Market Update
U.S. Movers: Discover Financial Domino's Pizza, United Airlines, Taiwan Semiconductor
Scott Peters
18 Jul, 2024
New York City
United Airlines Holdings increased 2% to $47.95, and the international carrier reported mixed quarterly results.
Total revenue in the second quarter increased 5.7% to $47.95, net income jumped 23.1% to $1.3 billion from $1.1 billion, and diluted earnings per share advanced to $3.96 from $3.24 a year ago.
Discover Financial Services rose 4.1% to $147.27, and the bank and payment services provider reported better-than-expected quarterly results.
Revenue in the second quarter increased 17% to $4.5 billion from $3.9 billion, net income rose 70% to $1.5 billion from $895 million, and diluted earnings per share advanced to $6.06 from $3.54 a year ago.
Total loans at the end of the quarter increased 8% to $127.6 billion from $117.9 billion, and the total net charge-off rate rose 161 basis points to 4.83% from 3.22% a year ago.
Taiwan Semiconductor gained 2% to $174.95 after an advanced semiconductor maker reported better-than-expected quarterly results.
Revenue in the second quarter increased 40% to NT $673.5 billion, net income jumped 36% to NT $247.8 billion, and diluted earnings per share rose 36.3% to NT $9.56.
In U.S. dollars, second-quarter revenue increased 32.8% from a year ago to $20.82 billion, an increase of 10.3% from the previous quarter.
Gross margin for the quarter was 53.2%, operating margin was 42.5%, and net profit margin was 36.8%.
The company forecasted strong demand for its 3 nanometer production capacity from artificial intelligence-linked customers, and third quarter revenue is expected to range between $22.4 billion and $23.2 billion, and gross margin is expected to be between 53.5% and 55.5%.
Domino's Pizza plunged 11.9% to $416.50 after the pizza delivery company reported mixed second-quarter results.
Revenue in the second quarter increased to 7% to $4.4 billion from $4.2 billion, net income increased 29.8% to $142 million from $109.3 million, and diluted earnings per share advanced 30.8% to $4.03 from $3.08 a year ago.
Same store sales growth at the U.S. locations increased to 4.8% from 0.1%, and international locations eased to 2.1% from 3.6%. from a year ago, respectively.
The company temporarily suspended its estimate of global stores of more than 1,100 due to the difficulties in international markets in Australia, Japan, and France.
The company now expects global net store growth to be between 825 and 925 in 2024, below the goal of 925 stores, and the U.S. locations to increase between 175 and 275 stores.
Chip and Tech Stocks Struggle as Investors Favor Small-cap and Cyclical Stocks
Barry Adams
18 Jul, 2024
New York City
Tech stocks attempted to rebound after falling sharply in the previous session after two widely followed benchmark indexes increased to multiple record highs over the last seven weeks.
The Nasdaq Composite advanced 0.2% after the index dropped the most in the previous session since 2022, as investors weighed rising trade restrictions with China.
Moreover, mega-cap stocks rebounded after falling in the previous session as investors increased positions in cyclical and small-cap stocks.
The Russell 2000 index, which tracks small-cap companies, increased 0.7%, and the benchmark index extended gains of 9% in the previous five sessions.
The current market rotation is based on the assumption that the Federal Reserve is ready to lower rates as early as September, and lower rates are likely to benefit smaller and cyclical companies.
The market rally broadened beyond mega-cap stocks in the last week of trading in the hopes that inflation's downward slide will continue and reach the Fed's target rate of 2%.
Investors may be too optimistic about inflation, but despite the eleven rate hikes over 2022 and 2023, inflation has stayed above 3%.
While the inflation rate has declined over the last two years, wages are still rising at a rate of more than 4% annually, inconsistent with the Fed's objective of bringing inflation down to 2%.
Moreover, the Fed Chair is Jerome Powell signaling that interest rates could be lowered before inflation drops to 2%, as long as price increases are slowing, indicating that policymakers may talk tough but are more likely to abandon their long-held objective of weakening inflation to 2% or lower.
U.S. Indexes and Treasury Yields
The S&P 500 index increased 0.3% to 5,605.26, and the Nasdaq Composite rose 0.2% to 18,024.79.
The yield on 2-year Treasury notes edged lower to 4.46%, 10-year Treasury notes decreased to 4.18%, and 30-year Treasury bonds edged higher to 4.30%.
WTI crude oil increased $0.13 to $82.97 a barrel, and natural gas prices edged up 4 cents to $2.07 a thermal unit.
