April 25, 2024
Stock Market

Dow falls as Wall Street awaits inflation data, Bitcoin surges

US stocks were in a holding pattern on Tuesday after a pullback from all-time highs, with retail earnings on tap to occupy investors counting down to a crucial inflation report.

The Dow Jones Industrial Average (^DJI) fell about 0.5%, while the S&P 500 (^GSPC) slipped more than 0.1% in the wake of a retreat from record levels. The Nasdaq Composite (^IXIC) gave up earlier gains to trade flat by the afternoon.

Stocks have lost momentum as investors regroup after the tumultuous run-up last week and as focus sharpens on the health of the US economy. Looming over investors is the PCE index report due Thursday, a key inflation input into the Federal Reserve’s rate-setting decisions.

Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

Given the market’s preoccupation with the timing of a rate cut, the PCE print is seen as a potential catalyst for stocks to move in either direction. In the meantime, consumers appear less confident about the US economy.

The Conference Board’s Consumer Confidence Index for February came in at a reading of 106.7, down from a revised 110.9 in January. January’s preliminary reading was 114, a two-year high for the measure. Economists surveyed by Bloomberg had expected a reading of 115 for February.

Investors digested other economic updates on Tuesday, including another rise in home prices and the largest drop in US durable goods orders in four years.

By contrast, the price of bitcoin (BTC-USD) soared to two-year highs, breaking above $57,000 per token, with gains buoyed by a big investment from MicroStrategy (MSTR). Shares of bitcoin miners and crypto exchanges such as Coinbase (COIN) rose alongside the leading digital currency.

Early morning earnings reports from major retailers provided a window into how the consumer is faring. Macy’s (M) shares slipped as it revealed plans to shutter 150 stores in a turnaround bid and reported another quarter of sales. Lowe’s (LOW) downbeat 2024 sales and profit outlook weighed on the home improvement chain’s stock.

Live10 updates

  • 3 companies are driving the ‘Magnificent Seven’ trade

    The stock market rally is no longer just about seven stocks driving the market higher.

    Three companies: Nvidia (NVDA), Meta (META) and Amazon (AMZN) have significantly outperformed the S&P 500 (^GSPC) to start 2024. Microsoft (MSFT) has gained about 8% this year, slightly outperforming the benchmark’s average return of just more than 6%. And then there’s Apple (AAPL), Alphabet (GOOGL, GOOG) and Tesla (TSLA), whose stocks have lost value through about two months of trade in 2024.

    The performance marks a clear divergence in what had been a story of seven “Magnificent” tech stocks leading the benchmark average higher in 2023.

    DataTrek co-founder Jessica Rabe reasoned the outperformance seen in Nvidia, Meta and to some extent Amazon makes sense when considering recent moves in earnings projections. Over the last 30 days as Wall Street analysts digested the latest round of corporate results from all seven big tech players, Meta Amazon and Nvidia saw the largest increases in earnings projections for both the current year and next year.

    Meanwhile, Tesla and Microsoft negative earnings shifts were the only two of the group to see their earnings moved lower by more than the S&P 500 for next year.

    “US Big Tech’s superior earnings estimate momentum versus the S&P 500 as a whole goes a long way in explaining why most of them have been able to continue to build on their [more than one] year run of outperformance,” Rabe wrote in a note to clients on Monday night. “As much as rates have risen this year, most Big Tech names are in considerably better fundamental shape than the broader US equity market.

    “As long as they keep delivering on earnings results in the same manner as last quarter, most of these stocks should keep outperforming and driving the S&P higher.”

  • Viking Therapeutics, Norwegian Cruise Line, Unity Software: Stocks trending in afternoon trading

    Here are the stocks trending on Yahoo Finance in afternoon trading on Tuesday:

    Viking Therapeutics (VKTX): Shares surged about 110% on Tuesday after the company reported positive top-line results from the phase II trial of its weight-loss treatment. The biopharmaceutical giant said the drug demonstrated “statistically significant reductions in body weight at all doses as compared to placebo.”

    Janux Therapeutics (JANX): Shares of the biotech stock tripled in value on Tuesday, rising more than 200% after the company revealed promising early clinical trial results for its prostate cancer treatment. The results show “promising efficacy with favorable safety profile in heavily pretreated subjects with late-stage [prostate cancer],” the company said.

    Norwegian Cruise Line Holdings (NCLH): Shares rose more than 15% on Tuesday after the cruise liner reported its first profitable year since 2019 as fourth-quarter losses narrowed significantly. The company also posted upbeat guidance for the current quarter, in addition to full-year guidance that matched Wall Street expectations.

