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Equity Indexes Wrap: Healthcare, Financials Lead While Energy, Tech Founder
20 minutes ago
The Dow
Health care stocks led the index again, with Merck & Co. (MRK) rising 2% and Amgen (AMGN) gaining 0.8%.
Financials also outperformed with American Express (AXP) climbing 0.8% and JPMorgan Chase (JPM) and Visa (V) both adding 0.7%.
Walgreens Boots Alliance (WBA) lost 5.1% after it slashed its dividend nearly in half as it prioritizes new growth initiatives.
Apple (AAPL) shares fell 1.3% after analysts at Piper Sandler downgraded the stock to “neutral,” citing soft iPhone sales.
Chevron (CVX) lost 1.1% as crude oil futures retreated after jumping yesterday.
Shares of McDonald’s (MCD) fell 0.9% amid reports the company is facing a boycott in the Middle East over its alleged support for Israel. CEO Chris Kempczinski called the allegations “ill-founded” on Thursday.
The S&P 500
EPAM Systems (EPAM) rose 2.7% after getting an upgrade from analysts at Wolfe Research, who cited stabilizing demand and strong sales growth in the coming years.
Allstate (ALL) rose 2.4% after Morgan Stanley analysts called the insurer under-appreciated and upgraded its stock.
APA Corp. (APA) fell 7.4% after the oil company agreed to buy Permian Basin producer Callon Petroleum for $4.5 billion. Oil companies in general lagged the index—ConocoPhillips (COP) fell 2.8% and Occidental Petroleum (OXY) lost 2.4%.
The Nasdaq 100
Some chip stocks, which have been battered the last two days, found their footing today. Marvell Technologies (MRVL) rallied 2.4% while Nvidia (NVDA) rose 0.9% and AMD (AMD) gained 0.5%. Others continued to struggle, like NXP Semiconductors (NXPI) and Onsemi (ON), both of which fell 3.9%.
Microchip Technology (MCHP) dipped 1.4% despite receiving $162 million in CHIPS Act funding.
Shares of PepsiCo (PEP) lost 0.9% as European supermarket giant Carrefour said it would stop stocking the company’s products because of “unacceptable” price hikes.
QuantumScape Stock Jumps on Promising Battery Test Results
1 hr 12 min ago
QuantumScape (QS) was the best-performing stock in the Russell 1000 by a wide margin Thursday after Volkswagen reported positive results from a test of its solid-state lithium electric vehicle battery.
The battery was depleted and recharged more than 1000 times and was found at the end of the testing cycle to have retained 95% of its charging capacity, according to PowerCo SE, a subsidiary of Volkswagen. QuantumScape’s battery far surpassed the industry’s efficiency standards, which call for 700 charges and a maximum capacity reduction of 20%. The results suggest the battery could enable a vehicle to travel half a million kilometers without significantly aging the battery.
“The final result of this development could be a battery cell that enables long ranges, can be charged super-quickly and practically does not age. We are convinced of the solid-state cell and are continuing to work at full speed with our partner QuantumScape towards series production,” said PowerCo CEO Frank Blome.
Solid-state batteries, which use a solid electrolyte rather than the liquid electrolyte in traditional lithium-ion batteries, are considered a vital next step in the development of electric vehicles as battery and car makers seek to increase range and improve safety. Research has shown that solid-state batteries are less prone to combustion than traditional batteries.
Shares of QuantumScape jumped 46% to trade at a 5-month high on Thursday.
Walgreens Shares Plummet as Slashed Dividend Overshadows Earnings Beat
2 hr 18 min ago
Walgreens Boots Alliance (WBA) shares tumbled over 6% Thursday after America’s biggest pharmacy chain slashed its dividend nearly in half, and said it would use the money for other purposes as it faced a “challenging consumer backdrop.”
Walgreens lowered its quarterly dividend by 48% to $0.25. CEO Tim Wentworth, who took over in October, said that cutting the dividend would “strengthen our long-term balance sheet and cash position.”
