The Stock Market At Close – Thursday, May 25
The Toronto Market
More banks continue to report earnings but the banks’ earnings reports today were mixed. CIBC gained as the earnings report beats views but TD and the Royal Bank were down. TD’s earnings report mentioned that the bank would not be able to meet its earnings growth target.
The Toronto Stock Exchange’s S&P/TSX composite index ended down 153.61 points, or 0.8%, at 19,774.08, its lowest closing level in two months.
A rise in the US dollar amid uncertainty over the debt ceiling also pressured Oil prices down today. The energy sector shed 2.2% as Russia played down the prospect of further OPEC+ production cuts at its meeting next week, pressuring oil. Gold weakened on the increasing prospects for U.S. hiking interest rates.
Today’s Statistics: Today, the decliners continue to outnumber the advancers. The ratio of declined issues to gaining issues was 1.87-to-1.00. The ratio was much improved for the advancers compared to yesterday. In real numbers, 479 advancers to 898 decliners with 186 unchanged. There were 42 new 52 week highs and 60 new 52 week lows. The total volume of shares traded for gaining stocks was 58,784,736 or 22.6%; the total volume for declined stocks was 194,280,794 or 74.7% and 7,058,202 or 2.7% for “Unchanged”. The ratio of declined issues to gaining issues yesterday was 4.37-to-1.00. Today was a lot better.
The US Market
Today, Artificial Intelligence (AI) was the rising tide lifting all boats. The markets from time to time need a cliché marketing term to help speculators make money. Artificial Intelligence fits that need right now. AI is the latest Tulip mania. There was the dotcom, Y2K, Bre X and other lesser market pumping creations.
The Dow Jones index declined 0.11% to close at 32,764.65 points. The S&P 500 gained 0.88% to close the market session at 4,151.28 points. The NASDAQ surged 1.71% to close at 12,698.09 points.
On the economic front, data showed the number of Americans filing new claims for unemployment benefits rose only moderately last week, while a Commerce Department report confirmed economic growth slowed in the first quarter. Growth in the economy has already slowed to almost a stall. Yet the Federal Reserve, after five percentage points of rate hikes, are still talking about rate hikes, the U.S. economy likely faces a rough patch in the second half of 2023.
According to Reuters report citing a source familiar with the debt-ceiling talks, U.S. President Joe Biden and Republican lawmaker Kevin McCarthy on Thursday were edging close to a deal, with the parties just $70 billion apart on discretionary spending. House Speaker McCarthy told reporters this evening that the two sides have not reached a deal. “We knew this would not be easy,” he said.
Tulip Mania or Irrational Artificial Intelligence Exuberance:
Nvidia Corp soared 24% to a record high close after the world’s most valuable chipmaker forecast quarterly revenue 50% higher than estimates and said it was ramping up supply to meet demand for its artificial-intelligence (AI) chips.
Investors exchanged almost $60 billion worth of Nvidia’s shares, accounting for a fifth of all trading in S&P 500 stocks during the session, according to Refintiv data. The exuberance today was of course limited to a few technology stocks. The rest of the sectors had things rough. It is certainly currently not the best market for gains. It may be time to be in cash unless one is focused only on the big tech companies. AI is definitely real but at some point today NVIDIA Corp was up more than rises $87, it was hard to not feel that some “octane powered” stock price pumping was at work.
Today’s Statistics: Today, the decliners again prevailed over the advancers on both the NYSE and the NASDAQ. The ratio of declined issues to gaining issues on the NYSE was a 1.97-to-1. In real numbers, 2,627 decliners to 1,329 advancers with 279 unchanged. There were 60 new 52 week highs and 192 new 52 week lows. The total volume for gaining stocks was 292,622,939 or 30.3%; the total volume for declining stocks was 666,416,323 or 68.9%; and 7,938,479 or 0.8% “Unchanged”. Total volume of stocks traded was 966,977,741.
On the NASDAQ, the ratio of declined issues to gaining issues was 2.36-to-1 or in real numbers, 3,149 decliners to 1,334 advancers with 375 unchanged. There were 76 new 52 week highs and 196 new 52 week lows. The total volume of shares traded for gaining stocks was 2,106,447,214 or 44.3%; the total volume for declining stocks was 2,573,871,612 or 54.1% and 76,288,323 or 1.6% for “Unchanged”. Total volume of stocks traded was 4,756,607,149.
The S&P 500 posted 11 new highs and 31 new lows.
Oil and the money markets: WTI crude futures fell more than 4% to nearly $71 per barrel, ending a three-day winning streak, after Russian Deputy Prime Minister Alexander Novak ruled out additional production cuts by OPEC+. Noak said that OPEC+ is unlikely to take additional steps in June because just a month ago certain decisions were made regarding the voluntary reduction of oil production by some countries. Earlier this week, Saudi Arabia’s energy minister warned short sellers to “watch out” for potential consequences, raising speculations that OPEC+ could consider further output cuts at a meeting on June 4th. Meanwhile, a rise in the US dollar amid uncertainty over the debt ceiling also pressured prices down.
The U.S. dollar continues to gain against a basket of major currencies.
Stocks In The News/Stocks To Watch
The Toronto Market
RBC, the Canadian bank with the highest market capitalization, reported a decline in quarterly earnings. Its shares slid 1.8%, while TD shares were down 4.2% after the lender said it would not be able to meet its earnings growth target.
Canadian Imperial Bank of Commerce shares ended up 2.1% after the company beat expectations for earnings per share.
The Canadian banks from all available data remain solid. Bank stocks are popular investments with Canadians. Canadian banks are not in the habit of cutting dividends. Dividends are paid per share, it may be a good time to buy Royal Bank and TD bank shares. Of course nothing should be taken for granted with the stock market.
Dye & Durham acquired practice management software provider GhostPractice.
The US Market
Marvell Technology (MRVL) stock soared on AI earnings remarks. The CEO said in a conference call that Generative AI is rapidly driving new applications and changing investment priorities for cloud customers. He added that the performance scale of current AI Implementations are still constrained by network capacity and expects overall AI revenue to at least double again next year and the cloud revenue to grow over 10% sequentially in Q2.
Arista Networks, Inc. (ANET) is a supplier of cloud networking solutions that use software to address the needs of Internet companies, cloud service providers and enterprises. Today the stock gained $14.99 or 10.61% to close at $16.21. Volume traded was 8.1M shares.
Super Micro Computers (SMCI) is definitely a stock to watch. The company manufactures servers and infrastructures for data centers. It is a global leader in Application-Optimized Total IT Solutions. Based in San Jose, California, Supermicro is committed to delivering first to market innovation for Enterprise, Cloud, AI, and 5G Telco/Edge IT Infrastructure and green computing. In November, SMCI was trading at $85.00
Intel Corporation (INTC), the “grand dad” of Microcomputer chips, was totally enveloped by the new kid on the block, (NVIDIA Corporation) today. Intel was down $1.60 or -5.51% to close at $27.40 with a volume of 78M shares traded. In the 1970s and 80s Intel and Motorola played the role that Nvidia Corp is now playing.
Regular Market Day Features
Beginner Investor’s (Canadian stocks) Watchlist
The Canadian Vanguard Chinese Stocks Watchlist
EV, Energy and Resource Stocks Watchlist at Today’s Market
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