The Dow Jones Industrial (^DJI) briefly touched over 40,000 for the first time in history, though it did end the day lower. Applied Materials (AMAT) posted its second quarter earnings, beating revenue expectations showing further signs of strength in the chip sector. Saint-Gobain North America CEO Mark Rayfield (SGO.PA) joined the show to give insight into homebuilding fundamentals and why he believes they remain “robust”.
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Video Transcript
There is a closing bell on Wall Street and now it is market domination over time.
Let’s get you up to speed on the action from today’s session sponsored by Tasty Trade.
Let’s start with where the major averages ended.
We touched down 40,000 earlier in the day between 10 and 11 a.m. and then we didn’t stay there.
So down on the day when all was said and done not repeating the record close of yesterday for all three averages.
The Dow ending the day down about 38.5 points as things lost steam.
The S and P 500 off about 1/5 of 1% and the NASDAQ down a quarter of 1%.
If we look at the Dow components to see kind of what happened here and what dragged things down.
I’m going to equal weight.
It just to give us a look here, Cisco falling the most after its numbers.
Although initially the chairs were higher Caterpillar down 2.5 percent Home Depot Amazon and sales force rounding out from the week performers Wal Mart numbers and the stock rising after its earnings was not enough to salvage the Dow here.
And then I also want to take a look at the sectors within the S and P 500.
We had materials discretionary, industrial, some of the worst performers big increase in consumer staples.
But again, that was not enough to salvage the overall performance.
Josh Julie stocks closing off the highs of the session with the Dow briefly passing 40,000 for the first time ever joining us.
Now with takeaways from today’s trading day is Yahoo Finance’s very own, Jared Blicker.
Jared.
Thank you.
Well, let’s go to the Wi Fi Interactive.
I want to start with the meme trade.
That’s faltering.
Uh Since yesterday, we’ve seen Games stop and that’s down 30% today and A MC, this little box here that’s down 15%.
It, in fact, over the last two days, you can see gamestop down over 40 A MC down over 30.
But if I turn this to a four day, look as I’ve been doing still a lot more green than red.
And you can see a MC and gamestop holding on to gains of more than 50%.
Although that was closing, it was pretty near 100% on the open.
So definitely losing steam here.
But I want to highlight another trade that is doing well in May.
And for all the talk of NVIDIA, this is called Edge A I.
And these are the companies that are processing data closer to the source.
So they don’t have to inundate and transmit all that data to a server farm somewhere and get it back.
What you notice here is Apple.
Apple hasn’t really participated much.
It’s also the biggest elephant in the room, maybe the only elephant, but here’s an equal rate.
We can also see Qualcomm.
That’s this is month to date.
So we see, actually let me show you month day.
There we go.
The numbers get a little bit better.
Ces up 26% dell up 17 Qualcomm 16.
And so we also have Arm Apple and Cate technologies in there.
So this is a trade and A I trade that is already doing well in the month of May.
And uh meanwhile, NVIDIA kind of stuck in that multi month range.
Yeah, what are you looking for?
And we actually talking beforehand, Jared about next week with NVIDIA and the levels you’re watching, you know, 750 is a big one to the downside and then we have the record highs.
I don’t know that off, off hand here.
But uh I think 750 if there is some kind of a disappointment, we’re gonna see the uh we’re gonna see NVIDIA come down to meet that and let me just let me just put a chart on real quick.
I do have on the Wi Fi Interactive here’s NVIDIA and let me show you here’s the year to date.
We’ve just kind of stalled out and here are these highs 900 1000 something in there.
So, my point was we could go down 750 if it’s not favorable.
And if we punch above, well, guess what, probably a new leg that we have to the upside and it’s already up 90% here today already.
Yeah.
Already.
Um, the meme stock.
Well, we had some fun earlier in the week, didn’t we?
And now things are kind of fade.
Continue to fade.
Right.
Yeah.
Um I don’t have a lot to add to the meme stock thing.
I think it’s just kind of faltered over the last two days, still holding on to some gains here.
What I’m interested is where the hot money is flowing.
And if we look, let’s get a four day look on the Wi Fi interactive.
These are my leaders and sentiment markers you’ll notice in the upper left over the last four days.
G BT C, that’s my Bitcoin proxy.
So Bitcoin has been seeing some of those edge flows.
Um a different use case for edge here.
Cannabis flying.
That’s, you know, the are we ever going to get that bill passed in Congress?
We’ll see or the reclassification.
Uh But we also have Chinese stocks.
Those have been doing very well.
In fact, China stocks are the most overbought.
