Market Showing Signs of Exhaustion, BTIG’s Krinsky Says
The S&P 500 has been on a stellar rally of late that has taken it to 4,600 for the first time in more than a year. However, the broader market index is now showing signs of exhaustion, according to Jonathan Krinsky of BTIG.
“As has been the case for the last couple of weeks, there are signals the rally should be getting tired,” the firm’s chief market’s technician wrote. “SPX cleared 4600 off the open, which brought it into the highs from March ’22. A flat or red close today would be notable after the gap-up and 4600 test.”
Stocks are Lower in Final Hour of Trading
The major averages are lower shortly into the final hour of trading. The Dow Jones Industrial Average dropped by 205 points, or 0.58%. The S&P 500 declined 0.57%, and the Nasdaq Composite fell 0.55%.
The Fed is Getting Close to its ‘Endgame,’ Bond Trader Says
After Wednesday’s Fed meeting, one bond trader thinks the end of the central bank’s tightening campaign is drawing closer. “We’re getting closer to the endgame,” said Gregory Faranello, head of U.S. rates strategy at AmeriVet Securities. “As we head through the summer … those high, high inflation prints from last year will start to roll off.”
Second-Quarter Earnings Season is Nearly Halfway Through
Second-quarter earnings season is nearly halfway through. So far, 44% of S&P 500 companies have reported results, or 219 companies. This season, earnings are expected to fall 6.8% from a year ago, with revenues expected to be down 0.6%. On the earnings front, 78% of companies have topped expectations, while 62% have beaten revenue estimates. The energy sector is slated for the biggest decline in earnings year over year.
Dow Trades at Session Lows in Afternoon Trading
The Dow Jones Industrial Average was last trading at session lows Thursday afternoon. Earlier in the day, the 30-stock index was higher by 125 points, but those gains evaporated. Shares of Honeywell weighed on the benchmark, down more than 4%. The Dow was last down 0.2%.
Royal Caribbean Shares Outperform After Earnings Beat, Cruise Line Stocks
Royal Caribbean outpaced the broader market after the cruise line beat expectations on the top and bottom lines in its most recent earnings report. Shares were last higher by more than 8%. The cruise line posted second-quarter adjusted earnings of $1.82 per share on revenue of $3.52 billion. Analysts polled by Refinitiv had expected per-share earnings of $1.55 on revenue of $3.41 billion. Other cruise line stocks also popped in afternoon trading. Shares of Carnival and Norwegian Cruise Line Holdings were last up by more than 4% and 5%, respectively. Royal Caribbean is higher this year by more than 120%.
Packed Day of Earnings Season Leads to Big Swings for Stocks
Earnings reports are causing big swings for many stocks on Wall Street today. Willis Towers Watson saw shares fall 8% after reporting softer-than-expected earnings for the second quarter. Sunnova Energy slid 10% after reporting a wider-than-expected loss for the second quarter. On the other hand, shares of Align Technologies surged 16% after a surprisingly strong second-quarter report.
Comcast, Alphabet Among the 42 S&P 500 Names Reaching Fresh Highs
There are 42 names in the S&P 500 reaching fresh highs Thursday, many on the back of their recent quarterly reports. Comcast and Alphabet were among the companies reaching fresh highs following their earnings beats.
Meta Capital Expenditure Comment Bode Well for Nvidia, Jefferies Says
Comments from Meta Platforms related to artificial intelligence spending and capital expenditures should bode well for shares of Nvidia, according to Jefferies. While the social media company reduced its CapEx range for 2023, it said it plans to shift some spending into 2024 due to postponed projects and equipment deliveries. Jefferies believes this will support AI spend in the near term and lead to CapEx growth driven by AI in 2024.
Honeywell Slide Threatens Dow Streak
A selloff in Honeywell shares on the back of its earnings report is putting the Dow’s winning streak at risk. The industrial stock slid around 5% on Thursday after posting a mixed earnings report for the second quarter. Honeywell reported adjusted earnings per share of $2.23, beating estimates, but fell short on revenue. If the Dow ends Thursday’s session down, it would snap a 13-day winning streak.
Costco Poised to Tie Longest Winning Streak Since 2019
Shares of Costco traded up in Thursday’s session, putting the retailer on pace for its 14th straight winning trading day. The last time it saw a streak of that length was in 2019.
The Dow’s 13-Day Streak Accounts for the Majority of its 2023 Gains
The Dow Jones Industrial Average has closed positive for 13 straight days, accounting for more than 75% of its year-to-date gains.
Communication Services Outperforms, Boosted by Meta, Comcast
Communication services was the leading sector in the S&P 500, up by more than 2.9% as of midday trading. The sector was boosted by shares of Meta and Comcast.
June Pending Home Sales Beat Expectations
June pending home sales rose for the first time in three months. The data showed a rise of 0.3% last month, exceeding expectations.
Dow Industrials May Match Length of a 126-Year-Old Record
The Dow Jones Industrial Average on Thursday may match a feat last accomplished in 1897, increasing for a 14th consecutive time. However, the current rally is still far short of the depth seen in the late Victorian era.
Overall, the market is showing signs of exhaustion, with the S&P 500 reaching new highs and the Dow Jones Industrial Average on a 13-day winning streak. Earnings season continues to impact individual stocks, with some beating expectations and others falling short. The Federal Reserve’s tightening campaign is drawing closer to its endgame, and investors are closely watching inflation numbers.