Stocks wobble after key data as Micron slips

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U.S. stocks were little changed Thursday as chipmaker Micron’s ( MU ) outlook dampened hopes for tech growth as investors weighed new economic data ahead of a key inflation reading for Federal Reserve policy.

The S&P 500 (^GSPC) hugged the flat line after rallying on Wednesday to close not far from a fresh new all-time high. The Dow Jones Industrial Average (^DJI) rose 0.2%, while the Nasdaq Composite (^IXIC) oscillated between positive and negative territory.

Stocks are struggling in the wake of Micron’s sales forecast for the current quarter, which met expectations but failed to satisfy investors looking for strong performance from AI-related companies.

The improvement around AI has helped lift the benchmark S&P 500 to a 15% gain this year. But concerns are growing that the rally could be in jeopardy if the handful of tech companies driving most of those gains fail to capture already high expectations.

Shares of memory maker Micron fell more than 6% in early trading. Nvidia (NVDA) fell more than 2%, reviving concerns about a return to the selloff that rocked markets last week.

Investors were weighing a fresh batch of economic data ahead of Friday’s PCE inflation print, which will influence the Fed’s view on the timing of interest rate cuts.

According to Labor Department data, a reading of initial weekly jobless claims came in at 233,000, a drop of 6,000 from a week earlier. The print came in below a consensus expectation of 235,000. But repeated jobless claims rose to their highest level since late 2021, suggesting it is taking longer for unemployed people to find a job.

Real gross domestic product (GDP) grew at an annual rate of 1.4% in the first quarter of 2024, according to the third estimate from the Bureau of Economic Development released Thursday morning. The print was slightly higher than the previous estimate of 1.3%.

Inflation could also loom large in the first debate between President Joe Biden and former President Donald Trump on Thursday night.

On the corporate front, shares of Levi Strauss ( LEVI ) fell more than 15% in the wake of the jeans retailer’s second-quarter earnings miss. Investors will look to Nike’s ( NKE ) quarterly results after the bell for more data on consumer resilience.

LIVE7 updates

  • The Purdue Pharma decision makes it more difficult for owners of bankrupt companies to avoid liability

    Yahoo Finance’s Alexis Keenan reports:

    A new Supreme Court ruling that upended a $6 billion opioid settlement just made it harder for owners of any company to use federal bankruptcy proceedings to protect themselves from legal risk.

    dispute – Harrington vs. Purdue — involved bankrupt OxyContin maker Purdue Pharma and members of the Sackler family, the company’s billionaire owners.

    The key question in the case was whether or not Purdue’s bankruptcy proceedings could be used to protect the Sacklers’ personal assets from future opioid-related liabilities.

    In the 5-4 ruling, the court said no provision within the U.S. Bankruptcy Code allows for the type of settlement the Sacklers and the company tried to reach.

    Read more here.

  • With only a few years until retirement, 55-year-olds haven’t saved enough

    Yahoo Finance senior columnist Kerry Hannon reports:

    Fifty-five-year-old Americans have an average retirement savings of less than $50,000.

    That’s grim news for older Gen Xers, who are only about a decade away from retirement — and well short of the goal of having eight times your annual income saved by this age.

    “A lot of people are behind and that has significant long-term implications for retirement,” David Blanchett, head of retirement research at PGIM DC Solutions, told Yahoo Finance. “It’s not easy. We can always find things we’d rather spend money on today than save for this thing that’s going to happen in 10, 20 or 30 years.”

    It’s not just the future that looks bleak. They’re just cracking up now: More than a third of 55-year-olds say they’d have trouble scraping together $400 to cover an emergency expense, compared with 19% of 65-year-olds and 15% of 75-year-olds, according to survey by Prudential Financial.

    Read more here.

  • Pending home sales fall in May

    High home prices and high mortgages are keeping potential buyers away from the housing market.

    Pending home sales – a forward-looking indicator of home sales based on contract signings – fell 2.1% in May from the previous month, according to data from the National Association of Realtors. Year-on-year, they fell 6.6%, data released Thursday showed.

    The Midwest and South posted a decline in contract signings in May from a month earlier. The Northeast and the West posted gains. All counties across the country reported losses in activity on an annual basis.

