The Dow Jones Industrial Average rose to a record level on Thursday as Wall Street rotated out of growth stocks following Nvidia's (NASDAQ: NVDA) earnings report. The 30-stock index climbed over 240 points to settle at 41,335.05 for the first time, while the S&P 500 Index closed just below the flatline and the tech-heavy Nasdaq Composite lost 0.23%.
Here's how the market settled on Thursday:
S&P 500 Index (NYSE: SPY): -0.00% or -0.22 points to 5,591.96
Dow Jones Industrial Average (NYSE: DIA): +0.59% or +243.63 points to 41,335.05
Nasdaq Composite Index (NASDAQ: QQQ): -0.23% or -39.60 points to 17,516.43
Nvidia:
Nvidia shares were under pressure on Thursday despite its second-quarter earnings beat, as its large-scale rally (the stock has risen more than 150% year-to-date) seems to lack room for further growth. Still, this was the artificial intelligence darling's foruthstaight quarter of triple-digit revenue growth, rising 122% year-over-year at more than $30 billion for the quarter. The company's third-quarter revenue guidance also topped analyst expectations at $32.5 billion.
"Death, taxes, and NVDA beats on earnings are three things you can bank on," Ryan Detrick, chief market strategist at Carson Group, wrote in a note, quoted by CNBC. "Here's the issue, the size of the beat this time was much smaller than we've been seeing. Even future guidance was raided, but again not by the tune from previous quarters."
CrowdStrike:
CrowdStrike (NASDAQ: CRWD) shares declined on Thursday after the cybersecurity company issued disappointing third-quarter guidance in its first earnings report since the global outage. The company sees current-quarter earnings of $0.80 to $0.81 per share, below analyst estimate of $0.96. CrowdStrike also reduced its full-year outlook to a range of $3.61 to $3.65 per share, compared to its previous guidance of $3.93 to $4.93 per share.
"Working with customers to recover from the July 19th incident, we emerge as an even more resilient and even more customer-obsessed CrowdStrike, continuing to aggressively invest in innovation. Our second quarter demonstrates the resilience of our business and platform - with LogScale Next-Gen SIEM, Identity Protection, and Cloud Security eclipsing $1 billion in combined ending ARR," said CEO George Kurtz in a release. "In response to rising point product complexity and an elevated threat environment, organizations are increasingly focused on consolidating their cybersecurity vendors into a streamlined platform that delivers better security outcomes, which is CrowdStrike Falcon. Our vision and mission of stopping breaches remains unchanged."
In Economic News:
Real GDP rose at a stronger pace than its initial estimate in the second quarter, the Commerce Department reported Thursday, was the growth mostly due to an upward revision in consumer spending. Real gross domestic product increased at an annualized 3% pace for the April-through-June period, up from the previous esitme of 2.8%.
Beneath the headline, consumer spending grew at a 2.9% pace during the quarter.
Other Earnings Reports:
Salesforce (NYSE: CRM) shares rose Thursday after the business software giant reported strong second-quarter results and raised its full-year profit forecast. The company also announced its CFO Amy Weaver will step down, remaining in her position until a successor is appointed; Salesforce said it is considering both internal and external candidates.
For its third quarter, Salesforce expects adjusted earnings of $2.42 to $2.44 per share on $9.31 billion to $9.36 billion in revenue. For its full year, the company calls for adjusted earnings of $10.03 to $10.11 per share on revenue of $37.7 billion to $38 billion, implying growth of 8% to 9%.
CEO Marc Benioff said the following about the company's artificial intelligence offerings, Agentforce, during the company's earnings call with analysts: "This is not copilots. So many customers are disappointed in what they bought from Microsoft, and copilots, because they aren't getting the accuracy and the responses they want. Microsoft has disappointed so many customers with AI. These agents are autonomous, able to act with accuracy, come right out of the box, able to go right out of the platform."
American Eagle (NYSE: AEO) reported mixed second-quarter earnings on Thursday, notably posting nearly 60% profit growth for its Aerie intimates line as costs begin to decline for the apparel retailer. For its current quarter, American Eagle expects comparable sales to grow between 3% to 4%, topping analyst expectations. For its full year, the company sees comparable sales growth of 4%, with total revenue increasing by 2% to 3%.
"In all the years I've been in this business, I probably see the greatest opportunity in history of the company," CEO Jay Schottenstein said during the company's earnings call with analysts on Thursday. "From our standpoint, today, we're a $5 billion business. We think the next few years we could be a $10 billion business. And I would emphasize this: We are committed to making the investment to become that business."
Dollar General (NYSE: DG) shares dropped over 35% on Thursday after the discount retailer reduced its full year sales and profit guidance as its demand wanes. The company now expects fiscal 2024 same-store sales to increase by 1% to 1.6%, lower than its prior outlook for a 2% to 2.7% increase. Full year earnings per share was also lowered to $5.50 to $6.20, compared to its previous forecast of $6.80 to $7.55 per share.
"While we believe the softer sales trends are partially attributable to a core customer who feels financially constrained, we know the importance of controlling what we can control," said CEO Todd Vasos in a statement.
Gap (NYSE: GPS) reported better-than-expected second-quarter results Thursday and raised its full-year profit margin outlook in its earlier release. Notably, comparable sales were highest from its Old Navy brand, which saw 5% growth, while its namesake posted 3% growth. The retailer reiterated its full-year sales guidance to increase slightly from the previous year, and increased its gross margin outlook to about a 200 basis point expansion.
For Friday:
Market participants will turn their attention towards July's personal consumption expenditures index reading alongside August's consumer sentiment reading. Earnings reports include Dell (NYSE: DELL), Lululemon (NASDAQ: LULU) and Ulta Beauty (NASDAQ: ULTA).