Tech Selloff Lowers Nasdaq, S&P 500 as Investors Turn to Small Caps

S&P key movers on Thursday

1 hour and 4 minutes ago

repulsive

• Tesla Shares ( TSLA ) suffered the biggest losses of any S&P 500 component, falling 8.4% after reports that the automaker will delay the unveiling of its robotaxi. The company previously indicated that it would hold an event to introduce the autonomous transportation solution on August 8, but Bloomberg reported that the presentation has been pushed back to October. The decline in Tesla shares ended a streak of 11 consecutive winning sessions.
• Losses mounted for large-cap technology stocks as investors appeared to shift away from stocks that have risen in 2024 to laggards that could be positioned for gains amid greater certainty that lower rates are coming. In particular, stocks in the semiconductor industry came under heavy pressure. Shares of suppliers of chipmaking equipment Lam Research (LRCX) and Applied Materials (AMAT) fell 6% and 5.4% respectively. The semiconductor behemoth Nvidia (NVDA) fell 5.6%.
• Airline shares lost ground afterwards Delta Air Lines (DAL) reported lower-than-expected earnings, citing rising fuel costs and other charges. Delta shares fell 4% on the day, while shares of rival companies also fell.

The progressives

• Shares of SBA Communications (SBAC), which owns and operates cell towers and other wireless communications infrastructure, was Thursday’s top performer in the S&P 500, rising 7.5%. The earnings came as the firm announced a change in its executive leadership, with Saul Kredi stepping into the role of vice president and chief accounting officer. Kredi’s past experience includes leadership positions in the infrastructure and management consulting industry.
• Declining consumer inflation helped lift stocks across the housing industry, with stronger expectations for rate cuts fueling optimism that mortgage rates may be heading lower. Stock distributor of construction products Builders First Source ( BLDR ) jumped 7.4%, as did shares of the flooring maker Mohawk Industries (MHK).
• In addition to construction suppliers, homebuilders benefited from the expected drop in borrowing costs. DR Horton Shares (DHI) added 7.3%, while Lennar Shares (LEN) gained 6.9%.

-Michael Bromberg

Homebuilder stocks rise on rate cut hopes

2 hours and 20 minutes ago

Home stocks rose on Thursday on hopes that mortgage rates will begin to decline significantly this year.

A cooler-than-expected inflation report for June raised investor hopes that the Federal Reserve will cut rates in September.

If the Fed lowers its benchmark rate, homebuyers who have chosen to sit on the sidelines may be more likely to enter the housing market — boosting investor confidence in the outlook for homebuilders.

The Fed has kept its key rate at a 23-year high for nearly 12 months in order to tame inflation by making borrowing more expensive.

This has been a double whammy for homebuilders, who not only face higher borrowing costs but also see weakened demand. Potential homebuyers have been priced out of the market as rising mortgage rates and home prices make buying a home less affordable.

Shares of DR Horton ( DHI ), Toll Brothers ( TOL ), PulteGroup ( PHM ), Lennar ( LEN ) and KB Home ( KBH ) all rose Thursday.

– Trina Paul

Tesla tanks on the report of a delayed robotaxis event

3 hours and 47 minutes ago

Shares of Tesla ( TSLA ) fell on Thursday after a report that the unveiling of the EV maker’s long-awaited self-driving robot taxi has been delayed by two months.

Bloomberg said Tesla’s planned Aug. 8 event has been pushed back to October to give teams working on the project more time to build additional prototypes. The news organization reported that people familiar with the decision said the postponement was communicated to workers internally.

Tesla CEO Elon Musk announced the August debut date on social media in April and has promoted the self-driving robotaxis as a technology that would make other vehicles obsolete.

Shares of Tesla entered an 11-session winning streak on Thursday, during which they gained 44%, boosted by its better-than-expected second-quarter deliveries report. The stock was down more than 7% in late Thursday trading.

–Bill McCall

Russell 2000 rises as investors rotate into small caps

4 hours and 20 minutes ago

As Nvidia ( NVDA ) , Microsoft ( MSFT ) , Apple ( AAPL ) and other large-cap tech stocks fell on Thursday, investors turned to small-cap stocks amid hopes they could get a boost from rate cuts of the Federal Reserve.

The Russell 2000 rose more than 3% after the Labor Department’s latest inflation report showed consumer prices fell unexpectedly in June, raising hopes that the Fed will have confidence to cut interest rates this year.

Rate cuts by the Fed would lower borrowing costs for borrowers, and small-cap stocks could potentially get a bigger boost from the Fed’s rate cut since many small- and mid-cap companies have more floating debt than their larger counterparts.

Bank of America analysts also suggested earlier this week that second-quarter earnings could show that growth is finally starting to extend beyond the biggest tech stocks, which have dominated gains and returns for the index so far this year. year.

–Kara Greenberg

Microstrategy rises after stock split announcement

7 hours and 9 minutes ago

MicroStrategy (MSTR), one of the world’s largest holders of bitcoin (BTC), said Thursday it is planning a 10-for-1 stock split, making it the latest company to announce a split.

Shares of MicroStrategy rose more than 3% in late morning trading Thursday, spurring a broader decline for the stock.

The shares will be split into MicroStrategy’s Class A and Class B shares to holders of record as of Aug. 1, with investors receiving an additional nine shares after markets close on Aug. 7 for each share they previously owned. MicroStrategy’s first split-adjusted trading day will be August 8.

While the spin-off will not change the overall value of investors’ MicroStrategy holdings by reducing the price of each MicroStrategy share, the spin-off may help make the stock more accessible to investors and stimulate demand.

The company’s shares have more than doubled in value this year following the US Securities and Exchange Commission’s approval of spot bitcoin ETFs in January, turbocharging the token’s prices.

However, some of the excitement surrounding bitcoin, which soared above $73,000 in March, has died down recently. The token is currently trading in a tight range below $60,000.

–Nisha Gopalan

Delta Falls on Weak Earnings; Other airlines take a hit

8 hours and 32 minutes ago

Shares of Delta Air Lines fell sharply in early trading Thursday after the airline reported second-quarter profit that fell well short of estimates and cut its guidance for the third quarter.

Total revenue rose 7% from last year’s second quarter to a record $16.7 billion, which was better than the $16.2 billion analysts had forecast, according to estimates compiled by Visible Alpha. However, Delta’s earnings per share of $2.01 fell 29% year-over-year, falling well short of expectations of $2.39.

The company said debt reduction remains Delta’s “top financial priority” in the second half of the year after it spent $1.4 billion to pay down debt in the second quarter. Delta affirmed its full-year adjusted earnings per share (EPS) guidance of between $6 and $7, but forecast lower-than-expected adjusted earnings of $1.70 to $2.00 in the third quarter.

Shares of airline rivals United ( UAL ), American ( AAL ) and Southwest ( LUV ) also fell in early trading Thursday.

–Aaron McDade

Stock futures fall ahead of CPI inflation report

10 hours and 57 minutes ago

Futures tied to the Dow Jones Industrial Average fell 0.2% about half an hour before the closely watched inflation data was released.

S&P 500 futures fell 0.1%.

Nasdaq 100 futures were also down 0.1%.