Gold decreased by $1.74 to $2,480.01 an ounce, and silver was down 6 cents to $30.30.
The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 103.91.
U.S. Stock Movers
United Airlines Holdings increased 2% to $47.95, and the international carrier reported mixed quarterly results.
Total revenue in the second quarter increased 5.7% to $47.95, net income jumped 23.1% to $1.3 billion from $1.1 billion, and diluted earnings per share advanced to $3.96 from $3.24 a year ago.
Discover Financial Services rose 4.1% to $147.27, and the bank and payment services provider reported better-than-expected quarterly results.
Revenue in the second quarter increased 17% to $4.5 billion from $3.9 billion, net income rose 70% to $1.5 billion from $895 million, and diluted earnings per share advanced to $6.06 from $3.54 a year ago.
Total loans at the end of the quarter increased 8% to $127.6 billion from $117.9 billion, and the total net charge-off rate rose 161 basis points to 4.83% from 3.22% a year ago.
Taiwan Semiconductor gained 2% to $174.95 after an advanced semiconductor maker reported better-than-expected quarterly results.
Revenue in the second quarter increased 40% to NT $673.5 billion, net income jumped 36% to NT $247.8 billion, and diluted earnings per share rose 36.3% to NT $9.56.
In U.S. dollars, second-quarter revenue increased 32.8% from a year ago to $20.82 billion, an increase of 10.3% from the previous quarter.
Gross margin for the quarter was 53.2%, operating margin was 42.5%, and net profit margin was 36.8%.
The company forecasted strong demand for its 3 nanometer production capacity from artificial intelligence-linked customers, and third quarter revenue is expected to range between $22.4 billion and $23.2 billion, and gross margin is expected to be between 53.5% and 55.5%.
Europe Movers: ABB, Frasers Group, Nokia, Publicis Groupe
Inga Muller
18 Jul, 2024
Frankfurt
The European Central Bank held its three key lending rates steady after trimming rates by 25 basis points in June for the first time since 2016.
The European Union passenger car registration increased in June, but battery vehicle sales eased.
The DAX index increased by 0.2% to 18,485.06; the CAC-40 index rose by 0.5% to 7,612.10; and the FTSE 100 index advanced by 0.6% to 8,239.17.
The yield on 10-year German bonds edged higher to 2.44%, French bonds inched higher to 3.10%, the UK gilts inched higher to 4.08%, and Italian bonds decreased to 3.73%.
Frasers Group PLC increased 8.9% to 889.50 pence after the company's annual guidance for the current year surpassed market expectations.
Publicis Groupe SA gained 4.5% to €101.60 after the company reported better-than-expected first-half results and raised its annual outlook for organic growth.
Automakers advanced after new car registration in the European Union increased by 4.3% to 1.09 million units, reversing the 3% decline in May.
BMW increased 1.8% to €91.32, Mercedes Benz advanced 2% to €64.61, Volkswagen jumped 1.2% to €107.75, and Renault gained 0.7% to €50.08.
Nokia declined 4.7% to €3.41, and the Finnish telecom equipment maker reported a 32% decline in its second quarter operating income due to weak demand for its 5G wireless communication equipment.
ABB Ltd. declined 6.2% to CHF 47.98 after the Swiss engineering company reported higher earnings, but orders fell in the second quarter.
Net income increased by 21% to $1.1 billion from $906 million, and basic earnings per share rose to 59 cents from 49 cents a year ago.
Revenue increased 1% to $8.24 billion from $8.16 billion, and orders dropped 3% to $8.44 billion from $8.67 billion in the previous year.
For the fiscal year, ABB retained its comparable revenue growth estimate of 5% and operational EBIT margin of 18%.
ECB Holds Rates Steady, EU New Car Registrations Rebounded In June
Bridgette Randall
18 Jul, 2024
London
European markets advanced, and investors awaited monetary policy decisions by the European Central Bank.
The ECB held its three key lending rates steady after lowering rates for the first time in June since 2016.
The central bank held its main refinancing rate at 4.25%, the deposit facility rate at 3.75%, and the marginal lending rate at 4.5%.
Policymakers have been reluctant to provide a future rate path outlook amid wage pressure, as inflation remains above the 2% target rate set by the central bank.
Bond traders are still looking for the ECB to lower rates by 25 basis points in September and October, but the rate outlook could change if energy prices rebound in the coming weeks.
EU Passenger Car Registration Advanced 4.3% In June
Passenger car registration in the European Union increased 4.3% from a year ago in June, driven by an increase in three of the four largest markets in the region.
