Mixed Market as Nasdaq Dips Amid Labor Market Concerns

The S&P 500 saw a slight uptick alongside Dow Jones while Nasdaq fell due to weak chip stock performance and labor market reports, with a diminishing chance of a Fed rate hike. Insights into earnings reports and forecasts from various companies suggest varied impacts on stock prices.

Date: 08-09-2024

AI Rating: 5

The latest market data shows mixed performance among major indices, with the S&P 500 Index rising slightly by +0.07% and the Dow Jones Industrials Index up by +0.47%. However, the Nasdaq 100 Index is experiencing a downturn, suffering a -0.63% drop to a 3-1/2 week low.

The decline is predominantly attributed to weaknesses in the chip stocks, especially Broadcom (ticker: AVGO), which fell by -9% after providing disappointing guidance on its Q4 revenue, forecasting $14.0 billion, lower than the consensus estimate of $14.13 billion. This highlights concerns over revenue growth for Broadcom, which could negatively impact its stock price.

Moreover, recent labor market data shows that US nonfarm payrolls for August rose by +142,000, falling short of the expected +165,000 increase, while July's figures were revised downward. This indicates potential weakness in economic activity, which investors may view negatively, thus influencing overall market sentiment.

On a positive note, the falling 10-year T-note yield to a 15-month low, coupled with increased chances for a Federal Reserve rate cut in September, adds a supportive element for stocks. The reduced rate cut probabilities rose to 56% from 38% prior to the payroll report, potentially leading to increased liquidity in the market, which could also support stock prices.

Interestingly, on the stock mover front, UiPath (ticker: PATH) recorded stronger-than-expected Q2 revenue of $316.3 million, above the consensus of $303.9 million. This indicates healthy revenue growth and positively impacts its stock outlook. Similarly, SmartSheet (ticker: SMAR) reported Q2 adjusted EPS of 44 cents, exceeding the consensus of 30 cents. The stronger performance led to a positive adjustment in its EPS forecast to $1.36-$1.39 for 2025.

In conclusion, while the markets are mixed with specific stocks under pressure due to weak forecasts and labor market data, there are instances of positive earnings results and projections from companies such as UiPath and SmartSheet indicating potential stock price support in the positive earnings performance segment.

Stocks: AVGO PATH SMAR