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Wednesday, September 4

Some of the largest macro moves in the market today include: AEX 25 Index (Netherlands) -1.4%. Some of the largest moves among US mega-cap stocks include: NVIDIA Corp (NVDA) -1.9%. 

The US trade deficit widened to $78.8 billion in July 2024, the largest gap since June 2022, driven by a significant increase in imports and modest growth in exports. This development comes as markets await key economic data releases including JOLTS job openings later today which could influence Federal Reserve policy decisions.

European equity indices are experiencing notable declines with major benchmarks like Germany's DAX and France's CAC down significantly amid concerns over weakening private sector activity indicated by revised PMI figures for August. The Eurozone Composite PMI was slightly lowered to 51 from an initial estimate of 51.2, reflecting ongoing fragility despite some improvement compared to previous months.

Asian markets also saw substantial losses led by Japan’s Nikkei dropping more than four percent due to global risk aversion following weak manufacturing data out of the US that revived fears about economic slowdown prospects worldwide; this sentiment has been exacerbated further by Nvidia’s sharp stock decline impacting tech-heavy indexes globally.

Invesco QQQ Trust Series I (QQQ) [-0.7%]
Invesco QQQ Trust Series I (NASDAQ: QQQ) has experienced a decline of 0.7% in pre-market trading, coinciding with a slight drop of 0.12% in the Dow Jones Index. Year-to-date inflows for QQQ stand at $19.329 billion, ranking it fourth among exchange-traded funds (ETFs). In August alone, U.S. ETFs attracted $75 billion, contributing to total inflows exceeding $600 billion this year, positioning 2024 to potentially challenge the record inflows set in 2021. The ETF's performance has been influenced by major holdings, including NVIDIA, which has faced antitrust scrutiny and reported a significant stock decline. Apple plans to transition to OLED displays for iPhones by 2025, while Zscaler's stock dropped sharply despite positive earnings due to a cautious outlook. QQQ is currently trading within a critical support range of 461-469.25, reflecting notable volatility in the market.

VanEck Semiconductor ETF (SMH) [-1.4%]
The VanEck Semiconductor ETF (SMH) has experienced a significant decline, yesterday was its worst daily performance since March 2020, and we are down further today. This downturn coincides with news of China's semiconductor investments, which surged to $25 billion in the first half of 2024, surpassing the combined spending of South Korea, Taiwan, and the U.S. This trend may adversely affect major chipmakers reliant on Chinese sales. Among the ETF's holdings, notable declines were observed in NVDA, AVGO, INTC, QCOM, and LRCX, with Broadcom facing negative sentiment due to setbacks in Intel's manufacturing business and disappointing tests. Concurrently, the Nasdaq 100 Index has also declined, reflecting broader market sentiment that may be influencing SMH's performance. Despite these challenges, some social media commentary suggests a belief in the ETF's long-term potential.

NVDA |-2.0%|-52.8B
NVIDIA Corp | Semiconductors
NVIDIA Corp is experiencing a notable decline, influenced primarily by a broader market downturn. The Nasdaq 100 Index has decreased, reflecting negative sentiment that correlates with NVIDIA's own price movement, which has dropped significantly. The company is under increased pressure following subpoenas issued by the U.S. Department of Justice as part of an antitrust investigation. This inquiry is focused on allegations that NVIDIA may penalize customers who do not exclusively use its chips, raising concerns about potential monopolistic practices. Recent reports indicate that NVIDIA's market capitalization has eroded by nearly $300 billion, exacerbated by a substantial drop in stock value, which closed at $108.00, down sharply, with continued declines in after-hours trading.

DLTR |-11.0%|-1.7B
Dollar Tree Inc | Consumer Staples Merchandise Retail
Dollar Tree Inc reported second-quarter earnings that significantly missed expectations, contributing to an 11% decline in its stock price during pre-market trading. The company posted an adjusted earnings per share (EPS) of $0.67, falling short of the $1.04 consensus, while net income decreased to $132.4 million from $200.4 million year-over-year. Revenue reached $7.37 billion, below the anticipated $7.49 billion. Same-store sales growth was just 0.7%, missing the expected 1% rise, with Dollar Tree-branded stores achieving only 1.3% growth versus a forecast of 2.9%. The company has also revised its full-year guidance downward, now projecting adjusted EPS of $5.20 to $5.60 and net sales between $30.6 billion and $30.9 billion, compared to previous estimates of $6.50 to $7.00 and $31 billion to $32 billion, respectively.

ZS |-18.0% | -4.3B
Zscaler Inc | Systems Software
Zscaler Inc reported fourth-quarter adjusted earnings per share of $0.88, surpassing the consensus estimate of $0.69, with revenue of $592.9 million exceeding expectations of $567.93 million. Despite these strong results, the stock experienced a significant decline due to a cautious outlook for fiscal year 2025. The company provided adjusted EPS guidance of $2.81 to $2.87, falling short of analyst expectations of $3.01, while revenue projections for fiscal 2025 were aligned with estimates at $2.60 billion to $2.62 billion. Following the earnings report, analysts from Baird and Loop Capital reduced their price targets for Zscaler, reflecting a shift in sentiment despite the strong quarterly performance. Additionally, the company indicated Q1 FY25 EPS guidance of $0.62-$0.63, below the expected $0.73.

HRL |-7.4% | -1.2B
Hormel Foods Corp | Packaged Foods & Meats
Hormel Foods Corp reported mixed third-quarter results, with adjusted earnings per share of 0.37, slightly exceeding the consensus estimate of 0.36 but down from 0.40 a year prior. Quarterly sales reached 2.898 billion, falling short of the expected 2.95 billion and reflecting a year-over-year decline of 2.2%. The company revised its fiscal year 2024 net sales guidance to a range of 11.8 billion to 12.1 billion, down from the previous range of 12.2 billion to 12.5 billion, citing lower commodity prices and production disruptions at its Suffolk, Virginia facility. Additionally, adjusted diluted net earnings per share are now projected between 1.57 and 1.63, slightly narrowed from prior estimates. Following the earnings announcement, Hormel's stock experienced a significant drop of 8.7%.

INTC | -2.4% | -2.0B
Intel Corp | Semiconductors
Intel Corp's manufacturing business is facing challenges due to disappointing test results in collaboration with Broadcom, leading to a premarket decline of approximately 3.0% in its stock price. This setback raises concerns about Intel's capacity to meet high-volume production demands and jeopardizes its eligibility for a $20 billion subsidy from the Chips Act, part of the Biden administration's semiconductor strategy. Additionally, a report from Accenture reveals that only 28% of Intel's workforce are women, with even fewer in technical roles, highlighting ongoing gender disparity issues within the semiconductor industry. The Nasdaq 100 Index has also declined, reflecting broader market sentiment that may be influencing Intel's performance. Overall, Intel is underperforming relative to its sector peers.

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