The announcement came as Walgreens reported better-than-expected fiscal 2024 first-quarter results. The company posted earnings per share (EPS) of $0.66, with revenue rising 10% from a year ago to $36.71 billion. Both exceeded forecasts.
Even with the strong first-quarter profit, Walgreens left its full-year EPS outlook of $3.20 to $3.50 unchanged.
Shares of Walgreens were 6.7% lower Thursday afternoon. They have lost about 36% of their value in the last year and are trading near a 25-year low.
-Bill McColl
Novo Nordisk Jumps to Record High on Research Agreements with U.S. Biotechs
3 hr 28 min ago
Shares of Novo Nordisk (NVO), the market leader in weight-loss drugs, jumped 5% Thursday after it said that it had inked research agreements with two American biotech firms as part of its partnership with venture capital firm Flagship Pioneering.
The first partnership, with Cambridge, Massachusetts-based Omega Therapeutics (OMGA), will focus on developing an obesity treatment that boosts metabolic activity through thermogenesis, the body’s natural ability to generate heat and raise body temperature. Omega shares jumped more than 100% on the news.
A separate agreement with privately-held Cellarity aims to develop a small molecule therapy for metabolic dysfunction-associated steatohepatitis (MASH), inflammation of the liver caused by the storage of excess fat.
As part of the deals, Novo Nordisk will reimburse the companies their research and development costs, and offer them up to $532 million in upfront and milestone payments, as well as royalties.
Thursday’s gains put Novo Nordisk shares at a record high of more than $108. The stock gained more than 50% last year when booming demand for its diabetes and weight-loss drugs Ozempic and Wegovy garnered it the title of Europe’s most valuable company.
Midday Movers
3 hr 57 min ago
Lamb Weston (LW) shares climbed as the food processor reported better-than-expected results and raised its full-year earnings guidance, saying it sees the consumer and operating environment remaining stable.
Shares of Allstate (ALL) also rose after Morgan Stanley upgraded the stock and boosted the price target, calling the insurer an underappreciated story in a favorable market.
Eli Lilly (LLY) shares advanced as the pharmaceutical firm launched a website for patients to order weight-loss drugs directly from the drugmaker.
Walgreens Boots Alliance (WBA) was the worst-performing stock in the Dow after the pharmacy chain slashed its dividend and said it planned to use the money to boost its cash flow and pay for strategic initiatives.
Shares of APA (APA) lost ground as the oil producer paid $4.5 billion for rival Callon Petroleum. Callon shares rose.
The slide in Apple (AAPL) shares continued as Piper Sandler downgraded the stock, joining in the concerns about demand for iPhones.
-Bill McColl
How Worried Should Investors Be About January?
4 hr 27 min ago
Is the sell-off that started the year a temporary hangover that stocks can shake off or a harbinger of more pain to come? That’s the question investors were asking Thursday as they looked ahead to a year they hoped would look a lot like 2023.
For believers in the January Barometer—a theory positing that the S&P 500’s performance in January can predict its performance for the rest of the year—2024 isn’t looking so good. And history may be on their side, according to a recent analysis by Deutsche Bank research strategist Jim Reid.
The graphic below shows how often the S&P 500 is negative at four separate points in January and then compares the average annual return of the index depending on whether stocks were positive or negative at those four points.
Reid finds that the index’s average annual return is significantly lower when stocks struggle in the first month of the year. The difference is especially stark if the S&P 500 finishes January in the red—in that case, the index falls an average of 0.7% over the year. If stocks rise in January, the index returns an average of 13.2%.
Deutsche Bank
Some of the difference can be attributed to the relatively obvious observation that in years when stocks fall in January, they need to cover more ground to catch up to years when they rise. Nevertheless, there remains a clear trend between January returns and full-year performance.
APA Tumbles on Callon Petroleum Deal
5 hr 13 min ago
U.S. oil producer APA Corp. (APA) is buying rival Callon Petroleum (CPE) for $4.5 billion including debt, in an all-stock deal that will boost APA’s portfolio in the Permian Basin, the companies announced Thursday.
