Markets News, October 23, 2024: Major Indexes Tumble as Tech Stocks Slide; Nasdaq's 5-Day Winning Streak Snapped
· InvestopediaMajor U.S. indexes closed sharply lower Wednesday as investors reacted to earnings reports and other noteworthy corporate news developments, while technology stocks tumbled and Treasury yields rose to a new three-month high.
The Dow Jones Industrial Average and S&P 500 fell 1% and 0.9%, respectively, while the Nasdaq Composite dropped 1.6%. The Dow and S&P 500, which ended last week at record highs, have now lost ground for three consecutive sessions, while the Nasdaq had a five-session winning streak snapped. The major indexes are on track to post weekly losses for the first time in seven weeks.
Large-cap technology stocks were lower across the board on Wednesday, as AI investor favorite Nvidia (NVDA) slid 2.8%, Meta Platforms (META) lost 3.2% and Apple (AAPL) shed 2.2%. Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN) and Broadcom (AVGO) also lost ground.
Shares of McDonald's (MCD) fell 5.1%, leading Dow decliners, after U.S. health authorities said late yesterday they were investigating an E. coli outbreak possibly linked to the burger chain’s Quarter Pounder. Starbucks (SBUX) shares ended the session up 0.9%, after recovering from steep earlier losses following news the company withdrew its outlook for 2025 and announced preliminary quarterly results that fell short of market expectations.
Coca-Cola (KO) shares were down 2.1% after a disappointing earnings report, while Boeing (BA) fell 1.8% after releasing its results, ahead of a key union vote that could put an end to a five-week machinists' strike.
AT&T (T) shares rose 4.6% after the telecommunications giant reported better-than-expected earnings, while GE Vernova (GEV) shares rose 1.3% even as the company reported a surprise loss. Shares of Tesla (TSLA) fell 2%, ahead of the release of the EV maker's highly anticipated earnings report after the closing bell.
The yield on 10-year Treasurys, which is sensitive to expectations around interest rates, rose to 4.25%, from 4.21% yesterday. The yield, which is at its highest level since late July, has been steadily rising amid investor uncertainty about how aggressive the Federal Reserve will be in cutting its benchmark lending rate.
Data released Wednesday morning showed that existing home sales reached their lowest level in 14 years last month, as mortgage rates are at their highest level since July. Investors are watching data releases closely for indications that the economy remains on sound footing as they look for information that could influence the Fed's decisions on rates.
Gold futures were down 1% at around $2,730 an ounce, after hitting a new all-time high above $2,770 earlier in the day.
Biggest S&P 500 Movers on Wednesday
7 hr 30 min ago
Decliners
- Wednesday's weakest performance in the S&P 500 belonged to shares of Enphase Energy (ENPH), which plummeted 15.0%. The steep drop came after the solar technology firm reported weaker-than-expected sales and profits for the third quarter, citing weak demand in Europe and an industry slowdown. Although Enphase expects to improve its U.S. business, it anticipates softness in Europe to persist. The company's current-quarter sales guidance also came in below consensus forecasts.
- Disk-drive and data-storage provider Seagate Technology Holdings (STX) topped sales and profit estimates for its fiscal first quarter, which ended in September. However, Seagate's second-quarter guidance fell short of expectations, and its shares plunged 8.1%. Although Seagate remains optimistic about the market potential for its heat-assisted magnetic recording (HAMR) technology, it faces possible delays in the rollout of HAMR products. Meanwhile, the uncertain economic environment in China could restrain demand for the company's smart city initiatives.
- Old Dominion Freight Line (ODFL) shares dropped 5.5% after the trucking company reported its third-quarter results. Although earnings per share (EPS) matched consensus forecasts, revenue fell shy of expectations. Despite an improvement in pricing, softness in the domestic economy and a drop in freight demand dragged down Old Dominion's performance.