    Unity Software (U): Shares fell nearly 10% on Tuesday, its largest drop in a year, after the company issued weaker-than-expected guidance for the current quarter and also reported a higher-than-expected loss for the fourth quarter. The disappointing results come after the company announced a strategic reset of its portfolio.

  • Hess, Chevron shares slump amid potential merger roadblock

    Shares of Hess (HES) and Chevron (CVX) slumped on Tuesday after their planned merger hit a snag.

    Oil giant ExxonMobil (XOM) and China National Offshore Oil Corporation (CNOOC) said they are considering pre-emption rights related to their project in Guyana, a key asset in Chevron’s planned acquisition of Hess.

    ExxonMobil is the operator of the project and owns a 45% stake, while CNOOC owns 25%. Hess owns the other 30%, which was expected to be transferred to Chevron once the merger closes.

    ExxonMobil said in a statement “We owe it to our investors and partners to consider our pre-emption rights in place under our joint operating agreement to ensure we preserve our right to realize the significant value we’ve created and are entitled to in the Guyana asset.”

    In a SEC filing Chevron stated it has been “engaged in constructive discussions” with ExxonMobil, CNOOC and Hess.

    “Chevron and Hess believe these discussions will result in an outcome that will not delay, impede or prevent the consummation of the merger,” stated Chevron.

    Last year the oil major announced plans to acquire US explorer and producer Hess in an all-stock deal valued at $53 billion.

    The Hess acquisition would give Chevron 30% ownership of more than 11 billion barrels-equivalent of recoverable resources in Guyana. The small country located in South America next to Venezuela is on track to produce more than 1 million barrels per day by 2026.

    Shares of Hess slumped more than 3% while Chevron dipped about 2%.

  • Stocks falls as Bitcoin soars

    US stocks were stuck in a holding pattern on Tuesday after a pullback from all-time highs.

    The Dow Jones Industrial Average (^DJI) fell about 0.5%, while the S&P 500 (^GSPC) slipped more than 0.1%. The Nasdaq Composite (^IXIC) gave up earlier gains to trade flat by the afternoon.

    Bucking the broader market action, Bitcoin (BTC-USD) soared with the price of the token breaking above $57,000 — on track for its largest one-month gain since January 2023.

  • Bitcoin hits two-year high

    The bitcoin rollercoaster is not done yet.

    The price of bitcoin (BTC-USD) soared to two-year highs on Tuesday, surpassing $57,000 a token as big buyers enter the market.

    On Monday, crypto investor MicroStrategy (MSTR) announced it purchased 3,000 bitcoins for $155 million while prices have also been buoyed by recent approvals of spot bitcoin exchange-traded funds (ETFs) in the US.

    Shares of other cryptocurrencies and exchanges echoed Bitcoin’s move to the upside. Ether (ETH-USD) topped $3,200 for the first time since 2022 while shares of Coinbase (COIN) rose about 3%.

    Bitcoin has gained nearly 35% so far in February. If current levels hold, it will be the token’s largest one-month gain since January 2023.

  • Viking Therapeutics stock rips 70% after positive trial results

    The weight-loss trade is alive and well on Wall Street.

    Shares of Viking Therapeutics (VKTX) rose as much as 70% early Tuesday after the company reported a phase II trial of its weight-loss treatment reached its primary and secondary endpoints.

    The trial showed its weight-loss treatment, VK2735, which is “a dual agonist of the glucagon-like peptide 1 (GLP-1) and glucose-dependent insulinotropic polypeptide (GIP) receptors,” saw patients lose up to a placebo-adjusted 13.1% of their body weight after 13 weeks.

    The company will now meet with the FDA to discuss the next steps in development.

    Viking stock has risen sixfold over the last year, and the company’s market cap is now closing in on $7 billion.

    Elsewhere on Tuesday, shares of Fractyl Health (GUTS) rose as much as 6% after Bank of America initiated coverage on the stock with a Buy rating and a $26 price target.

    Shares of Fractyl are down about 50% since their public debut earlier this month.

    Fractyl is developing diabetes and obesity treatments as the pharmaceutical industry continues to rush toward the opportunity unlocked by Novo Nordisk (NVO) and Eli Lilly (LLY).

    “We initiate coverage on Fractyl with a Buy and $26 PO,” BofA wrote in its note.

