Stocks were choppy in today's low-volume session, as investors balanced another strong round of earnings against a dismal reading on consumer confidence.
In terms of earnings, Walt Disney (DIS, +1.0%) gained the bulk of headlines after reporting a fiscal third quarter with much higher-than-expected earnings, revenues and Disney+ subscriber numbers.
"The streaming story for Disney remains intact," says Carter Henderson, portfolio specialist and director of institutional development at Fort Pitt Capital Group. Results from Disney's parks and entertainment segment were strong, too, achieving "positive profits when many analysts didn't expect profitability to return until later in 2021 or even next year," per Henderson.
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But this good news was tempered by data from the University of Michigan, which showed consumer confidence plunged to 70.2 in August – its lowest reading since April 2020 – with those surveyed expressing concern over unemployment, inflation and the quickly spreading delta variant.
Still, the Dow Jones Industrial Average (+0.04% to 35,515) and S&P 500 Index (0.2% to 4,468) managed to end the week at new highs.
Other news in the stock market today:
- The Nasdaq Composite eked out a 0.04% gain to 14,822.
- Several pharmaceutical stocks moved higher today, after the Food and Drug Administration authorized COVID-19 vaccine booster shots in immunocompromised individuals, including those with HIV and cancer. Among the names getting a lift were Pfizer (PFE, +2.6%), BioNTech (BNTX, +0.9%) and Johnson & Johnson (JNJ, +0.5%).
- Food delivery firm DoorDash (DASH, +3.5%) gained ground in the wake of its second-quarter earnings report. DASH said gross order volume surged 70% from the year prior to $10.5 billion, while revenue jumped 83% to $1.2 billion and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization). While these figures were higher than analysts were expecting, DASH did say in its shareholder letter that it "anticipates a seasonal decline in new consumer acquisition and order rates in Q3."
- U.S. crude oil futures slipped 0.9% to settle at $68.44 per barrel.
- Gold futures gained 1.5% to finish at $1,778.20 an ounce.
- The CBOE Volatility Index (VIX) retreated 0.9% to 15.45.
- Bitcoin rose 4.6% to $46,476.13. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
Don't Sweat the Small-Cap Underperformance
In the back of the pack today were small caps, with the Russell 2000 slipping 0.9% to 2,223. This is nothing new, with small caps lagging their larger-cap brethren dramatically over the past six months.
Scott Wren, senior global market strategist at Wells Fargo Investment Institute, says it's nothing to fear, and this underperformance is likely due to the "market getting concerned that future growth expectations are not going to pan out" as a result of a resurgence in COVID-19 cases.
"From our view, this small-cap underperformance is a temporary stumble," Wren adds.
For those investors who share this view that small caps will eventually bounce, we've recently compiled a list of the best small-cap stocks to buy, according to the pros.
And for those who want to add a little oomph to their portfolios, may we suggest these small-cap dividend stocks. While not typically known as income-building investments, this list of names offer hefty payouts for shareholders.
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