S&P 500, Nasdaq eke out small gain Monday as investors gear up for big tech earnings this week: Live updates – CNBC

The S&P 500 and Nasdaq Composite Indexes were up slightly on Monday as investors focused on earnings forecasts from major technology companies due to be released in the coming days.

The S&P 500 rose 0.08% to finish at 5,463.54, the Nasdaq Composite rose 0.07% to 17,370.20 and the Dow Jones Industrial Average lost 49.41 points, or 0.12%, to close at 40,539.93.

Pia Singh

Tesla shares rose more than 5% on Monday after Morgan Stanley named the electric car maker its top auto stock pick.

Analyst Adam Jonas replaced Ford with Tesla, citing its efforts to cut costs and manage risk.Ford shares were down more than 1% in midday trading.

Jonas’ call comes as automakers struggle to wrap up the electric car boom, with many companies in the sector scrapping or postponing plans for these types of vehicles.

“While Tesla still makes cars, the company is actively transferring resources, technology, talent and capital away from its auto division,” Jonas wrote to clients. “It’s notable that Ford management spent much more time discussing EVs during its second-quarter conference call than Tesla.”

Despite Monday’s moves, Tesla shares are still down more than 5% so far this year. Ford shares are down nearly 10%.

Alex Harring

The sell-off in big tech companies appears to have found some stability, at least in the short term.

The Round Hill Magnificent Seven ETF (MAGS) rose about 1.2% on Monday, following a 1% gain on Friday.

Prior to this rebound, the ETF had fallen in seven of eight trading sessions, with cumulative losses reaching nearly 10%.

Jesse Pound

McDonald’s is listening to a clear message from consumers: they want more value.

While the fast-food giant missed Wall Street’s quarterly targets, investors seem more focused on the future and seem to see management’s approach to pricing as heading in the right direction.

McDonald’s shares recently rose 4.5%, and management said it is working to improve menu prices. The company also plans to continue offering its popular $5 meal sets.

“We’re seeing tremendous enthusiasm and sales of our $5 meal sets exceeding our expectations,” McDonald’s U.S. president Joe Erlinger said on the earnings call. “Trial rates for these sets are strongest among lower-income consumers, and sentiment toward the brand around value and affordability is beginning to shift positively.”

Christina Cheddar-Burke

If the Russell 2000 closes below Friday’s low of 2,238.67, small-cap stocks will be headed for a potential bearish signal on Monday, known as an “outside day.”

Small-cap indexes have outperformed larger-cap indexes this month as the stock market has been rotating through sectors. The Russell 2000 has risen more than 9% in July, while the S&P 500 has risen just 0.3%. Over the past 20 trading days, the Russell has outperformed the S&P by more than three standard deviations above its historical average. Market watchers are expecting a near-term pause in the rally.

Cryptocurrency stocks are among the biggest drop-offs from their intraday highs, including Riot Platforms (RIOT), Cipher Mining (CIFR), and Marathon Digital (MARA). Other notable stocks that have fallen sharply from their highs include Archer Aviation (ACHR), Carvana (CVNA), and SoundHound AI (SOUN).

An “outside day” is a two-day technical pattern in which the second day’s trading range completely eclipses the previous day’s range, changing the direction of recent momentum. Traders often use this pattern to predict a potential reversal in an asset’s direction.

— Nick Wells

ON Semiconductor reported better-than-expected profit and sales before the close of trading on Monday, sending its shares up about 13%.

The semiconductor company’s second-quarter adjusted earnings per share were 96 cents, beating the 92 cents expected by analysts surveyed by FactSet. Revenue was $1.74 billion, below the consensus estimate of $1.73 billion. But both adjusted earnings per share and revenue were down from the second quarter of 2023.

The company expects third-quarter earnings per share to be between 91 cents and $1.03, and third-quarter revenue to be between $1.7 billion and $1.8 billion.

“We remain focused on driving growth through expanding market share, doubling down on investments in strategic markets and expanding the breadth of our industry-leading product portfolio with analog and mixed-signal solutions,” CEO Hassan El Khoury said in the earnings press release.

“As reflected in our recent supply agreement with the Volkswagen Group, we continue to strengthen silicon carbide’s leadership position in the automotive sector as we expand production with major global OEMs in Europe, North America and China,” he added.

Michelle Fox

The stocks with the biggest moves in midday trading were:

• Walt Disney — The entertainment giant’s shares rose 2% after the box office success of “Deadpool & Wolverine.”
• Dexcom — Shares of the diabetes treatment company rose 5%, recouping some of Friday’s losses.
• ON Semiconductor — Shares rose nearly 13% after the chip company reported better-than-expected earnings.

See the full list of stocks moving here.

— Lisa Kailai Han

Customers resisted menu price increases after McDonald’s latest quarterly results generally fell short of expectations. Same-store sales fell in every region and were down 1% company-wide, beating Wall Street’s expectations of a 0.4% increase. It was the first same-store sales decline since the fourth quarter of 2020.

Revenue for the latest quarter was flat but missed Wall Street expectations by the biggest percentage since October 2014 ($6.49 billion vs. $6.61 billion estimates).

As a result, the fast-food giant posted a second consecutive earnings miss, reporting adjusted earnings per share of $2.97 versus the expected $3.07, its biggest profit decline since January 2022. Profits for the most recent quarter fell 6%, its biggest year-over-year decline since the fourth quarter of 2020.

Despite all the bad news, McDonald’s stock is rising, likely because the poor performance came before the company rolled out its new $5 value menu, an initiative that began at the end of June, just days before the end of its latest quarter. McDonald’s hopes that this value proposition will lure customers back to its restaurants in what is now a highly competitive fast-food sales environment.

The recent move into small-cap stocks may not be losing steam just yet.

The iShares Russell 2000 ETF (IWM) rose about 0.9% in premarket trading, suggesting the market’s broad rotation into smaller-cap stocks may continue this week. The Russell 2000 index of small-cap stocks closed up 3.5% last week and is up 12% over the past month.

Fueling the rotation are expectations that central banks will soon cut interest rates, and that an improving interest rate outlook and inflation environment will boost small caps and other cyclical sectors that tend to have higher funding costs.

Pia Singh

According to market history compiled by Sam Stovall, the S&P 500’s decline from its all-time high hit on July 16th may not be over yet.

From last week’s peak to trough, the S&P 500 fell a total of 4.7%, according to CFRA’s chief investment strategist. Since 1990, 68% of declines of 4.5% or more have reversed within “a few weeks,” Stovall wrote in a Monday note. The strategist defines a pullback as a drop between 5% and 9.9%.

Oppenheimer strategist John Stoltzfus said the prospect of an extended rally in large technology stocks was becoming more realistic after last week’s volatile market.

The S&P 500 and Nasdaq Composite fell last week, while the small-cap Russell 2000 and Dow Jones Industrial Average rose.

“This is not to say that investors are abandoning the Magnificent Seven or the dominance of market performance by big tech stocks, but as the Fed moves closer to cutting interest rates, market participants appear to be realistic that the next upswing will require a broader, less concentrated approach if stocks are to rally,” Stoltzfus said in the note.

Fred Imbert

The Federal Reserve’s Federal Open Market Committee meets on Tuesday and Wednesday, but markets are not expecting a rate cut this week.

Traders in the federal funds futures market are estimating there is about a 96% chance that the central bank will keep rates steady at this meeting. CME Fed Watch Tool.

However, traders largely expect one rate cut at the September meeting.

Jesse Pound

The New York stock market was calm as of 6 p.m., with Dow futures up about 50 points.

Jesse Pound