Advancers
- Northern Trust (NTRS) shares surged 7.0%, securing the top performance in the S&P 500 on Wednesday after the wealth management firm reported better-than-expected sales and profits for the third quarter. Highlights of Northern Trust's earnings report included strong year-over-year gains in management fees, total assets under custody, and net interest income (NII). Optimism around lower interest rates and increased investor sentiment has helped management firms boost asset totals and increase fee generation.
- Shares of Teledyne Technologies (TDY), an industrial conglomerate that provides monitoring and control instruments for various industries, jumped 6.0% in the wake of the company's strong third-quarter earnings report. Solid demand for marine instrumentation and aerospace electronics helped Teledyne post a year-over-year increase in net income, and the company lifted its full-year profit forecast. The company is positioned to benefit as heightened global tensions drive an uptick in defense spending by various countries.
- Packaging Corporation of America (PKG), which produces containerboard and other packaging products, also topped expectations with its third-quarter sales and profits, and its shares rose 5.4%. Improved pricing and mix in the company's packaging segment helped offset softness in its paper segment. Both segments reported year-over-year increases in volumes.
Tesla Shares Jump in Extended Trading on Strong Earnings
7 hr 57 min ago
Tesla (TSLA) reported third-quarter earnings that beat analysts' expectations as margins improved, sending shares sharply higher in after-hours trading Wednesday.
The electric vehicle (EV) maker posted third-quarter net income of $2.17 billion or 62 cents per share, up from $1.85 billion or 53 cents per share a year ago, topping analysts' estimates as margins rose to 19.8% from 17.9%. Revenue grew 8% year-over-year to $25.18 billion.
Earlier this month, Tesla said it delivered 462,890 vehicles in the quarter, which topped expectations. The company added Wednesday that its "plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025."
Tesla's earnings beat comes after the EV maker's stock took a hit earlier this month following the company’s robotaxi event, which saw the unveiling of a prototype "Cybercab," along with a larger "Robovan.”
Analysts said a lack of details about whether Tesla would plan to operate its fleet of robotaxis or sell them to customers, and the fact Tesla did not announce the lower-cost model investors were hoping for, were among the concerns that drove the stock lower.
Tesla shares were up 12% at around $240 in extended trading about two hours after the closing bell. Even at that level, the stock is still down in 2024.
Hotel Stocks Slide After Hilton Warning
8 hr 31 min ago
Shares of Hilton Worldwide Holdings (HLT) and other hotel companies fell Wednesday after the company lowered its full-year earnings forecast and warned of softening leisure travel demand.
The hotel giant said it now expects 2024 net income between $1.41 billion and $1.43 billion, down from $1.53 billion to $1.56 billion. Hilton also reduced its earnings per share forecast and dropped the top end of its estimated revenue per available room (RevPAR) growth.
Hilton CEO Christopher Nassetta said he expects leisure spending to continue to normalize next year. "Demand is sort of flat to maybe even down a little bit," he said, according to a transcript of the company's earnings call provided by AlphaSense.
In the third quarter, Hilton posted net income of $344 million and RevPAR of $121.40, both of which missed the consensus estimate among analysts.
Nassetta attributed the disappointing results to a “slower ramp in September following Labor Day, weather impacts, unfavorable calendar shifts, and ongoing labor disputes in the U.S."
Shares of Hilton slid nearly 2% Wednesday. Competitors Marriott International (MAR) and Hyatt Hotels (H) fell 3% and 4%, respectively. InterContinental Hotels Group (IHG) also lost ground.
Northern Trust Surges 7% After Strong Earnings
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Shares of Northern Trust (NTRS) jumped 7% on Wednesday, securing the top daily performance in the S&P 500, after the wealth management firm exceeded sales and profit estimates with its results for the third quarter.
Gains in fee income collected by Northern Trust in exchange for managing and servicing clients' assets contributed to the strong performance. Third-quarter trust, investment, and other servicing fees jumped to $1.2 billion, up 8% year-over-year. The company said favorable market conditions, currency translation effects, and new business underpinned the fee growth.
