Traders on the floor of the New York Stock Exchange, Aug. 4, 2022.
The Nasdaq Composite and the S&P 500 rose Thursday, snapping three-day losing streaks as investors resumed buying tech stocks.
The tech-heavy index rallied 0.95% to 13,630.61, while the S&P 500 rose 0.37% to 4,381.89 — both closing near session highs. Meanwhile, the Dow Jones Industrial Average was lower by 4.81 points, or 0.01%, to 33,946.71.
"The Nasdaq is higher today but then again, it was off yesterday," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. "Equities appear to be in pause mode. The tug of war between bull and bear market camps is balanced, which implies uncertainty and increased volatility for the foreseeable future."
Investors snapped up some major tech stocks that got dinged this week. Tesla shares closed higher, despite falling earlier in the day, even after the second major Wall Street bank in as many days downgraded the high-flying retail trader darling. Shares have more than doubled this year. Morgan Stanley analyst Adam Jonas, a longtime Tesla bull, revised his rating Thursday to equal weight from overweight. He said the stock presents "a more balanced risk reward" after its rally. Meanwhile, shares of Amazon were higher by more than 4%. Microsoft rose 1.8%. Apple hit a fresh all-time high late in the day, rising more than 1%.
Elsewhere, Boeing supplier Spirit AeroSystems dropped more than 9% after the company halted production in its Kansas facility. This follows a worker strike announcement, set to start Saturday. Separately, Boeing shares also dropped more than 3%, weighing on the Dow.
The S&P 500 slid 0.5% on Wednesday, marking its worst daily performance in June. The equity benchmark is now down 0.6% week to date, on pace to break a five-week win streak. This comes after the broader market index hit its highest level in more than a year last week.
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Wednesday's decline came as Federal Reserve Chair Jerome Powell said more rate hikes are likely ahead to combat inflation, pouring cold water on investors who had hoped the central bank was close to the end of its tightening cycle. The Fed kept rates steady at last week's policy meeting after 10 consecutive hikes. However, officials indicated there could be two more quarter-percentage point increases this year.
"Markets are weaker because I think that they're realizing that not just the Federal Reserve, but global central banks are not done, and are still actually fully committed to their inflation fight and will sacrifice economic growth if they need to," said Megan Horneman, chief investment officer at Verdence Capital Advisors.
The Bank of England raised interest rates by 50 basis points on Thursday, its 13th consecutive increase. The decision follows this week's latest inflation data for the U.K., which showed a higher-than-expected reading of 8.7% in May.
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Nasdaq, S&P 500 close higher Thursday
The Nasdaq Composite and the S&P 500 rose Thursday, while the Dow Jones Industrial Average lagged the other two benchmarks.
The tech-heavy index rallied 0.95% to 13,630.61, while the S&P 500 rose 0.37% to 4,381.89 — both closing near session highs. Meanwhile, the Dow Jones Industrial Average was lower by 4.81 points, or 0.01%, to 33,946.71.
— Sarah Min
Correction: A headline in an earlier version of this blog post incorrectly stated the Nasdaq and S&P 500's moves on Thursday.
Better news for contrarians. Bullishness fell and bearishness rose in latest AAII survey
Bullishness toward stocks over the next six months fell to 42.9% in the latest American Association of Individual Investors' weekly sentiment survey, down from 45.2% last week, while remaining above the historical average of 37.5% for a third consecutive week.
Meanwhile, bearish opinion grew to 27.8% of respondents from 22.7% — which was the lowest since July 2021 — but stayed above the historical average of 31.0%, also for a third week. Neutral opinion narrowed to 29.4%, the lowest in seven weeks.
The AAII survey results were in contrast to the Investors Intelligence poll posted earlier this week{=null} that showed bullishness among financial newsletter editors continuing to expand, to 54.3%, a fresh 19-month high and up from 53.4% last week.
Contrarian investors look for rising bearishness as a sign of diminishing risk in the stock market, arguing that more pessimism means most investors are done selling and hold ample amounts of cash to eventually push prices higher. The reverse is true at times of growing bullishness.
— Scott Schnipper
Etsy at risk when student loan payments resume, says Deutsche Bank
Etsy is the most exposed ecommerce company to student loan repayment headwinds, Deutsche Bank said in a note Thursday.
Student loan payments resume in October, and that is expected to make a big dent in consumer spending —putting several retailers at risk.
