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Small-Caps Outperform, Most Indices Flat

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Markets lost a bit of steam as the trading session moved along today, with strength in the pre-market after seeing the passage of a new bill on renewable energy, Medicare availability and corporate tax minimums in the Senate give way to disappoints from Tyson (TSN - Free Report) and Palantir (PLTR - Free Report) on earnings, NVIDIA (NVDA - Free Report) on Q2 guidance. The Dow, which had been +300 points earlier today, closed +28 points - +0.09%. The S&P 500 and Nasdaq were -0.12% and -0.10%, respectively, while the small-cap Russell 2000 easily outpaced the rest of the pack: +1.17%.

The Russell is also the biggest gainer of the four major indices over the past month, with a very strong +12.2% versus the Nasdaq’s +11.2%, the S&P’s +7.4% and the Dow +5.3%. The small-cap index is still down year to date -14.6%, but that’s still better than the Nasdaq, which is still fighting its way out of bear-market territory, -20% from the first of the year. The Dow blue-chips are outperforming the field year to date, but still -10.3%.

Because NVIDIA is rightly seen as an important player in the world of semiconductors in the present and in the future, the company’s lowered guidance today carried a lot of weight in the early trading hours. We had seen a lower guide from competitor AMD (AMD - Free Report) just last week, as well as disappointing earnings results from semi majors Intel (INTC - Free Report) and Micron (MU - Free Report) . As such, even with a slash to Q2 revenue and Gaming expectations, NVIDIA’s stock has “only” fallen -6.3% on the day.

Because slash guidance the company did: NVIDIA now expects Q2 sales coming in at $6.7 billion — well beneath the $8.1 billion the company initially guided, which also happens to be the Zacks consensus until downward revisions work their way through the system. Gaming is expected to come down -33% to $2.04 billion. NVIDIA reports earnings August 24th — three weeks from Wednesday. We’ve expected lower guides from top companies in most industries virtually all quarter.

Speaking of Gaming, Take-Two Interactive (TTWO - Free Report) missed fiscal Q1 expectations on both top and bottom lines in the quarter, reported after Monday’s close: earnings of 71 cents per share was notably light of the 84 cents expected, while revenues of $1.00 billion was just shy of the $1.04 billion in the Zacks consensus. This marks the Grand Theft Auto and NBA2K creator’s second earnings miss in the past five years, and shares are down nearly -7% in late trading, -29.7% year to date.

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