Article published at 9:00 a.m. CT
JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- Dow is major mover in early trading
- American Express shares tumble
- Intel shares move to the upside
Investors are taking a breather as they buckle down ahead of the weekend and as oil prices calm down after yesterday’s increase.
In early trading, WTI Crude Oil prices eased to a tad below $89 a barrel. Yesterday they rose 6.17% to $92.29 a barrel, triggered by the escalating warfare in the Middle East. At their peak Thursday, prices were closing in on their resistance level of $94 a barrel, hitting $93.50 before retreating at the close. Crude oil prices are on track for a 10% gain this week, its third higher in a row.
The three major indices were mixed in early trading, with the S&P 500 Index edging slightly into positive territory, while the Nasdaq Composite was floundering just below the flat line. The Dow Jones Industrial Average was up slightly more, by 0.30%. Stocks got walloped yesterday as investors headed to the sidelines as fears over the massive spending on artificial intelligence spiraled and the spiking oil prices sparked after the war in the Middle East took on a new turn with strikes in the Red Sea.
By the time all was done, the three major indices ended sharply lower in the biggest sell-off in a month. Hit hardest was the Nasdaq, giving up 2.15%, with the S&P losing 1.21% and the Dow backtracking by roughly 1%.
The downturn wiped out hundreds of billions of market capitalization on a number of stocks, many of them tech-related stocks. Google parent Alphabet, for example, erased some $300 billion while Tesla scratched out about $200 billion. To give some perspective on the deep dives in market cap overall, those are big bucks and they’re only from two mega-caps, but plenty of wealth has been created in those and other tech stocks in the last year alone. Alphabet shares are up nearly 65% year-over-year, and Tesla shares have advanced 14.5% in the last year and 105% over the last five years. Both are treading moderately higher in early trading.
American Express shares are retreating by 4.2% after the card firm reported earnings that bested Wall Street’s expectations, but fell slightly short on revenues. Investors had hoped for a stronger quarter based on Amex’s affluent consumer base and its pricey fees. The firm raised its profit guidance by about 10% but didn’t lift its sales outlook.
Verizon earnings outpaced estimates but revenues fell short, which the company blamed on customers’ failure to upgrade their smart phones, hitting equipment sales. Shares were hugging the flat line in early trading.
Intel shares were moving forward by 3.7% after the chipmaker delivered better-than-expected profits and revenues and offered upbeat forward guidance. Intel marked a 25% increase in sales, boosted by demand for server central processing units needed for artificial intelligence infrastructure. Intel said it will expand its capital expenditures to $20 billion and indicated it would substantially beef them up next year.
“AI-driven compute continues to strengthen, and to support expected growth this year and next across products and foundry, we are meaningly increasing our investments in equipment, clean room space, and substrates,” Chief Financial Officer Dave Zinsner said in a statement.
Elsewhere, American Airlines shares tumbled 8.4% yesterday after the air carrier reported record second-quarter revenues, driven by a 13% hike in premium travel plus a 26% increase in corporate travel. But profits were weak and American pulled back its 2026 earnings forecast once again to a full-year loss of up to $0.65 a share, impacted by a jaw-dropping 83% hike in fuel costs. In early trading, shares were on the mend, higher by 1.8%.
Happy trading!
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