Market Performance
Stocks rallied today, leading the S&P 500 (+1.2%) and Nasdaq Composite (+2.0%) to close at fresh all-time highs. This surge was driven by NVIDIA (NVDA, Financial) jumping 5%, taking its market value over $3 trillion. It is now the most valuable stock by market cap after Microsoft (MSFT, Financial).
Other mega caps and chipmakers also contributed to the broader market's gains. Notable performers included:
- Meta Platforms (META): +3.8%
- Broadcom (AVGO): +6.2%
The Vanguard Mega Cap Growth ETF (MGK) settled 1.8% higher, and the PHLX Semiconductor Index (SOX) saw a 4.5% gain. Strength in these areas propelled the information technology (+2.6%), communication services (+1.5%), and consumer discretionary (+0.7%) sectors toward the top of the leaderboard today.
Market Breadth
Many stocks participated in today's broad advance after the market showed resilience to selling efforts this week. The equal-weighted S&P 500 rose 0.6%, and market breadth favored advancers by a 2-to-1 margin at the NYSE.
Treasury Yields
A drop in Treasury yields again acted as support for equities today after limiting gains in recent sessions. Key yield movements included:
- 10-yr note yield: -5 basis points to 4.29%
- 2-yr note yield: -4 basis points to 4.73%
This activity followed an ISM Non-Manufacturing Index for May that showed some deceleration in the Prices Index from April.
Year-to-Date Performance
Performance metrics for the year-to-date (YTD) include:
- Nasdaq Composite: +14.5% YTD
- S&P 500: +12.3% YTD
- S&P Midcap 400: +6.1% YTD
- Dow Jones Industrial Average: +3.0% YTD
- Russell 2000: +1.8% YTD
Economic Data Review
Today's economic data included:
- Weekly MBA Mortgage Applications Index: -5.2% (Prior: -5.7%)
- May ADP Employment Change: 152K (Consensus: 175K; Prior revised to 188K from 192K)
- May S&P Global US Services PMI - Final: 54.8 (Prior: 51.3)
- May ISM Non-Manufacturing Index: 53.8% (Consensus: 50.7%; Prior: 49.4%)
The key takeaway from the report is that it signals a pickup in activity in the nation's largest sector with prices paid remaining elevated, albeit less so than the prior month. Altogether, it is a report that doesn't command a rate cut soon.
Upcoming Economic Calendar
Thursday's economic calendar features:
- 8:30 ET: Revised Q1 Productivity (Consensus: 0.3%; Prior: 0.3%)
- Revised Q1 Unit Labor Costs (Consensus: 4.7%; Prior: 4.7%)
- Weekly Initial Claims (Consensus: 216,000; Prior: 219,000)
- Continuing Claims (Prior: 1.791 million)
- April Trade Balance (Consensus: -$76.5 billion; Prior: -$69.4 billion)
- 10:30 ET: Weekly natural gas inventories (Prior: +84 bcf)
Overseas Markets
Performance in overseas markets included:
- Europe: DAX +0.9%, FTSE +0.2%, CAC +0.9%
- Asia: Nikkei -0.9%, Hang Seng -0.1%, Shanghai -0.8%
Commodities
Commodities saw the following changes:
Today's News
Nvidia (NVDA, Financial) soared past a $3 trillion market cap on Wednesday, driven by excitement surrounding artificial intelligence. Shares climbed over 5% to close at $1,224.40. This milestone places Nvidia in an exclusive club, joining Apple (AAPL, Financial) and Microsoft (MSFT, Financial) in reaching such a valuation. CEO Jensen Huang announced upcoming AI accelerators and the Blackwell Ultra chip for next year, adding to the bullish sentiment. Nvidia also plans a 10-1 stock split this week, following last month's earnings announcement.
Five Below (FIVE, Financial) experienced a steep decline in after-hours trading on Wednesday after missing sales estimates in its Q1 earnings report and issuing lower-than-expected full-year guidance. CEO Joel Anderson noted that while Q1 sales were disappointing, disciplined cost management allowed the company to meet its adjusted EPS outlook. The retailer has missed revenue expectations in four of the last five quarters, with comparable sales down 2.8% for Q1.
Lululemon (LULU, Financial) reported Q1 GAAP EPS of $2.54, beating estimates by $0.12, and revenue of $2.21 billion, exceeding expectations by $10 million. Comparable sales increased by 6%, and the company's gross margin rose by 20 basis points to 57.7%. However, the Q2 outlook fell short of consensus, with expected revenue between $2.4 billion and $2.42 billion, and diluted EPS forecasted to be between $2.92 and $2.97.