The deal, which equates to $38.31 per share for Callon, was unanimously approved by the boards of both companies and is expected to close in the second quarter.
APA’s acquisition of Callon comes after a record year for U.S. oil and gas mergers and acquisitions in 2023, when deals for the highly-prized Permian topped $100 billion. That was led by Exxon Mobil’s (XOM) $60 billion acquisition of Pioneer Natural Resources and Chevron’s (CVX) $53 billion purchase of Hess.
APA was the worst-performing stock in the S&P 500 Thursday morning, with its shares down 7.4%. Callon shares were up 3.5%.
-Kevin George
Apple Falls on Second Analyst Downgrade
5 hr 52 min ago
Shares of Apple (AAPL) dropped more than 1% in early trading Thursday after the company received its second analyst downgrade this week amid concerns about flagging iPhone demand.
Piper Sandler on Thursday downgraded the stock to “neutral” from “overweight,” citing soft smartphone sales and a tough macroeconomic environment in the first half of the year. The downgrade comes just two days after analysts at Barclays expressed concerns of their own and assigned the stock an “underweight” rating. Analysts warned of “lackluster” iPhone 15 sales, especially in China where a sluggish economy and fierce competition from domestic brands are weighing on demand.
Apple has lost more than $150 billion in market value so far this year, stripping it of its $3 trillion market capitalization and even jeopardizing its long-held position as America’s most valuable company. After Thursday’s downgrade and stock losses, Apple’s market cap stood at about $2.82 trillion, just ahead of Microsoft’s (MSFT) $2.77 trillion.
Stock Charts to Watch Thursday
6 hr 37 min ago
The Energy Select Sector SPDR Fund (XLE), an ETF that tracks energy companies in the S&P 500, gained 1.6% Wednesday amid rising oil prices. The commodity settled 3% higher yesterday after protests caused disruptions at a Libyan oilfield that produces 300,000 barrels per day. The development comes as energy markets remain on tenterhooks about supply disruptions caused by geopolitical tensions in the Middle East.
Source: TradingView.com.
Despite the 50-day moving average crossing below the 200-day moving average to form a death cross pattern, XLE’s price closed above both averages on Wednesday. Moreover, the fund broke above a falling wedge in mid-December, raising doubts over the validity of the ominously named pattern that typically foreshadows lower prices.
If the ETF shakes off the death cross and moves higher, monitor the $94 on the chart which may become a key resistance area from a trendline connecting the September and November swing highs.
See here for two more charts to keep an eye on today.
-Timothy Smith
Stocks Making the Biggest Moves Premarket
7 hr 28 min ago
Gains:
- Peloton Interactive Inc. (PTON): Shares of the at-home exercise equipment maker rose nearly 10% after it announced a partnership with TikTok to bring short-form workout videos to the social platform.
- Equinor ASA (EQNR): Shares of the Norwegian oil company rose about 2% after it pulled the plug on a joint project with the U.K.’s BP (BP) to sell offshore wind energy to New York. BP shares gained about 1.5%.
- Eli Lilly & Co. (LLY): Shares of the pharmaceutical major inched up 1% after it launched a website to help patients get access to weightless drugs, like its recently approved Zepbound, through a telehealth provider.
Losses:
- Mobileye Global Inc. (MBLY): Shares of the autonomous driving technologies company plunged 29% after it forecast 2024 revenue below analysts’ expectations and said it it expects customers to cut spending as they clear excess inventory.
- Cal-Maine Foods Inc. (CALM): Shares of the egg producer fell 5% after it reported a decline in sales and net income in the second quarter of its 2024 fiscal year as egg prices fell.
- APA Corp. (APA): Shares of the oil company lost more than 4% after it said it would buy Permian Basin producer Callon Petroleum in an all-stock deal valued at about $4.5 billion.
Dow Futures Inch Higher While S&P, Nasdaq Lag
8 hours ago
Futures contracts connected to the Dow Jones Industrial Average were 0.2% higher in premarket trading Thursday.
S&P 500 futures were little changed.
Nasdaq 100 contracts were down 0.2% about an hour before markets opened.
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