Stock market news for July 11, 2024

The S&P 500 fell on Thursday as investors rotated out of large cap technology stocks.

The broad market index pulled back 0.88% to close at 5,584.54. The Nasdaq Composite slipped 1.95% to finish the session at 18,283.41, while the Dow Jones Industrial Average ticked down 32.39 points, or 0.08%, to 39,753.75.

— Brian Evans

The rolling, five-day moving average ratio of outstanding put options (bearish) to call options (bullish) “is reaching extreme levels of complacency,” Wolfe Research technical analyst Rob Ginsberg wrote to clients late Wednesday before the stock market opened Thursday. “The last time it signaled was July of last year, which ended up being pretty timely,” Ginsberg said.

The other contrarian signal Wolfe observed was the S&P 500 relative strength index, or RSI, closing above 80 on Wednesday for only the fifth time in the past 25 years. The Nasdaq-100 index RSI also closed above 80 on Wednesday.

“The unrelenting rally has brushed aside every single divergence and signal that has developed, so I’m sure it will laugh at these as well, but the combination of [these two events] does not happen often,” Ginsberg said.

At their lows on Thursday, the S&P 500 fell as much as 1.02% while the Nasdaq-100 dropped as much as 2.47%.

Large-cap biotech stocks also were positive, with Moderna rising more than 4%, Iqvia up nearly 3% and Gilead Sciences up 2%, among others.

Biotech companies, especially those at the clinical stage, are very dependent upon debt. For that reason, they tend to perform better when interest rates are lower.

With today’s gains, the IBB has risen about 6% year to date, with much of that momentum coming over the past month. Month to date, the fund has climbed 5%.

— Christina Cheddar Berk

The Federal Trade Commission is planning to delay its decision on whether to halt Chevron’s acquisition of Hess Corporation until after an arbitration case with Exxon Mobil is resolved, people familiar with the matter told Bloomberg News.

Exxon is claiming a right of first refusal over Hess’ lucrative oil assets in Guyana. Chevron has warned its deal with Hess would terminate if Exxon prevails in arbitration court.

An outcome in the arbitration is not expected until the fourth quarter at the earliest.

The FTC’s reported decision to hold off until the dispute with Exxon is resolved could delay the completion of the Chevron-Hess deal even longer. The FTC declined to comment.

Shares of Chevron and Hess were little changed in afternoon trading.

— Spencer Kimball

Shares of QuantumScape soared 33% after the company reached an agreement with the Volkswagen Group-owned battery company PowerCo to mass produce battery cells based on QuantumScape’s solid-state lithium-metal battery technology. Volkswagen shares also moved marginally higher following the announcement.

Per the agreement, PowerCo can manufacture up to 40 gigawatt hours, or GWh, a year using QuantumScape’s technology, with the option to increase that up to 80 GWh. This is enough to equip about one million vehicles annually, according to the companies.

The deal replaces an earlier joint venture between QuantumScape and Volkswagen to co-manufacture batteries.

— Sean Conlon

The Russell 2000 jumped in Thursday’s session, bucking the broader market’s slide in a rare showing of idiosyncratic strength.

The small cap-focused index jumped 3.2% in the session. Meanwhile, the broad S&P 500 slipped 0.8%.

If this holds through the closing bell, it will be the first time since 2008 that the Russell 2000 advanced at least 3% while the S&P 500 was down, according to Bespoke Investment Group. On Oct. 10, 2008, the Russell 2000 climbed 4.6% despite the S&P 500 shedding 1.2%.

On top of that, Thursday would mark just the second time this has happened since 1979, Bespoke said.

Thursday’s moves come amid a period of underperformance for small-cap stocks. The Russell 2000 has added less than 5% in 2024, underperforming the S&P 500’s rally of more than 17%.

— Alex Harring

Shares of artificial intelligence favorite Nvidia slipped roughly 5% on Thursday as investors rotate out of megacap tech stocks.

Stocks in the AI darling were under pressure early in the session following a cooler-than-expected June inflation print that pressured the broader field of tech shares.

Nvidia stock has advanced 159% in 2024.

— Brian Evans

The Japanese yen appreciated as much as 3% Thursday, marking the currency’s largest daily rise since late 2022. The yen was last hovering at 158.8 against the dollar.

The move came as the dollar index broadly fell after June’s better-than-expected consumer price index report. According to Japanese broadcaster Asahi, officials also intervened in the currency market to prop up the currency, per government sources.

Earlier in July, the yen fell to a 38-year low near the 162 level against the dollar.

The recent sell-off in Deckers Outdoor is a buying opportunity in “one of the strongest, best-run companies in our coverage,” Wedbush analyst Tom Nikic said in a note Thursday.

The footwear and apparel company is down more than 20% since hitting an all-time high in early June, he noted.

“We believe brand heat remains high at both core brands (Hoka and UGG),” wrote Nikic, who has an outperform rating and $1,030 price target on the stock. The target suggests about 15% upside from Wednesday’s close.

UGG is at a seasonal low point, so the story will likely hinge on Hoka in the near term, he said.

“However, given how strong demand for UGG was in Fall/Winter 2023 (a rare bright spot in a tough Holiday season), we believe that even when we get to the higher-volume periods for UGG they can ‘comp the comp’ due to the fact that demand exceeded supply a year ago,” Nikic said.

— Michelle Fox

Here are the stocks on the move midday:

• Delta Air Lines — The stock fell almost 5% after the airline issued a sales growth forecast for the third quarter that came in below expectations. The company also reported an almost 30% decrease in net income for the second quarter compared to a year ago. Shares of major airline stocks American Airlines and United Airlines also fell around 4.7% and 3.7%, respectively, following the results.
• MicroStrategy — Shares of the largest corporate holder of bitcoin rose more than 3% after the company announced a 10-for-1 stock split on Thursday “to make MicroStrategy’s stock more accessible to investors and employees.”
• WD-40 — The metal lubricant maker climbed about 3%. WD-40 reported total net sales of $155 million in the fiscal third quarter, up 9% from the year-ago period. The company’s gross margin also came in higher compared to the same quarter a year prior.