In making its assessment on Etsy, the firm analyzed the company's customer age cohort and its average revenue per user growth, which was the "most pronounced" of any of the platforms Deutsche Bank tracks. Etsy also has the highest concentration of customers in the 18 to 34 age group, analyst Lee Horowitz wrote.
"While Etsy deserves credit for holding on to much of its pandemic gains, we believe this age and ARPU analysis suggest that some piece of Etsy's ARPU gains are likely at risk in 2H23 as student loan repayments resume," he said.
— Michelle Fox
Here are where the major averages stand in the final hour of trading
All three major benchmarks were trading in positive territory shortly into the final hour of trading. In fact, they were all near session highs.
- The Dow Jones Industrial Average is higher by 8 points, or 0.03%
- The S&P 500 is higher by 0.3%
- The Nasdaq Composite is up by 0.79%.
— Sarah Min
Dow Inc falls after BofA downgrade
Dow Inc shares were down about 1% after Bank of America downgraded the chemicals company to underperform from neutral. The bank also lowered its price target on the stock to $55 from $64 per share.
"In the petrochemical space US and global polyethylene volumes are not rebounding as expected. In Europe demand seems to be going in reverse once again, while China demand may be growing but is offset by increased capacity," wrote analyst Steve Byrne.
— Fred Imbert, Michael Bloom
Sarepta Therapeutics resumes trading after announcing FDA decision
Shares of Sarepta Therapeutics have resumed trading after the company announced that the Food and Drug Administration had granted approval to a gene therapy for muscular dystrophy. The stock was halted for about 45 minutes.
The therapy, a one-time treatment called Elevidys, is only approved for children between the ages of four and five.
The stock has been volatile since trading resumed but is little changed for the session.
— Jesse Pound
S&P 500 sectors are about evenly split
S&P 500 sectors were about evenly split in afternoon trading. Five sectors were trading in positive territory, with consumer discretionary, health care, and information technology leading gains. Six sectors were in the red, with energy, real estate and utilities the biggest laggards in the index.
— Sarah Min
Oil falls more than 4%
Oil traded down more than 4% after the larger-than-anticipated interest rate hike from the Bank of England overshadowed crude inventory slides.
Brent futures slipped $3.33, or 4.3%, to trade at $73.79 a barrel. Meanwhile, U.S. West Texas Intermediate crude futures, called WTI for short, dropped $3.41, which equates to 4.7%, to sit at $69.12 per barrel.
The English bank's hike was top of mind on Thursday, despite news of U.S. supply falling, which surprised analysts.
— Alex Harring
NYSE decliners outpace advancers 2.2 to 1
New York Stock Exchange decliners outnumbered advancing stocks 2.2 to 1 in early afternoon trading.
— Sarah Min
Nasdaq Composite at risk of snapping streak of 8 straight winning weeks
The Nasdaq Composite is down nearly 1% on the week as of Thursday afternoon, putting the technology-heavy index on pace to snap a weekly winning streak not exceeded since 2019.
If this performance holds through Friday's close, it would end a streak of eight straight weeks that ended higher. That's the longest streak since a 10-week period that ended in March 2019.
The Nasdaq Composite has rallied in 2023 due to investor excitement around artificial intelligence and the outlook for other growth stocks. Despite the downturn so far this week, the index is still up nearly 5% on the month and almost 30% since the start of 2023.
— Alex Harring
Uber could make it into the S&P 500 next year, Evercore's Mark Mahaney says
Ride-sharing giant Uber could earn inclusion into the S&P 500 next year, according to Evercore ISI's head of internet research Mark Mahaney.
"I think we're finally, finally starting to break out on this stock after multiple years of really nothing," Mahaney told CNBC's "Squawk on the Street" on Thursday. "I picture they get added to the S&P 500 next year."
Shares of Uber have added more than 75% so far this year.
— Brian Evans
Technology 'hegemony' should continue from here with narrower near-term beneficiaries, Barclays says
The spike in valuations tied to artificial intelligence should continue, but Barclays sees a narrow group of foundational hardware stocks experiencing most of the near-term economic value.
"Valuations of primary beneficiaries are not extreme, and their earnings should grow into them over time," wrote strategist Venu Krishna in a Thursday note. "The U.S. market and Tech hegemony is set to continue, but spoils are likely to accrue to a few key Tech names."
Record valuation premiums and returns within the U.S., while justified given the technology sector's performance to the rest of the market and higher profitability across sectors, warrant diversification through global equities, Krishna added.