Northern Trust also benefitted from an increase in assets being managed by the firm. Total assets under custody or administration surged 23% year-over-year to reach $17.4 trillion as of Sept. 30.
Anticipation of lower interest rates and the Federal Reserve's first rate cut in September have boosted investor sentiment and contributed to a market rally, helping lift asset totals and fee generation for management firms.
Northern Trust also reported a strong uptick in net interest income, which measures the difference between revenue generated by interest-bearing assets and fees paid on interest-bearing liabilities. Quarterly NII of $569.4 million marked an increase of 21% from the year-ago period.
Following Wednesday's solid gains, Northern Trust shares are trading more than 20% higher in 2024, putting the asset manager's growth similar to the S&P 500's year-to-date gains.
Spirit Airlines Soars on Report of Renewed Frontier Bid
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Spirit Airlines (SAVE) shares surged Wednesday on a report that Frontier Airlines parent Frontier Group Holdings (ULCC) is in the early stages of a renewed bid for its rival discount carrier.
The Wall Street Journal said the two sides have had recent discussions and a deal would form part of Spirit's debt restructuring. Spirit is currently in the midst of discussions with bondholders ahead of a potential bankruptcy filing, the report said, noting that merger talks are in early stages and may not result in a deal.
Spirit last week extended a deadline for debt refinancing with Visa (V) and Mastercard (MA).
Frontier's initial plan to buy Spirit in 2022 fell apart after JetBlue Airways (JBLU) swooped in with an offer deemed superior. The JetBlue deal, which would have created the U.S.'s fifth-largest carrier, was called off in March amid antitrust scrutiny from regulators, causing Spirit's stock to crater.
Spirit shares were up 45% at $3.05 in late trading Wednesday. Even after today's big gain, Spirit shares have lost about 80% of their value this year.
Frontier Group shares were up 3% Wednesday.
Why Analysts Remain Optimistic About Boeing
11 hr 9 min ago
Boeing (BA) reported a $6 billion quarterly loss on Wednesday and has seen its shares decline 40% this year, yet no Wall Street analysts tracked by Visible Alpha recommend selling the stock.
Workers are voting on a new contract proposal, potentially ending a costly monthlong strike and removing a major hurdle standing between the company and a long-awaited turnaround.
Boeing's return to glory could take a decade, according to Bank of America analysts, who are optimistic the company can overcome its "Hurculean" challenges.
Other firms agree. Read the full article here.
Enphase Leads S&P Decliners After Reporting Weak Earnings
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Enphase Energy (ENPH) was the biggest decliner in the S&P 500 Wednesday, a day after the solar power equipment manufacturer posted weaker-than-expected results and guidance as European demand slumped.
The company reported third-quarter adjusted earnings per share (EPS) of $0.65, with revenue plunging more than 30% to $380.9 million.
Enphase said that sales in Europe fell 15% from the second quarter because "of a further softening in European demand." However, U.S. revenue jumped 43% sequentially on "higher shipments to distributors as inventory returned to normal levels."
CEO Badri Kothandaraman said that the company has "worked diligently to manage Enphase through an industry slowdown," according to a transcript of the earnings call provided by AlphaSense. Kothandaraman added that Enphase anticipates "incremental improvement in our U.S. business and a continued slowdown in Europe in Q4."
The company sees current-quarter revenue in the range of $360 million to $400 million, below forecasts.
Enphase Energy shares were down nearly 14% Wednesday afternoon at their lowest level in nearly a year. The stock has lost about 40% of its value in 2024.
Coca-Cola Stock Slips After Results
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Coca-Cola (KO) shares lost ground Wednesday as a surprise drop in unit case volumes offset better-than-expected results at the world's biggest soft drink maker.
