Markets News, May 7, 2024: S&P 500, Dow Edge Higher To Extend Winning Streaks; Nasdaq Ends Lower

Biggest Movers Tuesday

GAINS

FMC Corp. (FMC) led the S&P 500, popping 9.5% after the agricultural sciences company issued better-than-expected full-year revenue guidance. The provider of insecticides and other agricultural chemicals expects new products to drive robust revenue growth. FMC is also positioned to benefit from lower input costs, reduced interest expenses, and cost-saving initiatives.

International Flavors and Fragrances (IFF) jumped 6.4% after the provider of ingredients for food, beverage, and personal care products reported better-than-expected first-quarter revenue and earnings per share. Volume growth and productivity gains helped drive the strong performance, and the company highlighted successful measures to optimize its portfolio, including the divestment of its cosmetics ingredients business.

Kenvue (KVUE), the consumer health products business that completed its spinoff from Johnson & Johnson (JNJ) last year, gained 6.4% after the company's first-quarter profits exceeded expectations. Home to Tylenol, Listerine, and other well-known brands, Kenvue achieved strong sales growth in its self-care and essential care segments. The firm also announced plans to cut around 4% of its workforce as it aims to reduce costs.

LOSSES

Builders FirstSource (BLDR) posted the steepest losses of any S&P 500 stock, tumbling 19.1% in the wake of the building materials supplier's first-quarter earnings report. Although quarterly sales topped forecasts, net income fell short of estimates, and a shift in product mix toward lower-margin products contributed to a year-over-year drop in gross profit margin. Builders FirstSource also faces challenges related to higher mortgage rates limiting affordability and softness in the multi-family housing market.

Disney (DIS) dropped 9.5% after the entertainment giant reported a quarterly net loss, reflecting the impact of hefty restructuring costs and other impairment charges. Despite reporting a surprise profit in its direct-to-consumer entertainment streaming segment, Disney provided a weak growth outlook for subscriptions and experiences. It does not expect core subscriber growth for the Disney+ streaming service during the current quarter.

-Michael Bromberg

Apple Expands AI Push With New iPad Pro

Apple (AAPL) unveiled an iPad Pro powered by its new M4 chip capable of running artificial intelligence applications locally,

The product announcement marks a key milestone in Apple's push into AI, with the iPhone maker becoming the latest tech giant to announce in-house AI chips.

Apple called the latest iPad Pro an "outrageously powerful device for artificial intelligence," that with the M4 chip features Apple’s "most powerful Neural Engine ever." Apple said the "Neural Engine in M4 is more powerful than any neural processing unit in any AI PC today."

The iPad Pro and M4 chip unveiling marks a key milestone in Apple's push into AI, with the iPhone maker becoming the latest big tech company to announce in-house chips to enable running AI locally.

Apple joins Meta (META), Alphabet's (GOOGL) Google, Microsoft (MSFT), and Amazon (AMZN) in making its own AI-capable custom chips. The companies' custom chips could help them manage the high costs associated with AI and lessen their Nvidia (NVDA) dependency.

Apple shares gained 0.4% on Tuesday.

-Naomi Buchanan

Peloton Races Higher On Report of PE Interest

Shares in Peloton (PTON) kicked into a high gear Tuesday after a report that a number of private equity firms may be considering a buyout of the troubled company.

At least one firm has held talks with the Peloton about plans to take it private, CNBC reported.

After the pandemic-era boom, Peloton has struggled to remain relevant. And that is weighing on the company's financial health as earnings skid and costs pedal higher.

Peloton shares slumped to an all-time low last week after reporting worse-than-expected third-quarter earnings for is fiscal 2024 and announcing the exit of CEO Barry McCarthy.

The fitness company has also announced a restructuring plan, including eliminating 15% of its staff, in a bid to cut its operating expenses back by up to $200 million by the end of fiscal year 2025.

Peloton shares were up 17% in mid-afternoon trading, but have still lost about half their value over the past 12 months.

-Kevin George

UBS Shares Jump As Banking Group Returns to Profit

UBS Group (UBS) shares were up 6.5% in early afternoon trading after the Swiss bank returned to a quarterly profit as it continued to integrate former rival Credit Suisse, which it absorbed in a government-backed bailout in March 2023.

The banking gaint posted first-quarter net income of $1.76 billion—about three times the amount analysts expected. The gains came after two consecutive quarters of losses.

Total revenue jumped 45.7% year-over-year to $12.74 billion, also better than expected. The key global wealth unit saw revenue increase 28.3% to $6.14 billion.

The company noted that its Credit Suisse integration plans moved “at pace,” adding that it realized an additional approximately $1 billion in gross cost savings.

-Bill McColl

Datadog Stock Sinks On Disappointing Guidance

Datadog (DDOG) shares plunged more than 10% Tuesday morning as the cloud monitoring and security company’s guidance appeared to be less than some had anticipated. The company also announced that its president, Amit Agarwal, would be stepping down at the end of the year.

Datadog sees current-quarter adjusted earnings per share (EPS) in a range of $0.34 to $0.36, with revenue of $620 million to $624 million. It predicts full-year adjusted EPS to be $1.51 to $1.57, and revenue of $2.59 billion to $2.61 billion.

For the first quarter, the company reported adjusted EPS of $0.44, with revenue jumping 27% to $611.3 million. Both exceeded forecasts.

Datadog noted as of the end of March it had 3,340 customers with annual recurring revenue (ARR) of $100,000 or more. That was a 15% increase from a year earlier.

 -Bill McColl

GlobalFoundries Leads Nasdaq Gainers After Earnings

Shares of semiconductor maker GlobalFoundries (GFS) were the biggest gainer on the Nasdaq Tuesday morning, rising nearly 9% following the release of a first-quarter earnings report that beat expectations.

Despite falling from last year's first-quarter levels, GlobalFoundries' net income of $134 million, or 24 cents per share, nearly doubled analyst expectations of $73.96 million and 13 cents per share, according to estimates compiled by Visible Alpha.

Revenue also fell year-over-year to $1.55 billion from last year's mark of $1.84 billion, but topped estimates of $1.52 billion.

For the current quarter, GlobalFoundries projects revenue from $1.59 billion to $1.64 billion, with net income of $78 million to $146 million, or 14 cents to 26 cents per share.

The company manufactures semiconductors, which are used across a number of industries from smartphones to powering the electronics systems inside cars and other vehicles.

The chipmaker has been one of the beneficiaries of the Biden administration's goal of making the U.S. a semiconductor manufacturing power, receiving $1.5 billion in CHIPS Act funding earlier this year to build a new facility in New York and expand its operations in Vermont. The state of New York also pledged about $600 million for GF's New York facilities.

Tens of billions have been handed out from the CHIPS funding so far, to GlobalFoundries as well as a number of its competitors, including Intel (INTC) and Taiwan Semiconductor Manufacturing Company (TSM).

-Aaron McDade

Stock Futures Mixed

Futures contracts connected to the Dow Jones Industrial Average were up 0.1%

S&P 500 futures were also up 0.1%.

Nasdaq 100 futures were down 0.1% about 30 minutes before the opening bell