For the strength investors saw in so many individual stocks, that did not reflect in the market’s overall headline results. The broader indices posted modest gains in the stock market today, but nothing that made it look too robust.
It was noteworthy that the CBOE VIX Index — which measures volatility — fell so much on the day, down 4.3%. There have been sellers in the S&P 500 at and around 3,000, but they are starting to fade. At least for now, and with the VIX so low, it opens the door for higher prices. The Russell led the way today, exploding higher by 1.71%.
That easily trumped the next best-performing U.S. index, the Nasdaq, which finished higher by 0.85% and almost doubled the S&P 500’s return for the day.
Big Tech Drama
Some investors may be surprised at the strength in the Nasdaq, given Tuesday evening’s news that the Justice Department is indeed launching a probe into the potential antitrust behavior of some of the market’s largest players.
The DOJ is looking into “whether and how market-leading online platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers.”
While the DOJ didn’t say who exactly it was investigating, it’s looking at companies in “search, social media, and some retail services online.” To most market participants, that reads as Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG), Facebook (NASDAQ:FB) and Amazon (NASDAQ:AMZN). Apple (NASDAQ:AAPL) could be included in the last one too. We’ll see.
After a few hours into the day, the news didn’t bother many of these names. Facebook jumped more than 1% and Amazon crept higher on the day. Apple finished essentially flat, while GOOGL slid 0.72%. Still, it was nowhere near what investors would have expected on such news, even though it comes as little surprise at this point.
But the drama doesn’t end there. Facebook will report earnings tonight (more further down), while Amazon and Alphabet will report on Thursday.
Trouble in Automotive
Shares of Nissan Motor (OTCMKTS:NSANY) fell more than 2% after the company said reports that its first-quarter profits would fall 90% were “broadly accurate.” It’s not the only one hurting, though.
Almost two weeks ago, Daimler (OTCMKTS:DDAIF) warned about a huge loss in the coming quarter, its fourth profit warning in the past 12 months. On Wednesday, the company reported its results, logging a 1.56 billion euro loss before interest and taxes. It’s clear that R&D costs combined with a not-so-healthy global economy and increasing tariffs are hurting foreign automakers.
Let’s see if Tesla (NASDAQ:TSLA) and Ford (NYSE:F) can change the automotive narrative when they report after the close on Wednesday. GM doesn’t report until August 1st. (Here’s the trade setup in Ford).
M&A in the Stock Market Today
Shares of At Home (NYSE:HOME) jumped more than 15% on Wednesday on takeover talks. We don’t know who the acquirer might be, but Whitney Tilson stoked the buyout rumors by saying in his newsletter:
“The company is still in an active sales process, with at least two named suitors. The remaining private equity sponsor is rumored to be interested in rolling over their stake, and with the current price so far below the IPO price, there are many incentives to get a deal done, with room for a substantial premium.”
We’ve finally got some definitive news with the Sprint (NYSE:S) and T-Mobile (NASDAQ:TMUS) deal. Sprint closed higher by 8.1%, while T-Mobile stock climbed 3.1% on reports that Dish Networks (NASDAQ:DISH) has agreed to buy the duo’s divested assets.
According to the reports, Dish will pay $5 billion for the wireless assets. $1.5 billion is for Boost Mobile, while $3.5 billion is for spectrum, and Dish can’t sell the assets for at least three years. The move should pave the way for the Sprint/T-Mobile deal to go through.
Early Headline Numbers
Facebook popped higher by about 4.5% to $213.50 on a top- and bottom-line beat. However, those gains have slid to “just” 2.75% ahead of the conference call. Ford stock is down 4% after non-GAAP earnings of 28 cents per share missed estimates by 3 cents per share.
PayPal (NASDAQ:PYPL) is down 4.4% after beating on earnings, but missing on revenue expectations. Finally, Xilinx (NASDAQ:XLNX) is down 3% after topping earnings estimates, but reporting in-line revenue results.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell was long AAPL, AMZN, GOOGL.