    “GUTS is a pre-commercial stage, hybrid medtech/biopharma company that develops treatments for type 2 diabetes (T2D) and obesity. Lead asset Revita (pivotal stage) is a non-invasive endoscopic procedure that restores part of digestive system (duodenum) to a healthier state for better and durable glycemic control.

    “Follow-on asset Rejuva (preclinical) is a one-time, GLP1 gene therapy aims at remission of diabesity, potentially with better tolerability than on-market GLP1 drugs. We like GUTS for actionable catalysts with upside potential in 2024-25 eg pivotal data of Revita that can support approval in multi-bn T2D market.”

  • Consumer confidence falls from two-year high

    Consumers are feeling less confident about the current state of the US economy, according to new data released Tuesday morning.

    The Conference Board’s Consumer Confidence Index for February came in at a reading of 106.7, down from a revised 110.9 in January. January’s preliminary reading was 114, a two-year high for the measure. Economists surveyed by Bloomberg had expected a reading of 115 for February.

    The Expectations Index, which measures consumers’ short-term outlook for income, business, and labor market conditions, fell to 79.8 in February from a revised 81.5 in January. Historically, a reading below 80 in that category signals a recession in the coming year.

    “The decline in consumer confidence in February interrupted a three-month rise, reflecting persistent uncertainty about the US economy,” said Dana Peterson, chief economist at The Conference Board.

    “The drop in confidence was broad-based, affecting all income groups except households earning less than $15,000 and those earning more than $125,000. Confidence deteriorated for consumers under the age of 35 and those 55 and over, whereas it improved slightly for those aged 35 to 54,” she added.

  • Stocks mostly muted

    US stocks were mostly muted in early trading on Tuesday as investors digested a slew of retail earnings reports and awaited upcoming PCE inflation data, due Thursday.

    Both the Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC) were little changed in the wake of a pullback from all-time highs. Tech stocks were more upbeat, with a rise of 0.3% for the Nasdaq Composite (^IXIC).

  • Macy’s says it’s closing 150 more stores

    Just wow, Macy’s (M).

    In an effort to fend off an overthrowing of its board by activist investor Arkhouse (who has nominated nine directors to the board), Macy’s dropped a bombshell this morning: It plans to close 150 “underproductive” stores, with 50 shutting down this year.

    The goal is to boost profit margins and cash flow and, potentially, push the stock price higher.

    This is a huge, huge number for a company that has shuttered hundreds of stores across the country in the past decade.

    I will push to the side on what this could mean to the battle with Arkhouse for now.

    But what I will say is that this is likely bullish for the general merchandise departments at discounters Walmart (WMT), Target (TGT), and TJX Companies (TJX) long term. Essentially, Macy’s is exiting a fresh round of neighborhoods in the United States and, in turn, sending market share to competitors both in stores and online.

    I think the closures say a lot about how the shift to digital shopping continues to impact legacy retailers such as Macy’s.

    By the way, Amazon (AMZN) naturally is a winner here. It has made great strides in apparel and general merchandise selections, and considering it continues to cut delivery times, expect the tech beast to continue to put major pressure on department store retailers.

  • It still isn’t pretty in the housing market

    The vibe around the US housing market still isn’t pretty and likely won’t be any better until later this year.

    Appliance giant Whirlpool (WHR) just dropped some guidance ahead of an investor day down at the New York Stock Exchange today that says a lot about the continued pressures in the market.

    Despite a major innovation push this year (notably an aggressive push into new small appliances, such as automated KitchenAid espresso makers) the company guided to flat sales in North America year over year.

    The company doesn’t really see top-line improvement until 2026, when it outlined a 2% to 3% compound annual sales growth rate for its largest market — North America.

    I will be diving into the guide more with Whirlpool chairman and CEO Marc Bitzer in a chat that will air on Yahoo Finance Live today in the 3 p.m. ET hour.

    The positive here: The notorious industrial cost-cutter thinks it could expand its profit margins this year, next year, and in 2026 by removing a good amount of costs.

    Keep in mind this back-end weighted outlook from Whirlpool comes on the heels of a lackluster new home sales report this week.

    The bottom line for housing derivative stocks like Whirlpool and Home Depot (HD) to work higher again is that there will have to be new indications on when the Fed will be cutting interest rates. The expectations of rate cuts this year have been pushed back a lot amid stronger-than-expected inflation readings and various Fed speeches.

    That said, I am a buyer of one of those new KitchenAid automatic espresso makers. It’s a Snazzy tool to deliver caffeine in a super-efficient manner!

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