— Samantha Subin
See the stocks making the biggest moves midday
These are some of the stocks making the biggest midday moves:
- Overstock.com — Shares jumped 16% on news that the e-commerce company won the auction for Bed Bath & Beyond's digital assets and intellectual property, which includes the brand name.
- Accenture — The stock fell 2.6% after the consulting firm shaved the top end of its revenue expectations for the fiscal year.
- Root — The car insurance stock jumped d more than 35% following a Wednesday report from The Wall Street Journal that Embedded Insurance offered $19.34 per share in an attempt to takeover.
— Alex Harring
AWS is investing $100 million in generative A.I. center
Amazon's cloud unit said Thursday that it's allocating $100 million for a center to help companies use generative artificial intelligence, the technology that's taken off in the months since OpenAI unleashed its ChatGPT chatbot on the public.
The stock was last up 3.5% during midday trading.
— Jordan Novet
Loop Capital ups Amazon price target, says Wall Street is underestimating retail margin recovery
Wall Street is getting Amazon's retail margin recovery wrong, according to Loop Capital.
"While the timing of the end to AWS revenue deceleration will be the next driver of the stock, we think recovering unit economics in retail is a bigger driver of earnings power," wrote Rob Sanderson in a Thursday note. "We are confident in our view that consensus is severely mis-modeling this."
The analyst lifted his price target on shares to $180 from $140, reflecting more than 44% upside from Wednesday's close. The company's retail business, he said, looks "much richer" than before the pandemic as it expands advertising and revenue commissions.
"This has led to 585bps of positive leverage to retail segment margin and this is not reversing," Sanderson said.
— Samantha Subin
Powell says Fed can ease off the pace of rate hikes
Federal Reserve Chairman Jerome Powell faced multiple questions Thursday about where interest rates are heading, but he said the focus instead should be on how quickly the Fed is moving.
Policymakers, he insisted, are still committed to using rates to bringing down inflation, but are going to move more slowly than they had been during an aggressive run of hikes going back to March 2022.
"I think the data will tell us what to do," Powell told members of the Senate Banking Committee. "I think the point of our ... last meeting was really to moderate the pace of our decision making on this, because you know, it was very important to move quickly last year, and we did. It's not so important now."
—Jeff Cox
Tesla climbs even after multiple downgrades from Street, including Morgan Stanley
Shares of electric vehicle maker Tesla, which were lower all morning, are fighting into the green as investors ignore Wall Street analysts souring on the name and buy anyway.
The shares were significantly lower earlier Thursday after a downgrade from Morgan Stanley's Adam Jonas, one of the more notable analysts in the EV space.
Morgan Stanley's negative view followed a Barclays downgrade a day earlier, which similarly cited Tesla's recent rally as a signal that investors should take their profits. Jonas, a longtime Tesla bull, said Tesla's rally is riding on the coattails of investor excitement over artificial intelligence.
"I have to be up-front with you all. While the team has defended the Tesla OW rating all year, I did not see this 111% YTD rally coming (the S&P 500 is up 14% YTD, for context)," he said.
Along with Tesla, investors on Thursday were bidding higher other tech stocks that have led the 2023 gains such as Amazon, Apple and Nvidia.
Tesla was last up 0.2%.
— Brian Evans
Existing home sales beat expectations in May
Home sales unexpectedly increased in May in another positive sign for the housing market, the National Association of Realtors reported Thursday.
Existing sales totaled 4.3 million for the month, representing a modest increase of 0.2% but better than the respective Dow Jones estimates for a 4.25 million and a decline of 0.7%.
Supply also increased, up to three months now for the highest level since November 2022.
—Jeff Cox
Kellogg valuation attractive despite spin-off uncertainties, Bernstein says
Kellogg shares' inexpensive valuation and recent underperformance is likely due to falling investor sentiment following the announcement of a spin-off of the company's snacking unit, according to Bernstein. But that hasn't totally scared the firm off.
"The spin off creates uncertainty, but valuation is cereal-ously attractive," analyst Alexia Howard titled in a note to clients in which she upgraded the stock to market perform from underperform.
The announcement also overshadowed the company's improved earnings outlook, she said.
Still, it's been a tough year for the stock — and Howard is aware the road ahead may still be tough. Kellogg has sat out of the 2023 market rally, down nearly 8% on the year. And Howard's price target of $62 implies shares could slide another 5% over the next year from where the stock finished Wednesday, meaning there could be some more downside ahead.
