The stock market rally advanced in a holiday-shortened week. The Nasdaq and S&P 500 hit fresh highs, though they pulled back as Nvidia and other hot AI stocks retreated. The Dow Jones had a solid gain, regaining its 50-day line. The Russell 2000 rose, but is still below that key level. Treasury yields rose but are still near recent lows. Crude oil prices rebounded.
Stock Market Rally Advances
The stock market saw gains in the key indexes, though the rally remains uneven. The Dow Jones had the strongest week, retaking the 50-day line. The Nasdaq and S&P 500 pared weekly gains, reversing from record highs as Nvidia and other hot AI stocks slumped. Treasury yields rose but still near multimonth lows. Crude oil futures bounced.
Economic Data Weaken
The latest batch of economic data showed retail sales turning more sluggish, housing starts plunging and the four-week average of new jobless claims hitting an eight-month high. That's making the case for a Fed rate cut. Retail sales rose just 0.1% in May, while April sales were revised to a -0.2% monthly change from the initial flat reading. Excluding autos, sales have now fallen 0.1% the past two months. Overall sales rose 2.3% from a year ago, slowing from April's downwardly revised 2.7% pace. Housing starts fell 5.5% on the month to a 1.277 million unit annual rate, which was down 19% from a year ago. Single-family starts were down a modest 1.7% from a year ago, but multifamily starts have plunged 51.7%. Jobless claims slipped by 5,000 to 238,000 in the week through June 15, but the four-week average jumped 5,500 to 237,750.
On the upside, industrial production rose a better-than-expected 0.9%, with output up 0.3% among manufacturers and 1.6% among utilities.
Homebuilders Beat Views
KB Home and Lennar both reported better-than-expected second-quarter earnings. Lennar earnings per share grew 15% while revenue climbed 9% to $8.8 billion. Homes delivered climbed 15% to 19,690. But the average price fell 5% vs. a year earlier amid increased incentives, with management guiding to slightly lower prices in Q3 vs. Q2. KB Home's EPS rose 11% while revenue fell 3% to $1.71 billion and deliveries dipped 4% to 3,523. However, prices rose slightly with KB Home raising full-year revenue and average price targets. KBH stock rose modestly rom the 50-day line while Lennar fell solidly, losing sight of the 50-day. Meanwhile, housing economic data weakened.
Tesla China Sales Lagging
Tesla China registrations fell in the latest week, currently down 9% in the quarter vs. Q2 2023. Meanwhile, the Model 3 Long Range variant is now eligible for the $7,500 credit. The SEC probe in Tesla CEO Elon Musk's tardy and inaccurate disclosures of his Twitter stock holdings in April 2022 could spur regulators to ask a court to bar him from serving as an officer or director of a public company. Tesla stock rose modestly.
In Brief
Nurix Therapeutics said Monday more than 69% of patients with relapsed or refractory forms of chronic lymphocytic leukemia responded to its treatment. Nurix tested the oral drug in patients who'd previously undergone two to 14 prior treatments. Nurix stock, after slumping Monday, surged to a two-year high for the week.
Kroger reported a 5% EPS decline in its fiscal Q1, the first drop in 12 quarters but less than feared. Revenue was fractionally higher at $45.2 billion. The grocery giant maintained guidance. Shares reversed lower.
Dell Technologies and Super Micro Computer will provide server racks for a supercomputer owned by Elon Musk's artificial intelligence startup xAI. The supercomputer will use Nvidia AI processors.
Sarepta Therapeutics skyrocketed after the FDA gave full approval to its Duchenne muscular dystrophy gene therapy for all patients age 4 and older. Last year, the FDA gave an accelerated approval for Duchenne patients aged 4-5.
