U.S. stocks staged an eleventh-hour rally on Friday, rebounding dramatically from intraday lows to close higher after the release of key inflation data that largely met expectations.
The Dow Jones Industrial Average soared 1.5%, making Friday its best day so far this year. The S&P 500 rose 0.8%. The Nasdaq Composite, down as much as 1.7% midday, closed flat.
All three indexes lost ground over the week. The Nasdaq fell 1.1%, snapping a five-week streak. The Dow and S&P 500 lost 1% and 0.5%, respectively. Nonetheless, May was a good month for stocks, with each index registering gains—2.3% for the Dow, 4.8% for the S&P, and 6.9% for the Nasdaq.
Treasury yields retreated Friday after data showed core inflation, which excludes volatile energy and food prices, rose 0.2% in April and 2.8% over the year. The report, the Fed's preferred measure of inflation, was in line with expectations, easing fears that price increases are reaccelerating and reviving hopes for interest rate cuts later this year.
Dell Technologies (DELL) shares slumped after the PC maker’s double-digit decline in operating income and lower margins offset an earnings beat on surging demand for artificial intelligence (AI) servers. Its results, coupled with Salesforce's (CRM) disappointing report on Wednesday, weighed on tech stocks at the end of the week.
Stock Indexes Wrap: Semiconductors, Software Lag as Consumer Stocks Get a Boost From PCE
May 31, 2024 04:24 PM EDT
The Dow
Salesforce (CRM) gained 7.5%, rebounding from yesterday when the stock suffered its biggest one-day decline since 2004 after missing quarterly revenue estimates.
Consumer brands that have been struggling with sticky inflation and crunched consumers got a boost from modestly tamer April inflation data. McDonald’s (MCD) advanced 2.7% and Home Depot (HD) gained 1.7%. Coca-Cola (KO) rose 1.6%.
The index’s largest tech stocks lagged following a mixed earnings report from AI server maker Dell (DELL). Amazon (AMZN) slid 1.6% and Microsoft (MSFT) eked out a 0.2% gain.
The S&P 500
Caesars Entertainment (CZR) jumped 11.6% amid reports activist investor Carl Icahn had amassed a “sizable” stake in the casino operator.
Health insurers, beaten down lately by concerns about rising health care costs and lower Medicare payments, advanced on Friday. Aetna-owner CVS Health (CVS) added 6.4%, while Elevance (ELV) rose 6.1% and Cigna (CI) gained 4.1%.
The high-flying stocks of companies benefiting from AI demand were taken down a peg Friday. Vistra (VST) lost 6%, Super Micro Computer (SMCI) shed 5.3%, and HP (HPQ) declined 4.9%.
Semiconductor stocks also lost ground, with Broadcom (AVGO) declining 2.5% and Micron (MU) shedding 1%.
Costco (COST) declined 1% despite the warehouse retailer beating quarterly earnings estimates.
The Nasdaq 100
ZScaler (ZS) climbed 8.5% after reporting a surprise profit in its fiscal third quarter. Cybersecurity peer Fortinet (FTNT) followed ZScaler higher, rising 2.4%.
Kraft Heinz (KHC), Starbucks (SBUX), PepsiCo (PEP), and Keurig Dr. Pepper (KDP) all advanced amid signs of slowing inflation.
MongoDB (MDB) tumbled 23.9% as weak current-quarter guidance overshadowed its better-than-expected earnings. Enterprise software peers Datadog (DDOG) and Atlassian (TEAM) fell 6.2% and 2.2%, respectively.
Marvell (MRVL) slid 10.4% after reporting a big slowdown in the non-AI parts of its business.
MongoDB Stock Plunges On Weak Guidance
May 31, 2024 03:09 PM EDT
MongoDB (MDB) shares plunged Friday as soft guidance offset stronger-than-expected quarterly results.
The company, which makes money by selling add-on features and support for its open-source document-oriented database, guided fiscal second-quarter adjusted earnings of between 46 cents and 49 cents per share, well below analysts’ forecasts of 58 cents a share. It projects net sales in the period of $460.0 million to $464.0 million, also below the $470.4 million Street estimate.
MongoDB now expects full-year adjusted earnings per share of between $2.15 and $2.30, compared with previous guidance of $2.27 to $2.49. The company pegs revenue at between $1.88 billion and $1.90 billion, versus a previous forecast of between $1.90 billion and $1.93 billion.
The weak outlook follows light guidance from other enterprise software companies, includingSalesforce (CRM), UiPath (PATH),andWorkday (WDAY), as corporate customers spend more cautiously amid an uncertain economic environment.
MongoDB shares were down nearly 25% about an hour before markets closed on Friday. They have lost 43% of their value since the start of the year.
-Tim Smith
Caesars Entertainment Stock Jumps on Report of Carl Icahn's 'Sizable' Stake
May 31, 2024 02:16 PM EDT
Shares of Caesars Entertainment (CZR) spiked Friday following a Bloomberg report that billionaire investor Carl Icahn has taken "a sizable position” in the hotel and casino operator.
Citing people familiar with the matter, Bloomberg said it was unclear what the size of the stake was or what Icahn might plan to do with it.
The news organization noted that Icahn has a long history of investing in the gambling industry, and that he was involved with making changes at Caesars in the past. In 2019, the company announced an agreement with Icahn to appoint three members he backed to the board.
