U.S. stocks ended weaker on Friday after an early rally fizzled as investors digested in-line inflation data and weighed political uncertainty after the U.S. presidential debate.
Market Snapshot
The Dow Jones Industrial Average fell 45.20 points, or 0.12%, to 39,118.86 the S&P 500 slid 22.39 points, or 0.41%, to 5,460.48 and the Nasdaq Composite dropped 126.08 points, or 0.71%, to 17,732.60.
Market Movers
Nike reported fiscal fourth-quarter earnings that topped analysts’ estimates but revenue and first-quarter guidance missed forecasts, sending shares of the athletic apparel maker down 20%. Nike’s footwear revenue in North America—the company’s largest market—fell 6% year over year in the fourth quarter. It also saw soft consumer demand in China. The company said it expects first-quarter revenue to fall about 10% from a year earlier, while analysts had projected a decline of roughly 3%. Nike also said it sees fiscal-year revenue down mid-single digits.
Shares of footwear retailer Foot Locker fell 2.4%.
Walgreens Boots Alliance fell 0.8%, a day after the drugstore chain tumbled 22% when it unveiled plans that could lead to the closure of thousands of underperforming storesand reduced its fiscal-year earnings guidance. It was the stock’s largest percentage decrease on record, according to Dow Jones Market Data.
Walgreens is also in danger of getting dropped from the Nasdaq 100 index—the stock was booted out of the Dow Jones Industrial Average in February—with the most likely replacement being Super Micro Computer, which was down 8% to $819.35 on Friday. Super Micro has gained 188% this year. Andrew Bary of Barron’s noted that Super Micro, which has a market value of $52 billion, is the most discussed potential addition to the Nasdaq 100, which is made up of the largest nonfinancial companies listed on the Nasdaq exchange.
Trump Media & Technology Group fell 11% after rising earlier in the session following the first presidential debate Thursday evening. President Joe Biden had a rough night in the debate, according to prediction markets. The debate had speculation swirling as to whether another candidate could step in Biden’s place as the Democratic Party’s nominee. Both Biden and former President Donald Trump were light on specifics when it came to the economy and controlling inflation.
Infinera jumped 16% to $6.09 after Finland’s Nokia reached an agreement to buy the maker of optical telecom equipment for $2.3 billion. The deal values Infinera at $6.65 a share, a 28% premium to the stock’s closing price Wednesday of $5.26.
Accolade slumped 44% after the company’s guidance for its fiscal second quarter and year missed analysts’ expectations. Accolade, the health technology company, said it expects revenue in the second quarter of between $104 million and $106 million, and an adjusted Ebitda loss of $8 million to $10 million, wider than forecasts that called for a loss of $5.9 million.
Synchrony Financial rose 6.7% to $47.19 after shares of the financial-services company were initiated at Outperform by analysts at Baird with a price target of $56. The analysts called Synchrony the No. 1 “domestic private label credit card platform, with tenured large retailer partnerships, and an experienced management team.”
Humana was initiated with an Overweight rating and price target of $392 at Piper Sandler. Shares of the health insurer rose 3.2% to $373.65.
Kura Sushi declined 23% after issuing third-quarter and fiscal-year guidance that was below analysts’ expectations.
Market News
US inflation cools in May, boosting hopes of Fed rate cut
U.S. monthly inflation was unchanged in May as a modest increase in the cost of services was offset by the largest drop in goods prices in six months, drawing the Federal Reserve closer to start cutting interest rates later this year.
In the 12 months through May, the PCE price index increased 2.6% after advancing 2.7% in April. Last month's inflation readings were in line with economists' expectations.
Top U.S. banks hike dividends after sailing through Fed's stress test
U.S. banking giants announced plans to raise their third-quarter dividends on Friday after proving that they have enough capital to withstand severe economic and market turmoil in the Federal Reserve's annual health check.
JPMorgan Chase , the largest U.S. lender, hiked its dividend to $1.25 a share from $1.15, according to a filing. Its board also authorized $30 billion in new share buybacks, effective July 1.
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