Markets News, August 7, 2024: Stocks Give Back Early Gains to Close Lower as Chip Stocks Slide

Biggest S&P 500 Movers on Wednesday

3 hr 2 min ago

Decliners

• Super Micro Computer (SMCI) shares plummeted 20.1%, suffering the steepest declines of any stock in the S&P 500, after the server and data storage provider reported lower-than-expected profits for its fiscal fourth quarter. An unexpected drop in adjusted gross margin weighed on Supermicro’s performance. Supermicro also announced a 10-for-1 stock split.

• Shares of Airbnb (ABNB) tumbled 13.4% following the company’s second-quarter earnings report. Although the vacation rental platform edged out sales estimates, its profits came in below expectations, and Airbnb warned of a slowdown in U.S. travel demand. Despite decelerating growth in bookings, Airbnb highlighted gains in “nights and experiences” bookings. 
• Charles River Laboratories International (CRL) reported slightly better-than-expected profits for the second quarter, but the health care diagnostics company said it now expects sales to decline rather than grow over the full fiscal year. The company forecast softer demand among its global biopharmaceutical clients over the second half of 2024. Charles River shares sank 12.6% on the day.

Advancers

• Fortinet (FTNT) shares skyrocketed 25.3%, marking Wednesday’s best performance in the S&P 500, after the cybersecurity firm topped sales and profit estimates for the second quarter. Gains in services revenue and record operating margins contributed to the strong results. The company also provided upbeat guidance for the current quarter and touted its leadership in the Secure Access Service Edge (SASE) market.
• Shares of Axon Enterprise (AXON) jumped 18.4% as the maker of the Taser and other law enforcement equipment released strong quarterly results. Revenue exceeded analysts’ forecasts, and Axon reported an enthusiastic customer response to its Draft One AI product, which generates an initial version of a police report based on recordings from the company’s body cameras.
• Global Payments (GPN) shares added 6.9% after the financial technology provider posted better-than-expected sales and profits for the second quarter. The company also touted new technology partnerships to provide payment services for Minor League Baseball franchises as well as several football clubs in the U.K.

–Michael Bromberg

Strong Earnings Send Shopify Shares Soaring

4 hr 42 min ago

Shopify (SHOP) stock surged Wednesday after the e-commerce merchant technology company delivered second-quarter results that surpassed analysts’ expectations, accompanied by strong current-quarter guidance.

The Ottawa-based company said that it expects third-quarter revenue to grow year-over-year in the low-to-mid-20s-percent range from $1.7 billion in that period last year, above analysts’ consensus estimate of 21% growth, according to Visible Alpha.1

Shopify posted a second-quarter profit of $171 million, or 13 cents per share, swinging from a loss of $1.31 billion, or $1.02 per share, in the year-ago quarter. The latest results came in ahead of analysts’ expectations. 

Shopify shares gained 18% to finish at $63.89. The stock is still only trading at about a third of its pandemic-era highs.

–Andrew Kessel

Why Chasing Volatility with a VIX ETF is a Tricky Proposition

6 hr 25 min ago

U.S. investors looking for positive returns had few options on Monday. Stocks tumbled while Treasury bond prices pared early gains. The U.S. dollar slumped and commodities of all stripes—including gold, a traditional safe haven—slid. 

One index that was in the green: the Cboe Volatility Index (VIX), which surged to its highest level since March 2020 amid Monday’s turmoil. 

Commonly referred to as the “fear index,” the VIX is a measure of expected stock market volatility that is calculated with S&P 500 options prices. It often spikes when U.S. stocks tumble. For that reason, it can be tempting to view the VIX as a hedge against market routs like Monday’s, but the index is technically impossible to invest in directly. 

Traders who want to use the VIX to offset equity losses may instead be tempted to use a VIX exchange-traded fund (ETF), though doing so comes with substantial risk.

Read the full story here.

–Colin Laidley

TASER maker Axon Jumps to All-Time High After Earnings

7 hr 42 min ago

Axon Enterprise (AXON) shares soared to an all-time high Wednesday after the TASER maker posted better-than-expected sales and boosted its full-year guidance on strong services demand and excitement about its Draft One artificial intelligence product.

The supplier of military and police gear reported second-quarter revenue jumped 34.6% year-over-year to $504.1 million, well above the average estimate of $478.2 million of analysts surveyed by Visible Alpha. Earnings per share of $0.53 were in line with forecasts.

Sales at Axon Cloud & Services unit surged 47% to $194.7 million, driven by growing adoption of its software applications. Sensors & Other segment sales gained 28% to $112.4 million on demand for its Axon 4 body camera. TASER sales increased 278% to $197.0 million, fueled by the newest model, the TASER 10.

Axon shares were up 19% in recent trading.

–Bill MCColl

Fortinet Soars to Lead S&P 500 Gainers

8 hr 45 min ago

Fortinet (FTNT) shares surged Wednesday after the cybersecurity solutions provider raised its full-year revenue outlook, as enterprise customers increase spending to protect their data and applications from cyberattacks.

The company’s better-than-expected earnings report looks set create a bullish stock gap on the chart that could lead to a longer-term upside reversal.

Amid the post-earnings rally, Fortinet shares could test important chart levels including $62.50, $69, and $73.50.

Fortinet shares were up 26% in recent trading to their highest level since April.

Read the full technical analysis here.

–Timothy Smith

Airbnb Slides on Weakening U.S. Demand

10 hr 17 min ago

Airbnb (ABNB) shares sank Wednesday, a day after the vacation rental firm missed second-quarter profit forecasts and warned about slowing demand in the U.S.

The company posted earnings per share of $0.86, which came in short of analysts’ estimates, while revenue rose 10.6% to $2.75 billion, which was slightly above expectations.

Airbnb sees current-quarter revenue in the range of $3.67 billion to $3.73 billion, which is on the low end of analysts’ expectations. The company wrote in a letter to shareholders that it expects “a sequential moderation in the year-over-year growth of Nights and Experiences Booked relative to Q2 2024.”

Airbnb shares were down 13% in mid-morning trading, hitting their lowest level in more than a year.

–Bill McColl

Super Micro Computer Plunges After Earnings

10 hr 17 min ago

Super Micro Computer (SMCI) shares tumbled Wednesday after the server maker reported earnings that fell short of expectations and issued a light profit forecast, as the cost of transitioning to more expensive AI chips weighed on the bottom line.

The shares broke down below a descending triangle last month, with the price closing beneath the closely watched 200-day moving average in early August.

Super Micro Computer shares may find support at key chart levels including $496, $357, and $260.

The stock was off 14% at $528.33 in recent trading, at its lowest levels since February.

Read our full technical analysis here.

–Timothy Smith

Major Indexes Poised to Open Higher

12 hr 29 min ago

Futures tied to the Dow Jones Industrial Average were up 0.8% about 45 minutes before the opening bell.

S&P 500 futures were up 1.1%.

Nasdaq 100 futures were up 1.3%.