A handful of high-profile names were deep in the red Thursday, and the main U.S. equity indexes closed mixed. Headline numbers aside, the general trend remains up and to the right, with a decided risk-on edge amid summer trading volumes juiced once more by meme stocks.
President Donald Trump took a field trip to Federal Reserve facilities for an in-person inspection of a $2.5 billion renovation project at the center of White House efforts to discredit Fed Chair Jerome Powell.
Note that the next Fed meeting kicks off this Tuesday, July 29, and concludes on Wednesday, July 30. Be sure to check in on our live Fed blog for updates about the central bank.
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Meanwhile, the yield on the 2-year Treasury note, the market price most sensitive to Fed policy moves, inched up to 3.912% Thursday from 3.884% Wednesday. The yield on the 10-year U.S. Treasury note, a risk-free benchmark for the global financial system, was up to 4.402% from 4.888%.
But the 30-year yield – a barometer of long-term economic growth as well as inflation expectations and the basic health of the market – inched back to 4.948% from 4.949%.
Tesla tanks, Alphabet sings
There was more obvious heat from Magnificent 7 stocks such as Tesla (TSLA, -8.2%), which spun into reverse during Wednesday’s after-market session when management missed expectations with its second-quarter earnings report.
The market is more sanguine about Alphabet (GOOGL, +1.0%), which also reported second-quarter earnings late Wednesday.
Other members of the Mag 7, such as Amazon.com (AMZN, +1.7%) – one of the top-performing Dow Jones stocks on the day – and Microsoft (MSFT, +1.0%), posted solid gains.
Apple (AAPL, -0.4%) fell late in the trading session, but Meta Platforms (META, +0.2%) was higher Thursday. So was Nvidia (NVDA, +1.7%), the leader of the AI revolution, one of the best stocks of the century, and the biggest publicly traded company in stock market history.
NVDA was up despite President Trump revealing he thought about breaking up the company, even without much knowledge of what the chipmaker does.
Trump provided a bump for Chevron (CVX, +1.8%), with the energy stock rising after the administration said it will allow the oil and gas exploration and production company to resume drilling operations in Venezuela.
At Thursday’s closing bell, the blue-chip Dow Jones Industrial Average was down 0.7% to 44,693, widening the gap from a new all-time high to 320 points, or 0.7%.
The broad-based S&P 500 was up 0.1% to 6,363, and again made a new closing high. Same goes for the tech-focused Nasdaq Composite, which was up 0.2% to 21,058.
Big Blue’s good news is bad news
International Business Machines (IBM, -7.6%) was the biggest drag on the world’s oldest stock market index Thursday, even though Big Blue’s second-quarter results exceeded estimates and management solidified full-year guidance.
IBM stock had outperformed the S&P 500 by more than three times year to date through Wednesday’s close, reflecting great expectations and perhaps auguring today’s sell-off.
Big Blue – a member of the Dow Jones Industrial Average from March 1932 through March 1939 and since June 1979 – reported earnings of $2.80 per share on revenue of $17.0 billion vs a FactSet-compiled consensus forecast of $2.65 on $16.6 billion.
Stifel analyst David Grossman reiterated his Buy rating and his $310 12-month target price for IBM. “We would recommend opportunistic purchases for defensive-minded investors,” Grossman writes, “although post-report selling may persist for a short period.”
It’s a meme-stock market
Opendoor Technologies (OPEN, +5.7%) and Kohl’s (KSS, +10.8%) enjoyed big up days again Thursday, rising with the revival of a meme-stock craze that’s elevated names such as GameStop (GME, -1.8%) and AMC Entertainment (AMC, -2.9%) in the recent past.
Meme stocks are heavily shorted by “smart money” investors but move, infamously, on social media hype rather than fundamentals.
Krispy Kreme (DNUT, -0.2%) looked a little more like a normal stock Thursday, but that’s only by comparison to its 26.7% gain Tuesday and its 38.5% gap-up at Wednesday’s open.
“Retail interest was particularly on display in the options market,” Reuters reported, “with several retail favorite options names, including Krispy Kreme and Kohl’s, drawing massive trading volume.”
As OptionMetrics Head of Quantitative Research Garrett DeSimone told Reuters, “It seems like the story, at least in the equity market, is everything is kind of ‘risk on.'”
