Stock market today: S&P 500 rises for 4th day, Disney sinks 9% after earnings

US stocks finished close to where they started Tuesday but largely built on a string of gains amid growing hopes for rate cuts later this year. Meanwhile, investors soured on Disney's (DIS) earnings, sending the stock down sharply.

The Dow Jones Industrial Average (^DJI) rose just under 0.1%, or about 30 points, while the S&P 500 (^GSPC) ticked up 0.1% for its fourth consecutive positive session. The tech-heavy Nasdaq Composite (^IXIC) edged down about 0.1%.

Prior to the sideways movement, stocks had gained significant ground as confidence grew that a "Goldilocks" jobs report will give the Federal Reserve reason to ease up on historically high rates — a belief bolstered by comments from policymakers on Monday.

But in remarks at the Milken Institute Global Conference Tuesday, Minneapolis Fed chief Neel Kashkari said it's likely that the Federal Reserve will keep rates steady for an extended period of time.

In the corporate world, results from Disney took center stage as the media giant delivered its first quarterly earnings since winning its proxy fight with activist Nelson Peltz last month. The company's earnings beat Wall Street estimates as a key part of its direct-to-consumer streaming business — which includes Hulu and Disney+ — turned its first profit. But shares tumbled over 9% after the company said it expects weaker results in that segment for the current quarter.

Corporate earnings continue to hold sway even as the Fed's interest rate policy decisions dominate headlines. Over 80% of S&P 500 have posted results in the best season for earnings in almost two years, which has seen companies prosper despite "sticky" inflation and higher-for-longer interest rates.

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Stocks close largely unchanged

Tue, May 7, 2024 at 4:04 p.m. EDT, Hamza Shaban

The benchmark S&P 500 (^GSPC) index notched its fourth straight win as US stocks finished largely unchanged Tuesday. Investors pulled back from Disney (DIS) after the media giant issued a softer outlook for its streaming business. But Wall Street also maintained optimism that an eventual interest rate cut will arrive, perhaps as early as this summer.

The Dow Jones Industrial Average (^DJI) rose just under 0.1% or about 30 points, while the S&P 500 ticked up 0.1%. the tech-heavy Nasdaq Composite (^IXIC) edged down about 0.1%.

Peloton surges 16% after a report on a potential private equity buyout

Tue, May 7, 2024 at 3:30 p.m. EDT, Hamza Shaban

Peloton (PTON) shares are surging following a report that private equity firms are considering a buyout of the exercise equipment maker, which has been struggling to turn itself around after several years of losses, leadership changes, and bouts of layoffs.

The once fast-growing exercise company was a winner in the stay-at-home economy of the early phase of the pandemic. But as gyms and offices opened back up, many customers abandoned their make-shift home gyms and quit their memberships with Peloton.

The company has had talks with at least one firm as it considers going private, CNBC reported Tuesday, although the firm’s current level of interest in buying Peloton is unclear. Other private equity firms have considered the company as an acquisition target, but it’s not known if they have held formal discussions.

Peloton reported earnings last week, detailing uncertain revenue prospects, low subscriber growth, and weakening demand. Shares are down over 30% year to-date.

There is no guarantee a deal will be made, according to the report, and Peloton could remain a public company.

Fed’s Kashkari: Rates will stay high for 'extended period' and can't rule out a hike

Tue, May 7, 2024 at 2:45 p.m. EDT, Hamza Shaban

Until central bank officials are certain inflation is subsiding on track to reach their target, it's likely the Fed will keep interest rates elevated "for an extended period of time,” said Minneapolis Fed chief Neel Kashkari.

"I think it’s much more likely we would just sit here for longer than we expect or the public expects right now until we see what effect our monetary policy is having," Kashkari said at the Milken Institute conference in Los Angeles.

Kashkari also didn't rule out another rate hike, Yahoo Finance's Jennifer Schonberger reports.

