Broader Market Lower as Chip Stocks Tumble

The S&P 500 Index ($SPX) (SPY) today is down -0.27%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.03%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.81%.

Weakness in chip stocks is weighing on the overall market ahead of quarterly earnings results from Nvidia after the close.  Corporate news today is mixed for stocks.  Super Micro Computer is down more than -24% after it said it will delay filing its Annual Report on Form 10-K for the fiscal year ended June 30, 2024.  Also, Foot Locker is down more than -12% after cutting its 2025 gross margin forecast.  In addition, J M Smucker is down more than -5% after cutting its full-year net sales forecast.

On the positive side, Box Inc. is up more than +9% after reporting better-than-expected Q2 adjusted EPS and raising its 2025 adjusted EPS forecast.  Also, Kohl’s is up more than +6% after raising its 2025 EPS forecast, and Nordstrom is up more than +4% after reporting stronger-than-expected Q2 net sales and raising its full-year comparable sales forecast.

The markets are eagerly awaiting earnings results from Nvidia after today’s close.  Nvidia, the world’s most valuable chipmaker, is seen as a barometer for AI spending across much of the technology industry.  The consensus is that Nvidia’s Q2 revenue growth surged +70% y/y to $28.86 billion, and Q3 revenue is forecast at $31.85 billion.

US MBA mortgage applications rose +0.5% in the week ended August 23, with the purchase mortgage sub-index up +0.9% and the refinancing mortgage sub-index down -0.1%.  The average 30-year fixed rate mortgage fell -6 bp to a 16-month low of 6.44% from 6.50% in the prior week.

The markets are discounting the chances at 100% for a -25 bp rate cut for the September 17-18 FOMC meeting and at 35% for a -50 bp rate cut at that meeting.

Overseas stock markets today are mixed.  The Euro Stoxx 50 rose to a 5-week high and is up +0.54%. China's Shanghai Composite fell to a 6-1/2 month low and closed down -0.40%.  Japan's Nikkei Stock 225 closed up +0.22%.

Interest Rates

September 10-year T-notes (ZNU24) today are up +2 ticks.  The 10-year T-note yield is down -0.4 bp at 3.824%.  T-note prices today are slightly higher.  Strength in 10-year German bunds today is providing carryover support to T-notes.  However, supply pressures are limiting the upside of T-notes as the Treasury will auction $70 billion of 5-year T-notes later today.   

European government bond yields today are mixed.  The 10-year German bund yield is down -3.0 bp at 2.258%. The 10-year UK gilt is up +0.1 bp at 3.999%.

The Eurozone July M3 money supply rose +2.3% y/y, unchanged from June and weaker than expectations of +2.7% y/y.

Swaps are discounting the chances of a -25 bp rate cut by the ECB at 98% for the September 12 meeting.

US Stock Movers

Weakness in chip stocks is weighing on the broader market.  ARM Holdings Plc (ARM) and Micron Technology (MU) are down more than -4% and Intel (INTC) is down more than -2% to lead losers in the Dow Jones Industrials.  Also, Nvidia (NVDA) and Advanced Micro Devices (AMD) are down more than -2%.  In addition, Broadcom (AVGO), Marvell Technology (MRVL), Applied Materials (AMAT), ON Semiconductors NV (ON), Analog Devices (ADI), GlobalFoundries (GFS) and Lam Research (LRCX) are down more than -1%.

Super Micro Computer (SMCI) is down more than -24% to lead losers in the S&P 500 after it said it would delay filing its Annual Report on Form 10-K for the fiscal year ended June 30, 2024. 

Bath & Body Works (BBWI) is down more than -5% after reporting Q2 net sales of $1.53 billion, weaker than the consensus of $1.54 billion, and forecasting Q3 EPS of 41 cents-47 cents, below the consensus of 52 cents. 

J M Smucker (SJM) is down more than -5% after cutting its full-year net sales forecast to +8.5% to +9.5% from a previous forecast of +9.5% to +10.5%.

Foot Locker (FL) is down more than -10% after cutting its 2025 gross margin forecast to 29.5%-29.7% from a previous forecast of 29.8%-30%, weaker than the consensus of 29.8%. 

Lululemon Athletica (LULU) is down more than -3% after Wedbush cut its price target on the stock to $324 from $400.

nCino Inc (NCNO) is down more than -13% after forecasting Q3 revenue of $136 million-$138 million, below the consensus of $138.6 million. 

PVH Corp (PVH) is down more than -6% after forecasting Q3 adjusted EPS of about $2.50, well below the consensus of $3.12, 

Patterson Cos (PDCO) is down more than -14% after reporting Q1 net sales of $1.54 billion, weaker than the consensus of $1.59 billion. 

Insulet (PODD) is up more than +5% to lead gainers in the S&P 500.  Insulet is adding to Tuesday’s 6% jump after the company received FDA clearance for its Omnipod 5 to treat people with Type 2 diabetes ages 18 years and older.

Bio-Rad Laboratories (BIO) is up more than +2% after Nephron Research upgraded the stock to buy from hold with a price target of $390. 

Box Inc (BOX) is up more than +9% after reporting Q2 adjusted EPS of 44 cents, better than the consensus of 41 cents, and raising its 2025 adjusted EPS forecast to $1.64-$1.66 from a previous estimate of $1.54-$1.58, stronger than the consensus of $1.62. 

Kohl’s (KSS) is up more than +6% after raising its 2025 EPS forecast to $1.75-$2.25 from a prior estimate of $1.25-$1.85, well above the consensus of $1.53. 

Nordstrom (JWN) is up more than +4% after reporting Q2 net sales of $3.79 billion, above the consensus of $3.78 billion, and raising its full-year comparable sales forecast to 0% to +2% from a prior view of -1% to +2%. 

AeroVironment (AVAV) is up more than +14% after Alembic Global Advisors upgraded the stock to overweight from neutral with a price target of $216. 

Earnings Reports (8/28/2024)

Affirm Holdings Inc (AFRM), Bath & Body Works Inc (BBWI), Cooper Cos Inc/The (COO), Crowdstrike Holdings Inc (CRWD), Donaldson Co Inc (DCI), Five Below Inc (FIVE), HP Inc (HPQ), J M Smucker Co/The (SJM), Kohl's Corp (KSS), NetApp Inc (NTAP), Nutanix Inc (NTNX), NVIDIA Corp (NVDA), Okta Inc (OKTA), Pure Storage Inc (PSTG), Salesforce Inc (CRM), Veeva Systems Inc (VEEV).

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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.