Markets News, August 1, 2024: Major Indexes Fall Sharply Amid Chip Stock Selloff, Economic Concerns

Biggest S&P 500 Movers on Thursday

Decliners

• Moderna (MRNA) shares sustained the most severe losses of any S&P stock, plunging 21.0% after the vaccine maker slashed its full-year sales guidance. The biotech firm said slumping demand in Europe would restrain sales of its COVID-19 vaccine and pointed to stiff competition in the market for respiratory vaccines in the U.S. Thursday's steep losses sent Moderna shares into negative territory for 2024.

• Shares of MGM Resorts International (MGM) dropped 13.2% after the casino operator raised red flags about softness in bookings at its hotels for November's Formula 1 race in Las Vegas. MGM's CEO noted pre-bookings have not kept pace with last year's inaugural version of the auto race. Although capitalizing on premium pricing during key events remains a key to the company's success, MGM did post better-than-expected sales and profit figures in its second-quarter earnings report released yesterday, boosted by a rebound in its Macau business.  
• Semiconductor equipment manufacturer Lam Research (LRCX) reported better-than-expected quarterly sales and profit estimates while offering an upbeat outlook for the current period, but its shares lost 9.9%. The stock posted strong gains in the first half of 2024 amid optimism that artificial intelligence (AI) technology will boost demand for Lam's wafer fabrication equipment, but shares have been trending downward since reaching a record high in July.
  
• Data storage provider Western Digital (WDC) fell short of revenue estimates in its quarterly report, and its shares slipped 9.7%. The company also lowered its revenue guidance for the current quarter. While AI applications have lifted the fortunes of certain memory chipmakers, companies like Western Digital that supply products for conventional data centers have suffered from reduced demand.

Advancers

• C.H. Robinson Worldwide (CHRW) shares notched Thursday's top performance in the S&P 500, soaring 14.8% following the freight transportation firm's second-quarter earnings release Wednesday. The logistics company has implemented a new operating model to reduce costs as it navigates the macroeconomic challenges facing the shipping industry, helping it achieve better-than-expected earnings per share (EPS) results. Analysts at BMO Capital reacted favorably to the earnings release, boosting their price target on C.H. Robinson stock.
• Strong quarterly results also helped lift shares of FMC Corp. (FMC), which jumped 10.2%. The provider of insecticides, herbicides, and other crop protection solutions exceeded top- and bottom-line forecasts for the second quarter. Improving demand for FMC's products led to an increase in sales volumes, with particular strength in U.S. and Brazilian markets.
• Air Products and Chemicals (APD) shares were up 9.0% after the provider of industrial gases beat EPS forecasts for its fiscal third quarter. The company credited strength in the Americas and Europe as well as pricing and productivity improvements for its strong performance.
• Health care laboratory services firm Labcorp Holdings (LH) joined the group of earnings winners, topping second-quarter sales and profit estimates, and its shares added 8.3%. The company benefitted from robust demand for its diagnostic tests and bumped up its full-year revenue forecast.

-Michael Bromberg

MGM Drops on Concerns About Formula 1 Event Bookings

Shares of hotel and casino operator MGM Resorts International (MGM) dropped sharply Thursday after the company's top executive mentioned lackluster bookings for a big Formula 1 race-car event coming to Las Vegas in November.

Chief Executive Officer (CEO) Bill Hornbuckle raised concerns on MGM Resorts' second-quarter earnings call Wednesday about room rates for the Formula One (F1) Grand Prix race in November, which he said were “showing some softness.” He said that MGM is “hoping and believing that this race will continue to pace up,” but added that it “presents a potential headwind in the fourth quarter.”

The race bookings worries offset the company’s strong second-quarter financial results. Adjusted earnings per share (EPS) came in 46% higher than the year-ago quarter at 86 cents, and revenue jumped nearly 10% to $4.33 billion, a second-quarter record for MGM Resorts. Both exceeded analyst estimates from Visible Alpha.

Revenue from its Las Vegas properties was up 2.7% to $2.21 billion, also ahead of forecasts, primarily on higher room revenue and average daily rate, plus catering and banquet sales gains, MGM Resorts said. 

MGM fell 13% to its lowest level since November and was among the biggest decliners on the S&P 500 Thursday.

-Bill McColl

How Meta Eased Wall Street's AI Spending Worries

Meta (META) shares jumped on Thursday as the company's second-quarter results eased some of Wall Street’s fears about overspending on artificial intelligence. 

Meta on Wednesday reported capital expenditures (CapEx) increased 33% in the second quarter to $8.17 billion. It also raised the low end of its 2024 CapEx forecast to $37 billion from $35 billion. It left the upper band of its forecast range at $40 billion.

 The company joins a chorus of big tech companies saying they’ve dramatically increased their spending on AI infrastructure and expect to invest even more next year. Alphabet (GOOGL) and Microsoft (MSFT) increased CapEx by 91% and 55%, respectively, in the second quarter.

But the market reacted very differently to each company’s CapEx outlook, a reflection of how quickly the narrative surrounding AI can change on Wall Street. 

Read the full article here.

-Colin Laidely

Moderna Shares Down 20% After Revenue Warning

Moderna (MRNA) shares plunged after the COVID-19 vaccine maker slashed its outlook on lower demand in Europe and a tough market in the U.S.

The company now expects full-year product revenue of $3 billion to $3.5 billion, down from its earlier estimate of $4 billion. Moderna cited “very low [European Union] sales in 2024, potential revenue deferrals for certain international sales into 2025, and an increasingly competitive environment for respiratory vaccines in the U.S.”

The news sent shares of Moderna down 20%, pulling them into negative territory for the year so far.

The guidance came as Moderna reported a second quarter loss of $3.33 per share, and revenue fell 30% to $241 million. Sales of its Spikevax COVID-19 shot slumped 39% to $184 million.

-Bill McColl

Arm Plunges on Disappointing Guidance

Shares of Arm Holdings (ARM) fell sharply after the British chip designer’s light profit guidance overshadowed quarterly results that came in above expectations.

The stock was down 15% in recent trading to a two-month low.

Monitor if bulls can successfully defend an uptrend line that stretches back to the October 2023 low. A successful hold of the indicator could see a resumption of the stock’s longer-term uptrend, while a breakdown may signal a change in trend direction.

Upon a close below the uptrend line, Arm shares could find chart support at key levels including $117, $94, and $79.

Read our full technical analysis here.

-Timothy Smith

Meta Shares Jump on Strong Earnings

Shares in Meta Platforms (META) jumped early Thursday after the social media giant's quarterly results topped Wall Street’s estimates, giving investors confidence that the company’s significant investment in AI is reaping benefits.

Meta shares have remained in a trading range since the stock's earnings-driven breakaway gap in February.

Post-earnings buying could see the share price test key overhead chart resistance levels at $490 and $530. The measuring principle projects a price target of $640.

Read our full technical analysis here.

-Timothy Smith

Futures Point to Higher Open for Major Indexes

Futures tied to the Dow Jones Industrial Average were up 0.2%

S&P 500 futures were up 0.6%.

Nasdaq 100 futures were also up 0.6%.