Update—Feb. 20, 2024: For today's live markets coverage, see here.
Stocks fell Friday, snapping a 5-week winning streak, as bond yields rose after data showed wholesale prices rose more than expected in January.
The Nasdaq Composite dropped 0.8% Friday to finish the week 1.3% lower. The fell 0.5% to close down 0.4% for the week. The Dow Jones Industrial Average slid 0.4% on Friday and 0.1% on the week.
The Producer Price Index (PPI) increased 0.3% in January, more than the 0.1% economists were expecting, and an acceleration from December when the index fell 0.1%. Core PPI, which excludes food, energy, and trade services, rose 0.6%, its largest increase in a year.
Treasury yields jumped following the report, with the 10-year yield rising to about 4.3%, just under the year-to-date high it touched after Tuesday's hotter-than-expected CPI.
Shares of semiconductor equipment maker Applied Materials (AMAT) and crypto exchange Coinbase (COIN) surged on their quarterly earnings reports.
Stocks climbed yesterday after retail spending data showed consumers pulled back even more than expected in January, a good sign for the Fed as it seeks to return inflation to its 2% target.
Equity Indexes Wrap: Mega Caps Slip as Imminent Rate Cut Hopes Fade
February 16, 2024 04:14 PM EST
The Dow
Merck (MRK) and Walmart (WMT) led the Dow’s gainers, rising 1% and 0.7%, respectively.
Nike (NKE) tumbled 2.4% after it said it would lay off 1,700 employees as part of a broad restructuring undertaken to weather a slowdown in demand.
Intel (INTC) shares slid 1.2% ahead of its first annual foundry business conference next Wednesday.
The S&P 500
Vulcan Materials (VMC) rose 5.2% after beating earnings expectations and offering an upbeat outlook as it benefits from higher prices.
Eli Lilly (LLY) rose 3.2% after Morgan Stanley analysts raised their price target to $950 from $805.
Digital Realty Trust (DLR) declined 8.4% after the real estate investment trust missed revenue and funds from operations estimates.
Most big tech names fell—Meta (META) dropped 2.2%, Alphabet (GOOGL) slid 1.6%, and Apple (AAPL) lost 0.8%.
The Nasdaq 100
The Trade Desk (TTD) soared 17.5% after beating analyst estimates with its fourth-quarter sales and current-quarter outlook.
Applied Materials (AMAT) jumped 6.4% after also topping Wall Street estimates with its quarterly results. Peers KLA Corp. (KLAC) and Lam Research (LRCX) rose 1.4% and 1.3%, respectively.
DoorDash (DASH) tumbled 8.1% after reporting a wider-than-expected $154 million loss in the fourth quarter despite a 27% increase in revenue.
Adobe (ADBE) sank 7.4%, falling for a second day after Microsoft-backed OpenAI announced it would develop a text-to-video generator.
Eli Lilly Advances as Morgan Stanley Riles Up the Bulls
February 16, 2024 03:40 PM EST
Could Lilly be the first $1 trillion biopharma stock?
That’s the question Morgan Stanley analysts asked Friday in a research note, in which the firm raised its price target on Eli Lilly (LLY) to $950 from $805. Lilly shares rose 3.6% to $785 on Friday.
The move makes Morgan Stanley first among Eli Lilly’s many bulls on Wall Street. Analysts have assigned the stock price targets ranging from $540 to Morgan Stanley’s $950, with a median target of $790. Of the 27 analysts covering the stock, 18 rate it a buy, the highest possible rating, while 2 are overweight and 5 are neutral.
Eli Lilly shares have gained about 140% in the past year, boosted by the company’s GLP-1 agonists Mounjaro, which is indicated for diabetes but used off-label for weight loss, and Zepbound, which the Food and Drug Administration approved as a weight loss drug last year.
The weight loss craze on Wall Street has flung Eli Lilly and Danish competitor Novo Nordisk (NVO) into the ranks of the world’s most valuable companies. As of Friday, Eli Lilly was America’s eighth-most valuable, wedged between Warren Buffett’s conglomerate Berkshire Hathaway (BRK.B)—the only non-tech company to outrank it—and Tesla (TSLA).
Dropbox Stock Drops More Than 20% on Analyst Downgrades
February 16, 2024 03:08 PM EST
Shares of Dropbox (DBX) plummeted more than 20% Friday after several analysts downgraded thecloud storage provider following its weaker-than-expected guidance.
On Thursday, the company's fourth-quarter investor presentation explained that Dropbox anticipates full-year revenue of $2.535 billion to $2.550 billion, short of forecasts.
Bank of America Securities’ Michael Funk downgraded Dropbox from Buy to Underperform. He also reduced the price target to $28 from $34per share. Funk said that the “DBX bull thesis has played out.” He said that “yesterday’s results, guidance, and commentary suggest a negative inflection of DBX's risk/reward profile."