The company reported third-quarter unit case volumes were down 1% year-over-year, primarily driven by a 2% decline in concentrate sales. Coca-Cola blamed that on the timing of shipments. Volumes fell 2% in both the Asia Pacific and Europe, Middle East, and Africa regions. They were flat in North America and Latin America.
The volume drop came as higher prices helped the company exceed adjusted profit and revenue forecasts. Coca-Cola posted adjusted earnings per share (EPS) of $0.77, with revenue falling 0.8% to $11.85 billion. Analysts surveyed by Visible Alpha were anticipating $0.75 and $11.65 billion, respectively.
CEO James Quincey said the company was encouraged by its performance so far in 2024, and "our system's ability to manage near-term challenges while also remaining focused on long-term growth opportunities."
Coca-Cola now predicts full-year organic revenue growth of 10% compared with the previous outlook of 9% to 10%, as it sees "pricing impact of a number of markets experiencing intense inflation."
Shares of Coca-Cola were down more than 2% early Wednesday afternoon but are up about 15% in 2024.
Starbucks Levels to Watch After Company Suspends Outlook
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Starbucks (SBUX) shares were down slightly early Wednesday after the global coffee chain suspended its 2025 outlook and reported preliminary fiscal fourth-quarter results that came in below Wall Street expectations, as new CEO Brian Niccol starts implementing a turnaround strategy.
Starbucks shares have gained around 28% since Niccol’s appointment in August, but the stock is flat since the start of the year amid a slowdown in sales arising from increased competition and sluggish demand in the company's key U.S. and China markets.
Buyers have defended the lower trendline of a symmetrical triangle and the 50-day moving average, though the stock sits poised to break down below the pattern.
Investors should monitor key support areas on Starbucks' chart around $90 and $83, while watching overhead levels near $99 and $107.50 during a recovery.
The stock was down 0.5% at $96.31 in recent trading, after falling as low as $93.69 early in the session.
Read the full technical analysis piece here.
GE Vernova Reports Surprise Loss
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GE Vernova (GEV) reported an unexpected loss Wednesday, its second time in three quarters as a standalone company that it has posted an unprofitable period.
The former division of General Electric reported $8.91 billion in third-quarter revenue, about $10 million shy of analysts' estimates, along with a $99 million net loss, smaller than the one it reported as part of the conglomerate last year but well below the $134.5 million profit expected, per Visible Alpha.
GE Vernova said its margins improved in its power and electrification segments, but that growth was offset by contract losses in its offshore wind business.
The company affirmed its full-year outlook after lifting it in the second quarter, expecting revenue toward the higher end of the $34 billion to $35 billion range, and continues to say its wind segment should be "approaching profitability" by the end of the fiscal year.
Analysts have said GE Vernova is well-positioned over the long term as demand for electricity, especially in renewable forms, continues to increase across the globe to power energy-demanding projects like data centers needed for artificial intelligence (AI).
GE Vernova shares were fluctuating between slight gains and losses in early trading,
McDonald's Levels to Watch as Stock Slides After E. Coli News
18 hr 2 min ago
Shares in McDonald’s (MCD) plunged 7% in premarket trading after health authorities said late Tuesday they were investigating an E. coli outbreak possibly linked to the fast-food chain’s Quarter Pounder burgers.
The projected drop in the stock price may lead to a retest of a prior 16-month trading range before the stock potentially continues its longer-term uptrend.
investors should watch important retracement levels on the McDonald's chart around $300, $280, and $260. The stock was trading at $293 about two hours before Wednesday's opening bell.
The measuring principle, which calculates the distance between the trading range’s two trendlines and adds that amount to the breakout area, forecasts a bullish price target of $353.
Read the full technical analysis piece here.
Futures Point to Lower Open for Major Indexes
18 hr 29 min ago
Futures tied to the Dow Jones Industrial Average were down 0.5%.
S&P 500 futures were down 0.2%.
Nasdaq 100 futures were off 0.3%.