Market Recap: June 29, 2023 - Robust Q1 Growth, Bank Stocks Surge, and More Noteworthy Events

Greetings, traders! As we approach the end of the day, we are thrilled to have you here for an enthralling recap of the significant events that have left their imprint on the financial markets today.

US Economy Surpasses Expectations with 2% Growth in Q1 📈💪

The first quarter of the year saw a robust 2% annualized growth in the U.S. economy, significantly outperforming the previous estimate of 1.3% and the Dow Jones consensus forecast of 1.4%. The revised figure was driven by an increase in consumer spending and an upward revision in inventories. Consumer spending surged by 4.2%, marking the highest quarterly pace since Q2 2021. This surge was largely facilitated by an 8.7% increase in the Social Security cost-of-living adjustment. Furthermore, there was a 7.8% growth in exports, marking a strong recovery from a 3.7% decline in the fourth quarter of 2022. The stronger-than-expected economic growth has reduced expectations of an imminent recession. Inflation also showed signs of improvement, with core PCE prices, which exclude food and energy, rising 4.9%—a downward revision of 0.1 percentage points.

Indexes 📈📊

The indices were mostly up with the Dow Jones Industrial Average experiencing an upward surge driven by significant gains in prominent bank stocks following their successful completion of the Federal Reserve's annual stress test. Additionally, Wall Street's concerns regarding a potential recession were eased to some extent with an improved GDP figure. Now, let's explore how the market performed today...

The S&P 500 (SPX) was up by +0.45% coming to a conclusion at 4,396

The Nasdaq Composite (IXIC) fell by -0.003% to settle at 13,591

The Dow Jones Industrial Average (DJI) escalated by +0.80% ending the day at 34,122

The Russell 2000 (RUT) increased by +1.23% to finish at 1,881

The Nasdaq-100 (NDX) dropped by -0.16% to conclude at 14,939

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Bank Stocks Surge After Federal Reserve Stress Test 🏦💰

Bank stocks soared following the release of the Federal Reserve's annual stress tests. The top performers included Wells Fargo (WFC), Goldman Sachs (GS), JPMorgan (JPM), and Bank of America (BAC), all of which saw more than a 2% increase. This performance could also lead to a potential rise in dividends, as Barclays analyst Jason Goldberg expects several banks to announce increased dividend payouts following the release of the stress test results.

WFC:

42.45 ▲ +1.83 (+4.51%) Today

42.39 ▼ -0.06 (-0.14%) After Hours

GS:

323.24 ▲ +9.58 (+3.05%) Today

323.65 ▲ +0.56 (+0.17%) After Hours

JPM:

143.48 ▲ +4.89 (+3.53%) Today

143.48 ▲ +0.05 (+0.035%) After Hours

BAC:

28.66 ▲ +0.59 (+2.10%) Today

28.63 ▼ -0.029 (-0.10%) After Hours

Eli Lilly's Acquisition of Sigilon Therapeutics Boosts Share Prices and Strengthens Commitment to Disease Treatments 💪🔬

Pharmaceutical company Eli Lilly's (LLY) shares rose by more than 1% after announcing its acquisition of Sigilon Therapeutics. Likewise, Sigilon Therapeutics' (SGTX) shares were up nearly 500%. The deal is potentially worth up to $309.6 million, with an upfront payment of $14.92 per share and an additional $111.64 per share contingent upon reaching certain regulatory and developmental milestones. This acquisition could further Eli Lilly's commitment to developing treatments for acute and chronic diseases such as diabetes. Earlier this week, Eli Lilly announced successful trials of its experimental diabetes and obesity drug, Retartrutide, potentially solidifying its position in the pharmaceutical industry.

LLY:

464.47 ▲ +5.77 (+1.26%) Today

465.09 ▲ +0.60 (+0.13%) After Hours

SGTX:

21.15 ▲ +17.22 (+438.17%) Today

21.20 ▲ +0.05 (+0.24%) After Hours

Polestar Strikes Deal with Tesla, Enabling Use of Supercharger Network in North America 🤝🔌

Swedish electric vehicle maker Polestar (PSNY) has announced a deal with Tesla (TSLA) enabling Polestar vehicle owners to use Tesla's Supercharger network across North America from 2024. New Polestar vehicles sold in North America will also feature the Tesla-designed North American Charging Standard (NACS) plug from 2025. Polestar follows in the footsteps of Ford (F), General Motors (GM), Rivian (RIVN), and Volvo Cars (VLVLY), who have also recently announced similar agreements with Tesla.

PSNY:

3.85 ▲ +0.09 (+2.39%) Today

3.84 ▼ -0.01 (-0.26%) After Hours

TSLA:

257.50 ▲ +1.26 (+0.49%) Today

257.08 ▼ -0.42 (-0.16%) After Hours

Virgin Galactic Shares Drop Despite Successful Spaceflight Mission 📉🛰️

Virgin Galactic (SPCE), the space tourism pioneer, despite a successful launch of its first commercial spaceflight mission, Galactic 01, which carried three Italian Air Force pilots to the edge of space, saw a surprising 10% drop in its shares. Even as the company confirmed an upcoming mission, Galactic 02, in August and plans to begin launching monthly tourism flights, its shares remained in freefall. Despite the expected revenue from these missions, Virgin Galactic's operating costs for the year could still overshadow its income, leading to a significant fiscal year loss.