Kash Rangan of Goldman Sachs cut Dropbox’s rating to Sell from Neutral, reducing the price outlook from $26 to $24 per share.
JMP Securities’ Patrick Walravens lowered his rating from Market Outperform to Market Perform, without a price target. He expressed concerns about the firm’s decline in annual recurring revenue and number of paying users.
Dropbox stock was down 23.8% at $24.80 Friday afternoon. With today's big slide, Dropbox shares are only slightly in positive territory for the past year.
-Bill McColl
Toast Stock Rises 15% as Restaurant Software Firm Announces 550 Job Cuts
February 16, 2024 02:02 PM EST
Toast Inc. (TOST) shares rose 15% Friday after the maker of restaurant management software said it plans to lay off 550 of its employees, joining a string of technology firms announcing headcount cuts this earnings season.
Toast said it would cut the jobs as part of a restructuring plan to "promote overall operating expense efficiency." Toast had about 4,500 employees at the end of 2022, the latest publicly available data for its headcount.
The job cuts were announced as the company also reported fourth-quarter results. Toast's fourth-quarter net loss narrowed to $36 million from a net loss of $99 million in the year-ago quarter. For the full year, Toast's net loss narrowed to $246 million compared with a net loss of $275 million for all of 2022. Revenue rose 42% to $3.87 billion for the latest year.
Toast shares were trading at $22.18, up 15.5% at 12:57 p.m. ET Friday, helping them advance 21.5% so far this year. But the shares are down more than 14.5% in the last 12 months.
-Fatima Attarwala
Texas Roadhouse Stock Pops on Sales Growth, Lower Beef Costs
February 16, 2024 01:25 PM EST
Shares of Texas Roadhouse (TXRH) jumped Friday after the casual dining chain reported higher-than-expected same-store sales growth in the fourth quarter and lowered its full-year beef price forecast.
Texas Roadhouse reported same-store sales increased 9.9% at company-owned restaurants and 8.9% at franchised locations, exceeding Wall Street’s estimates. Margins increased by 75 basis points to 15.3% as higher sales offset a 3.2% increase in commodity prices and a 5.5% increase in labor costs.
In the first 50 days of 2024, same-store sales were up 6.8% over last year despite headwinds from harsh winter weather.
Texas Roadhouse lowered its 2024 commodity inflation forecast to 5% from the 5% to 6% range it reported in October. Executives on the company’s earnings call said beef supply was expected to be tight this year, but much of the impact would be felt in the second half of the year. Wage inflation is still expected to fall somewhere between 4% and 5%.
Head of Investor Relations Michael Bailen said he noticed some changes to consumer behavior, such as substituting soft drinks for alcohol and “going more toward the value side of our menu,” but that the company was ultimately pleased with trends. “I think we continue to see guests trading into us from fast casual or other casual diners,” he said.
Texas Roadhouse shares were up 10.3% at $147.70 Friday afternoon. They have gained more than 40% in the past year.
Super Micro Stock Continues Wild Week With Massive Friday Swings
February 16, 2024 12:40 PM EST
Super Micro Computer (SMCI) continued its wild week Friday as shares jumped in the first few minutes of trading before reversing course and moving sharply lower.
About halfway through Friday's session, the stock was down 11% at $892, after rising as much as 7% in the opening minutes of trading. The stock, which has more than tripled since the start of the year, surged 14% to above $1,000 on Thursday amid anticipation of future gains driven by rising demand for artificial intelligence (AI).
Barclays analysts this week raised their price target for the stock to $961 from $691, citing Super Micro Computer's position within the AI ecosystem and "strategic" partnerships with NVIDIA (NVDA), Advanced Micro Devices (AMD), and Intel (INTC).
Bank of America analysts initiated coverage this week with a "buy" rating, and also said they expect "this provider of server and storage solutions will be a beneficiary ofAI-driven demand growth."
-Naomi Buchanan
Coinbase Stock Jumps on Big Earnings Beat as Transaction Volume Grows
February 16, 2024 12:09 PM EST
Coinbase (COIN) shares jumped more than 15% to $191 on Friday after the largest U.S. cryptocurrency exchange reported quarterly earnings and revenue significantly above Wall Street expectations thanks to growth in transaction volumes.
The crypto exchange, which allows investors to buy, sell, receive, or hold digital assets, posted fourth-quarter adjusted earnings of $1.04 per share, compared with a loss of $2.46 per share in last year’s corresponding quarter. Analysts had expected the company to report earnings of just 2 cents a share. Total revenue of nearly $954 million grew 41% on a sequential basis and also came in ahead of the consensus estimate, which Wall Street had pegged at $826 million.
