Markets News, June 20, 2024: Semiconductor Slump Snaps Nasdaq’s Winning Streak; Dow Gains

Stock Indexes Wrap: Chip Stocks Weigh on Nasdaq as Oil, Defense Tick Up

3 hr 52 min ago

The Dow

Chevron (CVX) gained 2.2%, part of an energy sector that rose nearly 2% on Thursday. 

Shares of Johnson & Johnson (JNJ) rose 1.5% after it said it had obtained positive results from a phase 3 trial of its drug Tremfya for the treatment of Crohn’s disease. 

Honeywell (HON) ticked up 0.6% after announcing it would acquire defense contractor CAES Systems for $1.9 billion. 

Apple (AAPL) fell 2.2% after surging last week. The stock could be coming under pressure from a major index fund’s rebalancing, which is requiring the fund to sell more than $10 billion of Apple stock this week.

S&P 500

Gilead Sciences (GILD) surged 8.5% after reporting encouraging results from a phase 3 trial of its newest HIV prevention medication. 

Accenture (ACN) gained 7.3% after reporting slightly better-than-expected quarterly earnings amid robust growth of AI-related bookings. IT services peer EPAM Systems (EPAM) climbed 6.8%. 

Oil companies were among the index’s best performers. Hess Corp. (HESS) gained 2.7% and ExxonMobil (XOM) rose 2.2%. 

Defense firms got a boost from Honeywell’s CAES deal. Northrop Grumman (NOC) climbed 2.1% and Leidos (LDOS) added 1.5%.

Darden Restaurants (DRI) rose 1.5% after topping estimates with its adjusted quarterly earnings. 

Jabil (JBL) tumbled 11.5% after the company warned of “softness” in some of the tech markets it serves. 

Nvidia (NVDA) fell 3.5%, giving up the title of world’s most valuable company after taking it from Microsoft (MSFT) on Tuesday. 

Kroger (KR) fell 3.3% after it said it would pause share buybacks as it works to reduce leverage in anticipation of its acquisition of competitor Albertsons (ACI). 

Nasdaq 100

Amazon (AMZN) gained 1.7% as Anthropic, the OpenAI competitor it backs, unveiled a more advanced version of its Claude chatbot.

Chip stocks fell after a massive rally on several promising earnings reports and buzz about AI investments. Micron (MU) shed 6.1%, while Qualcomm (QCOM) declined 5.2% and Broadcom (AVGO) shed 4%. 

Gilead Stock Surges on Strong Results in HIV Drug Study

4 hr 35 min ago

Gilead Sciences (GILD) surged over 8% in intraday trading Thursday as the biotech firm announced a Phase 3 trial found its injectable lenacapavir was 100% effective in preventing HIV infection in women. 

Gilead noted that the results were so successful that the independent Data Monitoring Committee (DMC) recommended that the company end the blind phase of the study and offer lenacapavir to all of the participants.

The trial found zero cases of HIV infection among the 2,134 women who received the treatment, versus several cases among those who took Gilead’s current HIV pills, Truvada and Descovy. Truvada was the first pre-exposure prophylaxis, or PrEP, treatment approved by the Food and Drug Administration (FDA).

Gilead shares were 8.5% higher late in the session Thursday following the news. Despite Thursday’s advance, the stock has lost close to 16% of its value this year.

–Bill McColl

Honeywell Expands Defense Portfolio With $1.9 Billion CAES Systems Purchase

5 hr 18 min ago

Honeywell International (HON) shares rose Thursday as the conglomerate announced it was buying aerospace and defense contractor CAES Systems Holdings from private equity firm Advent International for about $1.9 billion. 

Honeywell said the all-cash deal “will enhance Honeywell’s defense technology solutions across land, sea, air and space, including new electromagnetic defense solutions for end-to-end radio frequency (RF) signal management.”

