Stocks fell Friday, the first triple witching day of 2024, as bitcoin continued to tumble from its record high reached earlier this week.
The Nasdaq Composite traded about 0.8% lower Friday afternoon, while the S&P 500 fell 0.5% and the Dow Jones Industrial Average slipped 0.4%.
Bitcoin slid to about $68,000 Friday as cryptocurrency markets took a breather after a run-up that took Bitcoin to more than $73,000 on Wednesday. Yesterday’s Producer Price Index, the second inflation report to come in hotter than expected this week, sent Treasury yields climbing, which also weighed on risk assets like crypto.
Adobe (ADBE) slumped after issuing a soft sales outlook in light of its record revenue in its fiscal 2024 first quarter. Ulta Beauty (ULTA) also slipped after its full-year earnings forecast fell short of expectations.
Stocks went on a rollercoaster ride yesterday before ultimately closing lower as Treasury yields advanced.
Madrigal Pharmaceuticals Soars After Getting FDA Approval for Liver-Scarring Treatment
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Shares of Madrigal Pharmaceuticals Inc. (MDGL) skyrocketed Friday after the Food and Drug Administration (FDA) gave accelerated approval for its drug, the first-ever drug to treat scarring caused by fatty liver disease approved by the regulator.
The FDA said Madrigal’s drug Rezdiffra, along with diet and exercise, can be given to patients who are afflicted with noncirrhotic nonalcoholic steatohepatitis, or NASH, and have moderate to advanced liver scarring.
The biotech company said that Rezdiffra was expected to be available to patients in the U.S. next month and be distributed through a limited specialty pharmacy network.
Shares of Madrigal Pharmaceuticals were 14% higher at around $277 Friday afternoon. They have advanced by almost 30% so this year.
Jabil Stock Plunges as Sales and Guidance Miss Estimates on ‘Revenue Headwinds’
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Jabil Inc. (JBL) was the worst-performing stock in the S&P 500 on Friday after the electronics manufacturing services firm’s second-quarter fiscal 2024 sales and current-quarter guidance missed estimates as it faced difficult economic conditions.
Jabil said that quarterly revenue declined 16.8% to $6.77 billion, short of forecasts. Core earnings per share (EPS) came in at $1.68, slightly better than expected.
Jabil anticipates current-quarter revenue of $6.2 billion to $6.8 billion, and core EPS of between $1.65 and $2.05. Both were less than analysts had been looking for. In addition, the company lowered its full-year revenue guidance to $28.5 billion from $30.6 billion.
Jabil shares were down 16.2% at $123.63 Friday afternoon. Despite today’s steep drop, the stock is up more than 50% over the past year.
Real Estate Stocks Tumble on NAR Settlement
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Shares of real estate firms like Zillow (Z), Redfin (RDFN), and Compass (COMP) tumbled on Friday after the National Association of Realtors (NAR) agreed to a $418 million settlement that could upend the way real estate brokers are compensated.
As part of the settlement, NAR agreed to abandon longstanding rules that required home listings to include offers of broker compensation. In October, a Kansas City, Mo., jury determined that practice had kept U.S. real estate broker’s commissions artificially high.
The agreement also introduces a new rule that requires Multiple Listing Service (MLS) participants to enter written agreements with buyers, effectively allowing buyers to negotiate with their agents and forgo some services.
The $418 million settlement, which is subject to court approval, will be paid out over four years.
Shares of digital home-listing provider Zillow tumbled more than 13% to a 3-month low on Friday. Brokerages Compass and Redfin slid 11% and 5%, respectively.
Volatility Index Up on First Triple Witching Day of 2024
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The Cboe Volatility Index (VIX) rose more than 4% on Friday, the first of this year’s four triple witching days.
Triple witching refers to the simultaneous expiration of stock options, stock index options, and stock index futures contracts. It occurs on the third Friday of every March, June, September, and December.
Triple witching days are characterized by above-average volatility in equity markets as traders either close or roll out their positions.
About $5 trillion worth of derivatives contracts expire today. More than $3 billion of index options and futures came due at the open. That leaves room for more volatility near the end of the day when about $2 trillion of single stock options and index derivatives will expire.
