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Stock market today: Stocks eke out gains as labor market cools, rate-cut bets rise

US stocks flipped between negative and positive territory on Tuesday, finishing narrowly in the green as investors shifted their rate-cut expectations after more weaker-than-expected economic data.

The S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) rose roughly 0.1% after erasing earlier losses. The Dow Jones Industrial Average (^DJI) rose about 0.4%.

Stocks have struggled to find a footing in recent days as investors face uncertainty over the path of interest rates. Recent weak manufacturing data has prompted Wall Street strategists to scale back their optimism for economic growth, which supports a case for rate cuts. But Federal Reserve officials have warned against hoping for a pivot anytime soon as they wait for inflation to cool sufficiently — and when that time comes isn't clear.

New government data on Tuesday showed that job openings fell in April to their lowest level since February 2021 as the labor market shows further signs of rebalancing. The labor market update serves as a precursor to the crucial May jobs report on Friday — the data highlight of the week.

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Traders have adjusted their expectations for rate cuts in recent days, according to the CME FedWatch tool. Almost two-thirds now expect at least one cut by the Fed's September meeting, a sizable gain from one week ago.

Read more: How does the labor market affect inflation?

Meanwhile, the GameStop (GME) rally — just one part of the jumpy summer start for stocks — lost steam on Tuesday, on the heels of a 21% surge for the meme darling. Shares of the video game retailer fell about 5%.

LIVE COVERAGE IS OVER16 updates
  • Stocks close slightly higher as weak data makes the case for rate cuts this year

    US stocks flipped from red to green territory on Tuesday, closing higher as investors assessed weaker-than-expected economic data against the probability of rate cuts this year.

    The S&P 500 (^GSPC) rose 0.1% while the tech-heavy Nasdaq Composite (^IXIC) increased almost 0.2%, erasing earlier session losses. The Dow Jones Industrial Average (^DJI) rose 0.4%.

    Weak manufacturing data and falling monthly job openings ahead of Friday's labor report make the case for possible rate cuts this year.

    Rate-sensitive stocks gained, with Real Estate (XLRE) outperforming the rest of the S&P 500 sectors. The Energy (XLE) sector lagged as oil fell again on Tuesday amid concerns the market will have a difficult time absorbing a phaseout of voluntary cuts starting in October.

  • Trump combines small donors and billionaires for a record fundraising haul in May

    Yahoo Finance's Ben Werschkul reports:

    Donald Trump's campaign said it raised nearly $300 million in May as it benefited from a new surge of support among small-dollar donors on top of an existing strength with billionaires.

    The potent combination is clearly helpful for Trump as he tries to close a fundraising gap with President Joe Biden ahead of a final campaign sprint this summer and fall.

    Though the full picture isn't yet available of how each candidate did in May, Trump's incoming money appears to be roughly split between groups catering to small and larger donors.

    Of the total, $141 million went to Trump's formal campaign and the Republican National Committee, where maximum donations are capped.

    Read more here.

  • Paramount unveils cost-cutting strategy as Skydance sale looms

    Paramount (PARA) executives gathered for the company's annual shareholder meeting on Tuesday — all while the fate of the legacy media giant hangs in the balance.

    The leadership team declined to answer questions related to its potential merger with David Ellison's Skydance Media, although they did unveil a plan to cut $500 million worth of costs, which will include layoffs, in addition to exploring potential asset sales and partnerships with competitors for streaming joint ventures.

    "We all agree that Paramount is not where we want it to be," co-CEO Chris McCarthy said during the meeting. "Given the strength of our assets, our people, and our long-term competitive advantage of making some of the biggest and broadest hits, we know that there is significant value to be unlocked."

    Management said they are prepared to move quickly on cost reductions and that $500 million in cost savings is "just the beginning," with more announcements expected in August (pending, of course, a potential sale).

    "We're confident the business can be run much more efficiently by adjusting to the realities of the environment we're operating in today," said co-CEO George Cheeks, who cited duplicative teams and functions across several areas such as real estate, technology, and marketing. "These cost reductions will be a major step in positioning the company for long-term sustainable growth."

    On Monday, Paramount shares surged after CNBC said the legacy media giant had reached an $8 billion takeover agreement with Skydance Media.

