Another choppy session finished with solid gains on Thursday, as Wall Street continued to stabilize after last week’s sharp decline. The Nasdaq led the upswing, rising 1.6%.
While the overall market pushed higher, recession fears continued to weigh on certain sectors. This included farm equipment makers, with AGCO (AGCO), Deere (DE) and Caterpillar (CAT) all slipping to new 52-week lows.
Elsewhere in the market, Robert Half (RHI) established a new 52-week low as well, as concerns about a slowing economy prompted an analyst’s downgrade. Similarly, Boise Cascade (BCC) also dropped on a bearish analyst note.
On the upside, Rite Aid (NYSE:RAD) jumped on a better-than-expected quarterly report. Meanwhile, strength in the Chinese electric vehicle space sent Li Auto (LI) to a new 52-week high.
Sector In Focus
Farm equipment makers suffered another round of selling pressure amid ongoing worries about a possible recession. A downgrade also fueled the latest retreat.
AGCO (AGCO) declined more than 8% after Morgan Stanley downgraded the stock to Equal Weight from Overweight, with the firm citing a potential recession. Meanwhile, Deere (DE) declined 6% and Caterpillar (CAT) fell by almost 5%.
With the slide, AGCO, CAT and DE all reached new 52-week lows.
Earnings news prompted a rally in Rite Aid (RAD). With the firm unveiling a narrower-than-expected loss and raised guidance, shares jumped almost 20%.
The drug store chain reported red ink for its latest quarter. However, the loss was not as deep as analysts had predicted. Revenue slipped 2% from last year to hit $6.01B but that result also exceeded consensus, topping expectations by $280M.
Looking ahead, RAD raised its forecast for the fiscal year, saying it now sees a top-line figure between $23.6B-$24.0B. Analysts were looking for a number around $22.91B.
Following the earnings report, RAD advanced $1.34 to close at $8.05. This brought the stock its highest close since late April.
An analyst’s downgrade sparked selling in Boise Cascade (BCC), which fell nearly 11% amid concerns about a weakening housing market.
Bank of America downgraded the engineered wood products maker, along with peer Louisiana-Pacific (LPX), due to a weakening forecast for U.S. housing starts. With a cooling of the homebuilding sector, demand for BCC’s products would wane.
With the downgrade, Bank of America lowered its rating on BCC to Neutral from Buy.
BCC finished Thursday’s trading at $55.74, a decline of $6.65 on the session. Shares reached a 52-week high earlier this year of $85.17 but have fallen precipitously over the past few weeks.
Shares have fallen about 34% since closing at $85 on June 7. With Thursday’s retreat, BCC recorded its lowest finish since October.
Notable New High
Chinese EV stocks received a boost on reports that the sector could benefit from government tax breaks. The news sent Li Auto (LI) higher by nearly 7%, with the stock setting a fresh 52-week high.
A report in the South China Morning Post indicated that China’s State Council was looking to maintain tax breaks to buoy the industry, which has been hurt by lockdowns in the country. Along with LI, stocks like Nio (NIO) and XPeng (XPEV) saw gains.
LI climbed $2.44 to finish the session at $39.24. During the day, the stock also reached an intraday 52-week high of $40.01.
Shares retreated from a level above $35 late last year to a 52-week low of $16.86 reached in mid-March. However, LI has been climbing steadily since the first half of May, more than doubling over that period.
Notable New Low
Robert Half (RHI) extended a long-term downtrend, setting a new 52-week low after Bank of America made a dramatic turn to a bearish stance on the stock. Dragged down by the commentary, shares of the staffing company slipped 6% on the day.
Bank of America announced a double downgrade of RHI, taking its rating to an Underperform from a Buy. The firm also slashed its price target to $67 from $133.
The downgrade came as BofA analyst Heather Balsky argued that fundamentals had peaked for RHI, saying that a slowing economy will limit staffing revenue growth.
Spurred by the downgrade, RHI dropped to an intraday 52-week low of $73.39. The stock trimmed its losses during the rest of the session but still finished lower by $5.15, ending the day at $75.08.
Thursday’s slide was part of a longer-term retreat for the stock. RHI has lost about 31% of its value so far in 2022.
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