The company added that the acquisition will boost its established platforms and upgrade positions in several key areas, including work on the F-35 fighter and the Navy’s SPY-6 radar.

Honeywell said that the transaction is expected to be completed in the second half of 2024 and accretive to adjusted earnings per share (EPS) “in the first full year of ownership.”

Shares of Honeywell were up 1% Thursday afternoon at $215, their highest level in almost a year and a half.

–Bill McColl

Semiconductors Sell-Off After Big 2024 Rally

6 hours ago

Semiconductor stocks sold off on Thursday after a massive rally fueled by booming demand for artificial intelligence infrastructure.

Micron (MU) shares were down more than 5% Thursday afternoon. They gained nearly 60% in the 3 months up to Tuesday’s close. The stock got a boost earlier this week when Bank of America raised its price target and named the company its “top US memory company.”

Broadcom (AVGO), which blew past sales estimates when it reported quarterly results last week, shares had risen 27% in the month leading up to Thursday’s session. Its rally this year, which took its share price from about $1,100 in January to $1,500 before reporting earnings, was part of the reason the chipmaker followed in the footsteps of Nvidia (NVDA) and announced a 10-for-1 stock split with its earnings report. The company’s shares retreated more than 3% on Thursday.

And Nvidia, which surged ahead of Microsoft in the ranking of the world’s largest companies on Tuesday, slipped as much as 4% on Thursday. Though by mid-afternoon the stock had recovered slightly to trade less than 2% lower. 

Kroger Halts Stock Buybacks as It Seeks Approval of Albertsons Deal

7 hr 37 min ago

Kroger (KR) reported revenue for the first quarter that beat analysts’ estimates and said it would pause stock buybacks as it works to get regulatory approval for its $24.6 billion acquisition of rival Albertsons (ACI).

Kroger posted revenue of $45.27 billion, up 0.2% from a year ago and above analysts’ projections. Same-store sales, excluding gas, were 0.5% higher. Kroger added that digital sales rose more than 8%, and that its delivery and pickup options grew by double digits.

Diluted earnings per share (EPS) came in at $1.29, down from $1.32 in the year-ago period and below analysts estimates. However, adjusted EPS of $1.43 beat projections.

The supermarket chain said it was putting a hold on share repurchases “to prioritize de-leveraging” ahead of the deal, which is being challenged by regulators over concerns about the merger potentially limiting competition.

Kroger shares were more than 2% lower early Thursday afternoon, though they’ve gained over 10% since the start of the year.

–Bill McColl

Darden Restaurants Posts Adjusted EPS Beat as Ruth’s Chris Sales Boost Results

8 hr 22 min ago

Darden Restaurants (DRI) shares advanced Thursday after the company posted a better-than-expected adjusted profit as it benefited from the acquisition of Ruth’s Chris Steak House.

The operator of Ruth’s Chris, Olive Garden, and other restaurants reported fourth-quarter fiscal 2024 adjusted earnings per share (EPS) of $2.65, above the $2.61 consensus estimate of analysts surveyed by Visible Alpha. Revenue rose 6.8% year-over-year to $2.96 billion, just short of forecasts.

Darden explained that the gains were driven by the addition of 80 Ruth’s Chris locations, and 37 other net new restaurants. Darden purchased Ruth’s Chris last year for about $715 million.

Same-store sales, which didn’t include Ruth’s Chris, were unchanged from the year before. They fell 1.5% at the firm’s biggest operation, Olive Garden, and were down 2.6% at its fine dining locations. Same-store sales increased 4.0% at LongHorn Steakhouse.

Shares of Darden Restaurants were up more than 2% midday Thursday, but are down more than 5% year-to-date.

–Bill McColl

Accenture Stock Jumps as AI-Related Bookings Soar

8 hr 47 min ago

Accenture (ACN) shares rose Thursday after the consulting giant reported third-quarter results that saw profit beat estimates and artificial intelligence (AI)-related bookings surge.