Passenger car registration in Italy increased 15.1%, in Germany it advanced 6.2%, in Spain it gained 2.2%, but declined in France by 4.8%.
Battery electric vehicle registration declined 1% to 156,400, driving the total market share down to 14.4% from 15.1% a year ago.
In the first half of 2024, new car registrations increased by 4.5% to nearly 5.7 million units; however, registration volumes remained 18% below pre-pandemic levels.
In the first six months of the year, the bloc’s largest markets all showed positive but modest performance, with a 5.9% increase in Spain, 5.4% in Germany and Italy, and a 2.8% rise in France.
Europe Indexes and Yields
The DAX index increased by 0.2% to 18,485.06; the CAC-40 index rose by 0.5% to 7,612.10; and the FTSE 100 index advanced by 0.6% to 8,239.17.
The yield on 10-year German bonds edged higher to 2.44%, French bonds inched higher to 3.10%, the UK gilts inched higher to 4.08%, and Italian bonds decreased to 3.73%.
The euro edged lower to $1.09; the British pound inched higher to $1.30; and the U.S. dollar weakened to 88.40 Swiss cents.
Brent crude increased $0.02 to $85.08 a barrel, and the Dutch TTF natural gas rose by €0.60 to €32.18 per MWh.
Europe Stock Movers
Frasers Group PLC increased 8.9% to 889.50 pence after the company's annual guidance for the current year surpassed market expectations.
Publicis Groupe SA gained 4.5% to €101.60 after the company reported better-than-expected first-half results and raised its annual outlook for organic growth.
Automakers advanced after new car registration in the European Union increased by 4.3% to 1.09 million units, reversing the 3% decline in May.
BMW increased 1.8% to €91.32, Mercedes Benz advanced 2% to €64.61, Volkswagen jumped 1.2% to €107.75, and Renault gained 0.7% to €50.08.
Nokia declined 4.7% to €3.41, and the Finnish telecom equipment maker reported a 32% decline in its second quarter operating income due to weak demand for its 5G wireless communication equipment.
ABB Ltd. declined 6.2% to CHF 47.98 after the Swiss engineering company reported higher earnings, but orders fell in the second quarter.
Net income increased by 21% to $1.1 billion from $906 million, and basic earnings per share rose to 59 cents from 49 cents a year ago.
Revenue increased 1% to $8.24 billion from $8.16 billion, and orders dropped 3% to $8.44 billion from $8.67 billion in the previous year.
For the fiscal year, ABB retained its comparable revenue growth estimate of 5% and operational EBIT margin of 18%.
Nikkei 225 Drops 2% Amid Global Chip Stocks Selloff, Japan's Trade Surplus Expanded in June
Akira Ito
18 Jul, 2024
Tokyo
The global tech stock selloff extended to Japan amid growing worries about rising trade tensions between the U.S. and China.
The Nikkei 225 stock average plunged more than 2%, and the broader Topix index declined 1.5% amid reports that the U.S. is looking to expand trade restrictions and impose tougher sanctions on companies exporting critical semiconductor equipment to China.
Moreover, Donald Trump, a U.S. presidential candidate and convicted felon, said that Taiwan should be paying for its defense as tensions simmer between China and Taiwan.
On the economic front, Japan's trade surplus unexpectedly rose in June after exports rose faster than imports.
Japan's trade surplus expanded to 224.04 billion yen in June from 36.5 billion yen in the corresponding month a year ago, the Ministry of Finance reported Thursday.
Japan recorded a trade surplus for the second month of this year, after exports rose 5.4% and imports advanced 3.2% from a year ago, respectively.
Exports increased for the seventh month in a row due to strong demand from the U.S. and China, and the weaker yen restricted the growth in imports.
For the first six months, Japan posited a trade gap of 3.23 trillion yen.
Japan Stock Movers
The Nikkei 225 stock average declined 2.3% to 40,153.18, and the Topix index dropped 1.5% to 2,872.61.
Tokyo Electron dropped 8.8% to ¥30,470.0, Lasertec declined 6.3% to ¥29,740.0, Screen Holdings fell 8.6% to ¥13,560.0, and Disco Corp. plunged 8.8% to ¥55,260.0.
Honda Motor Company declined 2.9% to ¥1,665.0, and the vehicle maker priced its secondary offering at a 3% discount to Wednesday's closing price.
On the upside, Kansai Electric Power, Nichirei, Nitori Holdings, and Asahi Group added as much as 3%.