    “The market is at an interesting point with rising inventory and lower demand,” NAR Chief Economist Lawrence Yun said in a statement. “Supply and demand movements suggest the easing of housing price appreciation in the coming months. Inevitably, more inventory in a job-creating economy will lead to larger home purchases, especially when mortgage rates decline.”

    Mortgage rates are at their lowest average in three months, but that’s still not enough to entice buyers. About 95% of mortgage borrowers have interest rates below current market rates and almost 80% have rates more than 2 percentage points below market rates, according to Goldman Sachs data.

    Looking ahead, Yun expects “moderately lower mortgage rates, higher home sales and stabilizing home prices.”

  • Walgreens books 24% lower guidance due to ‘challenging’ pharmacy trends, weak consumer

    Shares of Walgreens fell 24% to touch their lowest level since 1997 after the drugstore chain cut its fiscal 2024 earnings guidance, citing “challenging pharmacy industry trends and a worse-than-expected environment expected for US consumers”.

    “Our customers have become increasingly selective and price-sensitive in their purchases,” Walgreens Boots Alliance CEO Tim Wentworth said during the company’s earnings call Thursday morning.

    Management indicated that 25% of the company’s stores are not currently contributing to the long-term strategy and “changes are inevitable.”

    Walgreens said it plans to close a “substantial portion” of its underperforming stores over the next three years.

    It expects adjusted earnings per share for the year to be between $2.80 and $2.95, down from a previous forecast of $3.20 to $3.35.

  • Netflix, Meta help push Nasdaq into green territory

    Communications stocks propelled the Nasdaq Composite (^IXIC) into positive territory with a 0.3% gain shortly after the market opened Thursday.

    Netflix ( NFLX ) and Meta ( META ) both advanced more than 1%, helping lift the tech gauge that had been sitting just below the flat line.

    The S&P 500 (^GSPC) rose 0.2% while the Dow Jones Industrial Average (^DJI) was little changed.

    Meanwhile, shares of chip giant Nvidia ( NVDA ) were partly lower after Micron’s ( MU ) sales forecast failed to enthuse investors on the AI ​​craze that has fueled the broader market rally this year.

  • Stocks wobble as investors weigh economic data, Micron caps tech growth

    Stocks opened slightly lower on Thursday as investors weighed economic data released before the bell.

    The S&P 500 (^GSPC) was little changed, while the Dow Jones Industrial Average (^DJI) fell 0.1%. The tech-heavy Nasdaq Composite (^IXIC) fell slightly below the flat line.

    Real gross domestic product (GDP) grew at an annual rate of 1.4% in the first quarter of 2024, according to the third estimate from the Bureau of Economic Development released Thursday morning. The print was slightly higher than the previous reading of 1.3%, but still showed the slowest growth since 2022.

    According to Labor Department data, a reading of initial weekly jobless claims came in at 233,000, a drop of 6,000 from a week earlier.

    On the corporate front, chipmaker Micron’s ( MU ) sales forecast for the current quarter met expectations but failed to satisfy investors looking for strong performance from AI-related companies. The stock was down about 4% in early trading. AI chip giant Nvidia ( NVDA ) also fell almost 1% at the open.

  • Why does Levi’s neighborhood bother me?

    Shares of Levi’s ( LEVI ) are taking a 15% hit in early market gains.

    And I think it is deserved for two reasons.

    First, sales in China fell 10% from a year ago. Recently I have been talking to a large number of people who have visited China recently. One theme is that Chinese consumers are feeling on the dour side and aren’t spending as much as in years past. That mood is affecting demand for Levi’s jeans, Starbucks ( SBUX ) coffee and — according to General Mills’ ( GIS ) earnings call yesterday — Haagen-Dazs ice cream.

    It is hard to see the tipping point in China.

    The same goes for Levi’s wholesale business, or the business that sells to department stores. Sales fell 4% compared to a year ago. The company’s commentary suggests that bulk demand may not be affected until 2025.

    I plan to present some of my concerns to Levi’s CFO Harmit Singh today at 10:30 am ET on Yahoo Finance. Tune in!

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