Accenture reported $16.47 billion in revenue for the quarter, down from $16.56 billion in the third quarter of 2023 and below the $16.55 billion analysts expected, according to estimates compiled by Visible Alpha.

Net income attributable to the company beat estimates, however, with Accenture posting a profit of $1.93 billion, or $3.04 per share, better than the $1.91 billion and $3.01 per share analysts expected.

The company said its AI efforts are paying off, surpassing $900 million in new bookings related to generative AI for the quarter, pushing Accenture’s total AI-related bookings to $2 billion fiscal year-to-date.

However, Accenture lowered its full-year diluted earnings per share (EPS) guidance to a range of $11.29 to $11.44, down from its previous range of $11.41 to $11.64. The company previously said that it had faced an “uncertain macro environment” and had seen clients cut back on some discretionary spending.

Accenture shares rose 7% but remain down more than 14% so far this year.

-Aaron McDade

Nvidia’s Gains Make It Bigger Than Europe’s Stock Markets

9 hr 46 min ago

Nvidia (NVDA) shares continued to rise on Thursday, extending the AI chipmaker’s lead on Microsoft (MSFT), which it overtook as the world’s most valuable company on Tuesday.

Nvidia’s rise in the ranks of the world’s largest companies has been meteoric to say the least. Its market value has already doubled this year, after tripling last year. It has added $1 trillion in market capitalization—more than Warren Buffett’s storied Berkshire Hathaway (BRK.B), in the 23 trading days since May 20, according to a Deutsche Bank note distributed Thursday morning.

And with a market capitalization of more than $3.4 trillion, Nvidia has in recent week’s become larger than Germany, France, and the U.K.’s respective stock markets. The only countries with national stock markets worth more than Nvidia as of Thursday were India, Japan, China, and, of course, the U.S.

Given how quickly the stock has climbed, it’s reasonable to expect some profit taking in the near term, Bank of America Securities analysts said in a note Thursday. Volatility could be short-lived, they wrote, however, because of the company’s solid fundamentals and relatively attractive valuation.

We’re still in the early phases of the AI hardware deployment, and Nvidia should benefit from solid demand as it rolls out its next-gen Blackwell system later this year. Plus, Nvidia currently trades at about 30x price-to-earnings in Bank of America’s bull case—not that much higher than the entire S&P 500’s P/E ratio of 23.6 and in line with the Nasdaq 100’s ratio of 31.7.

–Colin Laidley

Dell Stock in Focus on News Company Will Provide Server Racks to xAI Supercomputer

10 hr 13 min ago

Dell (DELL) shares, which have gained 10% over the past two trading sessions, rose Thursday after Elon Musk said that his artificial intelligence (AI) startup xAI will use the hardware giant’s server racks to build its supercomputer.

“To be precise, Dell is assembling half of the racks that are going into the supercomputer that xAI is building.” Musk said in a post on social media platform on Wednesday. When prompted about xAI’s second partner, the Open AI co-founder replied “SMC,” referring to AI server maker Super Micro Computer (SMCI).1

Musk’s recent comments about Dell has added to the bullish sentiment about the stock.

Dell shares have remained in a longer-term uptrend since the 50-day moving average (MA) crossed above the 200-day MA to generate a golden cross chart pattern. More recently, the price gapped lower after the server maker missed Wall Street’s quarterly estimates, but promptly found buying interest near a horizontal line and the 50-day MA.

Looking ahead, if the stock continues its upward momentum, investors should monitor how the price responds to its all-time high (ATH) set last month at $179.70. A convincing breakout above this technically significant level backed by trading volumecould see the shares continue their move higher.

Dell shares rose almost 6% and they are up more than double this year.

–Tim Smith

Stock Futures Mainly Rising

11 hr 29 min ago

Dow futures were flat in premarket trading Thursday.

S&P futures were up 0.3%.

Nasdaq futures were up 0.5%.