Stock Market Update: S&P 500 Gains on Cooling Inflation and Strong Earnings

The S&P 500 added 1.1% on Friday, July 26 as PCE data reaffirmed cooling inflation, bolstering expectations for interest-rate cuts. Here are the key highlights from the day’s trading:

Price Increases Tick Downward in June

The latest Personal Consumption Expenditure (PCE) data revealed that price increases ticked downward in June. The PCE is a preferred gauge of inflation monitored by the Federal Reserve, so the continuing cooldown in price pressures supports the expectation that the central bank will cut interest rates in the coming months. This news had a positive impact on the stock market.

3M Shares Soar After Beating Estimates

Industrial conglomerate 3M reported better-than-expected second-quarter profit and sales, leading to a 23.0% surge in its stock price. The company also lifted its full-year guidance, indicating strong performance ahead. CEO William Brown expressed the conglomerate’s focus on organic revenue growth following the settlement of class-action lawsuits and the spinoff of its health care unit Solventum.

Mohawk Industries Beats Earnings Forecasts

Residential and commercial flooring manufacturer Mohawk Industries saw its shares soar 19.5% after beating earnings per share (EPS) forecasts for the second quarter. The company also guided third-quarter earnings above consensus estimates. Bank of America upgraded Mohawk stock from “underperform” to “buy” and significantly increased its price target, expressing confidence in Mohawk’s ability to continue expanding its margins.

Charter Communications Outperforms Expectations

Cable and internet provider Charter Communications achieved better-than-expected results in its second-quarter earnings release, leading to a 16.6% jump in its shares. Despite a decline in broadband subscribers, the company experienced growth in rural markets, driven by its expansion in mobile phones and government programs aimed at improving internet access in remote areas.

Dexcom Plunges on Revenue Shortfall

Shares of glucose monitor manufacturer Dexcom plummeted 40.7% after missing second-quarter revenue estimates and cutting its sales guidance for the current quarter and the full year. The company cited a reshuffling of its sales team, slower-than-expected new customer additions, and lower revenue per user as factors contributing to the weak results and a more restrained outlook.

Biogen Faces Setback in Europe

Biotechnology firm Biogen saw its shares sink 7.2% after regulators in Europe rejected its Alzheimer’s treatment Leqembi. The European Medicines Agency’s human medicines committee argued that the risk of serious side effects outweighs the treatment’s potential benefits. This setback comes after the U.S. Food and Drug Administration (FDA) approved Leqembi last year.

L3Harris Technologies Downgraded Despite Strong Earnings

Aerospace and defense contractor L3Harris Technologies fell 5.7% despite beating second-quarter profit estimates and raising its full-year guidance. Deutsche Bank downgraded the stock to “hold,” citing a high valuation following year-to-date gains.

Overall, the stock market saw significant gains on the final day of a volatile trading week. The cooling inflation and strong earnings reports from companies like 3M, Mohawk Industries, and Charter Communications contributed to the positive sentiment. However, Dexcom and Biogen faced challenges that led to significant declines in their stock prices.

Disclaimer: The information provided here is for informational purposes only and should not be considered as investment advice. Investing in the stock market involves risks, and individuals should do thorough research and consult with a financial advisor before making any investment decisions.