The Dow Jones Industrial Average rallied as Uber Technologies and Palantir Technologies surged on earnings news. Magnificent Seven stock Nvidia gained, but Apple lagged. Famed investor Cathie Wood snapped up a stock well off recent highs.
The Dow Jones industrials rose after the previous session's painful drawdown. The much-watched index closed the day up 294 points, or 0.8%. It failed to retake the 50-day moving average after at one point being up as much as 1.9% earlier in the session.
The tech-heavy Nasdaq composite surged 1%, as did the S&P 500, although both had been up more than 2% at highs for the day.
Volume was lower on the New York Stock Exchange and Nasdaq compared with Monday, according to early data. Breadth was decent, with advancers outnumbering decliners about 4-1 on the NYSE and more than 2-1 on the Nasdaq.
Stock Market Today: Growth Stocks Excel
Meanwhile, the S&P 500 sectors were all in positive territory. Real estate and financials were strongest, while energy and consumer staples made the slimmest gains.
Bears have mauled small caps in recent sessions, but those stocks got some relief Tuesday. The Russell 2000 ended near session highs as it gained 1.2%.
Growth stocks fared even better. The Innovator IBD 50 exchange traded fund cooled somewhat late but still turned in a gain of 2.5%.
Magnificent Seven: Google Ruling Hits Apple
The so-called Magnificent Seven group of stocks was anything but magnificent on Monday. They collectively lost $653 billion in market capitalization, according to Dow Jones data, the largest single-day loss as a collective.
A majority of this group of premium stocks climbed on the stock market today. Nvidia was benefiting from strength in chips as it rose 3.8%. But the Leaderboard stock remains around 12% below its 50-day moving average.
Microsoft and Facebook parent Meta Platforms also gained, rising 1.1% and 3.9%, respectively. Amazon.com rose 0.6%. Tesla popped 0.9%.
Google parent Alphabet and Apple struggled after U.S. District Judge Amit Mehta ruled Monday that Alphabet's Google illegally maintains a search monopoly. Alphabet ended 0.6% lower while Apple lost 1%.
According to Morgan Stanley, the ruling is "likely to impact the $20B+ Apple collects annually from (Google), though there was no clarity on potential future remedies/timeline." It remains to be seen if the ruling will hold however, because Google plans to launch an appeal.
Also hurting Apple was the fallout from the weekend's news that Berkshire Hathaway, which is led by Warren Buffett, has sliced its stake in the firm roughly in half.
Uber Stocks Revs Up After Beat
Ride-share stock Uber Technologies surged to close 10.9% higher on better-than-expected results for the second quarter.
EPS soared 161% to 47 cents, well clear of views for 31 cents. Revenue growth of 16% to $10.7 billion also came in above expectations. Uber guided for third-quarter adjusted earnings of $1.58 billion to $1.68 billion, which was higher than the average estimate of $1.62 billion at the midpoint.
But MarketSurge analysis shows it remains stuck below its 200-day and 50-day moving averages.
Uber stock holds an IBD Composite Rating of 42 out of 99, reflecting poor overall performance. Its EPS Rating of 24 out of 99 is especially concerning. Shares remain down nearly 4% over the past four weeks and hold a gain of just over 5% for the year so far.
3:26 p.m. ET
Treasury Yields Rise, VIX Falls
Yields were higher across the board as some risk appetite was restored following Monday's negative action. The 10-year Treasury note jumped 11 basis points to 3.89% while the two-year popped 10 basis points to 3.98%.
In contrast, the Cboe Volatility Index, which is seen as a psychological indicator of fear in the market, fell Tuesday. The gauge, which serves as a measure of the S&P 500's future volatility, dived 33% heading into the close.
The VIX ended Monday up 64.9% and at one point had risen as much as 181% – the biggest intraday increase in history. It was also the highest level since the 2020 Covid bear market.
2:00 p.m. ET
Stock Market Gets This Band-Aid
A name that may not be associated with dramatic growth is Band-Aid maker Kenvue.
However, it was among the top performers on the stock market today as it surged nearly 13% after it delivered better-than-expected results.
