The Dow Jones Industrial Average closed higher despite mixed action, while United Airlines flew after earnings. Tesla CEO Elon Musk revealed a supply issue with Nvidia after TSLA slid following its quarterly report. Netflix remained lower after mixed results.
Meanwhile, a trio of noteworthy stocks are near entries despite the challenging session. Heico, Broadcom and Atlas Energy Solutions are all looking strong and near buy points.
In economic data, weekly jobless claims fell 9,000 to 228,000 in the week ended July 15, Labor Department data showed. The jobs market bucked expectations again, this time vs. views for a rise to 242,000. Ongoing labor market strength increases the chance of more Fed interest hikes.
Treasury yields rose. The 10-year yield jumped 11 basis point to 3.85% while the two-year yield rose 8 basis point to 4.83%. The yield curve remains inverted.
Nasdaq Slammed As Small Caps, IBD 50 Dive
The tech-heavy Nasdaq was mauled, falling 2.1%. IBD Sector Leader Zscaler was a noteworthy loser here, knifing 8.2% lower. It sits barely above the 21-day exponential moving average.
The benchmark S&P 500 held up a bit better, dipping 0.7%. Discover Financial was obliterated here, cratering 15.9% after missing earnings expectations and disclosing some issues.
The S&P 500 sectors were mixed. Health and utilities, which are more defensive, were the top performers. Communication services and consumer discretionary lagged the most in the stock market today.
Small caps were spanked, with the Russell 2000 falling 0.9%. But growth stocks were given the worst pasting by the bears, with the Innovator IBD 50 ETF diving 2.8%.
Dow Jones Today: Microsoft Stock Lags As JNJ Jumps
The Dow Jones Industrial Average turned in a ninth up day in a row, a noteworthy achievement. The last time it had such a run was 2017. It closed up 164 points, or 0.5%.
Johnson & Johnson was a top performer in the Dow, surging 6.1%. JNJ stock was boosted after the company topped Q2 earnings and revenue expectations. J&J also lifted guidance.
AI stock Microsoft was among the worst performers on the Dow Jones today as it fell 2.3%. Despite this, it remains clear of its short-term moving averages, according to MarketSmith analysis.
Intel and Salesforce turned in even more torrid sessions, falling 3.2% and 2.7% respectively.
Tesla Earnings Shock Stock; Musk Shares Supply Issue
Tesla stock was one of the worst performers despite the carmaker beating Wall Street views on the top and bottom lines. TSLA stock ended the session down 9.7%, slipping just below its 21-day exponential moving average in the process.
Earnings per share popped 20% to 91 cents, better than the expected 9% rise to 83 cents, according to Zacks Investment Research. But operating profit missed views.
Revenue jumped 47% to $24.93 billion, also above analyst expectations. However, margins narrowed amid price cuts. Gross margin fell to 18.2% from 19.3% in Q1 and 25% a year earlier.
Tesla CEO Elon Musk said "short-term variances in gross margins" will "look silly" when autonomy vastly expands Tesla's profitability. This message did not immediately resonate with investors.
He later took to Twitter to air his frustrations over troubles getting enough Nvidia AI chips: "Unfortunately, they cannot supply us with even a small fraction of how much compute we need!" he said.
Nvidia chips are important to improving Tesla's self-driving software. Thankfully, Tesla has also been developing its own Dojo supercomputing platform to help drive the project forward.
Netflix Earnings Underwhelm, Stock Dives
Netflix earnings underwhelmed, causing the streaming giant to perform poorly in the stock market today. It beat earnings estimates but failed to meet analyst views on revenue. It earned $3.29 a share on sales of $8.19 billion in the June quarter.
As the company cracks down on password sharing, Netflix added 5.89 million subscribers in the June quarter. That was well above views for 1.81 million subscriber additions. Netflix ended the second quarter with 238.39 million subscribers worldwide.
Morgan Stanley analyst Benjamin Swinburne said in a note to clients that the firm's results show that its efforts to convert account "borrowers" into paying customers has been a success.
But investors still seem concerned over whether the firm can continue to add to its subscriber base or if this was a one-off boost. The stock closed slightly off lows for the day but still finished with a loss of 8.4%.
United Airlines Earnings Impress, Stock Takes Off
United Airlines stock was higher after the company posted impressive quarterly results late Wednesday. United posted EPS of $5.03, a 252% leap over the prior year's results and better than Wall Street views. Revenue also came in above targets, with a 17% lift to $14.18 billion.
United also hiked its full-year adjusted EPS estimates to $11-$12 vs. previous guidance of $10-$12. This was above analyst expectations. Deutsche Bank held its buy rating on the stock and lifted its price target to 75 from 60.
The Leaderboard Watchlist name is now trading near the top of its buy zone from a 54.06 entry. It pared some gains but ended the day up 3.2%.
In contrast, American Airlines fell 6.2% despite reporting better-than-expected Q2 earnings early Thursday.
Outside Dow Jones: 3 Stocks Dig In Near Buy Points
Even on challenging days it's a good idea to look for worthy stocks for one's watchlist. Here are a few ideas.
Aircraft component supplier Heico moved closer to a cup-with-handle entry of 177.91. This is a first-stage base, a positive.
Overall performance is very strong, netting the stock an IBD Composite Rating of 91 out of 99.
Broadcom is also one to watch as it trades near a second-stage consolidation buy point of 921.78. The stock is in the top 4% of stocks in terms of price performance over the past 12 months. Earnings are also a key strength for the chip play, with its EPS Rating a mighty 95.
IPO stock Atlas Energy Solutions jumped toward a consolidation entry of 18.95, rising 3.8%. The oil and gas field services stock has seen its relative strength line spike sharply upward in the past few sessions.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
