Markets News, June 14, 2024: Tech Lifts Nasdaq to Fifth Straight Record; Dow Lags

Why Investors Are Closely Watching Apple and Nvidia Friday

1 hr 36 min ago

All eyes were on Apple (AAPL) and Nvidia (NVDA) Friday as the two companies jockeyed to be America’s second-most valuable company by float-adjusted market capitalization.

Why does that matter today? The $70 billion Technology Select Sector SPDR Fund (XLK) will be rebalanced next week based on today’s market close. Due to relatively obscure diversification rules, the weight of individual stocks in the index is capped at 23%, and the sum of stocks weighing more than 5% can’t exceed 50%.

That is why Apple, Microsoft, and Nvidia—all worth more than $3 trillion—have such drastically different weights in the index. Apple and Microsoft each account for about 22% of the index, while Nvidia makes up just 6%.

If Nvidia’s float-adjusted cap closes above Apple’s, its weight in the index will jump above 20% next Friday and Apple’s will be cut to less than 5%.

With less than half an hour left in the session, the companies were neck and neck. Apple shares were down 0.8% and Nvidia was up 1.8%, which gave Nvidia a slight edge.

Arm Holdings To Join the Nasdaq-100 Index

2 hr 44 min ago

Arm Holdings (ARM) could get a boost after the Nasdaq announced that the British semiconductor and software design company would be added to the Nasdaq-100 Index. 

The exchange said the move would come ahead of trading on Monday, June 24. Arm will replace satellite programming provider Sirius XM Holdings (SIRI).

The decision came nine months after Arm first began trading following the biggest initial public offering (IPO) in the U.S. since 2021. 

After initially rising as much as 6% Friday on the news, American depositary receipts (ADRs) of Arm Holdings reversed course and were 2% lower late in the afternoon. Still, they have soared more than 100% so far this year.

–Bill McColl

RH Posts Bigger-Than-Expected Loss as Tough Housing Market Hurts Demand

4 hr 16 min ago

Shares of RH (RH) sank Friday, a day after the upscale home furnishings retailer posted a bigger-than-expected loss and gave soft guidance as the tight housing market squeezed demand.

The company formerly known as Restoration Hardware reported an adjusted first-quarter loss of $0.40 per share, wider than estimates. Revenue fell 1.7% year-over-year to $727.0 million, although that beat expectations.

Chief Executive Officer (CEO) Gary Friedman wrote in a letter to shareholders that the company faced “the most challenging housing market in three decades,” and that it anticipates “business conditions to remain challenging until interest rates ease and the housing market begins to rebound.”

As such, the company predicted current-quarter sales growth in a range of 3% to 4%, short of forecasts. It reiterated its outlook of full-year revenue to increase by 8% to 10%. 

RH shares tumbled more than 17% Friday to trade at their lowest level in seven months.

–Bill McColl

Stellantis To Shift Some EV Production on China Tariff Concerns

5 hr 32 min ago

Stellantis (STLA) shares fell Friday after the automaker announced it would be moving some electric vehicle (EV) production out of China to Europe following threats by European regulators of big tariffs on Chinese-made EV imports.

Reports from the company’s Investor Day said Chief Executive Officer (CEO) Carlos Tavares explained that Stellantis has changed its EV production plans with Chinese joint-venture partner Leapmotor. Tavares explained that it adjusted its assembly sites based on higher duties.

On Wednesday, the European Commission, the regulatory arm of the European Union (EU), warned that new tariffs on Chinese-made EVs would begin July 4 unless talks with Beijing resolved concerns that China’s EV subsidies gave its manufacturers an advantage over EU carmakers.

The Commission noted that the duties could be as much as 38.1%. 

Shares of Stellantis fell 5% and are are down 14% at their lowest level this year.

Adobe Stock Jumps After AI-Fueled Earnings Beat—Watch This Key Level

6 hr 10 min ago

Adobe (ADBE) shares surged nearly 15% in extended trading on Thursday after the software maker reported earnings that topped Wall Street’s estimates and lifted its full-year earnings and sales guidance amid robust demand for its suit of generative artificial intelligence (AI) digital media products.

In the three-month period ending May 31, the company posted adjusted earnings of $4.48 per share, above analysts’ estimates of $4.39 a share. Revenue in the period of $5.31 billion grew 10% from the same quarter last year and edged past expectations of $5.29 billion.

Adobe now expects adjusted earnings to range between $18.00 and $18.20 per share, up from $17.60 to $18.00 a share. It sees annual net sales of $21.40 billion to $21.50 billion, bumping the lower end of that forecast by $100 million. Analysts had been calling for adjusted earnings of $18.02 a share on revenue of $21.46 billion.

Adobe noted that it’s seeing Creative Cloud subscribers upgrade their plans to access Firefly capabilities, the company’s generative AI model.

Since forming a double top between December and February, Adobe shares have traded within a falling wedge, a bullish chart pattern that indicates a potential upward price movement. More recently, the stock found buying interest near the wedge’s lower trendline, with volume increasing slightly over the past week leading into the company’s quarterly results. 

Following Friday’s earnings-driven breakout from the pattern, investors should keep an eye on the $535 level, an area on the chart where the price may encounter selling pressure near the closely-watched 50% Fibonacci retracement level, which also sits in close proximity to the downward sloping 200-day moving average and a period of February price consolidation.

Stocks Making the Biggest Move in Early Trading

6 hr 53 min ago

Gains:

Adobe (ADBE): Shares surged 15% after the software maker posted higher-than-forecast results and raised its full-year earnings and sales guidance amid robust demand for its suite of generative artificial intelligence (AI) digital media products.

Shopify (SHOP): Shares rose 4% after Evercore ISI raised its rating on the e-commerce company to outperform from in-line. 

Arm Holdings (ARM): Shares in the chip designer were up 3% after Nasdaq said the chipmaker would be a member of the Nasdaq 100 and other Nasdaq indexes on June 24, replacing Sirius XM Holdings (SIRI).

Losses:

Stellantis (STLA): Shares fell 4% after the automaker behind Jeep and Fiat said it will move production of some Chinese-made EVs to Europe to limit European Union tariffs. 

RH (RH): Shares slumped 10% after the upscale furniture retailer posted a bigger-than-expected loss and gave soft guidance as the tight housing market squeezed demand.

Stock Futures Fall

8 hr 34 min ago

Dow futures were down 0.8% in premarket trading.

S&P futures were down 0.5%.

Nasdaq futures were down 0.3%.