China Indexes Recover Morning Losses Ahead of Third Plenum Policy Announcements
Li Chen
18 Jul, 2024
Hong Kong
Stocks in Shanghai and Hong Kong traded volatile and rebounded from heavy losses in morning trading to close higher.
The Hang Seng index and the CSI 300 index dropped at the open after semiconductor and tech stocks plunged following a report that the U.S. administration is looking to impose severe penalties on companies that share advanced semiconductor technology with China.
However, market sentiment recovered in late afternoon, and benchmark indexes erased a loss of 2% in Hong Kong to close higher.
Investors looked forward to possible market-supporting measures and economic reform announcements at the end of the Third Plenum later today.
The 4-day close-door meeting of 205 members and 171 alternative members of Chinese Central Committee policymakers is a forum to discuss and set the nation's economic agenda for the next five years.
Investors have lowered their expectations of deep economic reforms as the world's second-largest economy faces weakening domestic demand, rising geopolitical challenges, and steady capital outflow.
China Stock Movers
The Hang Seng index increased 0.5% to 17,830.35, and the CSI 300 index advanced 0.4% to 3,514.43.
Semiconductor stocks were under pressure after Bloomberg News reported that the U.S. administration is preparing to place severe curbs on companies sharing manufacturing technology with China.
Hua Hong Semiconductor increased 2.5% to HK $22.65, BYD Electronic fell 1.0% to HK $34.65, and SMIC increased 3.3% to HK $17.68.
Nongfu Spring Company soared 7.4% to HK$35.65 after the Hong Kong Consumer Council reversed its earlier decision to label bottled water from the company as containing bromate.
The HKCC apologized, said the brand was incorrectly categorized, and placed the company's product as a five-star product.
India Movers: Asian Paints, GMR Airports, Just Dial, KEC Intnl, Techno Electric, TV 18
Arun Goswami
18 Jul, 2024
Mumbai
Stocks lacked direction as investors reviewed the latest batch of quarterly results. Network 18, Just Dial, Asian Paints, Elcon Engineering, and L&T Finance released their quarterly results.
The Sensex index increased by 0.1% to 80,899.43, and the Nifty index rose by 0.2% to 24,656.65.
On the Mumbai stock exchange, 66 stocks traded at their 52-week highs, and 6 stocks traded at their 52-week lows.
The yield on the 10-year Indian government bonds inched higher to 6.96%, and the Indian rupee edged higher to ₹83.57 against the U.S. dollar.
GMR Airports decreased 0.7% to ₹96.25, and the parent company of New Delhi airport said June passenger traffic increased 8% from a year ago, driven by a 12.8% increase in international passengers and a 6.4% rise in domestic travelers.
KEC International increased 3.6% to ₹919.95 after the company said it won several contracts worth ₹1,100 crore in the Middle East, India, the Americas, and Australia. Domestically, the company won orders from Power Grid.
Just Dial increased 14.5% to ₹1,184.55 after the company reported a surge in quarterly profit.
Revenue in the June quarter increased 13.6% from a year ago to ₹280.5 crore, and net income soared 69% to ₹141.2 crore.
TV 18 Broadcast decreased 2.5% to ₹42.44, and the media company reported weak June quarter results.
Revenue declined 3% to ₹3,069 crore from ₹3,176 crore, and operating income loss expanded to ₹109 crore from ₹49 crore a year ago.
Techno Electric & Engineering increased 1% to ₹1,509.95, and the company launched its institutional offering on July 16 with a floor price of 1,506.58 per share.
Asian Paints decreased 0.8% to ₹2,950.95, and the paint and chemical maker reported a decline in revenue and earnings in the June quarter.
Revenue decreased 2.3% to ₹8,969.7 crore and net profits fell 24.6% to 1,186.8 crore from a year ago, respectively.
Housing Completions Jumped in June; Building Permits and Housing Starts Surpassed Expectations
Brian Turner
17 Jul, 2024
Washington, D.C.
Housing starts and completions were ahead of the market's expectations, the U.S. Census Bureau reported Wednesday.
Housing starts in June increased 3% from the previous month to an annualized rate of 1.353 million, building permits rose 3.4% to 1.446 million, and completions soared 10.1% to 1.71 million.
Building permits declined 3.1% from the corresponding month a year ago, and housing starts fell 4.4% over the same period.
Housing starts growth was driven by a 22% surge from the previous month in five units or more to 360,000, overcoming the 2.2% decline in single-family starts in June to an annual rate of 980,000.
Privately-owned housing completions reached an annual rate of 1.71 million, an increase of 10.1% from the revised May estimate of 1.553 million, 15.5% higher than the 1.48 million rate in the corresponding month a year ago.