— Alex Harring
Fed's Bowman backs additional interest rate hikes
Federal Reserve Governor Michelle Bowman is among the central bankers who think interest rates will need to increase more to bring down inflation to acceptable levels.
The rate-setting Federal Open Market Committee, of which Bowman is a voter, decided last week to hold rates steady, but pointed to likely additional increases before the end of 2023.
"I supported the FOMC's decision last week to hold the federal funds rate target range steady and to continue to reduce the Fed's securities holdings; however, I believe that additional policy rate increases will be necessary to bring inflation down to our target over time," Bowman said in remarks prepared for a speech in Cleveland.
Rates will need to move higher to push them into "a sufficiently restrictive stance" that will get inflation closer to the Fed's 2% goal, she added.
—Jeff Cox
Morgan Stanley downgrades aluminum mining giant on slower global growth
Morgan Stanley downgraded aluminum giant Alcoa on Wednesday, citing slower global growth and headwinds from a stronger dollar.
"Mining equities may continue their recent move higher on sentiment around China stimulus for a bit longer, but we don't think the rally is sustainable," Morgan Stanley analyst Carlos De Alba said.
Alcoa stock has slipped more than 22% so far this year.
CNBC Pro subscribers can read the full story here.
— Brian Evans
Stocks open lower Thursday
Stocks opened lower Thursday.
The Dow Jones Industrial Average fell 49 points, or 0.15%. The S&P 500 was down by 0.28%, and the Nasdaq Composite was 0.40% lower.
— Sarah Min
Deutsche Bank upgrades Bud Light parent, says headwinds will eventually abate
Deutsche Bank upgraded Bud Light parent company Anheuser-Busch InBev stock on Thursday and said consumers will eventually return to the popular beer.
Shares have slipped more than 5% since the start of the year, as some consumers fled Bud Light over the company's collaboration with influencer Dylan Mulvaney. Deutsche thinks the stock may have already overpriced in the downside risk.
"Our proprietary dbDIG survey data suggests that 24% of Bud Light consumers no longer buy the brand with another 18% buying less. However, 21% are buying more and 37% are buying the same amount," analyst analyst Mitch Collett said.
CNBC Pro subscribers can read the full story here.
— Brian Evans
Spirit AeroSystems, Boeing fall in the premarket
Spirit Aerosystems slid 9% in the premarket after the Boeing supplier halted production in its facility in Kansas. This comes after workers voted to strike starting Saturday. Following the news, shares of Boeing dropped nearly 3%.
— Sarah Min
Stocks making the biggest premarket moves
Check out the companies making the biggest moves in premarket trading:
- Tesla – Shares dropped more than 3% before the bell after Morgan Stanley downgraded the electric vehicle maker to equal weight, citing its steep valuation following the recent AI-fueled rally.
- Darden Restaurants — The company behind Olive Garden and other restaurant chains slid nearly 4% in the premarket. Darden beat expectations of analysts polled by Refinitiv for earnings in the fiscal fourth quarter, while revenue came in line with expectations. Its full-year earnings guidance placed the consensus estimate of analysts polled by FactSet on the higher end of the company's range. Meanwhile, Darden's revenue guidance was higher than Wall Street forecasted. The company also increased its quarterly dividend and announced Chairman Eugene Lee would retire.
- Overstock.com — Shares moved nearly 10% higher in premarket trading after the e-commerce discounter won the auction for Bed Bath & Beyond's digital assets and intellectual property, including the brand's name. Overstock will pay $21.5 million, the floor price set at the auction.
— Michelle Fox
Jobless claims were higher than expected last week
Initial jobless claims were unchanged last week, but still a bit higher than economists had expected.
First-time filings for unemployment benefits totaled 264,000 for the week ended June 17, the Labor Department reported Thursday. That was above the 256,000 estimate from Dow Jones.
Continuing claims edged lower to 1.759 million, below the 1.782 million FactSet estimate.
—Jeff Cox
Olive Garden parent slides in the premarket after earnings
Darden Restaurants slid more than 4% in the premarket. The Olive Garden parent company reported quarterly earnings Thursday that topped Wall Street's expectations, fueled by strong LongHorn Steakhouse sales.
The company also announced that former CEO Gene Lee plans to step down as chair of the board. Lee retired a little over a year ago as chief executive. He won't stand for reelection at the company's annual shareholder meeting, which is scheduled for Sept. 20.