If you look at the FX I ETF most overbought since 2021 that was a peak, we are nowhere near the peak.
So that has potential room to run even though short term overbought and then here’s unprofitable tech arc invest.
So the fringe part of the market, even if it’s not going into meme stocks looks like it’s going somewhere, momentum, trade, going somewhere.
Thanks so much.
Appreciate it.
We have earnings out right now from applied materials.
That company reporting earnings per share of $2.09.
That’s 10 cents above estimates as ne second quarter net sales at 6.65 billion.
6.52 billion is what was estimated here in the company given a range for third quarter net sales of 6.25 to $7.05 billion.
Analysts have been looking for $6.59 billion.
So um it looks like the shares are not doing a heck of a lot at the moment.
Um in terms of year to date, they are up about 33% here, Josh.
Yeah, it’s had a tremendous run.
I mean, it’s about 30% this year.
It’s up around 80% over the past 12 months.
So it was real strong heading into the print and obviously, you know, you care about this name because they’re a big, big maker of chip making equipment.
So they supply names like TS MC Intel, Samsung, I mean, you, you, they name it and investors obviously, they like to hear good things from a ma because they, they will take it out as sort of an indication of better times ahead of the chip industry.
And obviously when you talk a ma you talk China because A A is restricted in what it can ship to China.
And China would like to be a big global tech powerhouse.
The Biden administration has other plans.
Yes, indeed, it does.
Um And a lot of the company sales come from outside of the US, um applied materials just coming out as we talked about and reporting those better than expected results on the top and bottom line.
But the share is not doing much at the moment.
Joining us now is Corey Johnson for futur um chief Market strategist.
And he’s not just exactly and he’s not just joining us.
He’s joining us here in city.
Very excited to have you been in studios with you guys before?
Yes.
But in, in New York City, same city, different studio.
Yes, it is.
Exactly.
So let’s talk about a ma shall we um with that company coming out and, and the market reactions kind of ma Well, I mean, the guidance is you could drive a truck through that guidance.
I don’t know how that’s guidance.
I mean, really like saying it’s gonna be somewhere near something up or down, you know, the numbers they put up here today just now are good.
Uh the bottom line much better than expected, but that’s what these guys do.
They always, you know, lower their expectations about what they’re gonna do and then beat it.
Um, uh, I’m, I’m gonna dig through the release a little bit more.
Um, but what’s, what’s really interesting is that they’ve got lots of different pieces of their business and that their foundry services business has actually been doing quite well.
Um, uh, well, some of the other businesses have not.
And so, um, you know, these numbers are just about flat from where they were a year ago and we, we talk so much about expectations when we look at the market but companies that get bigger are better than companies that get smaller.
Cisco is a case in point yesterday, Cisco trading up after the clothes when they put up a print that was 13% up lower than it had in the previous year.
The networking segment was down 27% for a company that sells networking equipment.
So the, the market was briefly fooled by that, but a shrinking company not a good thing, growing company, good thing.
And I think the thing we’re gonna hear from a mat on the call is, is a real understanding of what’s hap is, has is the turnaround happening in semiconductors across uh the works.
We’ve gotten really mixed results from different semi companies over the course of the last few weeks.
What about uh you, you heard uh Julie I talking about China here, you know, A and A A Corey B like a lot of names, I mean, restricted what they can ship to China and just, I want to get your thoughts about this general sort of tension.
I mean, China would like to be this global tech giant, you know, and be a leader in all kinds of industries, like a I Biden administration, you know, I think it’s, it, it seems to be the one thing Republicans and Democrats can kind of unite on.
We’d rather not see China be a tech global power.
How are you thinking about this?
So what’s really interesting is that China has reacted to its inability to get the best equipment from a SMLN AM at to some degree and, and, and make the best chips and the best wafers in particular.
Um And now of course, they can’t buy the chips also the best chips from NVIDIA and from a MD that they would like to buy.
So they’ve responded by going into the market and creating uh the ability to make some people like to refer to them as old semiconductors or semiconductors and 45 nanometer or something you think is worthless.
I think of them foundational semiconductors.
They are the semiconductors that do most of the work and are most of the sales.
It’s not the fastest sexiest stuff, but it’s the stuff the world needs the most.
And so uh from a SML results, for example, what you saw is their sales in China went from uh as I recall for about six quarters of about 15% to 49% year over year growth.
So fantastic growth of selling semiconductor equipment, manufacturing uh equipment to China.
Right?
When we’re here talking about the vitamins Republicans agreeing on bans of of semi cap equipment to China.
