The Nasdaq Composite registered a fifth consecutive winning day, but still suffered its worst monthly loss of 2023.
The tech-heavy index added 0.11% to end Thursday's session at 14,034.97. The Dow Jones Industrial Average slipped 168.33 points, or 0.48%, to end at 34,721.91. The S&P 500 ticked down 0.16% to close at 4,507.66.
A recent string of positive sessions — in which the S&P 500 and the Dow climbed for four straight days — helped the indexes trim their monthly losses. Nevertheless, in August, the broad-market index lost 1.77%, while the Nasdaq shed 2.17%. The 30-stock Dow dropped 2.36%.
Traders on Thursday also pored over new U.S. inflation data. The core personal consumption expenditures index increased 0.2% month over month in July and 4.2% year over year, matching estimates from economists polled by Dow Jones. The core PCE is a closely watched inflation indicator by the Federal Reserve.
"At the end of the day, equities are following bonds, so a continued decline in U.S. Treasury yields is the keystone in the bridge for more upside in stocks, at least in the near term," said Joseph Cusick, senior vice president at Calamos Investments. "Absent a surprise result from the August U.S. nonfarm payrolls report on Friday, holiday-induced liquidity conditions are beginning to set in ahead of Labor Day."
Salesforce mitigated some of the Dow's losses. Shares advanced nearly 3% after the software company announced fiscal second-quarter results and third-quarter guidance Wednesday that exceeded analysts' expectations.
Investors will now turn their attention to non-farm payroll data out Friday morning. Economists polled by Dow Jones forecast 170,000 additions. Traders are holding onto hope that the report will indicate that the economy is slowing meaningfully, and ultimately give the central bank reason to pause benchmark interest rate hikes.
Correction: A previous version included an inaccurate description of the PCE indicator. The story has also been updated to reflect the correct month for the dataset.
Nasdaq notches worst month since December
For the month, the Nasdaq Composite slumped about 2.2%, while the Nasdaq-100 finished 1.6% lower.
The biggest laggards included software stocks Fortinet and Datadog, down 22.5% and 17.3% on the month, respectively. JD.com shares lost 19.6%, while Lucid Group and PayPal shaved off more than 17% each.
— Samantha Subin
Nasdaq closes slightly higher
The Nasdaq Composite ticked higher at the closing bell on Thursday, while stocks largely wavered.
— Brian Evans
American Beacon enters ETF industry with new managed futures fund
Another asset manager is dipping its toe into the world of ETFs, even as flows to that asset class have been underwhelming in 2023.
American Beacon, is an investment affiliate of Resolute Investment Managers, launched the American Beacon AHL Trend ETF (AHLT) on Thursday as its first ETF. The new fund is a managed futures strategy like many of the firm's longstanding mutual funds, including the $3 billion American Beacon AHL Managed Futures Strategy Fund, which has a four-star rating from Morningstar.
The fund, which is not directly tied to any previous mutual fund, is sub-advised by London-based AHL Partners.
Managed futures strategies, which make macro bets using derivatives products for areas like stock indexes and currencies, were a popular area in 2022 with both stocks and bonds declining, but many of the biggest funds in the space have seen meager inflows or even outflows this year, according to FactSet.
Resolute Investment Managers CEO Jeff Ringdahl called managed futures strategies a "great diversifier" for investors. He said the AHLT fund is launching with more than $20 million in seed capital and should be just the start for American Beacon in the ETF space.
"This is part of a true ETF family launch. We have this as the first of several to come," he said.
— Jesse Pound
Banks headed for worst month since March crisis
It has been an especially tough month for banks.
The Invesco KBW Bank ETF (KBWB) is down more than 8% in August. That puts it on track for its biggest one-month loss since the banking crisis that took place in March. Back then, the ETF lows more than 25%.
Citigroup, Citizens, Capital One and PNC Financial led the fund lower this month, losing more than 12% each.
— Fred Imbert
JPMorgan downgrades Hostess Brands
Hostess Brands was downgraded to neutral from buy on Thursday by JPMorgan, which cited the stock's recent rally.
On Friday, Reuters reported the Twinkies maker is exploring a sale, citing sources familiar with the matter. Hostess declined to comment, the news outlet said. Shares have added 26.18% since last Thursday's close, as of Wednesday's closing price of $28.06. That is 6 cents higher than JPMorgan's price target.
"Hostess should be one of the faster growing companies in our coverage over the next few years (both on the top and bottom lines) thanks to continued category strength and an eventual share recovery via higher advertising and more innovation. But the stock is near our price target," analyst Ken Goldman wrote in a note to clients.
— Michelle Fox
Fewest bulls since late winter in latest Investors Intelligence survey
The percentage of bulls in the latest weekly Investors Intelligence survey of financial newsletter editors and advisors fell to 43.1%, the fewest since late last winter, from 44.3% last week. In laste July, bullishness had risen as high as 57.1%, a shade below the high water mark reached in November, 2021, less than two months before the stock market topped out the next January.