"I am proud of what we have accomplished and believe that Darden is well-positioned to continue to grow and prosper for years to come," Lee said in a statement.
Darden reported per-share earnings of $2.58 on revenue of $2.77 billion. Analysts polled by Refinitiv expected per-share earnings of $2.54 on revenue of $2.77 billion.
— Amelia Lucas, Sarah Min
Turkey's central bank reverses course, hikes benchmark rate back to 15%
Turkey's central bank made a dramatic reversal on Thursday, hiking its benchmark interest rate to 15% from 8.5%. It was Turkey's first rate hike since March 2021.
Inflation in Turkey has declined from its recent peak but is still running at a pace of about 40%. Turkey's central bank had raised the policy rate all the way to 19% in 2021.
— Jesse Pound, Natasha Turak
Morgan Stanley's Adam Jonas downgrades Tesla
Tesla bull Adam Jonas downgraded Tesla stock to equal weight on Thursday, citing the company's high valuation.
Morgan Stanley's downgrade is the second such move by a major Tesla analyst in as many days, following Barclays on Wednesday.
"While the market may want to dream on the AI theme, we'd prepare to wake up to the sound of a blaring car horn," Jonas said. Shares of Tesla have soared more than 32% over the past month.
— Brian Evans
Bank of England announces half-point hike
The Bank of England announced a surprise 50 basis point rate hike on Thursday. The half-point hike brings the central bank's base rate to 5% and comes after the Federal Reserve skipped a rate hike at its last meeting.
Inflation is running hotter in the U.K. than in the U.S. On Wednesday, the U.K. consumer price index showed a rise of 8.7% annual rise in May.
— Jesse Pound, Elliot Smith
Swiss National Bank hikes rates
The Swiss National Bank hiked interest rates by 25 basis points Thursday, taking the key rate to 1.75%. The move was forecast in a Reuters poll of economists.
Switzerland has not suffered the same level of inflation as many of its European neighbors, but it remains above the central bank's 0-2% target, coming in at an annual 2.2% in May.
— Jenni Reid
Europe stocks open sharply lower
European stocks fell in early Thursday trade, with the Stoxx 600 index down 1.27% at 8:38 a.m. London time.
All sectors declined, with autos shedding 2.1% and banks falling 2.6%.
France's CAC 40 and Germany's DAX were down 1.2% and 1.08%, respectively. The U.K.'s FTSE 100 fell 1.2% ahead of a key monetary policy decision in which markets are raising bets on a potential 50 basis point hike.
— Jenni Reid
Bitcoin tops $30,000
Bitcoin hit a high of $30,749.45 during Wednesday's session, reaching its highest level since April 14 when bitcoin traded as high as $31,102. The last time bitcoin traded over $30,000 was April 26.
— Gina Francolla
S&P 500 suffers worst day in June — a modest decline in a strong month
The S&P 500 slipped 0.52% during Wednesday's regular session as the stock market rally took a break from its tech-powered run. The decline was just enough to mark the broad-market index's worst day in June.
Information technology and communication services, the two hottest sectors in the S&P 500 this year, apparently took a day off and each logged a loss of about 1.4%. Alphabet and Netflix, both in the communication services sector, dropped more than 2%. Meanwhile, AMD, which slid 5.7%, and Intel, which shed 6%, pulled down the tech sector.
Even after Wednesday's decline, the S&P 500 is up nearly 4.5% in June and is touting a 13.7% gain for 2023.
— Darla Mercado, Chris Hayes
Investors Intelligence bullishness climbs to new 19-month high
The percentage of bullish financial newsletter advisors and editors rose to 54.3% in the latest weekly Investors Intelligence survey, a fresh 19-month high and up from 53.4% last week. In November 2021, bulls reached what II calls "a danger level" of 57.2%.
Bearishness slumped further, to 20%, the lowest since January 2022 and down from 20.6% last week. Those editors forecasting a correction also fell, down to 25.7% from 26% last week.
The spread between the percentage of bullish and bearish advisors widened to 34.3 points from 32.8 points a week ago, the largest positive difference since November 2021.
Contrarian investors look for rising bullishness as a sign of increased risk in the market, arguing that the higher readings indicate optimistic investors have already done most of their buying and there's less cash on the sidelines to push prices higher. The reverse is true at times of growing bearishness.
— Scott Schnipper