    The deal must first be approved by Shari Redstone, who controls Paramount through her family's holding company, National Amusements. Last week, an independent special committee of Paramount's board recommended the deal.

    "We received the financial terms of the proposed Paramount/Skydance transaction over the weekend and we are reviewing them," National Amusements said in a statement to Yahoo Finance.

    The update comes after months of back-and-forth talks between Paramount and interested parties including not only Skydance but also Sony Pictures Entertainment and private equity firm Apollo Global Management, along with Warner Bros. Discovery (WBD), media mogul Byron Allen, and Hollywood producer Steven Paul. (Disclosure: Yahoo Finance is owned by Apollo.)

    So far, no word yet on what Shari ultimately decides.

  • Eyes on the volatile Super Micro

    Nvidia (NVDA) may have stolen the spotlight for AI growth, but other big players are seizing the momentum too.

    One of those names: Super Micro Computer (SMCI).

    I sat down with Super Micro CFO David Weigand at Bank of America’s Global Technology conference in San Francisco today, and my big takeaway from the conversation is that the demand is real.

    Reminder that non-GAAP EPS grew 300% in the most recent quarter from a year ago, while sales were up about 200% year over year. Now the big question is supply.

    “The opportunity that is presented is the huge demand,” Weigand told me.

    “We've had a growing backlog because of the fact that we're bringing really good products to market. It's really still a supply-constrained market," Weigan said.

    Helping fuel Super Micro’s unprecedented demand is its new product, liquid cooling, which makes data centers more efficient. Weigand told me that it’s what differentiates Super Micro from others within the industry and gives the company “an edge.”

    “Speed to market is really the edge that we have and what gave us the ability to guide so many shipments in liquid cooling this quarter," Weigand added.

    To put the expected growth perspective, Bank of America’s Ruplu Bhattacharya wrote in a recent note that just 1% of data centers use liquid cooling today, but Super Micro expects that figure to grow to 20% within the next 18 months.

    Weigand added that Super Micro’s massive outperformance (in case you missed it, shares are up a staggering 168% since the start of the year) is more than just a result of Nvidia’s blowout business. Weigand describes the company as the “Switzerland” of the industry.

    “Nvidia is a powerhouse, but AMD (AMD) and Intel (INTC) have great and very powerful solutions. We will deliver the products that deliver the best optimal performance," said Weigand.

    If he’s right, it sounds like Super Micro’s growth story is just getting started.

  • Another labor market data point reaches pre-pandemic levels

    Data out Tuesday showed there were 8.05 million job openings in April, the lowest level since February 2021 and below economists' expectations for 8.35 million openings in April.

    Economists were quick to point out that the data is showing signs of normalization in the labor market, not any indications of a downright slowdown.

    This can be seen throughout several Job Openings and Labor Turnover Survey (JOLTS) data points. In April, the ratio between job openings and unemployed workers fell to 1.2, which is in line with the several months leading up to the pandemic.

    Economist Jason Furman, who served as chairman of the Council of Economic Advisers under President Barack Obama, posted on X that this ratio is just one of several data points now hovering near pre-pandemic levels. The job openings rate, quits rate, employment rate among 25 to 54-year-olds, and overall unemployment rate are all near levels seen before the dawn of the COVID-19 pandemic, per Furman.

    This serves as a reminder amid the week of labor market data that just because things have been cooling in the labor market doesn't mean there are red flashing warning signs everywhere. It might just mean we're still in the process of returning to normal.

  • Bitcoin jumps back above $70,000

    Bitcoin (BTC-USD) climbed back above $70,000 per token on Tuesday. The cryptocurrency is up more than 1% over the past 24 hours.

    Analysts have pointed to recent consolidation nearing the token's March all-time highs, a move that could signal an eventual breakout above that level.

  • GameStop falls as latest meme rally fizzles again

    GameStop stock (GME) fell as much as 7% on Tuesday, reversing some of the meme stock's 21% gains from the prior session that was ignited by a social media post late Sunday from an account believed to be tied to the video game retailer's most public supporter.

    Shares of the video game retailer rose as much as 75% Monday after the user behind "Deep F***ing Value" posted a screenshot on Reddit's Superstonk subreddit late Sunday that purported to show they paid nearly $175 million building a position in GME shares and call options.