Global Tech Selloff Intensifies as the U.S. Prepares to Ratchet Up China Trade Restrictions
Alexander Garcia
17 Jul, 2024
Miami
Market indexes dropped sharply, led by a tech selloff, on the news that the U.S. government is considering the most stringent restrictions if U.S. companies continue to pass on advanced semiconductor technology to China.
In a broad selloff, stocks on Wall Street faced selling pressure as investors adjusted portfolios for the probable rate cut, rising trade tensions with China, and escalating political rhetoric ahead of the U.S. presidential election.
The S&P 500 index and the Nasdaq Composite decreased more than 1% and 2.6%, respectively, as selling accelerated on Wall Street.
Semiconductor stocks led the decliners, with AMD, ASML, Broadcom, Nvidia, TSMC, and Qualcomm dropping between 3% and 8%, but Intel advanced more than 3%.
Donald Trump, the Republican Party candidate for the U.S. president and a convicted felon, ramped up political rhetoric to impose additional tariffs on imports from Chinese companies.
Moreover, U.S. President Joe Biden's administration is also looking to place additional penalties on companies sharing advanced semiconductor manufacturing technology with China.
Bloomberg News first reported the President Biden administration's efforts to ramp up trade restrictions.
On the economic front, housing starts and completions were ahead of the market's expectations, the U.S. Census Bureau reported Wednesday.
Housing starts in June increased 3% from the previous month to an annualized rate of 1.353 million, building permits rose 3.4% to 1.446 million, and completions soared 10.1% to 1.71 million.
Building permits declined 3.1% from the corresponding month a year ago, and housing starts fell 4.4% over the same period.
Housing starts growth was driven by a 22% surge from the previous month in five units or more to 360,000, overcoming the 2.2% decline in single-family starts in June to an annual rate of 980,000.
Privately-owned housing completions reached an annual rate of 1.71 million, an increase of 10.1% from the revised May estimate of 1.553 million, 15.5% higher than the 1.48 million rate in the corresponding month a year ago.
Industrial production, which includes mining, utilities, and manufacturing, increased 0.6% from the previous month in June, the Federal Reserve reported Wednesday.
Mining production advanced 0.3%, utilities output rose 2.8%, and manufacturing output moved up 0.4%.
On an annual basis, overall industrial production increased 1.6% in June from 0.3% in May, and the largest increase since November 2022.
For the second quarter, industrial output increased at an annual rate of 4.3%, and manufacturing production advanced 3.4%.
Capacity utilization moved up to 78.8% in June, a rate that is 0.9 percentage point below its long-run (1972–2023) average.
U.S. Indexes and Treasury Yields
The S&P 500 index decreased 1.4% to 5,651.06, and the Nasdaq Composite rose 2.7% to 18,007.51.
The yield on 2-year Treasury notes edged higher to 4.48%, 10-year Treasury notes decreased to 4.19%, and 30-year Treasury bonds edged higher to 4.39%.
WTI crude oil increased $1.99 to $82.75 a barrel, and natural gas prices edged down 2 cent2 to $2.05 a thermal unit.
Gold increased by $11.41 to $2,456.92 an ounce, and silver was down $1.09 to $30.17.
The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 103.72.
U.S. Stock Movers
Semiconductor shares plunged after a Bloomberg report suggested that President Joe Biden's administration is looking to impose a tougher penalty on companies sharing advanced technologies with China.
Nvidia declined 5.4% to $119.53, AMD dropped 7.1% to $165.03, ASML Holding plunged 10.9% to $953.52, and BE Semiconductor fell 5.7% to $174.45.
Taiwan Semiconductor decreased 7.2% to $172.66 after Republican Party U.S. President candidate and convicted felon said that Taiwan should pay the U.S. for defending the nation.
Five Below plunged 17.5% to $84.33 after the deep discount retailer lowered its second quarter outlook and announced the departure of chief executive Joel Anderson.
Net sales in the fiscal first quarter ending on May 4 increased 11.8% to $811.9 million from $726.2 million, net income decreased to $31.5 million from $37.5 million, and diluted earnings per share fell to 57 cents from 67 cents a year ago.
Comparable same-store sales decreased by 2.3% compared to the quarter in 2023.
The company estimated fiscal second quarter sales between $830 million and $850 million, net income between $32 million and $38 million, and diluted earnings per share between 57 cents and 69 cents.
U.S. Bancorp rose 4.3% to $45.15 after the bank reported better-than-expected quarterly results.