So it will be curious to see again on the call and and when I read the release a little more from a at what they did with China and what their business was like into China.
So bottom line, it seems like most us semiconductor companies have managed to successfully navigate all of these restrictions by selling in those altered products.
And more to the point that China manufacture, that the semi cap equipment companies are selling the ability that the equipment that will manufacture these chips in China.
So they may never get out of China, but China is a, is a net exporter of chips, not an importer and that’s going to be even more.
So going forward, how do you think Corey about, you know, you talk about A I competition geopolitically, how do you sort of think about who’s ahead right now if you were asking us or China?
Oh, absolutely, unquestionably what’s going on in the eu.
And um because all the, because there’s freedom and creativity and people wanna develop here, they want to develop in Silicon Valley in particular.
Um And that’s where the smart people are.
I mean, you know, you were in the Bay Area for a long time and I’ve been there for even longer.
And, um, there are, there is so much excitement about A I right now and it, and it is really a foundational change since you still live at that has that dulled at all in the past six months, 12 months only still rampant hasn’t, it?
Was it too much excitement?
Surely there will be Boston.
But this is, this one really does feel different in that.
This is a real foundational change in what uh the technology can do.
And you’ll hear by the way.
So interesting is you’ve seen these, you’ll hear that it’s foundational.
It’s paradigm internet mobile A I, you, you agree with that 100% agree with that.
And you’re seeing the results, one of the differences, you know A I and machine learning have been around for, but there, the chat G BT moment was an iphone like moment.
It wa it was a, it was a Netscape browser moment.
It really showed us how things can are really gonna change in the future.
And uh the, the evolution in the last year is just jaw dropping.
Um And you know, you mentioned NVIDIA earlier, we get results next week from NVIDIA and that’s um it’s gonna be really interesting.
They, I I really expected them to, to lower it expectations and put a little damp on the fire a little bit last quarter and they did quite the opposite.
Um And so this could be really interesting.
So I’m glad you brought up NVIDIA because I actually um I’m writing about NVIDIA for tomorrow’s morning brief newsletter.
Shameless plug, please.
Yahoo Finance.
It is in my street, but I’ll give you a little tease here.
Like just looking at how much Nvidia’s data center business has grown and is expected to continue to grow.
And I was looking at other companies, right.
If you look at other companies that have grown a lot in the past, like Tesla had a year in 2013 when its sales were up 387% but it didn’t even have $2 billion in sales.
And you’re talking about company, a company that is growing sales on an annual basis, doubling tripling, but the sales are in the triple digits, billions of dollars like this.
I mean, has any other company been this big and been continuing to grow by this much?
We’ve never seen anything like this ever.
There’s nothing like it.
What’s also interesting is that NVIDIA and we’ll see how this plays out, but NVIDIA has also jacked their gross margins.
In other word, they’re selling everything they make, they’re making things as fast as they can, they’re inventing and integrating faster than, than any chip company really has ever.
But they’re also sticking to their customers and they’re raising their prices so much and successfully because because you know, the old saying used to be no one ever got fired for buying IBM, right.
Now, if you’re building a data center, you buy the NVIDIA chips, it’s just what you do and whatever they’re gonna charge you, you’re gonna, you’re gonna buy those chips.
So it doesn’t matter if it’s a build out happening with.
But, but again, you have all their customers, many of their customers saying we’re gonna start to design our own chips.
Now, I doubt that Google Meta Amazon, um uh are all gonna be able to create chips as good and as well as NVIDIA has, they’re gonna, it’s, it’s hard to do.
It’s the hardest thing maybe that’s ever been done.
So they might not have the same kind of success.
But um when all of your customers are trying to invent a competitor uh to the product, they, that you are selling them, you might want to work about that.
So NVIDIA is, uh they’re, they’re, they’re making a lot of money, they’re taking a lot of profits and they’re innovating at an incredible pace.
But uh their customers are don’t like paying as much as they’re paying one course for you core.
You know, we talk about the great A I Race and our, our colleague, Jared Blare was just here talking about Apple, you know, those companies where there’s a sort of perception that they’ve fallen behind.
Um And I think, you know, there’s this perception, Apple isn’t where it should be.
You know, there’s so much focus now on the big software show in June.
Do you think it’s so early innings that they’re still time?
We’re still shaking out winners and losers and if you’ve got the money and the engineers, you can play, you, you’re still catching up.
Apple’s fine.
But did you see the Lyra David episode where he starts screaming at Siri?
Oh, my gosh.
It was, it was the perfect moment.
It was the perfect moment.