SPCE:

4.22 ▼ -0.52 (-10.87%) Today

4.19 ▼ -0.04 (-0.95%) After Hours

Exxon Mobil Partners with Tetra Technologies for Lithium Exploration in Arkansas 🏭🌱

Exxon Mobil Corp (XOM) has entered a partnership with Tetra Technologies (TTI) to exploit over 6,100 lithium-rich acres in Arkansas, signaling Exxon's continuing foray into electric vehicle battery metals. This agreement follows Tetra's recent deal with Saltwerx, an Exxon-owned subsidiary, to develop lithium and bromine-rich brine deposits in Arkansas. The financial details and timelines for this development are yet to be disclosed. The partnership supports Tetra's bromine production needs while granting Exxon access to further lithium resources in the U.S., aiding in the scale-up of the domestic EV supply chain. Both companies anticipate submitting a revised application to develop the brine deposits later this year.

XOM:

106.70 ▲ +1.30 (+1.24%) Today

106.79 ▲ +0.09 (+0.084%) After Hours

TTI:

3.36 ▲ +0.22 (+7.01%) Today

There has been no movement in the stock price after hours

Visa to Acquire Pismo for $1 Billion 💳🤝

Visa (V) has agreed to acquire Pismo, a Brazilian cloud-based payment and banking platform provider, for $1 billion. This acquisition will enable Visa to deliver core banking and issuer processing capabilities for debit, prepaid, credit, and commercial cards via cloud-native APIs. It also allows Visa to support emerging payment rails, such as Brazil's Pix, for its financial institution clients. Pismo will retain its existing management team and the transaction is expected to close by the end of 2023.

V:

234.33 ▲ +6.37 (+2.79%) Today

234.25 ▼ -0.07 (-0.03%) After Hours

Oracle Invests Billions in Nvidia Chips 💰💻

Oracle (ORCL) is investing billions of dollars in Nvidia (NVDA) chips as it seeks to expand its cloud computing services to capitalize on the artificial intelligence boom. Oracle's cloud division is actively striving to increase its market share in the face of formidable competitors such as Amazon Web Services (AMZN) and Microsoft (MSFT). Oracle is also investing in central processor units (CPUs) from Ampere Computing, and Advanced Micro Device Inc (AMD). Oracle is working to build faster networks that can handle the large data volumes required for AI systems and continues to purchase graphics processing units (GPUs) for AI workloads. In June, Oracle announced a collaboration with AI startup Cohere to offer AI software running on supercomputers inside Oracle's data centers equipped with Nvidia chips.

ORCL:

117.17 ▲ +1.24 (+1.06%) Today

117.81 ▲ +0.03 (+0.025%) After Hours

NVDA:

408.22 ▼ -2.95 (-0.72%) Today

407.69 ▼ -0.54 (-0.13%) After Hours

Southwest Airlines Pilots' Union Calls for Release from Federal Mediation in Contract Negotiations ✈️👨‍✈️

Southwest Airlines (LUV) pilots' union has called for a release from federal mediation as they struggle to negotiate a new labor contract, potentially setting the stage for a strike. After more than three years of contentious negotiations, the union stated that they haven't been able to reach a meaningful agreement on key issues such as pay, work rules, and quality-of-life improvements. Despite the breakdown in talks, a strike is not immediately on the horizon, thanks to procedures in U.S. labor law. Southwest Airlines, on its part, has voiced disagreement with the need to be released from mediation, insisting that an industry-leading compensation proposal has been made and that mediation would drive the two parties toward a mutually beneficial agreement.

LUV:

35.95 ▲ +0.48 (+1.35%) Today

106.79 ▲ +0.09 (+0.084%) After Hours

Insilico Medicine's AI-Generated Drug Enters Human Clinical Trials, Marking a Milestone in AI-driven Drug Discovery 🧬🤖

In the field of artificial intelligence (AI), there has been a significant development as the first fully AI-generated drug, developed by Insilico Medicine, has entered human clinical trials. This drug is a potential treatment for idiopathic pulmonary fibrosis (IPF), a chronic lung disease. This milestone showcases the immense potential of AI in transforming drug discovery and design. Moreover, Insilico Medicine has already applied AI in the development of other drugs, including a COVID-19 drug and a cancer drug, both of which are in the clinical stage. The firm's CEO, Alex Zhavoronkov, is optimistic about the impact of AI technology in addressing complex healthcare challenges.

Bed Bath & Beyond Auctions Store Leases, Burlington Stores Secures 50 Locations in Expansion Move 🛒🏬

In the world of retail, Bed Bath & Beyond has successfully auctioned off 109 of its store leases as part of its bankruptcy proceedings. Burlington Stores (BURL) emerged as the biggest beneficiary, securing 50 former Bed Bath & Beyond locations for a total of $13.53 million. This move allows Burlington to rapidly expand its footprint at a time when quality commercial real estate is in short supply. The other winners of the auction include retailers like Michael’s, Haverty, Macy’s, and Barnes & Noble. With the lease auctions earning Bed Bath & Beyond a total of $24.41 million, the company can start paying off its creditors, marking a significant step in its bankruptcy proceedings.

