Equity Indexes Wrap: Solar Stocks Leads S&P 500 Higher; Tech Lags

The Dow

Merck (MRK) led the index higher, rising 5% after the FDA approved its treatment for pulmonary arterial hypertension. 

Industrial stocks gained ground, with Caterpillar (CAT) rising 2.3% and Honeywell (HON) gaining 2.1%. 

Disney (DIS) ticked up 0.9% after it reached a settlement with Florida that resolves disputes about the governance of the special district in which its parks are located. 

Amazon (AMZN) also gained 0.9% as it invested an additional $2.75 billion in AI startup Anthropic, bringing its total investment to $4 billion. 

Salesforce (CRM), one of only three components to lose ground, fell 1.5%. Visa (V) and Microsoft (MSFT) dipped 0.6% and 0.1%, respectively. 

The S&P 500

Enphase Energy (ENPH) gained 9.6% after analysts at Mizuho reiterated their buy rating and argued “restocking, revenue growth and margin recovery appear on track for the year.” Peer First Solar (FSLR) rose 9.3%. 

Albemarle Corp. (ALB) gained 8.2% after the Chilean government laid out a plan for doubling lithium production in the country. The plan opens the door for private developers, a departure from last year’s proposal that emphasized state control. 

M&T Bank Corp. (MTB) rose 2.5% despite it being one of five banks to have its credit outlook downgraded by S&P due to its high commercial real estate exposure. 

Carnival Corp. (CCL) ticked up 0.7% after reporting a narrower-than-expected loss in the first quarter. Competitor Norwegian Cruise Line Holdings (NCLH) rose 5.9%. 

Nvidia (NVDA) fell for a second consecutive session, dipping 2.5%. Super Micro Computer (SMCI), also a major AI stock, slipped 0.2%. 

Netflix (NFLX) slid 2.5% after a judge refused to dismissed a defamation lawsuit against the company over its miniseries “Inventing Anna.”

The Nasdaq 100

Cintas Corp. (CTAS) rose 8.3% after the business services provider topped Wall Street’s estimates with its quarterly sales and earnings. 

Moderna (MRNA) rose 3% after it secured $750 million in financing from Blackstone Life Sciences to develop flu shots. 

Coinbase Loses Bid To Dismiss SEC Lawsuit Against It, Stock Slips

Coinbase Global Inc. (COIN) suffered a setback as a judge denied the company’s motion to dismiss a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) for violating securities laws. The company's stock traded 3.6% lower late Wednesday following the news.

U.S. District Judge Katherine Polk Failla’s decision will allow the lawsuit to go forward, finding that the SEC has "sufficiently pleaded" that Coinbase operates as an exchange, broker, and clearing agency under federal securities laws, and through its staking program engages in the unregistered offer and sale of securities.

The regulator sued Coinbase in June, alleging that the company violated securities laws by operating as an unregistered exchange, broker-dealer, and clearing agency. Coinbase filed a motion to dismiss in August. The case now moves to discovery ahead of a trial. 

But it wasn't all bad for Coinbase, either. The court did grant the crypto exchange's motion to dismiss the SEC’s claims that the company acts as an unregistered broker by making its wallet application available to customers.

-Christiana Sciaudone

Carnival Stock Rises After Posting Smaller-Than-Expected Q1 Loss

Carnival Corp. (CCL) shares turned higher in intraday trading Wednesday after the cruise line posted a smaller adjusted first-quarter loss than analysts expected.

Carnival posted record first-quarter revenue of $5.41 billion, narrowly missing analyst estimates compiled by Visible Alpha of $5.43 billion. The cruise line also posted a smaller adjusted net loss than expected of $180 million, or an adjusted loss of 14 cents per share.

The company raised its full-year guidance, while noting that Tuesday's collapse of Baltimore's Francis Scott Key Bridge isn't yet included, due to how recently it took place. Carnival is currently projecting full-year 2024 adjusted income of about $1.28 billion, up from a prior outlook of $1.2 billion but still below analyst estimates of about $1.36 billion.

-Aaron McDade

Moderna Gets $750 Million in Flu Shot Funding, Stock Advances

Moderna Inc. (MRNA) shares advanced Wednesday as the biotech firm used its “Vaccines Day” event to make key announcements about new funding and the results of several vaccine trials.

The drugmaker said it recently entered into a development and commercialization funding agreement with Blackstone Life Sciences (BX) in which Blackstone will provide up to $750 million to advance Moderna’s program to create a flu vaccine. It added that Blackstone’s return would be “based on cumulative commercial milestones and low-single digit royalties."

Moderna also reported positive clinical data from three new vaccines to fight Epstein-Barr virus, Varicella-Zoster virus, and norovirus, and they will be advanced toward Phase 3 trials.