Ulta Beauty Stock Falls on Weak Margin Forecast
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Ulta Beauty’s (ULTA) stock fell Friday, a day after the beauty retailer reported fourth-quarter earnings that beat expectations but issued a weak margin forecast for 2024.
Ulta reported $394.4 million in net income, or diluted earnings per share (EPS) of $8.08, both above analyst estimates compiled by Visible Alpha.
For the 2024 fiscal year, Ulta projected net sales of $11.7 billion to $11.8 billion and diluted EPS of $26.20 to $27, above 2023 figures and analyst estimates. However, Ulta said it anticipates a lower profit margin of 14% to 14.3%, compared to 15% in 2023, with margins pressured by higher costs and increased promotions.
Ulta shares were down 5.5% at $535 late Friday morning, though they were up more than 9% year to date.
Ether Slips from Highs as Investors Lock in Profits After Upgrade
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Ether (ETH), the native coin of the Ethereum blockchain and second largest cryptocurrency by market capitalization, fell to about $3,700 early Friday morning, days after the network completed its highly anticipated Dencun upgrade, indicating investors may have already factored in the news.
The enhancement, which aims to improve the Ethereum ecosystem’s cost-effectiveness, added to bullish sentiment surrounding Ether, helping propel the cryptocurrency through the $4,000 level earlier this week.
Investors have also been hoping that the U.S. Securities and Exchange Commission (SEC) will approve an Ether ETF application filed by asset manager BlackRock on May 23, though Bloomberg ETF analysts estimate the chances of an approval by that date at just 30%.
Ether started its current bull run in late October last year, with the uptrend gaining further momentum when the 50-day moving average crossed above the 200-day moving average just over a month later to form a bullish golden cross chart pattern. Gains accelerated throughout February and early March before the price ran into resistance earlier this week just above the closely watched $4,000 level.
Amid ongoing selling pressure, monitor key Fibonacci retracement levels as potential areas of support. Currently, the 38.2% Fib level sits around $3,365, while the 50% Fib level lines up with the $3,135 region.
Adobe Stock Tumbles After Reporting Record Quarterly Revenue, Soft Guidance
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Adobe (ADBE) shares tumbled Friday morning after the company beat first-quarter earnings estimates, but issued soft guidance for the second quarter.
The company reported first-quarter revenue for fiscal 2024 of $5.18 billion. This record high exceeded analyst estimates compiled by Visible Alpha and represented 11% year-over-year growth.
Adobe’s net income for the quarter at $2.05 billion also beat analysts’ expectations and was up from the previous quarter and year-ago period. Diluted earnings per share (EPS) at $4.48 surpassed projections and grew from the quarter and year prior as well.
The company said it expects revenue in the second quarter of between $5.25 billion and $5.3 billion. However, analysts had anticipated guidance at the higher end of this range at $5.3 billion.
Adobe shares dropped more than 13% to $493 Friday morning. Still, the stock has gained about 47% in the past year.
Stocks Making the Biggest Moves Premarket
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Gains:
- Madrigal Pharmaceuticals Inc. (MDGL): Shares of the biopharmaceutical company jumped more than 20% after the FDA approved its treatment of liver inflammation associated with obesity.
- Vodafone Group Plc (VOD): Shares of the British telecom jumped more than 5% after it agreed to sell its Italian business to Swisscom AG.
- Rivian Automotive Inc. (RIVN): Shares of the electric truck maker rose more than 3% after an analyst at Piper Sandler upgraded the stock to buy, citing its attractive valuation and new vehicle platform.
Losses:
- Adobe Inc. (ADBE): Shares of the design software maker tumbled 11% after it beat earnings expectations but offered soft current-quarter sales guidance.
- Jabil Inc. (JBL): Shares of the electronics manufacturing company fell more than 10% after it also forecast weaker-than-expected revenue in the current quarter
- Ultra Beauty Inc. (ULTA): Shares of the beauty retailer slid 8% after it forecast lower-than-expected full-year earnings as higher costs weigh on margins.
Stock Futures Little Changed
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Futures contracts connected to the Dow Jones Industrial Average were up about 0.2% in premarket trading on Friday.
S&P 500 futures rose about 0.1%.
Nasdaq 100 futures were down 0.1% from Thursday’s close about an hour before markets opened.
