Key Takeaways
- The S&P 500 slipped 0.6% on Thursday, Nov. 14, 2024, as hotter-than-expected wholesale inflation data raised doubts about future interest-rate cuts.
- Shares of Leidos and Amentum moved lower amid an uncertain outlook and challenging competitive environment for government contractors.
- Tapestry shares surged after the Coach and Kate Spade parent called off its planned merger with fellow luxury brand holding company Capri.
Major U.S. equities indexes slipped on Thursday as the latest Producer Price Index report revealed that wholesale prices increased in October at their steepest rate in three months and Fed Chair Jerome Powell said there wasn’t a “hurry” to cut interest rates.
Although expectations remain high for another interest-rate cut by the Federal Reserve at its meeting in December, the hotter-than-expected PPI reading could influence policymakers as they weigh additional rate reductions next year.
The S&P 500 and the Nasdaq both closed Thursday’s session approximately 0.6% lower. The Dow was down 0.5%.
Shares of defense contractor Leidos (LDOS) suffered the heaviest decline in the S&P 500 on Thursday, plunging about 13%. With today’s downturn, Leidos stock has reversed gains posted in late October that corresponded with its third-quarter earnings release. Although strong bookings suggested that Leidos is positioned for growth, analysts have pointed to uncertainties surrounding the company’s artificial intelligence (AI) integration as well as risks related to the timing of its projects with the Veterans Benefits Administration.
Leidos was not the only government contractor to see its stock come under pressure. Shares of Amentum (AMTM), which provides engineering and technological solutions to the U.S. government and its allies, dropped about 11%. Amentum stock has been volatile since debuting on the public markets and joining the S&P 500 at the beginning of October. Amentum recently said it had secured a $490 million contract to help modernize the U.S. Navy’s training aircraft fleet. However, the company faces a challenging competitive environment as well as integration risks related to its recent merger with two divisions spun out from Jacobs Solutions (J).
Super Micro Computer (SMCI) shares extended their recent string of losses, slipping another 11% on Thursday. Supermicro stock has been under duress since the server manufacturer announced last month that it would postpone the release of its latest earnings report and has said it needs to hire a new auditor after accounting giant EY resigned from the role. The company faces a possible delisting from the Nasdaq if it can’t comply with the exchange’s reporting rules.
Meanwhile, the S&P 500’s top daily performance belonged to shares of luxury apparel and accessories holding company Tapestry (TPR), which soared about 13%. The gains for Tapestry stock came after the parent of the Coach and Kate Spade brands called off its merger with Capri Holdings (CPRI), home of Versace, Michael Kors, and Jimmy Choo. The companies pointed to legal challenges after a federal judge issued an injunction last month to block the deal, agreeing with claims that the combination would stifle competition and result in higher prices. Capri shares rose 4.4%.
Shares of casino operator Wynn Resorts (WYNN) added about 9% as a regulatory filing showed that billionaire Tilman Fertitta had boosted his ownership stake in the company to 9.9%. Fertitta is the CEO of the Texas-based restaurant and hospitality company Landry’s. Although filings indicate Fertitta’s Wynn position is a passive investment, reports suggested he might push for changes. Wynn is currently focused on expanding into gaming markets in the Middle East through a joint venture in the United Arab Emirates.
Solar stocks regained some ground Thursday following a series of losses in the wake of Donald Trump’s election victory. Trump has pledged to reverse Biden administration policies aimed at supporting renewable energy solutions, pressuring shares across the industry, but some analysts have suggested that the decline represents a buying opportunity. Shares of Enphase Energy (ENPH), which recently announced plans to lay off about 500 workers as it navigates the challenging industry dynamics, jumped 5.3%. Shares of panel manufacturer First Solar (FSLR) gained 7%.