If the Fed were convinced that inflation was entrenched at 3% and rates needed to be raised higher, it is possible it would take such an action.

"That's not my most likely scenario, but I also can't rule it out," he said, adding that "I think the bar for us raising is quite high but it's not infinite. There is a limit when we say, 'OK, we need to do more.'"

Stocks trending in afternoon trading

Tue, May 7, 2024 at 2:00 p.m. EDT, Hamza Shaban

Here are some of the stocks leading Yahoo Finance’s trending tickers page during afternoon trading on Tuesday.

Palantir (PLTR): Shares of the data analytics company tumbled more than 13% Tuesday, following the company's latest earnings release. An annual revenue forecast failed to impress investors as Palantir stock had already climbed 15% in the past five days, but revenue guidance came in roughly in line with the $2.68 billion analysts had expected.

Peloton (PTON): Shares of the long-troubled exercise equipment maker are surging Tuesday afternoon following a new report detailing multiple private equity firms in competition to buy out the home fitness company. Last week's earnings showed a continuing struggle to turn a profit and came with the announcement of the CEO departing. The stock is up 12%.

Disney (DIS): Shares of the entertainment giant fell 8% Tuesday morning after investors digested an earnings report that revealed a surprise profit for an important part of its streaming business but also showed the company expects weaker results in that segment for the current quarter.

Celsius (CELH): The global beverage maker's shares fell more than 2% following an earnings report that saw record sales for the quarter but still missed Wall Street expectations. First quarter revenue rose 37% to $356 million, but estimates compiled by Bloomberg had expected an average of $391 million.

TikTok, ByteDance sue to block US ban

Tue, May 7, 2024 at 1:15 p.m. EDT, Hamza Shaban

TikTok and its Chinese parent company have struck back.

The short video juggernaut said Tuesday that it filed suit in US federal court seeking to block a new law that would force ByteDance to divest from its US subsidiary or face a ban.

The companies argued that the law, signed by President Biden last month, violates the US Constitution on a number of grounds, including violating First Amendment free speech protections.

With bipartisan support, the divest or ban law was pushed through Congress on the belief that TikTok gives a foreign power the ability to spy on Americans and manipulate public opinion. But TikTok has denied those claims and said it safeguards user data to prevent government interference. Critics of the law have argued that national security concerns have not been publicly substantiated and that the ban represents drastic government overreach.

TikTok's legal challenge sets up a high-profile showdown thrusting the debate over free speech and security into the spotlight. It will also highlight broader questions over foreign corporate ownership and the rising influence of social media in the global marketplace.

Stocks rise in afternoon trading

Tue, May 7, 2024 at 12:30 p.m. EDT, Hamza Shaban

Stocks edged up during trading on Tuesday afternoon, even as remarks from Minneapolis Fed chief Neel Kashkari suggested that the central bank's tightening policy may not be restrictive enough to curb persistent inflation.

The Dow Jones Industrial Average (^DJI) stepped up roughly 0.2%, or 50 points, while the S&P 500 (^GSPC) gained about 0.3% after the benchmark scored its best three-day run in a standout 2024. The tech-heavy Nasdaq Composite (^IXIC) ticked up 0.2%.

Why Disney's Bob Iger called Netflix 'the gold standard' in streaming

Tue, May 7, 2024 at 12:00 p.m. EDT, Hamza Shaban

Netflix (NFLX), the biggest player in streaming and a chief rival of Disney (DIS), has several advantages over its late-to-the-game competitors. But Disney CEO Bob Iger praised the company Tuesday, highlighting one aspect of its business that his own streaming service will try to emulate: a crackdown on password sharing.

"Obviously, we're heartened by the results that Netflix has delivered in their password-sharing initiative and believe that it will be one of the contributors to growth," Iger said during the media giant's second quarter earnings call.

As Yahoo Finance's Allie Canal reports, Disney's own plans to curb password sharing is a classic tale of follow-the-leader, as Netflix remains the only consistently profitable streaming service and others in the industry attempt to catch up.

