Stocks were choppy early on Tuesday, but falling oil prices and a round of well-received corporate earnings helped the Dow Jones Industrial Average and S&P 500 climb higher into the close. The Nasdaq Composite, however, couldn’t sidestep an extended slump in chip stocks.
At the close, the tech-heavy Nasdaq Composite was 0.2% lower at 24,876, pressured by weakness in semiconductor stocks. The iShares Semiconductor ETF (SOXX), which counts Advanced Micro Devices (AMD, -8.2%) and Micron Technology (MU, -8.9%) among its biggest holdings, fell 4.8% and is now down 23% for the month to date.
The continued sell-off is being “driven by concerns about capital return prospects, valuations, circular financing dynamics and Chinese competition,” says José Torres, senior economist at Interactive Brokers.
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But the broader S&P 500 (+0.2% at 7,428) and the Dow Jones Industrial Average (+1.0% to 52,747) advanced thanks in part to falling oil prices. Front-month West Texas Intermediate crude futures fell 4% to settle at $79.26 per barrel.
Strong earnings for several blue chip stocks also helped buoy the benchmarks. Coca-Cola (KO), for one, jumped 5.0% after the soft drink maker beat second-quarter estimates and raised its full-year guidance.
The company credited the FIFA World Cup as one catalyst behind its strong results, seeing Trademark Coca-Cola volume growth of 5% in Q2, its best volume growth since the COVID-19 pandemic.
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Boeing (BA) was another post-earnings winner, rising 4.8% as the aerospace giant’s Q2 revenue came in higher than expected, which offset a wider-than-anticipated per-share loss.
Sherwin-Williams has its best day since 2022 after earnings
“Sales improvement was driven by continued growth investments, new account wins and increased share of wallet,” said Sherwin-Williams CEO Heidi Petz. “We also implemented pricing actions to offset raw material inflation that pressured our gross margin in the quarter.”
In mid-June, Argus Research analyst Alexandra Yates said SHW is “uniquely positioned to benefit from significantly higher demand trends and margin expansion in the long term, this due to its dominant market position.” Yates added that she views the materials stock as a “core long-term holding.”
Corning suffers its biggest one-day drop in six years
Not all earnings reports were well received. Corning (GLW) plunged 12.1%, its biggest one-day drop since March 16, 2020, after the Gorilla Glass maker’s disappointing third-quarter revenue forecast overshadowed a second-quarter beat.
Susquehanna analyst Mehdi Hosseini says the softer-than-expected revenue guidance is due primarily to “weakness outside Optical Communications, particularly within the Solar segment.”
And he maintained a Positive (Buy) rating on the tech stock, saying it “remains well positioned to benefit from growing AI cluster sizes and increasing and width requirements, while also enabling alternative manufacturing approaches for fiber array units (FAUs), which we believe are among the most critical components in the commercialization of optical CPO (transceiver) architectures.”
These transceiver architectures have a variety of use cases, including in data centers, AI chip connections and high-performance computing.
Buckle up
There are plenty more events this week that could spark market volatility. On the economic front, Wall Street is waiting for tomorrow afternoon’s policy announcement from the Federal Reserve.
While it’s unlikely the central bank will raise the federal funds rate this time around, rate hike odds have been rising. According to CME Group FedWatch, futures traders are now pricing in a 32% chance the Fed will increase rates tomorrow, up from 26% one week ago.
We’re reporting live on the July Fed meeting. Follow along with Kiplinger for all the news and updates.
And on the earnings calendar, Wednesday’s after-the-close announcements from Meta Platforms (META, -0.08%) and Microsoft (MSFT, +1.1%) will likely draw a crowd. Apple (AAPL, +0.9%) and Amazon (AMZN, -0.2%) will report on Thursday.
