S&P 500 rises as sell-off comeback continues, nearly erases the week’s losses: Live updates

“The events of the past few weeks should give investors a taste of what is to come,” according to Montreal-based BCA Research. BCA sees the S&P 500 collapsing by about 30% to 3750 sometime next year as the U.S. enters a recession, driving down the yield on the 10-year Treasury note to 3%.

By contrast, the lowest S&P 500 target among Wall Street strategists regularly surveyed by CNBC is JPMorgan’s at 4200.

“Global equities have been hit by a one-two punch,” BCA analysts led by chief global strategist Peter Berezin wrote in a report released Thursday. “The first punch was a jab in the form of rising skepticism over the bullish AI narrative. The second was an uppercut in the form of rising concerns over global growth. These first emerged in Europe and China, and then spread to the U.S. following a surprise jump in the unemployment rate.”

Although BCA expects stocks to “stabilize in the near term, the medium-term direction is to the downside. We continue to expect the U.S. to enter a recession in late-2024 or early-2025,” the researcher said.

History suggests traders should fade discretionary industries as unemployment rises, according to Strategas.

Ryan Grabinski told clients on Thursday that it makes sense to bet against this area of the market when the unemployment rate rises. Notably, the jobless rate climbed to 4.3% in July, which marked its highest since late 2021, according to government data released last week.

All discretionary industries besides broadline retail underperformed the S&P 500 on average during the four periods of rising unemployment the firm has data for, Grabinski said. To be sure, he noted the small sample size.

Broadline retail can buck the trend because it contains Amazon, which would likely show defensive characteristics in a downturn, and companies like Target that are considered historically defensive.

— Alex Harring

Asian markets managed to recoup some of the steep losses a few days ago, closing out the week with only modest declines.

Japanese equity benchmark Nikkei ended the week down just 2.5% for its fourth negative week in a row. The index plunged 12.4% on Monday for its worst day since the “Black Monday” of 1987. The drastic sell-off was triggered by a rate hike from the Bank of Japan and the unwinding of the yen “carry trade.”

The South Korean stock market finished the volatile week down 3.3%, while Hang Seng, the stock market index in Hong Kong, rose 0.9% this week for its first positive week in four.

— Yun Li

The market may have been overly pessimistic on the economy during Monday’s sell-off, according to UBS.

While volatility could persist at higher levels as more yen carry trades unwind and political tensions escalate, the firm believes much of the moves earlier stemmed from technical factors.

“We believe investors shouldn’t overreact to swings in market sentiment,” said Solita Marcelli, chief investment officer Americas.

The firm is sticking to its S&P 500 year-end target of 5,900, implying around 10% in upside potential for the broad market index.

— Hakyung Kim

U.S. stocks began Friday’s session lower.

The Dow Jones Industrial Average slipped 77 points, or 0.2%. The S&P 500 and Nasdaq Composite dipped less than 0.1% each.

Week to date, the major averages are all on pace for losses. The broad market index is down around 0.6%. The blue-chip Dow is lower around 1% for the week, and the Nasdaq is down 0.8%.

— Hakyung Kim

Sociedad Quimica y Minera de Chile, the world’s second-largest lithium producer by market value, was upgraded to buy from neutral Friday at Goldman Sachs. The stock, actively traded in the U.S., is 3% higher premarket Friday after climbing 3.5% on Thursday.

Goldman, which began research coverage of SQM with a sell in May 2023 and upgraded it to neutral in December, is more optimistic now that lithium prices have crashed 87% since their Dec. 2022 peak. Goldman now “expects limited downside ahead. Additionally, expansion capex is coming to an end in 2026 and sales volume is increasing by 50% by 2028, in support of an attractive FCF yield …and valuation,” analysts led by Marcio Farid in Brazil wrote in a report.

“While investors’ interest on the lithium market remains muted due to an expectation of a prolonged bear market, we now think risk-reward is skewed to the upside, with our price target implying a ~30% upside to current share price and with SQM being well positioned for a lithium supply/demand improvement by 2027,” Goldman wrote.

The investment bank’s 12-month price target stands at $46.50.

Shares of E.l.f. Beauty slid 7% in premarket trading despite the cosmetics company reporting an earnings beat for its fiscal first quarter and raising guidance.

E.l.f. generated $1.10 in adjusted earnings per share on $324 million of revenue. Analysts surveyed by LSEG were looking for 84 cents of earnings per share on $305 million of revenue.

The company also hiked its full-year guidance for net sales and adjusted net income. However, even the top of E.l.f.’s new sales guidance range at $1.3 billion would be growth of less than 30% year over year, compared to growth of 50% in the first quarter.

