Dow Jones Industrial Average continues to fall as weak earnings and interest rate worries make investors nervous

live7 Updates

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  May 30, 2024 (Thursday) 9:42 a.m. EDT

  Nelson Peltz sells all Disney shares after losing proxy fight

  Activist investor Nelson Peltz has sold his entire stake in Disney (DIS), according to sources familiar with the matter.

  Peltz sold his stake for about $120 a share, making a profit of about $1 billion, the people said.

  The development, first reported by CNBC, comes after Disney successfully fended off Peltz’s demands to retain a seat on its board, formally ending a bitter proxy fight that has plagued the entertainment giant for months.

  Peltz had been trying unsuccessfully to retain seats on Disney’s board for himself and former Chief Financial Officer Jay Rasulo, but Disney announced at its annual shareholder meeting in early April that its current board members would remain in place after shareholder voters “widely” defeated its candidates.

  Disney shares have risen about 12% since the beginning of the year but have fallen about 15% since the company defeated Peltz in the proxy fight.

  Please see here for the detail.

  

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  Thursday, May 30, 2024, 9:32 a.m. EDT

  Salesforce shares fall 18% as Dow Jones Industrial Average falls 300 points

  The Dow Jones Industrial Average (^DJI) fell about 300 points at the open due to a drop in Salesforce.com’s (CRM) stock price.

  Blue-chip indexes continued to fall on Thursday after dropping 400 points in the previous trading day. The S&P 500 (^GSPC) fell 0.3% and the tech-heavy Nasdaq Composite Index (^IXIC) also fell 0.4%.

  Shares of cloud-based software company Salesforce fell as much as 18% in open trading after the company missed second-quarter earnings guidance, raised concerns about the macroeconomic environment and delayed a deal closing.

  AI chip darling Nvidia (NVDA) is soaring, but it’s not buoying the broader market, as recent gains have been limited by growing concerns about higher interest rates for a long time amid shaky inflation.

  The bond market is struggling as the 10-year Treasury note (^TNX) again surged above 4.5%, putting pressure on stocks.

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  Thursday, May 30, 2024 at 8:39 a.m. EDT

  GDP: US economy grows slower than initially thought in Q1

  The U.S. economy grew at a slower pace in the first quarter than initially thought.

  The Bureau of Economic Analysis’ second estimate of U.S. gross domestic product (GDP) for the first quarter showed the economy growing at an annualized rate of 1.3% during the period, down from 1.6% in its first estimate in April. However, this was in line with the decline from the first estimate that economists had expected. The GDP for the first quarter of 2024 was significantly lower than the GDP for the fourth quarter, which was revised upward to 3.4%.

  The BEA said its update to first-quarter growth “largely reflects a downward revision in consumer spending,” which grew 2% in the first quarter, down from 2.5% in the previous quarter.

  The soft GDP reading comes at a time when inflation is proving stronger than expected and markets are sensitive to signs that the economy may be running hotter than the Federal Reserve would like.

  But it’s notable that many forecasters don’t see the first-quarter slowdown in economic growth as the start of a broader trend. Goldman Sachs, in its release on Thursday, projected second-quarter growth at an annualized rate of 3.2%, while the Atlanta Fed’s GDPNow forecasters now expect first-quarter growth to be at an annualized rate of 3.5%.

  Bank of America US economist Michael Gapen wrote in a client note last Friday that his team had expected a downward revision to first-quarter GDP figures but that this did not signal a concern for future economic growth.

  “On balance, the economy slowed somewhat in the first quarter but remains stable overall,” Gapen wrote on Friday.

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  Thursday, May 30, 2024, 8:22 a.m. EDT

  Best Buy’s terrible quarter

  Yahoo Finance senior reporter Brooke DiPalma has all the numbers you need about Best Buy’s (BBY) quarter here.

  I’d like to add that Best Buy’s performance this quarter was again truly awful.

  The company’s sales declines are piling up, and I wonder if there are structural issues the business can’t overcome. Sales pressures have been going on for about two years. I also wonder if management needs a fresh perspective once this holiday shopping season is over.

  

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  May 30, 2024 (Thursday) 5:21 a.m. EDT

  Follow-up: Chewy

  Chewy (CHWY) made an appearance on these live blog pages on Wednesday, and rightly so.

  Following the better-than-expected quarterly results, shares surged 27% (though shares were slightly lower in premarket today). The reaction was somewhat surprising, as the company’s highly-regarded active customer metric again fell year over year, and in fact, the rate of decline accelerated compared to the rate of decline in the previous quarter.

  Nevertheless, Wall Street was enthusiastic about the company’s comments about expanding profit margins and an improving demand environment.

  We reiterated the improving demand backdrop in our in-depth interview with Chewy CEO Sumit Singh on Yahoo Finance Live (watch the full video below).

  It’s interesting to note that the company seems to be fully committed to opening veterinary clinics: it is currently operating four veterinary clinics that opened in the first quarter, with four more planned to open by the end of the year.

  The company lags far behind Mars Inc., which operates thousands of veterinarians (it has been buying and integrating family-run practices in the sector), but the opportunity here is for Chewy to offer a better environment for care that’s aligned with the services and products it sells online.

  Also notable is that the company has begun testing a paid membership program.

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  May 30, 2024 (Thursday) 5:11 a.m. EDT

  Trend Watch: PC Demand Cycle

  Shares of HP Inc. (HPQ) are up 3% in pre-market trading after the company reported better-than-expected quarterly earnings last night.

  Speaking with HP CEO Enrique Lores after the results were announced (see the full interview below), what struck me was that the company called on businesses to upgrade their computers ahead of the end of support for Windows 10. It seems that a race is on to replace computers ahead of that moment in October 2025.

  This month, HP’s first AI PC hit the market, which is likely to accelerate the upgrade cycle even further.

  “We continue to believe HPQ is well positioned to benefit from the PC upturn, which should accelerate in the second half of the year and FY25,” Evercore ISI analyst Amit Daryanani wrote in a client note this morning.

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  Thursday, May 30, 2024, 5:05 a.m. EDT

  Salesforce crashes

  Salesforce (CRM) shares are down 16% in pre-market trading.

  The rush to sell is justified.

  Salesforce missed its target with a key performance metric growing just 10% versus expectations of an 11% increase, and the call was peppered with concerns about the macro environment that is slowing deal-making.

  The company’s second-quarter guidance, which fell short of consensus, reflects these concerns (a good thing for management).

  “While Q1 was a consistently weak quarter for software, the magnitude of the miss below expectations could suggest that more idiosyncratic issues (seat exposure, downsell, competition) may continue to weigh on the business in Q2, especially as FY2025 revenue is now aggressive (suggesting second-half acceleration versus Q2),” Citi analyst Tyler Radke said in a client note. “While valuation isn’t particularly high at 20x EPS and 18x enterprise value/free cash flow (FY2025 forecast), slowing growth, lack of risk aversion forecasts, and active M&A suggest the company is better off staying on the sidelines waiting for improved growth and/or further evidence of data cloud/GenAI momentum/monetization.”

  Overall, it was a disappointing quarter for Salesforce, and the stock is likely to remain in the penalty box until there are signs of a more stable macro environment.