Bearish sentiment rose slightly, to 20.8% from 18.6% a week ago. Too little pessimism suggests "most professionals are invested, leaving little cash to power additional gains," Investors Intelligence said.
The editors in the correction camp, expecting a shprt-term pullback in stock prices, eased to 36.1% from 37.1% last week, which was the highest since the fall of 2022. "This group raised cash as the indexes fell from late July highs. The recent shifts sought to lock in gains before they were gone," II said.
The "bull/bear spread," measuring the difference between optimists and pessimists, narrowed again, to 22.3 points from 25.7 a week ago and two-year high of 38.5 points reached just four weeks ago.
— Scott Schnipper
UGI surges 10% on strategic review 3 days after Wells Fargo upgrade
Sometimes it's better to be lucky than smart.
Three days after Wells Fargo upgraded shares of UGI Corp., saying the natgas and propane distributor was undervalued and likely to see a turnaround, the stock surged as much as 9.9% on Thursday after UGI announced a strategic review postmarket Wednesday.
Valley Forge, Pennsylvania-based UGI didn't hire just any old investment banks for its strategic review either, retaining both Goldman Sachs and JPMorgan to assist in a process that's focused on UGI's liquified petroleum gas (LPG) business.
UGI "will consider a range of strategic, operational and financial alternatives" and "is exploring a full range of options with the goal of reducing UGI's earnings volatility and strengthening its balance sheet."
— Scott Schnipper
Cannabis stocks pop on call to ease restrictions
Cannabis stocks surged on Thursday, a day after the U.S. Department of Health and Human Services called for an easing of marijuana restrictions, and recommended reclassifying the drug as lower risk.
— Samantha Subin, Annika Kim Constantino and Stefan Sykes
Dollar General shares fall 13% after earnings miss
Dollar General shares slid more than 13% in midday trading after the retailer posted a second-quarter earnings miss and lowered its full-year guidance.
The dollar store posted second-quarter earnings of $2.13 per share, lower than the $2.47 expected by analysts polled by FactSet. Revenue came in at $9.80 billion, weaker than the $9.93 billion consensus estimate.
For the fiscal year ending January 2024, Dollar General issued per-share earnings guidance in the range of $7.10 to $8.30, far lower than the $10.01 anticipated by the Street. It expects year-over-year revenue growth of 1.3% to 3.3%, weaker than prior guidance of 3.5% to 5.0%. It's also lower than the consensus estimate of 3.9%, according to FactSet.
On Thursday, JPMorgan analyst Matthew Boss downgraded the stock to neutral from overweight, citing the poor guidance. He also cut his price target to $132 from $210. That implies 16% downside from Monday's close. Oppenheimer also downgraded the stock Thursday to perform from outperform and removed its prior $195 price target.
Dollar Tree also dipped 1.9% in midday trading.
— Sarah Min, Michael Bloom
These are the stocks moving midday: Tilray, Salesforce, CrowdStrike and more
These are the stocks making the biggest moves during midday trading:
- Salesforce — The cloud software company saw its stock jump 3% after Salesforce announced quarterly results and guidance that surpassed Wall Street's expectations.
- CrowdStrike — The cybersecurity company jumped 8.7% after it not only beat analysts' second-quarter expectations on the top and bottom lines late Wednesday but also issued positive earnings and revenue guidance for the third quarter and full year.
- Cannabis stocks — Cannabis stocks popped a day after the the Department of Health and Human Services recommended easing restrictions on marijuana and classifying it as a lower-risk drug. Shares of Tilray Brands were last up 9%.
Read the full list of stock on the move here.
— Samantha Subin
Goldman Sachs cheers Salesforce earnings
Goldman Sachs sees even more upside ahead for Salesforce following the software company's strong quarterly report.
"We see revenue generated from Gen AI products, price increases and pent-up demand (following a period of restrained spending in the CRM industry) potentially accelerating revenue in CY24 (FY25)," Goldman Sachs analyst Kash Rangan said in a note to clients Wednesday. "Improved top-line growth may also support LT margin durability."
Salesforce beat expectations on both lines and issued strong current-quarter guidance. Read more about what Wall Street thinks of the report here.
— Alex Harring
S&P 500 rally nears resistance level, technical strategist says
The S&P 500 is on track for its fifth straight positive session, but this upward move will likely hit a ceiling soon, according to BTIG chief market technician Jonathan Krinsky.
The technical strategist said in a note to clients that the index is bumping against the upper level of a Bollinger Band, which sits at 4,544. A Bollinger Band is a type of chart tool designed to anticipate a trading range of a stock or index.
The S&P 500 was trading near 4,525 in midday trading Thursday.
"While this rally has certainly been more than we anticipated, our sense is that we start to turn back down here as we enter September," Krinsky said.
— Jesse Pound
Alphabet, Adobe are among the 15 S&P 500 names trading at fresh highs
Google-parent Alphabet and <