BURL:

153.60 ▲ +2.46 (+1.63%) Today

154.95 ▲ +1.35 (+0.88%) After Hours

After Hour Movers 🌑👟

Nike's (NKE) fourth-quarter revenue surpassed Wall Street's expectations, reaching $12.83 billion, a 5% increase from last year's $12.23 billion. This marks the seventh straight quarter the company beat revenue estimates. However, the sneaker giant's profits fell short, with a net income of $1.03 billion, or 66 cents per share, compared to $1.44 billion, or 90 cents a share, a year earlier. This came as a result of lower margins, falling 1.4 percentage points due to higher input costs, logistics expenses, and unfavorable currency exchange rates. Inventory remained flat at $8.5 billion compared to the prior-year period. For the full fiscal year, Nike's revenue increased by 10%, reaching $51.2 billion, but net income dropped by 16% to $5.1 billion. Despite this, sales from Nike's Direct channel rose 15% year-over-year to $5.5 billion, and sales in China saw a 16% increase to $1.81 billion. However, sales from the Converse brand fell 1% during the quarter to $586 million, below estimates.

NKE:

113.40 ▲ +0.37 (+0.33%) Today

108.56 ▼ -4.81 (-4.24%) After Hours

Progress Software (PRGS) reported fiscal second-quarter earnings of $12.1 million, or 27 cents per share, exceeding Wall Street expectations. Adjusted earnings, excluding one-time gains and costs, were $1.06 per share. The business software maker also surpassed revenue forecasts, with $178.3 million in revenue and adjusted revenue of $179.2 million. For the current quarter, Progress Software expects earnings per share between 98 cents and $1.02, while analysts had anticipated $1.10 per share. The company projects revenue in the range of $172 million to $176 million for the fiscal third quarter, higher than the expected $165.5 million. Progress Software anticipates full-year earnings of $4.16 to $4.24 per share and revenue between $690 million and $698 million.

PRGS:

54.88 ▲ +1.28 (+2.39%) Today

55.11 ▲ +0.23 (+0.42%) After Hours

SMART Global (SGH) reported better-than-expected results in the Q3 FY2023 quarter, with revenue of $383.3 million, beating analyst estimates by 2.21%. The company expects next quarter's revenue to be around $375 million, in line with expectations. SMART incurred a GAAP loss of $24.1 million, a decline from its profit of $24.5 million in the same quarter last year. Non-GAAP gross margin increased to 28.0%, and non-GAAP earnings reached $0.66 per share. The company's CEO, Mark Adams, highlighted the strong results and the company's transformation to a high-performance, high-availability enterprise solutions company. While the semiconductor industry is cyclical, SMART is well-positioned to benefit from emerging trends in AI, machine learning, and data analytics. SMART's inventory levels improved, and the company has a strong balance sheet with a record cash position of $401 million.

SGH:

26.63 ▲ +0.32 (+1.22%) Today

27.45 ▲ +0.82 (+3.08%) After Hours

Accolade (ACCD), reported a loss of $38.4 million in its fiscal first quarter, equivalent to a loss of 52 cents per share. However, the results exceeded Wall Street expectations, with analysts predicting a loss of 64 cents per share. The company's revenue for the period was $93.2 million, surpassing Street forecasts, which had anticipated $90.4 million. Accolade projects revenue in the range of $93 million to $95 million for the current quarter and full-year revenue between $410 million and $414 million.

ACCD:

12.64 ▲ +0.03 (+0.24%) Today

14.75 ▲ +2.11 (+16.69%) After Hours

Sectors 💵📡

Out of the 11 sectors, 8 closed in positive territory today, with Financials leading the way with a gain of +1.67%, while Communication Services saw a decline of -0.63%.

Conclusion 👋

To wrap it up, the first quarter of the year has shown robust economic growth in the United States, surpassing previous estimates and market expectations. The 2% annualized growth was driven by increased consumer spending and a strong rebound in exports. This positive economic performance has alleviated concerns of an imminent recession and has also led to improvements in inflation, with core PCE prices rising slightly. In the stock market, bank stocks experienced significant gains following the successful completion of the Federal Reserve's stress tests, which could potentially lead to increased dividend payouts. Microsoft's proposed acquisition of Activision Blizzard is under scrutiny due to antitrust concerns, while Eli Lilly's acquisition of Sigilon Therapeutics and Polestar's deal with Tesla has shown notable developments in the pharmaceutical and electric vehicle industries, respectively. However, companies like Virgin Galactic and Southwest Airlines face challenges despite positive developments in their operations. Additionally, there have been significant advancements in the fields of artificial intelligence, retail, and technology, with the first fully AI-generated drug entering human clinical trials, Bed Bath & Beyond auctioning off store leases, and Oracle investing in Nvidia chips. Overall, the first quarter has brought both positive and challenging developments across various sectors of the economy.

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