Total revenue in the second quarter declined 4.3% to $6.9 billion from $7.2 billion, net income increased $1.6 billion from $1.4 billion, and diluted earnings per share increased to 97 cents from 84 cents.
European Markets Extended 3-day Decline Ahead of ECB Rate Decisions
European stock indexes declined for the third day in a row as investors reviewed the latest updates on inflation.
Benchmark indexes in Paris, London, and Frankfurt decreased as investors awaited the monetary policy decisions from the European Central Bank later in the week.
Consumer price inflation in the eurozone eased to 2.5% in June from 2.6% in May, according to the final estimate released by Eurostat on Wednesday.
Inflation has cooled over the last year from 5.5%, largely because of the decline in energy prices.
The UK's consumer price inflation held steady at 2.0% in June, matching the rate in the previous month, the Office for National Statistics reported on Wednesday.
Europe Indexes and Yields
The DAX index decreased by 0.3% to 18,466.30; the CAC-40 index fell by 0.1% to 7,570.81; and the FTSE 100 index rose by 0.3% to 8,187.46.
The yield on 10-year German bonds edged lower to 2.42%. French bonds inched lower to 3.09%; the UK gilts inched lower to 4.07%; and Italian bonds decreased to 3.70%.
The euro edged lower to $1.09; the British pound inched higher to $1.30; and the U.S. dollar weakened to 89.78 Swiss cents.
Brent crude increased $1.35 to $85.05 a barrel, and the Dutch TTF natural gas rose by €1.19 to €31.60 per MWh.
Europe Stock Movers
Antofagasta plc decreased 4% to 2,043.0 pence after the Chilean copper miner said annual production is to be near the bottom of the end of the company's guidance.
Reckitt Benckiser Group increased by 0.2% 4,279.0 pence, and the company said its U.S. sales would be negatively impacted after a tornado struck a warehouse in Mount Vernon, Indiana.
Demant AS dropped 112.5% to DKK 260.40 after the Danish hearing aid company issued a profit warning.
Smiths Group decreased 0.8% to 1,739.0 pence, and the engineering company plans to sell 1.2 million shares in ICU Medical.
ASML Holding decreased 7.7% to €901.60, and BE Semiconductor declined 2.9% to €162.65 on the worry of additional curbs on exports to China.
Allianz SE rose 0.4% to €262.50, and the German insurance company said it acquired a majority stake in Singapore-based Income Insurance for $1.6 billion.
Adidas AG rose 3.6% to €236.20, and the sportswear maker raised its annual outlook.
The company said revenue in the second quarter increased 11% from a year ago.
Japan Indexes Lacked Direction; Toho, Komatsu and Toray Advanced
Amid positive market sentiment, stock indexes in Tokyo advanced in Wednesday's trading, supported by gains in overnight trading in New York.
The Nikkei 225 stock average and the Topix index diverged at close but advanced in early trading.
Market sentiment was positive on the growing conviction that the U.S. Federal Reserve is set to start its rate cuts as early as September.
In addition, the S&P 500 index advanced to a new high as the market rally broadened beyond mega-cap tech stocks.
The small-cap-focused Russell 200 index gained nearly 2% and increased for the fifth session in a row.
Closer to home, on the economic front, the Tankan survey showed business sentiment among large manufacturers increased to a seven-month high in July, despite the weakening of confidence among nonmanufacturing companies.
Investors are looking forward to the Bank of Japan's policy meeting at the end of this month, and the policy committee is expected to announce its bond tapering plan from the current purchase of 6 trillion yen a month.
Japan Stock Movers
The Nikkei 225 stock average decreased 0.3% to 41,147.42, and the Topix index advanced 0.4% to 2,917.04.
Tech stocks traded down following the weakness in overnight trading in New York.
Tokyo Electron, Advantest, Screen Holdings, and SoftBank declined between 0.3% and 1.5%.
Industrial and consumer exporters gained from thin trading.
Mitsubishi Electric, Canon, Sony, and Panasonic gained between 0.2% and 2%.
Toho Co. soared 11.2% to ¥5,064.0 after the entertainment distribution company reported a sharp increase in earnings in its movie business.
Net profit in the quarter ending in May increased 31% to 16.5 billion yen, or $102. million, driven by a 16% increase in revenue to 86 billion yen.
Operating profit from its movie unit increased 53% to 20.10 billion yen, and the company retained its annual earnings outlook for the fiscal year ending in February 2025.
