Market Overview
The S&P 500 (+0.2%) and Nasdaq Composite (+0.3%) added to their record closing highs today, but market breadth was negative and other major indices closed with losses. The Dow Jones Industrial Average fell 0.2% and the Russell 2000 settled 0.9% lower.
Some normal consolidation efforts drove the underlying negative bias following a big run in many stocks. Decliners led advancers by a nearly 2-to-1 margin at the NYSE and at the Nasdaq.
Market Rates and Economic Data
Dropping market rates and solid gains in some mega cap stocks were not enough to offset the downside bias. The 10-yr note yield fell six basis points to 4.24% and the 2-yr note yield declined six basis points to 4.69%. This price action was in response to a cooler-than-expected inflation reading in the form of the May Producer Price Index, a weaker-than-expected initial jobless claims report, and today's $22 billion 30-yr bond reopening, which was met with solid demand.
Stock Performance
- Broadcom (AVGO 1678.99, +183.48, +12.3%) was a standout from the mega cap space following its better-than-expected earnings report, outlook, and 10-for-1 stock split announcement.
- NVIDIA (NVDA 129.61, +4.41, +3.5%) logged a solid gain in sympathy.
- Super Micro Computer (SMCI 871.10, +96.36, +12.4%) also registered an outsized gain in sympathy with AVGO.
Gains in the aforementioned names boosted the information technology sector (+1.4%), which was the top performer among the 11 sectors. The rate-sensitive real estate sector (+0.5%) showed the next largest gain, benefitting from the drop in market rates.
Guru Stock Picks
Warren Buffett has made the following transactions:
- Add in LSXMA by 1.44%
Today's News
Medical Properties Trust (MPW, Financial) saw its largest tenant, Steward Health Care System, gain bankruptcy court approval for a new $225M Chapter 11 financing. This move is crucial for Steward to continue operations while undergoing a sale process. The financing, provided by a group of lenders including Brigade Capital Management, Owl Creek Investments, and WhiteHawk Capital Partners, follows Medical Properties Trust's initial $75M debtor-in-possession loan approved in May.
Broadcom (AVGO, Financial) surged as much as 15% on Thursday, reaching a record high after a stellar quarterly report that exceeded both top-line and bottom-line estimates. The semiconductor giant forecasted full-year revenue of $51B, surpassing the $50.58B estimate. Shares ended the session 12.29% higher at $1,679.29, marking the fifth consecutive session of gains. Broadcom is making significant progress in integrating VMWare into its core business, focusing on simplifying product offerings and transitioning to a subscription model.
Ford (F, Financial) announced it will no longer require dealerships to invest up to $1M for the option to sell electric vehicles (EVs) due to lackluster demand. The company is ending its "EV-certified" program, reducing barriers to entry, and allowing all dealers to sell EVs. This change, effective July 1, will double the number of dealerships eligible to sell EVs to 2,800. Despite the program's initial success, participation has fallen significantly.
PepsiCo (PEP, Financial) shares continued to decline for the seventh consecutive session, closing 0.3% lower at $163.3 on Thursday. The beverage giant has seen a 6% drop over the past six sessions and is down more than 3% year-to-date. Analysts remain cautious, with mixed ratings ranging from Strong Buy to Hold.
The US government plans to recalculate the quality ratings of Medicare Advantage plans following federal court rulings in favor of SCAN Health Plan and Elevance Health (ELV). This recalculation is expected to result in hundreds of millions in additional bonus payments to insurers next year. SCAN Health anticipates an increase of around $250M for 2025 due to the recalculated ratings.
GameStop Corp. (GME, Financial) postponed its annual meeting on Thursday due to technical difficulties, specifically server outages caused by heavy traffic. The company has not yet announced a rescheduled date for the meeting, which includes voting on the election of directors and other key issues.
AppLovin (APP, Financial) shares fell 8% over the past week amid concerns about Apple's (AAPL) new AdAttributionKit, which will replace the existing SKAdNetwork. Despite the pullback, analysts believe the new framework will have a neutral impact on AppLovin's Software Platform business, viewing it as a rebranding rather than a significant change.
NextEra Energy Partners (NEP, Financial) dropped 7.3% after Barclays downgraded the stock to Underweight from Equal Weight, citing potential distribution cuts of 45%-75% to manage its ~$3.7B in convertible equity portfolio financings due over 2026-32. The analyst highlighted limited debt capacity and a high payout ratio as constraints.
Starwood Property Trust (STWD, Financial) declared a $0.48/share quarterly dividend, maintaining a forward yield of 10.05%. The dividend is payable on July 15 to shareholders of record as of June 28.
EPR Properties (EPR, Financial) declared a $0.285/share quarterly dividend, maintaining a forward yield of 2.81%. The dividend is payable on July 15 for shareholders of record on June 28.
AGNC Investment (AGNC, Financial) declared a $0.12/share monthly dividend, maintaining a forward yield of 14.58%. The dividend is payable on July 10 to shareholders of record as of June 28.
Trinity Capital (TRIN, Financial) declared a $0.51/share quarterly dividend, maintaining a forward yield of 13.77%. The dividend is payable on July 15 for shareholders of record on June 28.
Wells Fargo (WFC, Financial) fired more than a dozen employees from its wealth and investment management division in May after investigating claims of faking work. The employees were found to be simulating keyboard activity to create the impression of active work. The bank has been working to clean up its image since a scandal in 2016.
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