Dow extends decline as lackluster earnings and interest rate fears get on nerves

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• Thu May 30, 2024 6:42 AM MST

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  Nelson Peltz sells entire Disney stake after losing proxy battles

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

  Peltz sold his position at a price of about $120 per share, generating a return of about $1 billion, the source said.

  The development, first reported by CNBC, comes after Disney successfully fended off Peltz in his quest to secure board seats at the company, officially ending a highly contentious proxy battle that plagued the entertainment giant for months.

  Peltz had fought to secure board seats for himself and former Disney CFO Jay Rasulo, but was ultimately unsuccessful. At the company’s annual shareholder meeting in early April, Disney said the current board would remain intact after a shareholder vote that gave the company’s slate a win “by a significant margin.”

  Disney shares are up about 12% since the start of the year, but are down about 15% since the company defeated Peltz in its proxy battle.

  Read more here.

  

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  Thu May 30, 2024 6:32 AM MST

  Dow falls 300 points while Salesforce stock falls 18%

  The Dow Jones Industrial Average (^DJI) fell about 300 points at the open, weighed by shares of Salesforce (CRM).

  The blue chip index fell on Thursday after falling 400 points in the previous session. The S&P 500 (^GSPC) fell 0.3%, while the tech-heavy Nasdaq Composite (^IXIC) also fell 0.4%.

  Shares of Salesforce fell as much as 18% on the stock market after the cloud-based software company missed second-quarter expectations, raising concerns about the macro environment and delaying deal signings.

  Rising shares of AI chip darling Nvidia’s (NVDA) have failed to boost overall markets. Growing concerns about higher interest rates for an extended period amid bumpy inflation numbers have undermined recent rallies.

  The bond market has struggled as the 10-year Treasury bond (^TNX) rose above 4.5% again, putting pressure on stocks.

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  Thu May 30, 2024 5:39 AM MST

  GDP: The US economy grew more slowly in the first quarter than initially thought

  The US economy grew more slowly in the first quarter than initially thought.

  The Bureau of Economic Analysis’ second estimate of first-quarter U.S. gross domestic product (GDP) shows the economy grew at an annual rate of 1.3% during the period, up from an initial reading of 1.6 % in April. But it was in line with the decline from the first reading that economists had expected. Q1 2024 GDP was significantly lower than Q4 GDP, which was revised upwards to 3.4%.

  The update to the first quarter growth measure “primarily reflected a downward revision in consumer spending,” the BEA said. Personal consumption grew 2% in the first quarter, compared to a previous growth of 2.5%.

  The soft GDP comes at a time when markets have been sensitive to signals that the economy may be running too hot for the Federal Reserve’s liking, as inflation has proven more persistent than expected.

  It is striking, however, that many forecasters do not see the slowdown in economic growth in the first quarter as the start of a broader trend. In Thursday’s reading, Goldman Sachs assumed annual growth of 3.2% in the second quarter. Meanwhile, the Atlanta Fed’s GDPNow forecaster currently predicts 3.5% annualized growth in the first quarter.

  US economist Michael Gapen of Bank of America wrote in a letter to clients last Friday that his team expected a downward revision to GDP in the first quarter, but that this was not a cause for concern for future economic growth.

  “The bottom line is that the economy has moderated somewhat in the first quarter, but remains stable overall,” Gapen wrote on Friday.

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  Thu May 30, 2024 5:22 AM MST

  Terrible quarter from Best Buy

  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 this quarter from Best Buy really stunk again.

  The revenue declines are piling up for the company, which makes me wonder if there are structural issues the company can’t overcome. The selling pressure has been going on for about two years now. I also wonder if fresh eyes will be needed in the C-suite after the upcoming holiday shopping season.

  

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  Thu May 30, 2024 2:21 AM MST

  Follow up: Chewy

  Chewy (CHWY) found its way onto these live blog pages on Wednesday, and for good reason.

  Shares exploded 27% thanks to a better-than-expected quarter (shares are down slightly in pre-market today). The response took me a bit by surprise, as the company’s closely watched active customer metrics continued to decline year over year. In fact, the decline accelerated from the previous quarter’s decline.

  Still, the Street devoured the company’s margin expansion and commentary on an improving demand environment.

  We spoke to Chewy CEO Sumit Singh in a wide-ranging interview on Yahoo Finance Live (full view below), where he reiterated the improvement in demand.

  I found it interesting that the company is fully committed to opening vet clinics. There are now four in operation that opened in the first quarter, with four more opening by the end of the year.

  The company is far behind Mars, which operates thousands of veterinarians (it has been a middleman in this field, acquiring family practices). But there’s an opportunity here for Chewy to provide a better healthcare environment that matches the services and products it sells online.

  Also something to keep an eye on: the company has started testing a paid membership program.

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  Thu May 30, 2024 2:11 AM MST

  Trendwatch: PC demand cycle

  HP Inc. (HPQ) shares are trading up 3% pre-market after a better-than-expected quarter last night.

  Of everything I talked about with HP CEO Enrique Lores (full interview below) following the results, it was his call for companies upgrading computers ahead of Windows 10’s withdrawal of support that left an impression. It appears the race to replace computers has begun before that point in October 2025.

  The introduction of HP’s first wave of AI PCs to the market this month will likely further fuel that upgrade cycle.

  “We continue to think HPQ remains well positioned to benefit from the PC upcycle, which should only accelerate in the second half and into FY25,” EvercoreISI analyst Amit Daryanani wrote in a client note this morning.

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  Thu May 30, 2024 2:05 AM MST

  Salesforce crashes

  Salesforce stock (CRM) is getting hammered 16% pre-market.

  The sell-off is justified.

  Salesforce missed its key benchmark for performance commitments, growing 10% versus estimates of 11%. The conference call was littered with concerns about the macroeconomic environment, which is hindering deal signings.

  The non-consensus Q2 guidance reflects these concerns (hopefully for management’s sake).

  “While the first quarter has been consistently weaker for software, the magnitude of the miss may point to more idiosyncratic issues (market positioning, down-sells, competition) that could continue to weigh on the company in the second quarter, especially now FY25 earnings now look aggressive.” (implying acceleration in the second half versus the second quarter),” Citi analyst Tyler Radke said in a client note. “The valuation is not demanding at 20x earnings per share, 18x enterprise value/free cash flow (as per FY25 estimates), but with slowing growth, a lack of less risky estimates and more active M&A activity, we may be on the sidelines waiting for improving growth or more evidence of data.” Cloud/GenAI momentum/monetization.”

  All in all, a surprising quarter from Salesforce that was not telegraphed. The stock will likely remain in the box until signs of a more stable macro environment emerge.