So, it, you know, I think that, um, uh it really demonstrates the frustration that people have with the Apple product and, and the lack of A I there because that’s something A I would help.
Um And so there’s, there’s some room in the marketplace, but Apple’s really locked themselves in this position, particularly in the US with smartphones that no one else is there.
I, I’ve had similar conversations with Alexa, by the way.
Yes, she doesn’t really understand what your I I wouldn’t go that far.
My Children are usually around when I’m talking to her.
So I, I keep myself under control, Corey.
It’s great to see you.
Good to see you guys.
It’s good to be here.
Thanks for coming in, come visit us again.
All right, coming up, we’re gonna talk about mortgage rates which decreased for the second consecutive week.
We’ll check in on the latest housing hurdles on the other side.
More market domination overtime coming up.
Let’s recap.
Today’s session for you, sponsored by Tasty trade.
We’ve got all three major averages that fell today after earlier hitting records, then pulling back the Dow in particular, touching 40,000 before finishing the day down 1/10 of 1%.
The S and P and the NASDAQ also lower Walmart was the standout though both in the Dow and the S and P was the best performer up by 7% following its earnings.
But we ended up seeing a drag from some other sectors on the day.
And construction of new homes rose 5.7% in April at a lower clip than economists were in fact projecting recent data, suggesting builders are cautious as mortgage rates hovered elevated levels but some good news for home buyers, mortgage rates edging lower for the second straight week.
We’re speaking with a top executive of one of the top building materials suppliers about the demand they are seeing right now.
So joining us is Saint Gobain, North America, CEO Mark Rayfield Mark.
It is good to have you on the show and, and maybe Mark just we can start with your general take there on the housing market.
What are you seeing?
Mark?
What are the fundamentals look like?
So, so first off, thanks for having me on and, and uh on the housing market, we have remained relatively bullish on on the current projections and going forward.
There’s a great under built capacity in in in home and housing right now, both in the US and in Canada, probably 7 million under built in the US and 3.5 million unbuilt in Canada.
So the fundamentals remain strong as well as the fundamentals are still strong on remodeling and renovation.
Nothing like it was in COVID, but still quite robust.
So, so while you have interest rates high, you have housing starts and completions on a month to month basis, getting a lot of attention in general, the basic fundamentals of housing in North America are very strong and will be for the next number of years.
And mark, how are you all doing with uh having enough supply to keep up with that demand?
Obviously, that was an issue during COVID.
What does that landscape look like now?
It it’s much better right now.
I mean, it’s still, it’s still a very robust market.
So, so for the vast majority of building materials, if you look at exterior products and roofing and siding and gypsum and insulation, the market is there thereabouts at capacity not sold out like it was in in uh COVID, but depending where you are regionally, there could be some supply challenges, not not long, but so that is another reason I say the market remains quite robust at the at these housing levels.
So the the housing you know, looks robust.
I’m curious Mark, where are you seeing kind of the most activity within that market though you know, is is it um is is it new construction mark?
Is it remodeling?
Where are you seeing it.
So it’s a mix.
What I like to say is you want to know where the activities follow the people.
So obviously, the southeast and southwest where people are gravitating to, to somewhat has a greater degree of activity, but we have two buckets.
You have, the large home builders are still building at a relatively good clip and having a good success.
They’re looking out long term and realize there’s need for more homes.
And you have a lot of uh weather impacted building going on for remodeling, whether it be after the snow thaws and the storms of the West coast now really building up on a lot of remodeling or out through the Midwest into the southeast, which has a lot of uh weather impacted remodeling taking place.
Mark you guys aren’t just residential, you don’t provide just residential uh materials, you also do other kinds of construction.
So what, what’s the sort of share in North America or what, how does it break down in North America?
And what’s the demand looking like in those other areas?
So we are predominantly residential, so closer to 75% residential than another number.
So we, but we have a significant commercial business both in our gypsum insulation interiors, ceilings business as well as we have some very innovative products with sage glass, Electromatic glass.
So in, in, in commercial, you have a softer market, particularly when you’re looking at the the office base in the major cities, there’s some remodeling of those into, into, into, into housing units.
And I think your top properties are getting renovated and rebuilt and, and people are coming back in, but it’s certainly a softer market till you get to biofarm.
Transportation, airports, which is still a relatively good marketplace.
So it’s, it’s certainly not as robust as residential.
I, I’m curious too, Mark.
You know, we, we talk about, obviously, of course, the, the labor market on this show, curious how, how you’re seeing that are you all hiring right now?
Mark and, and are, are you if you, if so, are you, are you finding the people you wanna hire?