-Bill McColl

Sunrun Surges After S&P Bumps From Mid-Cap to Small-Cap Index

Shares of Sunrun (RUN) climbed more than 15% Wednesday after S&P Dow Jones Indices bumped the solar company from the S&P Mid-Cap 400 index to the S&P Small-Cap 600 index.

The reindexing is something of a downgrade for Sunrun, which has lost 72% of its market value since its inclusion in the mid-cap index was announced in July 2020, but it could actually be a boon to shares. That’s because Sunrun will have more weight in the capitalization-weighted small-cap index than it did in the mid-cap index. Thus, to reflect the rebalancing, passive funds that track the small-cap index will need to buy more Sunrun stock than will need to be sold by mid-cap index funds. 

Research has born this out. One 2013 study found that stocks often rise when they move from the Russell 1000, which consists of the 1,000 largest U.S. stocks, to the Russell 2000, which consists of the next 2,000 largest, due to index fund buying.

But being bumped up from a small to a large-cap index doesn’t necessarily have the opposite effect. Shares of Roivant Sciences (ROIV), which will replace Sunrun in the mid-cap index, rose more than 9% on Wednesday, bringing their return over the past 12 months to 53%. Despite Wednesday’s gains, Sunrun shares are down 28% in the last year.

Merck Stock Hits Record High as FDA Approves Its Cardiovascular Disease Drug

Merck & Co. (MRK) shares hit an all-time high Wednesday, a day after the drug maker announced that the Food and Drug Administration (FDA) approved its treatment for a rare condition that causes high blood pressure in patients because of restrictions in their lung arteries.

The injectable drug, which goes by the brand name of Winrevair, is for adults suffering from pulmonary arterial hypertension (PAH).

Winrevair reportedly is priced at $14,000 per dose, and patients take the injection once every three weeks to treat the disease, which affects nearly 40,000 people in the U.S. Merck, which paid $11.5 billion for the company developing the medicine in 2021, generates more than 40% of its revenue from cancer treatment Keytruda, the world’s top-selling drug.

-Bill McColl

Robinhood Stock Rises on Launch of Credit Card With 3% Cash Back

Shares in Robinhood Markets (HOOD) rose Wednesday morning after the online trading app said it was launching a credit card, as it moves to become a one-stop shop for financial services.

Robinhood said the card is available exclusively to its premier Robinhood Gold customers and comes after it bought X1, a credit-card startup, last year.

Chief Executive Officer Vlad Tenev said the 3% cash back is well above industry norms and would appeal to the online trading app’s typical customers in their 30s, college students, or recent graduates in their first jobs—as well as draw new people to its platform.

-Fatima Attarwala

GameStop Stock Plunges After Earnings Fall Short of Expectations

Shares in brick-and-mortar video game retailer and legacy meme stock GameStop (GME) plunged Wednesday after the company disclosed quarterly earnings that fell considerably short of Wall Street’s expectations amid an ongoing shift to digital downloads and softening consumer spending.

In the three-month period ending Feb. 3, the Grapevine, Texas-based company posted adjusted earnings of 22 cents per share, compared to analysts’ estimates of 30 cents a share. Revenue of $1.79 billion in the period fell from $2.23 billion a year earlier and missed the $2.05 billion consensus view.

GameStop's share price has remained entrenched within a multi-year downtrend, pressured by a long-term trendline connecting several prominent countertrend swing highs.

Amid the earnings-driven sell-off, investors should monitor how the stock’s price responds to the 2023 low at $11.83. A reversal at this level could mark the beginning of a potential double bottom pattern, while a failure to hold this important chart level could act as a catalyst for further declines.

-Timothy Smith

Stocks Making the Biggest Moves Premarket

Gains:

• Trump Media & Technology Group (DJT): Shares of the Truth Social parent company jumped 16%, adding to yesterday’s 16% gain on the stock’s first day of trading. 
• Robinhood Markets Inc. (HOOD): Shares of the digital trading platform and brokerage gained more than 7% after it said it planned to launch a credit card for premium Robinhood Gold customers. 
• Merck & Co. Inc. (MRK): Shares of the pharmaceutical giant rose more than 5% after the FDA approved its new drug for the treatment of pulmonary arterial hypertension. 
• Moderna Inc. (MRNA): Shares of the vaccine maker rose more than 3% after it secured $750 million in funding from private equity firm Blackstone to develop a flu vaccine. 
  

Losses:

• GameStop Corp. (GME): Shares of the video game retailer fell more than 17% after it reported lower-than-expected quarterly earnings of 22 cents per share. 
• Nio Inc. (NIO): American depositary receipts of the Chinese electric vehicle maker fell 3% after it lowered its forecast for first-quarter deliveries amid a slowdown in demand and price war in the world’s largest EV market. 

Stock Futures Rise After Two Losing Days