At the time, Icahn said the best path forward for Caesars was a merger. A few months later, Caesars agreed to be purchased by rival Eldorado Resorts for $17.3 billion, including debt, and the combined company retained the Caesars name.
Caesars Entertainment shares had surged 11.5% as of Friday afternoon but were still down almost 25% year-to-date.
-Bill McColl
Zscaler Jumps on Unexpected Profit
May 31, 2024 01:24 PM EDT
Shares ofcloud security providerZscaler (ZS) surged Friday, a day after the company released fiscal third-quarter results that easily beat estimates.
Zscaler posted a surprise profit for the quarter of $19.1 million, compared with a loss of $46.05 million in the year-earlier period. Revenue of $553.2 million was up 32% from last year.
The cybersecurity industry has been in atough spot in recent months, with profit and sales projections from other cloud and cybersecurity providerslike Palo Alto Networks(PANW) andCloudflare(NET)dragging down stocks around the industry.
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Zscaler shares were up 6.4% in early-afternoon trading but have still lost about a quarter their value since the start of the year.
-Aaron McDade
DJT Slips After Trump Conviction
May 31, 2024 12:12 PM EDT
Shares of Trump Media & Technology Group (DJT), the parent company of Donald Trump’s Truth Social, fell Friday after the former President was found guilty of 34 criminal charges.
The stock, which is known for being highly volatile due to its small float and the notoriety of its namesake, rebounded at the open after slumping Thursday night when the Manhattan jury’s verdict was announced. Shortly after the open, shares tumbled to trade about 7% lower at mid-day.
The stock has joined the ranks of meme stocks since Digital World Acquisition Corp. merged with Trump Media and donned the ticker “DJT” in March. It regularly experiences double-digit swings in either direction as retail traders pile in to ride momentum higher and dump the stock as it tanks.
Marvell's Q1 Struggles in Other Divisions Outweigh AI, Data Center Growth
May 31, 2024 11:30 AM EDT
Marvell Technology's (MRVL) shares plunged Friday, after the company's first-quarter fiscal 2025 report showed that struggles in most areas of business offset an 87% year-over-year jump in data center revenue.
Total revenue for the quarter was $1.16 billion, narrowly above the $1.15 billionanalysts expectedthanks to what MarvellChief Executive Officer (CEO) Matt Murphy called "stronger than forecasted demand" for itsartificial intelligence-related products. In the first quarter a year ago, Marvell generated $1.32 billion in revenue.
Marvell reported a wider-than-expected loss of $215.6 million, or 25 cents per share, as analyst estimates compiled by Visible Alpha had projected a quarterly loss of $196.6 million, or 20 cents per share. Last year, the company lost $168.9 million, or 20 cents per share, in the first quarter.
Marvell's 87% jump in data center revenue to $816.4 million, which was largely fueled by the company'sAI-relatedproducts, wasn't enough to offset declines in its other divisions, which ranged from 13% to 75% compared with last year.
Marvell shares fell 12%.
-Aaron McDade
Gap Stock Surges After Turnaround Plan Drives Quarterly Results, Raised Outlook
May 31, 2024 10:14 AM EDT
Gap Inc. (GPS) shares surged 22% Friday morning after the clothing and accessories retailer posted a better-than-expected quarterly earnings report and raised its full-year guidance in signs that the company's turnaround plan is paying off.
For the three month period ending May 4, the retailer posted earnings per diluted share of 41 cents, crushing analysts' estimates of 14 cents a share. Sales in the quarter of $3.39 billiongrew 3% from a year earlier and topped expectations of $3.29 billion.
Looking ahead, the company raised its full-year guidance, saying it now expects full-yearoperating incomeoutlook to the mid-40% growth range, significantly higher than its earlier forecast of growth in the low-to-mid teens.
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Since finding a bottom in May last year, Gap shares have trended higher, with gains accelerating after the 50-day moving average (MA) crossed above the 200-day MA in early October to form agolden crosspattern. Leading into the retailer’s quarterly results, the stock had rallied towards the 50-day MA after a period of recentconsolidation, indicating bullish expectations by market participants.
Amid the stock’s earnings-driven surge, investors should closely monitor the $28.50 level, an area where the price would likely run into overheadresistancefrom its March 2024 high.
-Tim Smith
Stocks Making the Biggest Moves Premarket
May 31, 2024 09:24 AM EDT
Gains:
- Gap (GPS): Shares surged 23% in premarket trading after the clothing and accessories retailer’s earnings beat and raised outlook showed its turnaround is working.
- Nvidia (NVDA): Shares rose 2% as the pickup in sentiment following the PCE data’s release buoyed the AI chip maker.
- Zscaler Inc. (ZS): Shares jumped 17% after the cloud-based cybersecurity provider reported better-than-expected first-quarter revenue and billings.
Losses:
- Dell Technologies (DELL): Shares fell 16% after the PC maker’s double-digit decline in operating income and lower margins offset an earnings beat on surging demand for artificial intelligence (AI) servers
- MongoDB (MDB): Shares lost 24% in premarket trading after the database-software maker posted earnings below expectations and cut its full-year forecast.
Stock Futures Fall Ahead of PCE
May 31, 2024 08:24 AM EDT
Dow futures dropped 0.1% in premarket trading on Friday.
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S&P futures fell 0.2%.
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Nasdaq 100 futures were off 0.3%.
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