Dow Jones Today: Tech Selloff Sends Nasdaq, S&P 500 Lower as Investors Rotate Into Small Caps – Investopedia

S&P majors on Thursday

1 hour 36 minutes ago

Rejectors

• Tesla Tesla (TSLA) shares had the biggest fall among S&P 500 stocks, plummeting 8.4% after reports the company would delay its robotaxi launch. The company had previously suggested it would hold an event on August 8 to unveil its autonomous vehicle solution, but Bloomberg reported the launch has now been pushed back to October. Tesla’s decline ended an 11-day winning streak.
• The decline in large technology stocks widened as investors appeared to be shifting money away from stocks that surged in 2024 and toward laggards that could rally as interest rates look set to fall. Semiconductor industry stocks in particular came under heavy pressure. Shares of semiconductor manufacturing equipment suppliers Lam Research (LRCX) and Applied Materials (AMAT) fell 6% and 5.4%, respectively. NVIDIA (NVDA) fell 5.6%.
• Airline stocks fall Delta Airlines Delta Air Lines (DAL) reported weaker-than-expected profits, citing rising fuel and other fees. Delta shares fell 4% on the day, dragging down shares of rival airlines.

The Advancer

• of stocks SBA Communications SBAC, which owns and operates cell towers and other wireless communications infrastructure, rose 7.5%, the highest on the S&P 500 index on Thursday. The gains came after the company announced a leadership shakeup, with Saul Kredi taking on the role of executive vice president and chief accounting officer. Kredi has held leadership positions in the infrastructure and management consulting industries.
• The decline in consumer price inflation has helped boost stock prices across the housing industry, while rising expectations of interest rate cuts have stoked optimism that mortgage rates could fall. Shares of home improvement materials retailers have risen. Builders First Source (BLDR) rose 7.4%, with shares of the flooring maker also rising. Mohawk Industries (MHK).
• In addition to construction material suppliers, housebuilders also benefited from expected declines in borrowing costs. DR Horton (DHI) shares rose 7.3%; Renner (LEN) shares rose 6.9%.

-Michael Blomberg

Homebuilding stocks rise on hopes of interest rate cuts

2 hours 52 minutes ago

Shares of homebuilders soared Thursday on hopes that mortgage rates will start to fall significantly this year.

A weaker-than-expected June inflation report has raised investor expectations that the Federal Reserve will cut interest rates as early as September.

If the Federal Reserve cuts its influential interest rates, homebuyers who chose to stay on the sidelines could be more likely to enter the housing market and investors could have more confidence in the prospects of homebuilders.

The Federal Reserve has kept interest rates at their highest level in 23 years for nearly 12 months in an effort to keep borrowing costs higher and thus tame inflation.

This is a double blow for homebuilders, who are facing not only higher borrowing costs but also weak demand: Rising mortgage rates and home prices are making home buying unaffordable and driving potential homebuyers out of the market.

Shares of D.R. Horton (DHI), Toll Brothers (TOL), PulteGroup (PHM), Lennar (LEN) and KB Home (KBH) all surged on Thursday.

-Trina Paul

Tesla shares plummet after robotaxi event postponed

4 hours 20 minutes ago

Shares of electric car maker Tesla (TSLA) plummeted on Thursday after reports that the company’s highly anticipated rollout of its self-driving robotaxi has been delayed by two months.

Bloomberg Tesla said it has postponed the event, originally scheduled for August 8, until October to give the team working on the project more time to build more prototypes, and that the postponement has been communicated internally to employees, according to a person familiar with the decision.

Tesla CEO Elon Musk announced the August debut date on social media in April and has touted self-driving robotaxis as a technology that will make other vehicles obsolete.

Tesla shares rose 44% on Thursday, their 11th consecutive trading day after the company reported better-than-expected second-quarter deliveries. The company was down more than 7% in late trading on Thursday.

–Bill McCall

Russell 2000 Index surges as investors shift to small caps

4 hours 52 minutes ago

As large tech stocks like Nvidia (NVDA), Microsoft (MSFT), and Apple (AAPL) fell sharply on Thursday, investors shifted money to smaller caps on hopes that a Federal Reserve interest rate cut would boost stock prices.

The Russell 2000 index rose more than 3% after the Labor Department’s latest inflation report showed consumer prices unexpectedly fell in June, raising hopes that the Fed will feel more confident to cut interest rates later this year.

A Fed rate cut would lower borrowing costs for borrowers, and since many small and mid-cap stocks have more liquid liabilities than larger companies, they could stand to gain more from a Fed rate cut.

Bank of America analysts suggested earlier this week that the second-quarter profits could signal that growth is finally starting to expand beyond the big tech stocks that have dominated the index’s profit growth and returns so far this year.

–Kara Greenberg

MicroStrategy Gains After Announcement of Stock Split

7 hours 41 minutes ago

MicroStrategy (MSTR), one of the world’s largest holders of Bitcoin (BTC), said on Thursday that it plans to conduct a 10-for-1 stock split, becoming the latest company to announce a split.

MicroStrategy shares rose more than 3% in late morning trading Thursday, bucking a broader stock market decline.

MicroStrategy will split both its Class A and Class B shares to holders of record on August 1, with investors receiving nine additional shares for each share previously held after the market closes on August 7. MicroStrategy’s first day of trading after the split will be August 8.

While the stock split will not change the overall value of investors’ MicroStrategy holdings, it will lower the price per MicroStrategy share, making the stock more available to investors and potentially stimulating demand.

The company’s shares have more than doubled this year as the U.S. Securities and Exchange Commission’s approval of a spot bitcoin ETF in January sent the token’s price soaring.

However, the enthusiasm surrounding Bitcoin, which topped $73,000 in March, has cooled somewhat recently, with the token now trading in a tight range below $60,000.

–Nisha Gopalan

Delta Air Lines plunges as profits fall, other airlines hit

9 hours 4 minutes ago

Delta Air Lines shares fell sharply in early trading on Thursday after the airline reported second-quarter profit that fell sharply short of expectations and lowered its third-quarter outlook.

Total revenue rose 7% from last year’s second quarter to a record $16.7 billion, beating the $16.2 billion analysts had expected, according to estimates compiled by Visible Alpha. But Delta’s earnings per share were $2.01, down 29% from a year ago and well below the $2.39 expected.

The airline said reducing debt remains its “highest financial priority” going into the second half of the year after spending $1.4 billion to pay down debt in the second quarter. Delta maintained its full-year adjusted earnings per share (EPS) outlook of $6 to $7, but now expects third-quarter adjusted earnings to be below expectations, at $1.70 to $2.00.

Shares of rival airlines United Airlines (UAL), American Airlines (AAL), and Southwest Airlines (LUV) also fell sharply in early trading on Thursday.

–Aaron McDaid

Stock futures fall ahead of CPI inflation report

11 hours 30 minutes ago

Futures contracts linked to the Dow Jones Industrial Average fell 0.2 percent about 30 minutes before the release of the closely watched inflation data.

S&P 500 futures fell 0.1%.

Nasdaq 100 futures also fell 0.1%.