Article published at 9:05 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:
- Markets moved moderately to the upside
- Cerebras and Cisco shares tumble after earnings
- Wendy’s could be in play
Investors got another breather on inflation expectations after the Producer Price Index (PPI) came in cooler than expected, confirming what the Consumer Price Index (CPI) told us Wednesday.
But again, like yesterday, it did little to spur market activity. In early trading, the S&P 500 Index was moving 0.45% to the upside while the Nasdaq Composite moved out of negative territory to rise 0.60%. The Dow Jones Industrial Average was up 0.26%.
Yesterday’s CPI report was so on mark it gave investors little to react to, leaving the markets flopping around the flatline for much of the session. The S&P 500 flirted with tipping into a new record, but only managed to eke out a small gain of 0.26%. The Nasdaq hit higher ground climbing 0.54%, pushed by technology stocks. The Dow couldn’t seem to keep a foot in positive territory, trailing 0.04% at the close.
We’re likely to see more of that today – barring any unexpected news. This is not unusual. During the waning summer days like these, volumes are light as investors enjoy the last days of summer. In other words, don’t overthink it, it is what it is.
Shares of Cerebras are tumbling after the chip maker failed to impress investors with its second-quarter release. Though the reported loss was notably lower than expected, revenue missed some higher-end projections. Investors were also miffed over a quadrupling of cloud and services revenue compared with the lower-than-expected hardware earnings – its main product. This was only the second earnings release since the company’s May initial public offering (IPO) and investors are probably still figuring out how best to analyze the company. Shares were falling 16% in early trading.
Cisco shares were under pressure, too, in early trading despite posting a record fiscal year and fourth-quarter profits and sales, which were ahead of Wall Street’s estimates as artificial intelligence demand grew. The forecast was relatively strong as well, but investors might have been disappointed with gross margins, despite an uptick in operating margins. Chief Executive Chuck Robbins noted the share fallback – down 7% – remarking that all areas of the business have headwinds during an interview on CNBC. Still, shares were on the high road ahead of earnings, chalking up a 63% gain year-to-date.
Sales of designer brand Coach single-handedly drove Tapestry’s slightly better-than-expected earnings and revenue, while Kate Spade sales disappointed in the fiscal fourth quarter. The forecast was soft, pulling shares down 13% in early trading. Still, Tapestry upped its dividend 16% and said it will launch a $1.35 billion share buyback program in its next fiscal year.
The FIFA World Cup gave StubHub the big revenue boost it projected, but it wasn’t enough to offset operating costs, which led to an unexpected per-share loss. Shares stumbled 22% in early trading.
Wendy’s shares are flat in early trading, tapering off from yesterday’s 14% advance sparked by takeover talks. The Financial Times reported Nelson Peltz’s Trian Management fund is laying the groundwork to take the restaurant chain private. Peltz is said to be working with Abu Dahbi-based BlueFive Capital and Flynn Group, one of the fast-food chain’s largest franchisees, to form a consortium to take over the home of Frosty’s and “old-fashioned” burgers. Peltz has been toying with this since February when he called the chain “undervalued” in a regulatory filing. Peltz owns 16% of the chain and another 8% is held by Trian, which has been a Wendy’s stakeholder since 2005. The Peltz family also has a minority investment with a franchisee who owns 87 Wendy’s in the New York region, the FT reported. If he’s planning to go forward, there’s another regulatory filing in the making. Stay tuned.
Happy trading!
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