The Dow Jones Industrial Average bounced off lows midday Thursday as investors took their cues from resilient Big Tech and positive inflation data. Regional banks got pummeled after PacWest reported a deposit exodus. Google parent Alphabet showed surprising strength, mounting a key price level.
Dow Jones component Walt Disney posted big losses after the latest quarterly report showed little progress by new CEO Bob Iger. DIS shares fell more than 8%.
Disney missed fiscal Q2 2023 earnings estimates by a penny, reporting a profit of 93 cents per share. Revenue met analyst targets at $21.82 billion, but shareholders hit the exits when the Mouse admitted a 2% quarter-over-quarter decline in Disney+ subscriptions, to 157.8 million. Its broader direct-to-consumer services continued to bleed red ink as well, posting a $700 million operating loss despite a 12% surge in revenue.
Cathie Wood's ARK fund holding Robinhood Markets lost altitude midday after a big opening uptick, while former meme-stock Peloton hit an all-time low.
Portfolio manager Wood's stock pick Robinhood Markets rallied nearly 8% in the first hour after beating Q1 2023 top and bottom lines, despite a loss of 57 cents per share. It trimmed gains into the noon hour but is still trading in the green.
Robinheed revenue surged an impressive 47.5% year over year to $441 million, well above estimates for $426 million. HOOD stock holds a 2.61% weighting in Wood's ARK Next Generation Internet ETF, according to Business Insider.
The revenue growth marked a major turnaround for the online broker and former meme stock, surging from year-over-year contraction through most of 2022. This quarter marked the strongest sales growth since the second quarter of 2021.
Mutual funds have taken note, scooping up more HOOD shares in the last three quarters. Ownership stood at 241 funds in Q2 2022, rising to 275 in Q3, 322 in Q4 and 328 in Q1 of this year.
On the downside, once-thriving meme-stock Peloton hit a nearly all-time low after the troubled fitness operator recalled 2 million exercise bikes due to "fall and injury" hazards. Wood sold her Peloton holdings in the third quarter of 2021. PTON shares lost 7.3% into midday.
Alphabet mounted a key price level Wednesday and added 5% to gains in the first half of Thursday's session. This marks the best two-day stretch since November 2022. However, GOOGL stock is still down nearly 22% from November 2021's all-time high.
GOOGL stock has run up the right side of a cup base with a 122.53 buy point after breaking out above tough resistance around 110. Within the larger pattern, Alphabet broke out past the 106.69 buy point of a cup with handle about a month ago. The rally suggests that advertising revenue will improve in coming months despite fears of an economic downturn.
Earnings are forecast to grow 13% this year and 19% in 2024. But Alphabet has reported declining earnings growth in each of the last four quarters, so it's wise to be skeptical.
The S&P Regional Bank ETF turned lower after PacWest reported a 9.5% decline in deposits in the last week. PACW stock plummeted 23%. Western Alliance held up better, losing 0.8%.
The regional bank fund is testing the 18-month low struck a week ago.
Dow Jones By The Numbers
The April producer price index, or PPI, matched Wednesday's benign CPI report, with the 0.2% reading lower than 0.3% expectations. The core also beat estimates at 0.2% while March was revised upward to 0%.
Weekly unemployment claims surged to 264,000, well above 247,000 consensus, while continuing claims hit 1.813 million. This marks the highest unemployment reading since October 2021. Both metrics point to a slowly deteriorating jobs market.
Big Tech resilience continued in the premarket and first hour, buoyed by the PPI report. But blue chips and small caps struggled, with regional banks getting sold and the debt ceiling deadline less than three weeks away.
The Dow Jones Industrial Average lost 0.7% in the first half while the S&P 500 shed 0.2%. The Russell 2000 small-cap index dumped 0.9% and remains vulnerable to a test of 2023 lows. The Nasdaq composite held up better than blue chips, lifting 0.1, as buyers grew defensive in reaction to bank weakness.
Growth stocks matched weak benchmarks, dropping the Innovator IBD 50 ETF 0.5%.
NYSE and Nasdaq volume fell below Wednesday's first-hour levels. European and Asian markets sold off, posting losses of less than 1%.
The 10-year Treasury eased toward weekly support, trading at 3.39%. Bitcoin remained stuck in a trading range of $27,000 to $30,000.
Thursday Market Movers
IBD 50 component Copa Holdings rallied more than 9.5% after a strong quarterly report. CPA stock gapped above the 98.21 buy point. CPA stock also mounted the 2022 peak and traded at a three-year high. The relative strength line lifted to a 52-week high.
Also in the IBD 50, Trade Desk reversed lower after mounting the 66.45 buy point, dumping 4% despite beating Q1 2023 top and bottom lines and raising Q2 revenue guidance. TTD stock fell into the 7% sell zone.
DoubleVerify shook off a 16% two-week decline, surging 6% after an upbeat Q1 report and in-line guidance. The stock still holds a perfect 99 Composite Rating, despite recent downside.
Dillard's bounced 0.5% after blasting through Q1 earnings estimates, beating by $3.91 per share. The company reported an $11.85 profit on a 1.7% year-over-year revenue decline. DDS stock traded just above a seven-month low and has underperformed Dow Jones Industrial Average retail components Home Depot and Walmart throughout 2023.
Follow Alan Farley on Twitter at @msttrader.
