus $45.51 billion estimated (Bloomberg consensus), which represents a 7.2% jump compared to a year ago ($44.75 billion). GM reported adjusted EPS of $3.06, compared to estimates of $2.70, with GM also reporting adjusted EBIT (earnings before interest and taxes) of $4.438 billion, easily topping estimates of $3.88 billion.
In terms of guidance, GM reported the following updates to its full-year 2024 forecast:
EBIT adjusted: $13.0 billion to $15.0 billion ($12.5 billion - $14.5 billion previous)
Automotive operating cash flow: $19.2 billion - $22.2 billion ($18.3 billion - $21.3 billion previous)
Adjusted automotive free cash flow: $9.5 billion - $11.5 billion ($8.5 billion - $10.5 billion previous)
EPS diluted-adjusted: $9.50 $10.50 ($9.00 - $10.00 previous)
Existing home sales fall in June as home prices reach record high
Existing home sales declined in June for the fourth consecutive month as high mortgage rates continued to pressure potential buyers.
Sales of previously owned homes fell 5.4% in June from May to 3.89 million units on a seasonally adjusted annual basis, according to the National Association of Realtors. Sales were also down 5.4% year over year.
The drop in sales underscores how high mortgage rates and home prices are keeping a lid on buying activity. June also marked the second consecutive month of home prices reaching an all-time high. The average price tag on a previously owned home increased 4.1% from a year earlier to $426,900, the NAR said.
That rise in home prices has suppressed buyer appetite. At the end of June, unsold homes for sale grew 3.1% to 1.32 million, according to the NAR, and marked a 23% gain from last year.
“We’re seeing a slow shift from a seller’s market to a buyer’s market,” said NAR chief economist Lawrence Yun. “Homes are sitting on the market a bit longer and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.”
Stocks little changed at the open
US stocks wobbled on Tuesday as investors weighed early reports on a marquee earnings day, with Big Tech results later in focus as potential fuel to sustain this year's rally.
The S&P 500 (^GSPC) fell just below the flat line while the tech-heavy Nasdaq Composite (^IXIC) slipped more than 0.2%. The Dow Jones Industrial Average (^DJI) was down about 0.1%.
The minor declines came after Big Tech stocks led a rally in markets on Monday.
Quick take: Coca-Cola
Similar to my prior post comparing FedEx (FDX) to UPS (UPS), you have to do the same thing always with Coca-Cola (KO) and PepsiCo (PEP).
Coca-Cola easily wins the battle of the second quarters. The two things that stood to me from the results this morning were a 15% organic sales increase and a nice pop in operating margins year over year. PepsiCo pretty much delivered the opposite.
Coke also lifted guidance; PepsiCo no go.
Quick take: GM's earnings
In what is becoming a recurring theme dating back to the middle of last year, General Motors (GM) once again hiked its annual profit forecast after a sizable quarterly beat.
GM sees full-year adjusted earnings of $9.50 to $10.50 a share. Previously, it had modeled for $9 to $10 a share. The company beat second quarter earnings estimates by $0.31.
For the year, it reiterated a recently lowered goal of producing 200,000 to 250,000 EVs.
I am talking to GM CFO Paul Jacobson around 8 a.m. ET today. Keep an eye out for that interview airing in the 9 a.m. ET hour live on Yahoo Finance.
All in all, GM continues to regain its cred with investors.
Another tough quarter for UPS
The sentiment around FedEx (FDX) and UPS (UPS) has really shifted, with the former seen as a solid play on tons of cost cutting while the latter is out of favor because of bad quarters.
To that end, another tough quarter for UPS this morning. I don't think the full-year operating margin cut is going to be well-received by investors.
