Stocks ended Monday with a whimper as a solidly higher open lost momentum throughout the trading day.
Disappointing earnings announcements from a pair of tech names created selling pressure for the broader market. Most notably, Nvidia (NVDA) shed 6.3% after the chipmaker said its second-quarter revenue will likely come in at $6.7 billion – lower than the $8.1 billion it previously guided for – amid a 33% year-over-year decline in gaming revenue. The company also expects “challenging market conditions” to persist in Q3. NVDA will release its full earnings report on Aug. 24.
Earnings from Palantir Technologies (PLTR) were also on Wall Street’s radar. Shares plunged 14.2% after the data analytics firm reported a per-share loss of 1 cent in its second quarter, compared to the consensus estimate for earnings of 3 cents per share. PLTR also gave lower-than-anticipated full-year revenue guidance.
Not surprisingly, technology was the worst-performing sector today, giving back 0.9%. Meanwhile, the biggest gains were found in the materials (+0.6%) and real estate (+0.7%) sectors.
As for the major indexes, the Nasdaq Composite (-0.1% at 12,644) and S&P 500 Index (-0.1% at 4,140) finished in negative territory, while the Dow Jones Industrial Average eked out a 0.1% gain to end at 32,832.
Other news in the stock market today:
- The small-cap Russell 2000 jumped 1.0% to 1,941.
- U.S. crude futures gained 2.0% to settle at $90.76 per barrel.
- Gold futures rose 0.8% to $1,805.20 an ounce.
- Bitcoin soared 4.4% to $23,932.38. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- Bed Bath & Beyond (BBBY) and AMC Entertainment Holdings (AMC) were notable gainers, with many suggesting retail traders on Reddit’s WallStreetBets were driving the action in the two meme stocks. BBBY was up 63.5% at its intraday peak, before closing with a 39.8% gain. AMC shares popped 8.0% today.
- Signify Health (SGFY) jumped 11.0% after a report in The Wall Street Journal over the weekend said CVS Health (CVS, -0.3%) is looking to buy the healthcare platform. CVS plans to submit an offer for SGFY in the coming week, the article indicates, citing people familiar with the matter. “Since the CVS investor day in December of last year, investors have been waiting for details on how the company plans to deploy capital in order to improve its care delivery model,” says BofA Global Research analyst Michael Cherny, who has a Buy rating on CVS. “SGFY used an over-arching tech platform that both allows for optimal efficiency for its clinicians but also to ensure the most appropriate types of evaluations in the home. While CVS does not participate in this market directly, building any additional services into the home in our view would be a positive step, even if it feels like there is more urgency on the primary care side.”
What the Inflation Reduction Act Means for Investors
Electric vehicle (EV) stocks were a pocket of strength today after the Senate over the weekend passed the Inflation Reduction Act. The industry is poised to benefit from the spending bill, which aims to commit $369 billion toward green energy investments – including extending a tax credit for purchases of electric vehicles – and reduce carbon emissions by 40% by the end of this decade.
The efforts to fight climate change are a major part of the roughly $430 billion bill. But as with all things in life, nothing is free. In order to pay for the measures, the plan proposes a 1% tax on stock buybacks and a 15% minimum tax on companies reporting more than $1 billion in revenue.
“We find the potential tax on share buybacks to be particularly interesting,” says Sonia Joao, chief operating officer of Houston-based RIA Robertson Wealth Management. “Share buybacks have been a popular way for American companies, and particularly tech firms, to reward their shareholders. This may incentivize them to spend less on payouts and more on dividends or debt reduction. It’s early, but we could see this having far-ranging implications for the U.S. market.”
While the bill still has to make it through the House before being signed into law by President Joe Biden, investors will want to keep an eye out for its potential impact to their portfolios. Here, we’ve put together a short guide detailing some of the best (and worst) stocks from the Inflation Reduction Act. Check them out.
Karee Venema was long PLTR as of this writing.