CNBC Daily Open: Fake breakout?

This report comes from today's CNBC Daily Open, our international markets newsletter. CNBC Daily Open keeps investors updated on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Labor boost
Wall Street rises After the latest Unemployment data Rekindled investor confidence in the U.S. economy. this S&P 500 Index Notching its best one-day gain since November 2022, rising 2.3%, while Nasdaq Index up 2.87%. this Dow Jones Industrial Average Soared 683 points. Tech stocks rebounded after taking a beating on Monday. chip manufacturer NVIDIA and Broadcom Both rose more than 6%. this 10-Year Treasury Bond Yield Reach 4% That's the level seen before Friday's disappointing jobs data sent markets reeling. US oil prices Rose 1%.

Delta IT takes a hit
Delta Air Lines revealed last month mass strike A power outage and subsequent flight cancellations resulted in $550 million financial hit. This includes $380 million in lost revenue from refunds and compensation, and $170 million in operational recovery costs. The airline plans to seek damages From CrowdStrike and Microsoft It also acknowledged a $50 million reduction in fuel costs due to the cancellation of approximately 7,000 flights.

unemployment
Paramount Worldwide Plans to cut 15% of U.S. workforce The company is preparing to merge with Skydance Media. As part of the merger, Paramount identified $500 million in cost savings, including layoffs. The company also said earnings jumped as the company's streaming unit unexpectedly turned a profit – the first time Paramount has announced quarterly profits for its direct-to-consumer business. Paramount also took a $6 billion impairment charge on its cable network, similar to Warner Bros. Discoveryof Write down. Its shares rose 5% in after-hours trading.

Blowout profits
Eli Lilly and Company blow over Second quarter financial report and revenue expectations, and raised its full-year revenue forecast by $3 billion. The company now expects revenue of up to $46.6 billion, driven by booming sales of diabetes drug Mounjaro and weight-loss injection Zepbound. “We're just seeing incredible demand, but we're not even promoting the drug that hard,” Eli Lilly CEO David Ricks told CNBC. “What you're seeing is just organic demand from consumers because we ship More products as we deliver more supply online in the U.S.” Shares closed up more than 9%.

AI defense duo
PalantirThe stock price soared 11% Announcing a partnership and Microsoft Provides secure cloud, analytics and artificial intelligence solutions to the U.S. defense and intelligence communities. The partnership will use Microsoft's Azure cloud platform to provide Palantir's data analysis and artificial intelligence software to government agencies. The partnership aims to provide defense and intelligence organizations with advanced artificial intelligence tools for a variety of applications, including logistics and strategic planning. Palantir's stock has soared 70% this year as it focuses on government contracts and growing demand for artificial intelligence solutions.

(PRO) Weight Loss Competition
Eli Lilly and Company Share price plummeted 16% in one month Second quarter financial report Report. The drugmaker's results show Eli Lilly is making progress in its battle with pharmaceutical companies Novo Nordisk exist Competitive weight loss market.

Focus on small caps Russell 2000 The index's recent volatile performance has led Wolfe Research to conclude that the index's recent breakout is illusory.

“False breakthroughs: confirmed,” said Rob Ginsberg, managing director at Wolff Research. wrote in a note to customers Wednesday. He explained that the small-cap index had gained 10% over the past three weeks, but had all but erased those gains. Ginsburg warned that the index could fall further.

“We've seen a series of false breakouts over the past two-plus years, but this is by far the most notable,” Ginsburg added. The index has gained 2.8% so far this year and closed up 2.4% on Thursday.

This raises questions about market broadening. Mona Manajan, senior investment strategist at Edward Jones, believes The market shiftsinvestors are gradually moving away from the “Big Seven” technology stocks.

“We're seeing a small amount of air escaping from the tires,” Manajan told CNBC. “We're seeing the beginning of what we call a rotation, where people may be profiting from that market into the expanding theme, which is the market. The cyclical value part of that…in order for this market to really work, we need to see not just a rotation, we need to see a real expansion of market leadership. “

CNBC's David Faber asked how important Nvidia's upcoming earnings report is to the market.

“We do think artificial intelligence is still in the early stages of a multi-year, long-term growth trend,” Manajan said. NVIDIA Profitability “will be key for the industry, and we think they've been leading. Can they continue to lead at the same pace? Maybe not.”

While Wall Street rallied as jobless claims fell more than expected, providing some relief for the U.S. economy, not everyone is convinced.

Nancy Lazar, chief global economist at Piper Sandler, believes that the recent rise in the unemployment rate to 4.3% may actually underestimate the true degree of weakness in the labor market.

Lazar pointed to several other labor market indicators, such as an increase in continuing jobless claims, the New York Fed's downbeat consumer survey and a decline in the resignation rate in the JOLTS report, all of which point to a weaker job market than the official unemployment rate express.

“The quit rate… indicates an unemployment rate above 5% – it always falls during a recession,” Lazar said in a note to investors.

— CNBC’s Alex Harring, Jesse Pound, Hakyung Kim, Todd Haselton, Leslie Josephs, Annika Kim Constantino and Spencer Kimball contributed to this report.