Yes.
So, so we are hiring, we continue to hire.
So I’m watching, we’d love to talk to you.
So, so I think we’re still hiring, we’re growing in North America doing a lot of investments.
So we’re always looking for, for talent in the business and the labor market and, and attracting labor has gotten better again off of the really challenging times of COVID.
But it’s still, you need to have the right value proposition.
You need to have the right work environment.
You need to have something that they want to embed into.
What we’re seeing is the labor force coming in.
Doesn’t just want a job, they want to be connected to something they believe in.
We, we are decarbonizing the construction market trying to make the world a better home.
If you will through construction and light sustainable construction.
So they want to have that purpose to come forward.
So more so than ever, you need a culture and a welcoming environment to bring a very diverse workforce in uh Mark.
I, I wanna go back to the beginning where we talked about mortgage rates and that we are starting to see a little bit of a tick down.
What kind of magnitude of tick down in those uh mortgage rates will we need to see to unlock really sort of the next tranche of demand for residential construction?
That’s a great question.
Um I can give you an opinion.
I don’t think I have the answer.
You know, the reality is that I think if you look at some of the stuff out of the National Association Association of Home Builders and some numbers, if you were to go down in the six and a quarter percent, you know, another 4 to 5 million people could afford a home today.
If you go down to 5% it’s another 10 million.
So just getting to those levels brings the affordability gap up for, you know, really 10 million new people to enter the housing market.
The real lock is also just people with a 3% mortgage.
Will they sell their house and go to a larger or new house for 6% right now?
Maybe when you get below six, I think you start to see people start to unlock that the, the historic average of mortgages is in the 7% range if you take the long view of it.
So we’re, we’re higher than we’re used to in the last decade, but we’re not outrageous.
Right.
Mark Rafield.
Thanks so much for your perspective.
Appreciate it.
Thanks for your time.
Have a great day.
Take care.
You too and checking in now on oil as us crude stockpiles decline for a second week.
It’s a positive signal for demand.
Yahoo finance is in for right here with the latest on the oil market.
Hi, Ines.
Hi Julie.
Yeah.
When we see stockpiles decreasing, that is bullish for oil.
So taking a look at where we’re at today, we did see WT I and Brent crude on our Wi Fi interactive.
You can see that those arose today.
Both wt I just above $79 per barrel.
Brent crude also higher year to date.
By the way, wt I is of about 12% of Brent crude is of about 10%.
Now oil has been going a little bit higher over the last couple of sessions.
We do have the expectation that the fed will be cutting rates.
So part of the reason why we have seen oil go higher is because of that expectation that would be bullish for oil because lower rates would stimulate the economy that would be good for demand.
I do want to mention something else that’s going on in the energy market.
And that is natural gas prices.
You can see that natural gas is at around $2.50.
That’s up about more than 2% today.
But I want to show you a one month chart so you can see up 43% over the last month ei A data showing that last week’s build fell short of estimates that’s also bullish for natural gas.
You’ve had recent production shut ins that’s been bullish for natural gas and analysts are expecting that the summer will be hot.
So you will have some demand.
Remember that we saw natural gas prices at below $2 back in around April where you just saw a glut of supply in the market that has changed over the last several weeks.
And by the way, in that last CP I report that was reported yesterday, you saw two components of the energy index which were down month over month in April 1 of them was electricity.
The other one was natural gas, natural gas coming off those lows recently.
And as thank you, appreciate it time now for to watch Friday May 17 starting off in the South.
Voting for Mercedes workers in Alabama to join the United Auto Workers will wrap up tomorrow.
This is another major test after UAW President Sean Fain victory in Tennessee where workers at a Volkswagen plant voted to you.
Moving over to the Federal Reserve will get some comments from fed Governor Christopher Waller in the morning is coming after a big round of fed commentary today including Cleveland Fed Press, Loretta Master Master suggesting that interest rates should stay high for longer saying that the recent inflation data indicates that quote, it will take longer to gain that confidence.
And finally, Boeing holding its annual shareholder meeting in the morning, Boeing shareholders deciding on whether to approve executive pay and re elect the playmakers outgoing Ceo Dave Calhoun to its board.
It’s coming after proxy advisors flagged performance concerns found the January mid air blowout on a 737 max nine that today’s market domination over time.
Be sure to come back tomorrow at 3 p.m. Eastern for all of your coverage leading up to an act of closing Bell.
Stay tuned.
We’ve got more yahoo finance on the other side.
Source: Stocks slip, Applied Materials earnings: Market Domination Overtime