The quarterly results received a boost from transaction revenue growing 64% from a year earlier on the back of excitement surrounding spot Bitcoin ETF approvals and expectations of improving macroeconomic conditions in 2024.
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Since bottoming out in late December 2022, Coinbase shares have traded within an ascending channel, oscillating several times between the pattern’s upper and lower levels to establish key support and resistance areas. More recently, buyers stepped up to defend a pullback to the 50-day moving average, indicating growing bullish momentum in the stock.
Amid an earnings-driven price pop, keep an eye on the channel’s upper trendline currently sitting around $210, which investors may see as an area on the chart to book profits.
-Timothy Smith
DoorDash Stock Tumbles on Disappointing Earnings
February 16, 2024 11:10 AM EST
Shares of DoorDash (DASH) fell Friday morning after the food delivery company reported a wider-than-expected fourth-quarter loss despite beating revenue estimates.
DoorDash reported a net loss of $154 million, or 39 cents per share, an improvement from last year’s $640 million loss but still bigger than analysts had forecast. Revenue increased 27% to $2.3 billion on a 23% increase in total orders. Sales got a boost from both more users—monthly active users reached an all-time high of 37 million in December—and higher order frequency. Adjusted EBITDA came in at $363 million, just slightly above the midpoint of its guided range of $320 million to $380 million.
The company forecast first-quarter gross order value of between $18.5 million and $18.9 million, implying 19% growth at the higher end of the range. That’s a slowdown from the fourth quarter’s 22% increase. Adjusted EBITDA is expected to again fall within a range of $320 million to $380 million.
The results were good, but not good enough for investors, who had driven the stock up nearly 90% in the 12 months leading up to Thursday’s earnings report. Shares were down 10% at $113.65 Friday morning.
Applied Materials Stock Pops On Earnings Beat Amid Advanced Chip Demand
February 16, 2024 10:07 AM EST
Shares in Applied Materials (AMAT) rose sharply Friday morning after the semiconductor equipment maker delivered better-than-expected quarterly results and provided a current-quarter outlook that topped analysts’ forecasts, underpinned by growing demand for advanced chips.
The Santa Clara, California-based company, whose customers include chip-industry bellwethers Intel (INTC) and Taiwan Semiconductor Manufacturing Company Ltd. (TSM), posted fiscal first-quarter adjusted earnings of $2.13 per share on revenue of $6.71 billion. Both headline numbers came in comfortably above Wall Street’s expectations of $1.90 a share and sales of $6.48 billion.
Looking ahead at the fiscal second quarter ending in April, the company anticipates adjusted profit to come in between $1.79 and $2.15 a share, with the lower end of that guidance range matching the consensus view at $1.79 per share. Applied Materials' midpoint sales forecast for the period of $6.5 billion also tops forecasts, which analysts had modeled at $6.34 billion.
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Since a deep retracement to the 200-day moving average and lower portion of a multi-month ascending channel in late October, Applied Materials' share price has trended steadily higher, with the stock climbing to a record close ahead of yesterday’s earnings report.
In the weeks ahead, keep an eye on the channel’s top trendline, which may turn into a key future support area on the chart during pullbacks before another potential move higher.
-Timothy Smith
Stocks Making the Biggest Moves Premarket
February 16, 2024 09:24 AM EST
Gains:
- The Trade Desk Inc. (TTD): Shares of the advertising technology company soared 18% after it beat revenue expectations in the fourth quarter and offered better-than-expected current-quarter guidance.
- Coinbase Global Inc. (COIN): The cryptocurrency exchanges shared surged 14% to nearly a 2-year high after reporting a surprise profit of $1.04 per share in the fourth quarter.
- Applied Materials Inc. (AMAT): Shares of the semiconductor manufacturing equipment maker jumped more than 8% after it topped Wall Street estimates with its fiscal first-quarter earnings and current-quarter guidance.
Losses:
- Roku Inc. (ROKU): Shares plunged 17% after reporting a wider-than-expected loss in the fourth quarter.
- Dropbox Inc. (DBX): Shares of the digital storage platform sank 14% after its first-quarter revenue forecast fell short of analyst estimates.
- DoorDash Inc. (DASH): Shares of the meal delivery company fell 8% after it reported a wider quarterly loss than analysts had been expecting, overshadowing a revenue beat and $1.1 billion share buyback authorization.
Stock Futures Slip After Stronger-Than-Expected PPI
February 16, 2024 09:02 AM EST
Futures contracts connected to the Dow Jones Industrial Average were down 0.4% in premarket trading on Friday.
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S&P 500 futures were about 0.3% lower.
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Nasdaq 100 futures gave up earlier gains to trade about in line with Thursday's close.
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