Market News, July 31, 2024: S&P 500, Nasdaq Close Sharply Higher on Chip Stock Rally, Rate-Cut Hopes

Top S&P Movers on Wednesday

Advancers

• Shares of Vistra Corp. (VST) soared 14.8%, marking Wednesday's top performance in the S&P 500, after the power generation firm reported that the Nuclear Regulatory Commission has approved an extension of the company's license to operate the Comanche Peak Nuclear Power Plant in its home state of Texas. The new authorization allows Vistra to continue operating the 2,400-megawatt plant through 2053.
• Vistra received an additional boost as PJM, the largest U.S. electrical grid operator, announced an 800% year-over-year price increase in its annual power market auction. Shares of fellow nuclear power provider Constellation Energy (CEG) also notched significant gains on the day, jumping 12.5%.
• Shares of Match Group (MTCH) jumped 13.2% after the operator of Tinder and other online dating platforms topped sales estimates with its second-quarter results. Revenue from Hinge, the company's dating app that uses an algorithm to display potential compatible matches, helped drive the strong performance, growing 48% year over year. Match Group's CEO highlighted a stabilization in monthly active user (MAU) trends and progress on attracting paying users compared with the prior year.

• After slipping in the previous session, semiconductor stocks moved higher on Wednesday following a strong earnings report from chipmaker Advanced Micro Devices (AMD). AMD topped second-quarter sales estimates, driven record revenue from its data center segment amid surging demand for its artificial intelligence (AI) chips, and its shares added 4.4% on the day. Shares of AI semiconductor behemoth Nvidia (NVDA) gained 12.8%, while Broadcom (AVGO) stock was up 12.0%.

Decliners

• Humana (HUM) shares tumbled 10.6%, suffering the steepest drop of any stock in the S&P 500, after the health insurer provided disappointing full-year earnings guidance. Although Humana beat second-quarter sales and profit estimates, elevated levels of inpatient hospital admissions and net costs dragged on the results, and the company expects these headwinds to continue for the rest of the year.
• Shares of Verisk Analytics (VRSK) slipped 8.5% after the data analytics and risk assessment company released a mixed second-quarter earnings report, beating profit forecasts but falling short of revenue expectations. The company's full-year sales guidance also came in below consensus forecasts. Wednesday's declines could represent profit-taking after the stock reached a record high earlier this week. 
• Shares of Bunge Global (BG), the world's largest oilseed processor, fell 8.1% after the company posted lower-than-expected profits for the second quarter. Lower crushing margins contributed to the lackluster performance. Meanwhile, crop prices remain at low levels amid elevated supplies of corn and soybeans, making it less advantageous for farmers to sell their harvests and pressuring the business of processors like Bunge.

-Michael Bromberg

Dow Leads Major Indexes in July

The Dow Jones Industrial Average finished the month with a 4% gain, while the S&P 500 added 1% and the Nasdaq fell less than 1%.

Boeing Leads Dow Gainers After Naming of New CEO

Boeing (BA) shares rose Wednesday as the announcement of a new chief executive outweighed second quarter results that came in below expectations.

The airplane maker said that its next CEO will be Kelly Ortberg, a former engineer and CEO of Rockwell Collins, an aerospace manufacturer that now operates as a subsidiary of RTX (RTX) called Collins Aerospace.

Ortberg will take over for outgoing CEO Dave Calhoun starting Aug. 8. Boeing announced in March that Calhoun would leave the position at the end of the year.

Boeing's second-quarter results came in worse than analysts expected as it looks to move past a troubled first half of the year that included safety incidents, tense Congressional testimony, investigations from regulators and law enforcement, and a guilty plea for defrauding the federal government.

Boeing reported $16.87 billion in Q2 revenue, down 15% year-over-year, while the company's net loss widened to $1.44 billion, nearly 10 times as large as the $149 million loss last year.

Boeing shares were up 4% in late trading, leading gainers on the Dow Jones Industrial Average.

