Stock Market Mixed Ahead Of Debt Ceiling Talks. Advanced Micro Devices Hits Buy Point.
The stock market traded steady Tuesday afternoon, with the major indexes showing mixed results. The Nasdaq composite and Big Tech stocks remained the leaders. Investors held back ahead of the debt ceiling meeting later today, while the Dow Jones Industrial Average got pulled down by Home Depot (HD) results.
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Advanced Micro Devices (AMD) surged 5.4%. A regulatory filing revealed that hedge fund Third Point opened a 1-million-share stake. Activist investor Daniel Loeb runs the fund.
The semiconductor manufacturer posted better-than-expected Q1 earnings and sales May 2, but gave disappointing Q2 revenue and margin guidance.
AMD shares broke out of a cup base, hitting the 102.53 buy point, and are in the 5% buy range stretching to 107.66.
Macro And Market News
President Joe Biden and congressional leaders meet at 3 p.m. ET for new talks on the debt ceiling. The U.S. could default on its debt around June 1 if there's no agreement to raise the debt limit.
The Dow Jones Industrial Average edged 0.7% lower while the Nasdaq rose 0.2%. The S&P 500 trimmed 0.3%. The Russell 2000 fared worse than the major indexes, falling 1.2%.
NYSE and Nasdaq volume rose vs. the same time on Monday.
The Nasdaq 100-tracking Invesco QQQ Trust ETF (QQQ) notched up 0.4%, highlighting continued Big Tech resilience. The Innovator IBD 50 ETF (FFTY) dialed back 0.9%.
Crude oil gave back 0.2% to $70.96 per barrel. Gold futures shed 1.5% and traded below the psychological $2,000 level. Bitcoin sank 1.6% to $27,045.
The 10-year U.S. Treasury yield added 4 basis points to 3.55%. The CME FedWatch tool shows over 70% odds for no rate hike at the June Fed meeting.
European stocks ticked lower, with the German DAX down 0.1% and Paris CAC down 0.2%. The London FTSE lost 0.3% to close out the trading day.
FTC Sends Shivers Through Biotech Industry
Horizon Therapeutics (HZNP) fell 15% in heavy volume, after Bloomberg reported the Federal Trade Commission will file a lawsuit to block Amgen's (AMGN) $28 billion acquisition bid.
HZNP is on pace for its largest one-day percentage declines since Aug. 3, when it tumbled 18.47%.
The biotech specializes in medicines for rare autoimmune diseases while Amgen makes therapeutics for inflammatory diseases, cancers and cardiovascular diseases.
"Amgen is disappointed by the FTC's decision and remains committed to completing this acquisition," the company said. Amgen added that it sees "no legitimate competitive issues" and plans to close the deal in mid-December.
Shares of AMGN retreated 1.3% on the news.
Retail Sales Lag Estimates
April retail sales rose 0.4% vs. the 0.7% rise projected, but higher than the -1% in March.
Without autos, the metric was in line with the 0.4% forecast. The data covers durable and nondurable segments of consumer spending, which comprise the majority of GDP.
April industrial production rose 0.5% vs. the zero-growth consensus, while manufacturing popped 1%, beating the 0.1% estimate. The reading covers manufacturing, mining, and electric and gas utilities.
Stock Market Movers: Home Depot Gives Gloomy Outlook
Home Depot sank 1.6% in heavy volume after the company missed on Q1 sales and beat earnings expectations. Comparable sales fell 4.5% year over year.
The home improvement retailer blamed the sales miss on lumber price deflation and bad Western U.S. weather. The big-box retailer expects full-year 2023 sales to drop 2% to 5%.
Even more concerning, the Dow Jones component projected a 7%-13% EPS decline in the current fiscal year. It now expects to earn $14.52 to $15.52 per share in 2024, vs. the $15.72 FactSet estimate.
Shares fell further below the 50-day line, a red flag.
Rival Lowe's (LOW) fell 1% in sympathy, taking it below its 50-day line. The drop triggered the 7% sell rule from the 212.60 buy point of a cup-with-handle base.
Capital One (COF) popped 2.4% in heavy volume, after Warren Buffett's Berkshire Hathaway (BRKB) reported a purchase of over 9.9 million shares in a regulatory filing.
COF found resistance at its 50-day line.
Berkshire sold Bank of New York Mellon (BK) and U.S. Bancorp (USB) during the first quarter.
Chinese internet provider Baidu (BIDU) climbed 4.6% after better-than-expected Q1 earnings and sales. It reiterated a commitment to its generative artificial intelligence business. BIDU launched the Ernie Bot AI chatbot in March.
The move added to Monday's 6.3% jump, lifting BIDU back above its 200-day line.
IBD 50 stock On Holding (ONON) tumbled 9.5% despite better-than-expected Q1 EPS and sales. The Swiss athletic-shoe maker also raised its full-year sales forecast.
Shares have broken the 21-day exponential moving average.
Other Stock Market Movers
Sea Ltd. (SE) plummeted over 17% after the Singapore-based e-commerce and entertainment platform reported worse-than-expected Q1 EPS and sales numbers.
Shares sank below the 50-day line, a red flag.
C3.ai (AI) reversed course, falling 0.8% in heavy volume after Monday's 23.4% gain. Yesterday, the enterprise AI juggernaut lifted revenue guidance above expectations. The company reports earnings May 31.
Shares reclaimed the 50-day line on Monday. The stock is up a whopping 117% this year.
Follow Kimberley Koenig for more stock news on Twitter @IBD_KKoenig.
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Source: Investor's Business Daily
