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Sunday, November 10

Stocks waver after key data as Micron slides

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By on Economy

US stocks were little changed on Thursday after chipmaker Micron’s (MU) outlook put a dent in tech-rally hopes as investors assessed fresh economic data ahead of an inflation reading key to Federal Reserve policy.

The S&P 500 (^GSPC) hugged the flatline after rising Wednesday to close not far short of a new all-time high. The Dow Jones Industrial Average (^DJI) rose 0.2%, while the tech-heavy Nasdaq Composite (^IXIC) wavered between positive and negative territory.

Stocks are struggling in the wake of Micron’s sales forecast for the current quarter, which met expectations but failed to satisfy investors looking for stellar outperformance from AI-linked companies.

Bullishness around AI has helped lift the benchmark S&P 500 to a 15% gain this year. But concerns are growing that the rally could be at risk if the handful of tech companies driving most of those gains stop topping already lofty expectations.

Memory maker Micron’s shares slid more than 6% in early trading. Nvidia (NVDA) was down more than 2%, reviving worries of a return to the sell-off that rattled markets last week.

Investors were weighing a new batch of economic data ahead of the PCE inflation print on Friday that will influence the Fed’s thinking on the timing of interest rate cuts.

A reading on initial weekly jobless claims came in at 233,000, a decrease of 6,000 from the previous week, according to Department of Labor data. The print came in below a consensus expectation of 235,000. But recurring jobless claims rose to their highest since late 2021, suggesting it’s taking longer for unemployed people to find a job.

Real gross domestic product (GDP) increased at an annual rate of 1.4% in the first quarter of 2024, according to the third estimate by the Bureau of Economic Development released on Thursday morning. The print was slightly higher than the prior estimate of 1.3%.

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

On the corporate front, Levi Strauss (LEVI) shares sank over 15% in the wake of a second quarter revenue miss for the jeans seller. Investors will look to Nike’s (NKE) quarterly results after the bell for more clues to consumer resilience.

Live10 updates

  • Speaking of Chewy….

    As Josh Schafer pointed out in a previous blog post, Chewy (CHWY) shares are letting out a few barks this afternoon following a tweet from cat fan and GameStop (GME) lover Roaring Kitty.

    Can’t make this stuff up!

    Since Chewy is in the news, I thought it would be worthwhile to share what Chewy the actual business is up to. The company is coming off a comeback quarter, where auto ship sales improved. Chewy is also pushing into the vet business to diversify itself, as CEO Sumit Singh told me on Yahoo Finance.

    Our full interview below.

  • Chewy quickly rises 15% after Roaring Kitty tweet

    Chewy (CHWY) shares rose more than 30% in less than fifteen minutes after Roaring Kitty’s X account posted a picture of a dog.

    Posts on the account tied to investor Keith Gill, also known as “Roaring Kitty” on social media, have been driving up shares of Gamestop (GME) over the past month. While that meme trade had largely gone quiet over the past week, the account’s tweet at 1 p.m. ET sent shares of Chewy rocketing higher.

    Petco (WOOF) also saw a quick bounce, rising more than 7%.

    Ryan Cohen, the CEO of GameStop who Keith Gill recently talked glowingly about during a YouTube livestream, is the founder of Chewy.

  • Trending tickers for Thursday

    Walgreens (WBA)

    Walgreens Boots Alliance stock tanked 25% after the pharmacy chain lowered its earnings per share guidance due to “challenging” industry trends and a worse-than-expected US consumer environment.

    Micron (MU)

    Chipmaker Micron’s sales forecast for the current quarter met expectations but failed to satisfy investors looking for stellar outperformance from AI-linked companies.

    The stock sank 6% on Thursday.

    GameStop (GME)

    GameStop was the #3 ticker on Yahoo Finance’s Trending Ticker page on Thursday as the stock popped roughly 5%.

    It’s been a volatile two months for shares of the video game retailer following the online reemergence of one of the stock’s biggest retail investor bulls, Keith Gill.

  • Purdue Pharma ruling makes it more difficult for owners of bankrupt companies to sidestep liability

    Yahoo Finance’s Alexis Keenan reports:

    A new Supreme Court ruling that upended a $6 billion opioid settlement just made it more difficult for owners of any company to use federal bankruptcy proceedings to shield themselves from legal peril.