"What we're building is the technology that Netflix has had in place and has been building for well over a decade to improve the business from a bottom-line perspective," Iger added. "That starts with password sharing."

Iger said Disney's crackdown will begin next month in select markets with a more global launch slated for September. He first revealed the company would address password sharing last year after noting the number of subscribers sharing accounts is "significant."

Warner Bros. Discovery's (WBD) Max streaming service will also begin to restrict password sharers later this year, with a wider rollout expected in 2025.

Apple is designing its own AI chips for data centers

Tue, May 7, 2024 at 11:01 a.m. EDT, Hamza Shaban

Apple (AAPL) has for months stood out as an outlier in Big Tech for not aggressively pursuing AI initiates or announcing new services powered by AI. The company is expected to share more of its AI strategy at its developer conference in June. But in the meantime, the Wall Street Journal reports that Apple has been developing its own AI chips to be used in data centers, a project that has been years in the making.

Designed to be used to run AI software, the server project is code named Project ACDC, the report said, for Apple Chips in Data Center, channeling the company's expertise in designing chips for its flagship hardware including iPhones, iPads, and Macs.

It's not clear when the new chip will be announced formally, or if the development process will even lead to production, according to the report.

The news comes as Apple debuted its latest lineup of iPads during a virtual launch event on Tuesday. The new tablets include more powerful versions of the $999 11-inch and $1,299 13-inch iPad Pro outfitted with Apple's M4 chip and more vibrant OLED displays, and an upgraded iPad Air, which gets a 13-inch screen option to go along with the existing 11-inch version.

Stocks trending in morning trading

Tue, May 7, 2024 at 10:21 a.m. EDT, Hamza Shaban

Here are some of the stocks leading Yahoo Finance’s trending tickers page during morning trading on Tuesday.

Disney (DIS): Shares of the entertainment giant fell 8% Tuesday morning after investors digested an earnings report that revealed a surprise profit for an important part of its streaming business but also that the company expects weaker results in that segment for the current quarter.

Datadog (DDOG): The technology company's shares fell more than 10% Tuesday after the company said its president, Amit Agarwal, will be stepping down at the end of the year. The announcement came alongside a quarterly report that showed a beat on earnings and revenue.

Celsius (CELH): The global beverage maker's shares fell more than 2% following an earnings report that saw record sales for the quarter but still missed Wall Street expectations. First quarter revenue rose 37% to $356 million, but estimates compiled by Bloomberg had expected an average of $391 million.

Crocs (CROX): An upbeat first quarter report lifted shares of the footwear company by more than 10% Tuesday. Results exceeded Wall Street expectations for revenue and earnings.

Stocks open slightly higher as Disney falters

Tue, May 7, 2024 at 9:35 a.m. EDT, Hamza Shaban

US stocks ticked up to start the trading session on Tuesday, as investors recoiled at Disney's (DIS) darkened outlook for its streaming business,

The Dow Jones Industrial Average (^DJI) stepped up roughly 0.2%, while the S&P 500 (^GSPC) gained about 0.3% after the benchmark scored its best three-day run in a standout 2024. The tech-heavy Nasdaq Composite (^IXIC) ticked up 0.2%.

Disney CFO post-earnings takeaways

Tue, May 7, 2024 at 7:53 a.m. EDT, Brian Sozzi

Just taped with Disney (DIS) CFO Hugh Johnston (interview coming up live in the 9 a.m. ET hour) right after earnings.

Some top takeaways:

On the potential for more Disney+ price hikes:

"I think you're going to see prices steadily go up over time in the streaming service mostly because the content we have is worth paying for."

On more cost cuts for lagging TV network business:

"Any time a business is losing revenue, you have to look at it for cost cuts. And I think the team is doing a terrific job trying to come up with creative ways to produce television programs more cheaply, share resources where it makes sense, take a hard look at every dollar that's being spent and say, 'Okay, is this one that necessary?'"