It gapped through all of its moving averages after earnings per share grew 7% to 32 cents as revenue held steady at $4 billion. This was better than Wall Street expected. The firm's after-tax margin also expanded.
While the stock's move was impressive, the 200-day moving average remains above the 50-day line, a bearish look. KVUE had also been trending lower on its weekly chart, so it remains to be seen whether this jump will hold.
In addition to Band-Aid, Kenvue owns brands such as Tylenol and Benadryl. It was spun off from Johnson & Johnson last year.
12:28 p.m. ET
Stock Market Today: These Issues Show Strength
It is a good idea to seek out stocks that are showing relative strength amid the recent negative stock market action. Here are a few equities that saw their relative strength lines reach fresh highs today.
Hamilton Beach Brands is in a buy zone after clearing a cup base entry of 25.24. The RS line climbed to a fresh high. It reported strong earnings last week, but it's thinly traded.
It boasts an EPS Rating of 80 out of 99 and is in the top 3% of issue in terms of price performance over the past 12 months.
Castle Biosciences also saw its relative strength line reach a fresh high. The medical services play has cleared a consolidation entry of 25.91. This is a first stage pattern, a bonus.
The firm bested earnings views Monday. It swung from a loss of 70 cents a share to earnings of 31 cents a share. Revenue climbed 74% to $87 million.
Given the current stock market conditions, it is not advisable to make any new purchases at the moment. Instead, adding to one's watchlist is a more prudent approach.
10:55 a.m. ET
Dow Jones Today: Caterpillar Wiggles Higher After Earnings
There was mixed action among Dow Jones components, but a firm majority of them were higher.
Caterpillar proved the best performer, wiggling more than 4% higher after the industrial equipment titan beat views on earnings.
Earnings rose 8% to $5.99 a share even as revenue slipped 4% to $16.69 billion. Both were better than analyst expectations.
Caterpillar is rebounding from the 200-day moving average but remains below the 50-day line.
Other components performing well included Dow Inc. and American Express, which each rose more than 3%.
Stock Market Today: Palantir Stock Surges
Much-watched artificial intelligence stock Palantir Technologies powered higher on the stock market today. It soared after the firm delivered second-quarter earnings and revenue that bested Wall Street targets.
Earnings popped 80% to 9 cents a share as revenue jumped 27% to $678 million. The Denver-based company also raised its 2024 revenue guidance by about 2% to between $2.742 billion and $2.75 billion.
Chief Executive Alex Carp said in a letter to shareholders that there is an "unrelenting wave of demand from customers for artificial-intelligence systems that go beyond the merely performative and academic."
Nevertheless, there was some skepticism from analysts about the firm.
"While the Q2 results are encouraging, we continue to believe PLTR needs to consistently demonstrate stronger execution and growth in order to justify a notably higher valuation," Mizuho analyst Gregg Moskowitz said in a note to clients.
Cathie Wood Adds To Palantir, Buys Plunging Stock
Warren Buffett once said that investors should "be fearful when others are greedy and to be greedy only when others are fearful."
This approach paid off for ARK Invest Chief Executive Cathie Wood, who used Monday's painful stock market plunge as an opportunity to add to the ARK Innovation Fund's holdings. One move that paid off immediately was adding 33,492 shares in Palantir ahead of earnings. Buying ahead of a report is a risky strategy which goes against IBD investing principles.
She also took the opportunity to add more than 23,000 shares in 10X Genomics. This is also a risky move, though it may also offer a sharp upside, given the stock had fallen more than 68% from its Dec. 20 high of 57.90. Another issue is the firm has yet to turn a profit.
The fund also bought more than 30,000 Roku shares for the ARK Innovation Fund. Roku stock is currently stuck below its 50-day and 200-day moving averages, MarketSurge analysis shows. On the stock market today, shares sit around 52% off their recent high of 108.84 reached Dec. 14.
Other moves made by the swashbuckling Wood included purchases of Amazon.com, Coinbase Global, Robinhood Markets and Advanced Micro Devices
This was balanced out by some sales, which included trims of Teladoc Health, Block, UiPath and Zoom Video Communications
Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.