Morgan Stanley's (MS) recent report highlighted the growing concentration of market capitalization among the top U.S. stocks. The "Magnificent Seven" — Microsoft (MSFT, Financial), Apple (AAPL, Financial), Nvidia (NVDA, Financial), Alphabet (GOOGL), Amazon (AMZN, Financial), Meta (META), and Tesla (TSLA) — accounted for more than half of the S&P 500’s gains in 2023. This concentration has nearly doubled over the past decade, reaching 27% by the end of 2023.
Williams Companies (WMB) won a court ruling in Louisiana, granting a permanent injunction against Energy Transfer (ET) to prevent interference with its Louisiana Energy Gateway natural gas project. The court sided with Williams on all seven crossings, though the project’s in-service date has been delayed to the second half of this year.
Shopify (SHOP, Financial) extended its winning streak to seven consecutive trading sessions, closing at $61.26 on Wednesday. The stock has gained 6.35% over the past six days, buoyed by a recent upgrade from Goldman Sachs to Buy from Neutral. The analysts cited the company's marketing investments as a driver for future revenue growth, despite a year-to-date decline in shares.
Amazon (AMZN, Financial) is facing renewed labor challenges as the Amazon Labor Union has teamed up with the International Brotherhood of Teamsters. The partnership aims to strengthen negotiations for better pay and working conditions at the JFK8 warehouse in Staten Island. A vote to formalize the affiliation will occur in the coming weeks.
Boeing (BA, Financial) CEO Dave Calhoun is set to testify before a U.S. Senate panel on June 18 regarding ongoing concerns about the company's product safety. The Federal Aviation Administration recently restricted Boeing from increasing production of its 737 Max, following an incident where a 737 Max 9 lost a door panel mid-flight.
Twilio (TWLO, Financial) ended a six-day losing streak, closing 0.5% higher at $57.03 on Wednesday. Despite recent losses, the stock retains a Strong Buy rating from analysts, with a score of 4.52 out of 5. The company has received high marks for growth, valuation, and revisions, though its momentum rating lags.
Semiconductor stocks surged on Wednesday, led by ASML Holding N.V. (ASML, Financial) and Taiwan Semiconductor Manufacturing Company (TSM, Financial), which rose 8% and 7%, respectively. The rally was fueled by news that ASML plans to ship its latest chip-making system to TSM and Samsung. Other semiconductor companies, including Applied Materials (AMAT), Lam Research (LRCX), and Broadcom (AVGO), also saw significant gains.
General Dynamics (GD) declared a quarterly dividend of $1.42 per share, maintaining its forward yield at 1.9%. The dividend will be payable on August 9, with a record date of July 5.
Victoria’s Secret (VSCO) reported Q1 Non-GAAP EPS of $0.12 and revenue of $1.36 billion, both in line with expectations. The company forecasts a slight decline in Q2 sales and reaffirmed its full-year outlook, expecting net sales of around $6 billion.
NIO (NIO) is set to report Q1 earnings on June 6, with analysts expecting a loss per share of $0.39 on revenues of $1.44 billion. Despite a challenging quarter, NIO recorded over a 200% year-over-year increase in vehicle deliveries for May.
Vale (VALE) continued its losing streak, closing in the red for the seventh consecutive day at $11.42. The stock has lost 11.5% over the past year and recently hit a 52-week low. Analysts have given the stock a mixed rating, with some recommending a strong buy and others advising caution.
Semtech (SMTC) reported Q1 Non-GAAP EPS of $0.06, beating estimates by $0.06, and revenue of $206.1 million, surpassing expectations by $5.96 million. The company provided a positive outlook for Q2, with expected net sales of $212 million.
Smartsheet (SMAR, Financial) posted Q1 Non-GAAP EPS of $0.32, beating estimates by $0.05, and revenue of $263 million, exceeding expectations by $4.8 million. The company announced a $150 million share repurchase program and provided strong guidance for the next quarter and full fiscal year.
AMC Entertainment (AMC) shares rose over 8% following the company's annual shareholder meeting. Shareholders rejected the executive pay plan but approved an equity incentive plan for executives. The proposal to declassify the board of directors did not pass.
Plug Power (PLUG) fell 4.1% after a U.S. senator requested an investigation into a $1.7 billion financing deal provided by the Department of Energy. The inquiry aims to ensure transparency and accountability in the allocation of funds to the company.
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