Several Wall Street analysts pointed to this potentially “conservative” outlook as a reason for the stock’s slide, which the JPMorgan analyst called it a buying opportunity.

— Jesse Pound

Check out some of the companies making headlines in premarket trading.

• Taiwan Semiconductor — Stock in the chipmaker rose about 1% before the opening bell after the company reported strong July revenue, which showed an increase of nearly 45% year-over-year, according to a StreetAccount report.
• The Trade Desk — Shares gained nearly 4% after the ad-buying company beat analyst second-quarter estimates and raised its third-quarter outlook. The company now expects revenue of at least $618 million, while analysts polled by LSEG forecast $604.7 million.
• Expedia — Stock in the online booking company added about 8% following a second-quarter beat on the top and bottom lines. Expedia reported an adjusted profit of $3.51 per share on revenue of $3.56 billion, while analysts polled by LSEG predicted it would earn $3.06 per share on revenue of $3.53 billion. The company cautioned that macroeconomic factors weighed on travel demand in July.

Read the full list here.

— Brian Evans

Expedia reported an earnings and revenue beat after the bell Thursday, sending shares nearly 9% in premarket trading.

Adjusted earnings per share for the second quarter came in at $3.51, topping the $3.06 expected from analysts polled by LSEG. Revenue was $3.56 billion, versus the $3.53 billion consensus estimate.

However, CEO Ariane Gorin warned that in July the company saw “a more challenging macro environment and a softening in travel demand” and are adjusting expectations for the rest of the year.

— Michelle Fox

Paramount shares were up 4.5% in the premarket after the media company announced it would lay off about 15% of its U.S. workforce.

It also reported second-quarter earnings that beat analyst expectations. Paramount posted an adjusted profit of 54 cents per share. That’s well above an LSEG estimate of 12 cents per share.

— Fred Imbert

Shares of Take-Two Interactive gained more than 7% in the premarket after the video game maker reiterated its full-year bookings and earnings guidance. That gain would be the stock’s biggest since May 2023.

To be sure, the company’s fiscal first-quarter revenue came in slightly below expectations at $1.22 billion.

Traders at Goldman Sachs expect the stock market to continue regaining ground from this week’s sell-off, but not in linear fashion.

“From here choppy but higher,” they said in a note. “The tremors we are feeling won’t disappear
tomorrow, but we don’t get the sense anything sinister is brewing where it clearly was in Nov of 2008 and in March of 2020.”

They also added that “buying 5% dips in the S&P 500 has proven to be a very sound strategy over time.”

— Fred Imbert

The flagship cryptocurrency, which has been rebounding alongside risk assets, surpassed the $60,000 threshold on Thursday night.

Bitcoin was last 12% higher on the day at $61,535.40, according to data from CoinMetrics. Ether, which has also staged a comeback, gained 13% to $2,672.47.

Both cryptocurrencies are on pace for weekly losses, however.

—Darla Mercado, Tanaya Macheel

Advancing volume as a percentage of the total reached 87% on the New York Stock Exchange in Thursday’s big rally, even better than the 80% of upside volume seen on the Nasdaq, according to FactSet data.

Almost 79% of all stocks on the NYSE rose in price Thursday, against more than 70% on Nasdaq.

Still, new 52-week lows beat new highs on the NYSE by 53 to 39, and by 212 to 60 on Nasdaq.

Composite volume was a shade below average, reaching more than 98.7% of the past 30 days’ average on the NYSE and almost 97.6% on Nasdaq.

— Scott Schnipper

Check out the companies making headlines in after-hours trading.

• Paramount Global — The media company jumped 5.7% after posting a massive earnings beat for the second quarter, reporting earnings of 54 cents per share while analysts polled by LSEG called for 12 cents per share. Paramount’s revenue of $6.81 billion for the period fell short of the estimated $7.21 billion, however, making that the company’s biggest miss relative to analyst estimates since February 2020. Paramount also announced it is cutting 15% of its U.S. workforce as part of a broader cost-cutting plan ahead of its merger with Skydance Media.
• Expedia — Shares slipped 2.2% after Expedia said it has seen a more challenging macroeconomic environment and a softening in travel demand in July. The online travel company beat expectations, however, reporting earnings of $3.51 per share on revenue of $3.56 billion, while analysts polled by LSEG called for earnings of $3.06 per share on revenue of $3.53 billion.
• Unity Software — Shares shed 4.6% after the video game software development company beat Wall Street’s earnings and revenue expectations, but forecast third-quarter revenues below estimates, seeing a range of $415 to $420 million compared to an expected $458 million.

For the full list, read here.

— Pia Singh