Read the full list here.

— Sean Conlon

Apple pulled back on Thursday, threatening to end a period of continuous record closes.

The megacap technology stock slipped about 2% in Thursday’s session. If that holds though the closing bell, it will conclude a seven-day streak of the stock rising to new highs.

On Wednesday, Apple closed at a record level for the seventh consecutive session. That marked the first streak of all-time closing highs of this length since 2012.

Apple’s drawdown comes amid broader troubles for tech names in the session, with the Nasdaq Composite sliding more than 1%. With Thursday’s pullback, the stock was up just about 0.3% on the week.

— Alex Harring, Nick Wells

Shares of Tesla were down 6% in midday trading after Bloomberg News reported that the automaker is bumping back its robotaxi event to October from August.

The report, citing sources familiar with the decision, said the delay was to give Tesla employees more time to build vehicle prototypes.

Autonomous driving and robotaxis are a key part of the long-term case for Tesla, which trades at higher valuations than legacy automakers. For years, CEO Elon Musk has touted this as a major potential growth area for the company.

Tesla’s stock has been red hot recently, but Thursday’s drop threatens to snap an 11-day winning streak.

— Jesse Pound

Megacap tech stocks underperformed on Thursday. Market darling Nvidia dropped more than 3%, as did shares of Meta Platforms. Apple and Google parent Alphabet both slid 2.7%. Shares of Amazon were down 2.4%.

Those moves added pressure to the S&P 500, even as a majority of the stocks in the benchmark traded in positive territory. The broader index was last down 0.3%, even with 415 names advancing.

— Sarah Min

Real estate stocks in the S&P 500 tracked for their best day in several months.

The sector added about 2.8% Thursday. If that holds through session close, it will mark its best day since March 27, when the sector climbed 2.42%.

SBA Communications and BXP led the sector higher with gains of more than 4%. Every stock in the sector was trading in the green.

With that jump, real estate was the best-performing sector of the 11 that comprise the broad S&P 500. Utilities followed with an advance of about 1.3%.

— Alex Harring

Easing inflation in June solidified the case for the Federal Reserve to begin cutting interest rates later this year.

Hopes of lower rates helped propel housing-related stocks higher Thursday morning. Shares of Home Depot, Lowe’s and D. R. Horton added 2%, 3% and nearly 5%, respectively. The SPDR S&P Homebuilders ETF also gained nearly 4%.

Thursday morning’s trio of earnings extends the trend from the flurry of early reporters ahead of the meaty part of earnings season.

All three companies that reported this morning — PepsiCo, Conagra and Delta Air Lines — all missed Wall Street’s revenue expectations. Currently, almost 60% of the nearly two dozen companies that have already reported results early in this season have missed revenue estimates. Nike, General Mills, J.M. Smucker, Oracle and CarMax were some of the other notable revenue misses in recent weeks.

Consumers have cut back on snacking, and those volume declines hurt food makers’ top lines. PepsiCo posted a revenue miss for just the second time in six years, while Conagra revenues missed for the fourth time in five quarters.

Meanwhile, the oversupply in the airline industry’s routes and number of seats available this summer is pressuring airfares, especially among lower-cost airlines. But Delta Air Lines, which offers a bevy of premium offerings, also saw headwinds as two key metrics fell short of analysts’ estimates. Revenue per available seat mile fell nearly 3% from a year ago on an adjusted basis, while passenger loads on its airplanes were a tad lighter than expected, too.

— Robert Hum

Small-cap stocks saw the biggest rally after the cool consumer price index report, with the iShares Russell 2000 ETF (IWM) jumping about 3%.

Small caps have underperformed throughout this market rally, and the Russell 2000 was up less than 2% for the year entering Thursday.

Part of the reason that small-cap stocks have struggled is concern that higher interest rates will make it more difficult for those companies to pay off or refinance their debt, especially if the U.S. economy falls into a recession. But the possibility of a “soft landing” was bolstered on Thursday, with both CPI and weekly jobless claims declining from their prior readings.

— Jesse Pound

Expectations for a September rate cut jumped after the latest inflation data showed easing pricing pressures.

Markets are currently pricing in a greater than 80% chance the Federal Reserve will lower rates in September, according to the CME FedWatch Tool. That is up from a roughly 70% chance just the day prior.

There is also a greater probability of three quarter-percentage-point rate cuts this year. The chance of the federal funds rate ending the year at 4.50% to 4.75% has jumped, to 41.7% from 26.2% in the previous session. The probability of it ending the year at 5.00% to 5.25% fell to 44.1% from 46.2%.

— Sarah Min, Jeff Cox

June’s consumer price index reading is promising news for the inflation front, and supports the case for the Federal Reserve to lower interest rates at its September meeting, according to Comerica Wealth Management Chief Investment Officer John Lynch.

Lynch noted that the CPI report is also important for the market on several fronts.

“Reduced borrowing costs can help personal spending, as consumer stocks have lagged the S&P 500 this year. Lower rates can also aid debt service payments for the federal budget deficit. And finally, the equity market can benefit from lower discount rates for future profits, helping to support P/E multiples going forward,” Lynch said.

He added that “investors should be careful what they wish for.”

“If the Fed cuts much beyond that, it will be because the Fed has to cut! That is not an environment conducive for economic or market growth,” said Lynch.

— Hakyung Kim