    Late Monday, the Wall Street Journal reported that executives at Morgan Stanley's trading platform E-Trade had discussed a potential ban on the account believed to be tied to individual investor Keith Gill.

    GameStop was also one of the numerous stocks impacted on Monday by a technical glitch at the New York Stock Exchange.

    Read more here.

  • Ford's US sales soar 11.2% in May, powered by hybrids, trucks, and even EVs

    Yahoo Finance's Pras Subramanian reports:

    Ford (F) reported May US auto sales that jumped considerably, once again powered by hybrid vehicle and truck sales.

    For the month, Ford sold 190,014 vehicles, an 11.2% increase from a year ago and up 6.4% sequentially from April. Ford delivered 17,631 hybrid vehicles for the month, driven by the new F-150 hybrid and Maverick hybrid.

    The Maverick was a standout, with sales jumping nearly 96% to 13,616 trucks sold in May. The hybrid version of the Maverick saw sales jump 111% to 7,687 trucks. Ford said Maverick pickup and hybrid sales hit a sales record in May.

    Read more here.

  • Oil extends slide amid weak manufacturing data, concerns of oversupply

    Oil futures extended their decline on Tuesday as the markets continued to digest the latest output decision by OPEC+ while weaker-than-expected manufacturing data raised concerns over the health of the US economy.

    West Texas Intermediate (CL=F) slid more than 1 % to trade just above $73 per barrel, while Brent (BZ=F), the international benchmark price, also fell 1% to hover just above $77 per barrel.

    The slide in crude futures follows a decline on Monday after the oil alliance led by Saudi Arabia extended most of its output cuts into 2025, but will begin unwinding additional and voluntary reductions in October of this year. Analysts had expected those reductions to remain in place through the fourth quarter of this year.

    Traders have been reluctant to buy the dip amid concerns about oversupply in the market and waning demand heading into 2025.

    “The US economy also looks to be wavering with the Atlanta Fed Reserve showing a fifth consecutive downward estimation of GDP growth,” Dennis Kissler, senior vice president at BOK Financial, said in a note on Tuesday.

    The latest ISM manufacturing report for May came in short of expectations at 48.7. New orders of 45.4 were the weakest since May 2023, while production came in at the lowest levels since February.

  • Job openings fall to lowest level in more than three years

    Job openings fell in April to their lowest level since February 2021 as the labor market shows further signs of rebalancing.

    New data from the Bureau of Labor Statistics released Tuesday showed there were 8.05 million jobs open at the end of April, a decrease from the 8.35 million job openings in March, which was revised lower from 8.48. Economists surveyed by Bloomberg had expected the report to show 8.35 million openings in April.

    The Job Openings and Labor Turnover Survey (JOLTS) survey also showed 5.6 million hires were made during the month, little changed from March.

    The hiring rate held at 3.6%, unchanged from March. Also in Tuesday's report, the quits rate, a sign of confidence among workers, held at 2.2%.

  • Stocks open lower led by decline in Energy sector

    Stocks opened in the red on Tuesday amid increased concerns over the health of the US economy following weaker-than-expected manufacturing data.

    The S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) both fell about 0.3% after closing modestly higher on Monday during a bumpy session for the three major gauges. The Dow Jones Industrial Average (^DJI) decreased about 0.2% after losing more than 100 points in the prior session.

    The S&P 500 Energy Select ETF (XLE) led the declines as oil hit a four-month low on Tuesday. Traders continued to assess the latest output cut plan by OPEC+ amid concerns of oversupply towards the end of the year. The oil alliance plans to extend most of its production reductions into 2025 but will start phasing out additional voluntary cuts starting in October.

    Recent data shows activity cooling across a variety of metrics, dampening expectations that US economic growth could accelerate for a second straight year.

    April job openings due later this morning may be another indication about how the economy is holding up. The labor market update serves as a precursor to the crucial May jobs report on Friday.

  • The unsavory fast food trade

    Fast food stocks have been, well, ice cold.

    The Street has really soured on the likes of McDonald's (MCD), Restaurant Brands (QSR), Yum! Brands (YUM), and many others in recent months amid sticky inflation and new $5 price wars.