-Aaron McDade

Treasury Yields Dip to Four-Month Low Ahead of Fed Decision

Treasury yields declined as markets waited to see how clearly the Federal Reserve, which concludes its July policy meeting this afternoon, would signal its next move on interest rates. 

The yield on the 10-year note, which reflects investors’ expectations for long-term interest rates, dipped below 4.1% for the first time since March before rebounding slightly by early Wednesday afternoon.

Treasury yields have declined precipitously in the last week as investors have ramped up bets that the Fed will begin a long-awaited rate cut campaign in September. 

Economic data in recent weeks have painted a picture of a cooling, but not ailing, economy. Hiring slowed and inflation declined in June, but the U.S. economy grew faster in the second quarter than it did in the first. 

-Colin Laidley

Why Chip Stocks are Soaring Wednesday

Nvidia (NVDA) and other chip stocks rebounded from Tuesday’s slump after better-than-expected earnings from Advanced Micro Devices (AMD) gave what could be a strong demand signal for the industry.

A report that expected U.S. restrictions on chip-equipment exports could be less stringent than previously thought also lifted some companies' shares.

The iShares Semiconductor ETF (SOXX) was up nearly 5% in early trading Wednesday, recovering from Tuesday’s losses, though it's still off highs seen earlier in the month.

The comeback for chip stocks comes after AMD reported strong second-quarter sales as data center revenue more than doubled year-over-year to a record high as demand for AI chips surged. 

Microsoft (MSFT), a buyer of AMD’s AI chips, said in its earnings call after the bell Tuesday that it plans to ramp up investments in AI to meet demand, with nearly all of its $19 billion in capital expenditures allocated to cloud or AI investments.

Nvidia was among the stocks leading gains on the S&P 500 Wednesday after Morgan Stanley analysts reported “consistent upside to AI [capital expenditures].”

"The selloff presents a good entry point," Morgan Stanley wrote.

An update on chip designer Arm’s (ARM) financial results after the bell Wednesday could reinforce the trend. Analysts expect Arm to report double-digit quarterly revenue growth after posting record-high royalty revenue a quarter earlier.

-Kara Greenberg

ASML Among Top Chip Stock Gainers

Shares of Dutch semiconductor-gear maker ASML Holding (ASML) are soaring in early Wednesday trading on a report that the U.S. is on track to exclude chip-equipment makers in the Netherlands and elsewhere from its latest set of trade curbs aimed at reining in China's tech advance.

According to Reuters, shipments from several countries that export key chipmaking equipment, also including, Japan, and South Korea, won’t be included in a Biden administration expansion of the Foreign Direct Product Rule next month.

The expansion will prevent around half a dozen Chinese fabs from getting exports from many countries, the report said. Places whose exports would be affected would include Taiwan, Israel, Singapore, and Malaysia. Taiwan is home to chip manufacturing giant Taiwan Semiconductor Manufacturing Company (TSM).

ASML shares had been struggling after Bloomberg reported earlier this month that that the Biden administration's upcoming stricter curbs on China access to foreign chipmakers' exports would be used to crack down on the Chinese businesses of ASML and Japan's Tokyo Electron.

ASML shares were up 7% in early trading.

-Nisha Gopalan

AMD Surges on Strong Revenue

Advance Micro Devices (AMD) shares moved sharply higher in premarket trading Wednesday after the chipmaker posted better-than-expected second quarter revenue and issued an upbeat sales outlook for the second half of the year.

Trading volumes have remained below average throughout the stock's recent sell-off, while the relative strength index indicator nears oversold levels, setting the stock up for a post-earnings bounce.

AMD shares may encounter overhead resistance at key chart levels including $151, $170, and $187.

Read our full technical analysis here.

-Timothy Smith

Futures Point to Higher Open for Major indexes

Futures tied to the Dow Jones Industrial Average were up 0.2%.

S&P 500 futures were up 1%.

Nasdaq 100 futures were up 1.7%.