The company forecasts annual revenue to fall 1.2% to 280 billion yen and net income to drop 14% to 39 billion yen.
Hitachi Construction Machinery, Toray Industry, Komatsu, and Sumitomo Heavy Industries advanced between 3% and 4%.
China's Third Plenum Focuses On President Xi Jinping's Vision not Market Measures
Stocks in Shanghai and Hong Kong lacked direction as investors awaited the announcements from policymakers at the conclusion of the third plenum on Thursday.
The Hang Seng Index and the CSI 300 index hugged the flatline amid downbeat expectations of new economic reforms and market-supportive measures from policymakers.
The much-delayed third plenum is likely to focus on how to implement President Xi Jinping's vision of modernization, industrial diversification, and reducing reliance on the U.S. and Europe for advanced technology.
Investor sentiment has turned negative as Chinese policymakers are likely to focus on supporting new technological innovation and expanding manufacturing capabilities.
These government initiatives are likely to provide much-needed impetus to expanding China's technological capabilities, but they will also come at the expense of weakening the domestic economy.
The International Monetary Fund revised its annual economic growth outlook to 5% from 4.6%, citing strong exports and a stronger-than-expected rebound in private consumption.
China Stock Movers
The Hang Seng index declined 0.1% to 17,720.0, and the CSI 300 index fell 0.1% to 3,495.64.
JD.com added 2.2% to HK $106.80, Baidu advanced 0.5% to HK $91.60, and Alibaba Group increased 0.8% to HK $76.10.
BYD decreased 1% to HK $238.20, Li Auto jumped 2.3% to HK $80.35, and Xpeng advanced 2.5% to HK $34.40.
ICBC was unchanged at HK $4.38, the Bank of China declined 1.4% to HK $3.43, and China Minsheng was unchanged at HK $2.82.
U.S. Movers Five Below, Semiconductor Stocks, U.S. Bancorp
Scott Peters
17 Jul, 2024
New York City
Semiconductor shares plunged after a Bloomberg report suggested that President Joe Biden's administration is looking to impose a tougher penalty on companies sharing advanced technologies with China.
Nvidia declined 5.4% to $119.53, AMD dropped 7.1% to $165.03, ASML Holding plunged 10.9% to $953.52, and BE Semiconductor fell 5.7% to $174.45.
Taiwan Semiconductor decreased 7.2% to $172.66 after Republican Party U.S. President candidate and convicted felon said that Taiwan should pay the U.S. for defending the nation.
Five Below plunged 17.5% to $84.33 after the deep discount retailer lowered its second quarter outlook and announced the departure of chief executive Joel Anderson.
Net sales in the fiscal first quarter ending on May 4 increased 11.8% to $811.9 million from $726.2 million, net income decreased to $31.5 million from $37.5 million, and diluted earnings per share fell to 57 cents from 67 cents a year ago.
Comparable same-store sales decreased by 2.3% compared to the quarter in 2023.
The company estimated fiscal second quarter sales between $830 million and $850 million, net income between $32 million and $38 million, and diluted earnings per share between 57 cents and 69 cents.
U.S. Bancorp rose 4.3% to $45.15 after the bank reported better-than-expected quarterly results.
Total revenue in the second quarter declined 4.3% to $6.9 billion from $7.2 billion, net income increased $1.6 billion from $1.4 billion, and diluted earnings per share increased to 97 cents from 84 cents.
Sellers Gain Upper Hand On Wall Street, Semiconductor Stocks Drop 5%
Barry Adams
17 Jul, 2024
New York City
Stocks on Wall Street faced selling pressure as investors adjusted portfolios for the probable rate cut, rising trade tensions with China, and escalating political rhetoric ahead of the U.S. presidential election.
The S&P 500 index and the Nasdaq Composite decreased more than 1% and 2%, respectively, as selling accelerated on Wall Street.
Semiconductor stocks led the decline, with AMD, Nvidia, ASML, Broadcom, TSMC, and Apple dropping between 3% and 8%.
Donald Trump, the Republican Party candidate for the U.S. president and a convicted felon, ramped up political rhetoric to impose additional tariffs on imports from Chinese companies.
Moreover, U.S. President Joe Biden's administration is also looking to place additional penalties on companies sharing advanced semiconductor manufacturing technology with China.
On the economic front, housing starts and completions were ahead of the market's expectations, the U.S. Census Bureau reported Wednesday.
Housing starts in June increased 3% from the previous month to an annualized rate of 1.353 million, building permits rose 3.4% to 1.446 million, and completions soared 10.1% to 1.71 million.