    In short, there is just no catalyst in place to drive the stocks higher in the near term.

    This was underscored by Evercore ISI analyst David Palmer this morning, who has cut his same-store sales estimates for the aforementioned names.

    I wanted to highlight two sections of interest from his report:

    "US drive-thru chains are experiencing weakness across most income groups, but the weakness is most pronounced with households earning less than $50,000/year. This cohort is benefitting less from rising asset prices and suffering more from higher interest rates. Lastly, it is these consumers that most experience the regressionary tax of inflation itself with 30%+ COVID-era food cost inflation combining with the higher restaurant meal costs (over 4x higher than at-home prepared) to create an affordability problem. In addition, increased media and social media scrutiny of fast food pricing has added to pressure on McDonald’s, in particular."

    And:

    "In the past, compelling value menus were often anchored by a hero item — often viewed by the consumer as a loss leader. These included the $1 double cheeseburger (McDonald’s 2003- 2012), the $1 any size soft drink (McDonald’s 2017-2020), the $5 footlong (Subway), the $5 mix-and-match (Domino’s), and the $1.50 hot dog (Costco). The question of the day — will a $5 bundle be enough to stabilize McDonald’s traffic and will the higher food cost of the meal prove worth it enough to keep around the rest of the summer (or longer)? If the $5 meal is not a long-term solution, will a BOGO $1 menu do the trick for McDonald’s? We suspect the answer will come in the advertising effectiveness — will it leverage McDonald’s $1 billion national advertising budget? Should McDonald’s be able to stabilize traffic with value in 3Q the steady stream of new products in 2H24 and 2025 should kick off a substantial brand recovery."

  • Good point on stocks from Goldman

    And I awoke to a 16-page research report on stocks from Goldman Sachs. Great train reading.

    Good point by its team on stocks:

    "However, given the rise in valuations, and the recent corresponding rise in investor sentiment, equities are more vulnerable to disappointments. Stocks have largely, so far, shrugged off the delay in interest rate cuts because growth has been holding up — cyclical sectors of the main markets have been outperforming defensives leaving them exposed to any signs of economic activity faltering (particularly around the labour market)."

  • Citi spent some time with Nvidia's CFO

    While Nvidia (NVDA) CEO Jensen Huang gets all the attention, his longtime CFO is also important to track if you are invested in the name.

    Colette Kress has been Nvidia's CFO for 10 years and is viewed in Wall Street circles as one of the best in the game.

    Citi got to spend time with her this week and is out with a note. I think what they said below (based on their meeting with Kress) about a little-discussed demand driver for the chipmaker is of interest.

    "Sovereign AI demand is strong in various parts of the world. In Europe, Nvidia is seeing some work being done by countries such as France, Germany and Italy, with France leading the way. The Middle East is also an area investing heavily in AI. It is also the case in South East Asia. Nvidia clarified that not all investors are directly tied to the government. Some entities are just government-backed, not owned. In general, sovereign AI clients already have specific use cases to use their products for. Generally speaking the entities look to build models based on their own characteristics."

  • Stifel's call on the markets

    I have no problem with strategists making bold calls as long as they are rooted in reality.

    I think that's what we are getting from Stifel's Barry Bannister this morning.

    Bannister says he is looking for a 10% correction in the S&P 500 to about 4,750, occurring between the second and third quarters.

    Why:

    • "Sticky (and slightly higher) inflation in the second half of the year, starting early 3Q24E."

    • "No Fed rate cuts in 2024, despite sluggish cyclical economic growth."

    • "S&P 500 price to earnings ratio to decline about 2 multiples (about 500 points) by the end of the third quarter."

    Below is what Stifel's CEO Ron Kruszewski told me about the Fed and markets recently:

  • Bottom line on GameStop

    GameStop (GME) shares are flatlining in the early going today after a 21% pop (well off the 103% gain seen around the open).

    I think my longtime markets go-to Steve Sosnick from Interactive Brokers said it best to me via email on the move here:

    "It can’t be explained by normal, rational means."

    Be careful here, folks, in chasing this one.

    Some coverage of GameStop mania this week from Yahoo Finance:

Correction: A previous version of this article misspelled Narendra Modi and GameStop. We regret the errors.