Markets News, July 11, 2024: Tech Selloff Sends Nasdaq, S&P 500 Lower as Investors Rotate Into Small Caps

Top S&P Movers on Thursday

4 hr 10 min ago

Decliners

• Tesla (TSLA) shares suffered the steepest losses of any S&P 500 constituent, plummeting 8.4% following reports that the carmaker will postpone the unveiling of its robotaxi. The company previously indicated it would hold an event to introduce the autonomous transportation solution on Aug. 8, but Bloomberg reported the presentation has been pushed back to October. The decline for Tesla shares ended a string of 11 consecutive winning sessions.
• Losses mounted for large-cap tech shares, as investors appeared to rotate away from stocks that have soared in 2024 into laggards that could be positioned for gains amid greater certainty that lower rates are forthcoming. In particular, stocks in the semiconductor industry came under heavy pressure. Shares of chip fabrication equipment suppliers Lam Research (LRCX) and Applied Materials (AMAT) fell 6% and 5.4%, respectively. Semiconductor behemoth Nvidia (NVDA) dropped 5.6%.
• Airline stocks lost altitude after Delta Air Lines (DAL) reported lower-than-expected profits, citing increasing fuel costs and other fees. Delta shares sank 4% on the day, while shares of rival carriers also moved lower.

Advancers

• Shares of SBA Communications (SBAC), which owns and operates cellular towers and other wireless communications infrastructure, notched Thursday’s top performance in the S&P 500, jumping 7.5%. The gains came after the firm announced a shakeup of its executive leadership, with Saul Kredi stepping into the role of vice president and chief accounting officer. Kredi’s past experience includes leadership positions in the infrastructure and management consulting industries.
• The drop in consumer inflation helped lift stocks across the housing industry, with firmer rate-cut expectations boosting optimism that mortgage rates could be headed downward. Shares of building products distributor Builders FirstSource (BLDR) jumped 7.4%, as did shares of flooring manufacturer Mohawk Industries (MHK).
• In addition to construction suppliers, home builders benefitted from the expected decline in borrowing costs. D.R. Horton (DHI) shares added 7.3%, while Lennar (LEN) shares gained 6.9%.

–Michael Bromberg

Homebuilder Stocks Rise on Rate-Cut Hopes

5 hr 26 min ago

Homebuilder stocks jumped Thursday on hopes that mortgage rates will start to significantly downshift this year.

A cooler-than-expected inflation report for June raised investors’ hopes that the Federal Reserve will cut rates as soon as September.

If the Fed does cut its influential rate, homebuyers who have chosen to stay on the sidelines may be more likely to enter the housing market—boosting investor confidence in the outlook for homebuilders.

The Fed has held its key rate at a 23-year high for nearly 12 months in order to tame inflation by making borrowing more expensive.

That has been a double whammy for homebuilders, who not only face higher borrowing costs themselves but also see weakened demand. Potential homebuyers have been sitting out of the market as rising mortgage rates and home prices make buying a house less affordable.

Shares of D.R. Horton (DHI), Toll Brothers (TOL), PulteGroup (PHM), Lennar (LEN) and KB Home (KBH) all surged on Thursday.

–Trina Paul

Tesla Tanks on Report of Delayed Robotaxi Event

6 hr 53 min ago

Tesla (TSLA) shares slumped Thursday after a report that the the unveiling of EV maker’s much-awaited self-driving robotaxi has been delayed by two months.

Bloomberg said Tesla’s planned Aug. 8 event has been bumped to October to give the teams working on the project more time to build additional prototypes. The news organization reported people familiar with the decision said that the postponement was communicated to workers internally.

Tesla Chief Executive Officer (CEO) Elon Musk announced the August debut date on social media in April, and has touted the self-driving robotaxi as a technology that would make other vehicles obsolete. 

Tesla shares entered Thursday on an 11-session winning streak during which it gained 44%, fueled by its better-than-expected second quarter deliveries report. The stock was down more than 7% in late trading Thursday.

–Bill McColl

Russell 2000 Surges as Investors Rotate Into Small Caps

7 hr 25 min ago

As Nvidia (NVDA), Microsoft (MSFT), Apple (AAPL) and other large-cap tech stocks tumbled Thursday, investors rotated into small-cap stocks amid hopes they could get a boost from Federal Reserve rate cuts.

The Russell 2000 was up more than 3% after the Labor Department’s latest inflation report showed consumer prices unexpectedly fell in June, raising hopes the Fed will have the confidence to cut interest rates this year. 

Rate cuts by the Fed would lower the costs of taking on debt for borrowers, and small-cap stocks could potentially stand to get a bigger boost from Fed rate cuts as many small and mid-caps companies have more floating debt than their larger counterparts.

Bank of America analysts also suggested earlier this week that second-quarter earnings could show growth finally starting to broaden beyond the biggest tech stocks, which dominated earnings gains and returns for the index so far this year. 

–Kara Greenberg

Microstrategy Rises After Stock-Split Announcement

10 hr 15 min ago

MicroStrategy (MSTR), one of the world’s largest holders of bitcoin (BTC), said Thursday it is planning a 10-for-1 stock split, making it the latest company to announce a split.

Shares of MicroStrategy were up more than 3% in late-morning trading Thursday, bucking a broader downturn for stocks.

Shares will be split for both MicroStrategy’s class A and class B shares for holders of record as of Aug. 1, with investors set to receive nine additional shares after markets close on Aug. 7 for each share they owned previously. The first day of MicroStrategy’s split-adjusted trading will be on Aug. 8.

While the split will not change the overall value of investors’ MicroStrategy holdings, by lowering the price of each MicroStrategy share, the split could help make the stock more accessible to investors and stimulate demand.

Shares in the company have more than doubled in value this year after the U.S. Securities and Exchange Commission’s approval of spot bitcoin ETFs in January turbocharged the token’s prices.

However, some of the excitement around bitcoin, which rose above $73,000 in March, has ebbed recently. The token is currently trading at a tight range below $60,000.

–Nisha Gopalan

Delta Tumbles on Weak Earnings; Other Airlines Take a Hit

11 hr 38 min ago

Delta Air Lines shares fell sharply in early trading Thursday after the airline reported second-quarter profit that fell well short of estimates and lowered its guidance for the third quarter.

Total revenue rose 7% from last year’s second quarter to a record $16.7 billion, which was better than the $16.2 billion analysts had projected, according to estimates compiled by Visible Alpha. However, Delta’s per-share profit of $2.01 sank 29% year-over-year, falling well short of the $2.39 expectation.

The company said that debt reduction remains Delta’s “top financial priority” heading into the second half of the year after spending $1.4 billion to pay down debts in the second quarter. Delta affirmed its full-year adjusted earnings per share (EPS) guidance of between $6 and $7 but forecast lower-than-expected adjusted earnings of $1.70 to $2.00 in the third quarter.

Shares of airline rivals United (UAL), American (AAL) and Southwest (LUV) also tumbled in early trading Thursday.

–Aaron McDade

Stock Futures Lower Ahead of CPI Inflation Report

14 hr 3 min ago

Futures contracts connected to the Dow Jones Industrial Average were down 0.2% about half an hour before the release of the closely watched inflation data.

S&P 500 futures slipped 0.1%.

Nasdaq 100 futures were also off 0.1%.