Building permits declined 3.1% from the corresponding month a year ago, and housing starts fell 4.4% over the same period.
Housing starts growth was driven by a 22% surge from the previous month in five units or more to 360,000, overcoming the 2.2% decline in single-family starts in June to an annual rate of 980,000.
Privately-owned housing completions reached an annual rate of 1.71 million, an increase of 10.1% from the revised May estimate of 1.553 million, 15.5% higher than the 1.48 million rate in the corresponding month a year ago.
U.S. Indexes and Treasury Yields
The S&P 500 index decreased 0.4% to 5,651.06, and the Nasdaq Composite fell 1.2% to 18,210.50.
The yield on 2-year Treasury notes edged higher to 4.48%, 10-year Treasury notes decreased to 4.19%, and 30-year Treasury bonds edged higher to 4.39%.
WTI crude oil increased $0.84 to $81.61 a barrel, and natural gas prices edged down 1 cent to $2.18 a thermal unit.
Gold increased by $5.45 to $2,473.07 an ounce, and silver was down 33 cents to $30.73.
The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 103.72.
U.S. Stock Movers
Semiconductor shares plunged after a Bloomberg report suggested that President Joe Biden's administration is looking to impose a tougher penalty on companies sharing advanced technologies with China.
Nvidia declined 5.4% to $119.53, AMD dropped 7.1% to $165.03, ASML Holding plunged 10.9% to $953.52, and BE Semiconductor fell 5.7% to $174.45.
Taiwan Semiconductor decreased 7.2% to $172.66 after Republican Party U.S. President candidate and convicted felon said that Taiwan should pay the U.S. for defending the nation.
Five Below plunged 17.5% to $84.33 after the deep discount retailer lowered its second quarter outlook and announced the departure of chief executive Joel Anderson.
Net sales in the fiscal first quarter ending on May 4 increased 11.8% to $811.9 million from $726.2 million, net income decreased to $31.5 million from $37.5 million, and diluted earnings per share fell to 57 cents from 67 cents a year ago.
Comparable same-store sales decreased by 2.3% compared to the quarter in 2023.
The company estimated fiscal second quarter sales between $830 million and $850 million, net income between $32 million and $38 million, and diluted earnings per share between 57 cents and 69 cents.
U.S. Bancorp rose 4.3% to $45.15 after the bank reported better-than-expected quarterly results.
Total revenue in the second quarter declined 4.3% to $6.9 billion from $7.2 billion, net income increased $1.6 billion from $1.4 billion, and diluted earnings per share increased to 97 cents from 84 cents.
Europe Movers: Adidas, Allianz, Antofagasta, ASML, BE Semiconductor, Demant, Smiths Group
Inga Muller
17 Jul, 2024
Frankfurt
European markets extended losses to the third session in a row ahead of the European Central Bank's policy decisions later in the week.
The DAX index decreased by 0.3% to 18,466.93; the CAC-40 index fell by 0.2% to 7,563.30; and the FTSE 100 index rose by 0.03% to 8,167.91.
The yield on 10-year German bonds edged lower to 2.42%. French bonds inched lower to 3.09%; the UK gilts inched lower to 4.07%; and Italian bonds decreased to 3.70%.
Antofagasta plc decreased 4% to 2,043.0 pence after the Chilean copper miner said annual production is to be near the bottom of the end of the company's guidance.
Copper production increased 20% from a year ago in the second quarter to 155,300 tons, primarily driven by Los Pelambres mine following the extended concentrate pipeline maintenance and cleaning activities that was required in February. This increase was, however, offset by lower grades and recoveries at Centinela’s concentrator related to elevated levels of clay and fines in ores processed.
Reckitt Benckiser Group increased by 0.2% 4,279.0 pence, and the company said its U.S. sales would be negatively impacted after a tornado struck a warehouse in Mount Vernon, Indiana.
Demant AS dropped 112.5% to DKK 260.40 after the Danish hearing aid company issued a profit warning.
Smiths Group decreased 0.8% to 1,739.0 pence, and the engineering company plans to sell 1.2 million shares in ICU Medical.
ASML Holding decreased 7.7% to €901.60, and BE Semiconductor declined 2.9% to €162.65 on the worry of additional curbs on exports to China.
Allianz SE rose 0.4% to €262.50, and the German insurance company said it acquired a majority stake in Singapore-based Income Insurance for $1.6 billion.
Adidas AG rose 3.6% to €236.20, and the sportswear maker raised its annual outlook.
The company said revenue in the second quarter increased 11% from a year ago.