Article published at 8:35 a.m. CT
JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- Sandisk’s bullish guidance fuels stock
- Applied Materials fails to wow Wall Street
- Reddit to join the S&P 500 Index
Markets are tame again in early trading today, mirroring most of this week’s trading after inflation fears were settling amid spot-on economic reports.
The Dow Jones Industrial Average was slipping into negative territory while the Nasdaq Composite and the S&P 500 Index were edging higher. Volume was a bit better for summer trading yesterday and could be again today. Remember big market swings can happen when there’s not much news to move the markets and volume is low.
The slow start to Thursday’s trading ended on the high side as inflation fears lessened with thanks to the week’s Consumer Price Index (CPI) and Producer Price Index (PPI) reports, which were on the mark with expectations. The S&P 500 ended the session at yet another record peak, up 0.65%. The Nasdaq also had a relatively good day, up 0.81% while the Dow edged higher by 0.13%.
Workday shares were sharply higher yesterday — prompting a halt because of the volatility — after Reuters reported an acquisition could be in the works from private-equity giant Silver Lake. Shares touched higher by 21% before settling nearly 18% on the upside. In early trading, shares were barely budging.
In a what-can-you-do-for-me-now scenario, investors are souring on shares of Applied Materials despite delivering a 25% increase in revenue and record earnings per share, all of which outpaced Wall Street’s expectation. The culprit appeared to be twofold: the semiconductor’s fiscal third-quarter results were strong, but not good enough to meet lofty expectations; and there was a 20% slowdown in China revenue. The semiconductor-equipment maker plans to lift its manufacturing capacity, responding to growing demand. Shares are heading 6% lower in early trading, underscoring how many of these high-flying technology companies need to not just surprise Wall Street, but wow it.
Meanwhile, investors are stocking up on Sandisk shares, pushing them to the upside again after the company offered a bullish long-term financial framework through 2030. At its investor day Thursday, the memory supplied forecast revenues to swell by mid- to high-teens with adjusted gross margins jumping 80% during the period that begins in 2028. Shares are up 7.5% in early trading. Yesterday, the closed the session 13.7% to the upside and have gained a striking 550% year-to-date.
Netflix shares were flat in early trading after Thursday’s 5.4% advance. The upturn came after Pershing Square Capital Management, led by Bill Ackerman, disclosed it snapped up a 4.9% stake in the streaming video giant. Netflix shares have had a tough time in the past year, tumbling 42% year-over-year.
Reddit is joining the S&P 500 Index August 18, giving the online forum shares an 11% boost in the early going. Only the second pureplay social media to get added – Meta is the other – Reddit will replace AvalonBay Communities, which is being purchased by Equity Residential, already part of the S&P benchmark gauge. It’s a big deal to join the S&P because suddenly the stock gets into the bigger arena as all funds that reflect the S&P 500 are pressured to buy the stock. Stay tuned.
Happy trading!
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