    The dispute — Harrington v. Purdue — involved bankrupt OxyContin manufacturer Purdue Pharma and members of the Sackler family, the company’s billionaire owners.

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

    In the 5-4 decision, the court said that no provision within the US Bankruptcy Code permits the type of agreement that the Sacklers and the company tried to reach.

    Read more here.

  • With just a few years until retirement, 55-year-olds haven’t saved nearly enough

    Yahoo Finance’s Senior Columnist Kerry Hannon reports:

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

    That’s bleak news for older Gen Xers who are only about a decade out from retiring — and a far cry from the target of having eight times your annual income saved by this age.

    “A lot of folks are behind, and that has important longer-term implications for retirement,” David Blanchett, head of retirement research at PGIM DC Solutions, told Yahoo Finance. “It’s not easy. We can always find things that we’d rather spend the money on today than save for this thing that’s going to happen in 10 or 20 or 30 years.”

    It’s not just the future that looks grim. They’re just squeaking by right now: More than one-third of 55-year-olds say they would have trouble putting together $400 to cover an emergency expense, compared to 19% of 65-year-olds and 15% of 75-year-olds, according to the survey from Prudential Financial.

    Read more here.

  • Pending home sales fall in May

    High home prices and elevated mortgages are keeping prospective buyers away from the housing market.

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

    The Midwest and South posted a drop in contract signings in May from the month before. The Northeast and West recorded gains. All regions across the country registered losses in activity on an annual basis.

    “The market is at an interesting point with rising inventory and lower demand,” NAR chief economist Lawrence Yun said in a statement. “Supply and demand movements suggest easing home price appreciation in upcoming months. Inevitably, more inventory in a job-creating economy will lead to greater home buying, especially when mortgage rates descend.”

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

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

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

    Walgreens stock plunged 24% to touch its lowest level since 1997 after the drugstore chain lowered its fiscal 2024 earnings guidance, citing “challenging pharmacy industry trends and a worse-than-expected US consumer environment”

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

    Management indicated that 25% of the company’s stores are not currently contributing to the long-term strategy and “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, down from its prior forecast of $3.20 to $3.35.

  • Netflix, Meta help lift Nasdaq into green territory

    Communication stocks boosted the Nasdaq Composite (^IXIC) into positive territory with a rise of 0.3% shortly after the market open on Thursday.

    Netflix (NFLX) and Meta (META) both advanced more than 1%, helping lift the tech-heavy gauge that had dipped just below the flatline.

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

    Meanwhile, chip giant Nvidia’s (NVDA) shares were fractionally lower after Micron’s (MU) sales forecast failed to enthuse investors on the AI craze that has fueled the broader market rally this year.

  • Stocks waver at open as investors weigh economic data, Micron puts lid on tech rally

    Stocks opened slightly lower on Thursday as investors assessed economic data released before the bell.

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

    Real gross domestic product (GDP) increased at an annual rate of 1.4% in the first quarter of 2024, according to the third estimate by the Bureau of Economic Development released on Thursday morning. The print was slightly higher than the prior reading of 1.3% but still showed the slowest growth since 2022.

    A reading on initial weekly jobless claims came in at 233,000, a decrease of 6,000 from the previous week, according to Department of Labor data.

    On the corporate front, chipmaker Micron’s (MU) sales forecast for the current quarter met expectations but failed to satisfy investors looking for stellar outperformance from AI-linked companies. The stock fell about 4% in early trading. AI chip giant Nvidia (NVDA) also slipped almost 1% at the open.

  • Why the Levi’s quarter bothers me

    Levi’s (LEVI) shares are getting slammed by 15% in the premarket following earnings.

    And I think it’s deserved for two reasons.

    First, China sales tanked 10% from the prior year. I have been chatting to a good number of folks of late who have recently visited China. One theme is that Chinese consumers are feeling on the gloomy side and not spending like in years past. That mood is impacting demand for Levi’s jeans, Starbucks (SBUX) coffee, and — according to General Mills’ (GIS) earnings call yesterday — Haagen-Dazs ice cream.

    It’s hard to see the inflection point in China.

    Same goes for the Levi’s wholesale business, or the business that sells into department stores. Sales fell 4% from the prior year. The company’s commentary suggests wholesale demand may not inflect until 2025.

    I plan to put some of my concerns to Levi’s CFO Harmit Singh today at 10:30 a.m. ET on Yahoo Finance. Tune in!

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