On an economic slowdown impacting Disney US:

"We haven't seen any of that at this point, so we certainly feel good about that. Now as I understand it, the lower-income consumers are the ones that are feeling the pinch a little bit more. But even for those consumers, the family vacation is one that's kind of a priority for people."

Full coverage of Disney's earnings from Yahoo Finance's Alexandra Canal here.

Disney lessens streaming losses, boosts profit outlook

Tue, May 7, 2024 at 7:02 a.m. EDT, Alexandra Canal

Disney (DIS) said Tuesday that an important part of its streaming business turned a profit for the first time as the media giant reported fiscal second quarter earnings per share that beat analyst estimates.

The company's direct-to-consumer (DTC) portion of its entertainment segment, which includes Disney+ and Hulu, posted operating income of $47 million, compared to a loss of $587 million in the prior year period.

That doesn't mean all of Disney's streaming services were profitable. Including ESPN+, total direct-to-consumer losses amounted to $18 million versus the $659 million loss reported in the year-earlier period. Disney expects full streaming profitability by the fourth quarter of this year.

Shares moved lower in pre-market trading as investors digested the release.

Over the past year, Disney has been grappling with challenges that include a declining linear TV business, slower growth in its parks business, and profitability hurdles in streaming. But a recent turnaround plan from CEO Bob Iger has investors more bullish in recent months. The company is fresh off a win in a high-profile proxy fight against activist investor Nelson Peltz.

The company reported Q2 adjusted earnings of $1.21 a share — a beat compared with the $1.10 analysts polled by Bloomberg had expected and higher than the $0.93 Disney reported in Q2 2023.

It also raised its guidance for full-year adjusted earnings growth to 25%, up from the prior 20%. However, Disney did take a hit after merging its Star India business with Reliance Industries, reporting an impairment charge of more than $2 billion.

Revenue came in at $22.1 billion, meeting consensus expectations and ahead of the $21.82 billion the company reported in the year-ago period.

The company did warn DTC results in the entertainment segment will be "softer" in the third quarter, driven by losses from its Indian brand Disney+ Hotstar.

Read more details about the results here.

Milken sights and sounds!

Tue, May 7, 2024 at 6:37 a.m. EDT, Brian Sozzi

Greetings from the Beverly Hills Hilton, home of the Milken Conference.

It's 3:24 a.m. PT here and the hotel is empty, a different scene from Monday's packed house at noon. You are probably wondering why I am here at this time? Well, we are taping an interview with Disney's (DIS) Hugh Johnston soon right after earnings hit. I have known Hugh for a decade, going back to his long time serving as PepsiCo's (PEP) CFO.

So considering that and my natural inclination to be awake, why not get things popping early! (Our live coverage on day two of Milken kicks off at 9 a.m. ET on our network, a more normal time)

A couple random thoughts that crept into my head during the inflationary Uber ride to the hotel:

1. Chatted up a source of mine I have known for years who has knowledge of the Bill Gates and Steve Ballmer relationship. Or should I say no relationship — the two apparently haven't talked in years because Steve is a "family man" and doesn't agree with some of Gates's life choices in recent years.

2. If Kevin Hassett has been chosen to be the next Fed chief in Trump presidency round two, as the WSJ recently speculated, he didn't show it in an interview with Akiko Fujita and yours truly yesterday afternoon. He actually downplayed it happening further, off camera. Then again, who in Trump's inner circle wants to speak out against him in any way — don't bite the hand that feeds you, I suppose.

3. Some thoughts below by Apollo Global Management (APO) CEO Marc Rowan on the college campus protests below. Rowan has been very vocal on the issue. (Note: Apollo is the parent company of Yahoo Finance.)

4. Yahoo Finance Senior Reporter Yasmin Khorram was in the room for a much anticipated main stage interview at Milken with Tesla (TSLA) CEO Elon Musk last night. People were leaving early during the meandering conversation, Khorram reports.