Week In Review: S&P 500, Nasdaq, Dow Hit Highs; Broadcom, Palo Alto Hot; JPMorgan, BofA Warn
The S&P 500 and Nasdaq composite rose to fresh record highs in a short week, with Broadcom (AVGO), Palo Alto Networks (PANW) and several retailers reporting strong earnings. Meanwhile, JPMorgan Chase (JPM), Bank of America (BAC) were among several Wall Street giants to warn of weak trading revenue. However, job growth was weaker than expected in May, with notable downward revisions.
Stocks Power To New Highs
The Nasdaq composite and S&P 500 index hit all-time levels on Thursday with the Dow Jones industrial average setting a record close. FANG internet giants didn't lead Thursday's moves, while financials tumbled and energy stocks struggled as oil prices fell sharply. Variety discounters and some, but by no means all, retailers reporting results moved higher.
Wall Street Banks Crack On Trading Woes
Shares of the big banks slipped after JPMorgan Chase (JPM), Bank of America (BAC), Goldman Sachs (GS) and Morgan Stanley (MS) warned of sluggish second-quarter trading revenue. JPMorgan CFO Marianne Lake said caution on an OK-but-not-great economy and an absence of "idiosyncratic events" had led to quieter market activity. Idiosyncratic events like, say, President Trump's election, have been in shorter supply over the past several months, and investors have been waiting for his agenda to turn into policy before sending bank stocks higher. JPMorgan, Bank of America and Goldman Sachs all undercut the lows of their recent consolidations.
In Q1, JPMorgan, Bank of America and Citigroup (C) reported trading gains. Goldman, however, posted a drop in trading revenue, blaming low volatility, political uncertainty and missteps in the market.
Jobs Growth Disappoints
The U.S. economy added just 138,000 jobs in May, far less than expected, while prior months were revised lower. The jobless rate fell to a long-time low of 4.3%, but that reflected people streaming out of the labor force. Wage growth was modest. Meanwhile, the ISM manufacturing index edged higher in May, suggesting incrementally stronger factory growth.
Variety Discounters Fare Well
Ollie's Bargain Outlet's (OLLI) earnings jumped 25% to 25 cents per share, beating by 2 cents. Revenue climbed 17% to $227.6 million, above views. Same store-sales were up 1.7%. The discounter sees full year EPS of $1.18 to $1.21, above analyst targets for $1.16. Ollie's stock rose 6.1% on Thursday to a record high.
Teen-centric Five Below (FIVE) reported 25% earnings growth and a 21% revenue rise, both topping. Five Below also gave bullish guidance. Five Below shares jumped early Friday.
Dollar General (DG) reported flat EPS of $1.03 with revenue up 7% to $5.61 billion, both beating analyst views. The discounter raised its full year sales growth target to 5% to 7%, the midpoint of 6% above views for 5.5% growth. It also announced plans to open more stores. Dollar General shares gapped up 6.5% on Thursday, moving above their 200-day line.
Top Chipmakers Top Views
Broadcom (AVGO) and Analog Devices (ADI), which both supply Apple (AAPL) among others, reported better-than-expected quarterly results, while Semtech (SMTC) posted mixed results. Broadcom earned $3.69 a share excluding items in its fiscal Q2, up 46%, on sales of $4.19 billion, up 18%, both above views. Broadcom shares soared to record highs early Friday.
Analog Devices earned $1.03 a share ex items, up 61%, on revenue of $1.15 billion, up 47%, both beating. But Analog Devices shares, which skyrocketed Wednesday morning, closed at session lows, and then fell below a buy point on Thursday.
Semtech earnings rose 47% and sales grew 10% $143.8 million. Semtech shares fell Thursday but stayed in buy range.
Workday Tops But No Big Customer Wins
Workday (WDAY) reported fiscal Q1 adjusted earnings and revenue that topped views but didn't announce any major new customer deals for financial management software. Adjusted fiscal first-quarter earnings were 29 cents, up nearly six times from a year ago, with revenue rising 38% to $480 million for the period ended April 30. Analysts expected earnings of 16 cents on revenue of $467.3 million. For the current fiscal second quarter, Workday said it expects subscription revenue growth to ease to 38% in Q2 from nearly 43% in Q1.
Palo Alto Networks
The computer security software vendor showed a 25% rise in revenue to $431.8 million. EPS rose 45%. The outlook for the current quarter also beat views. Palo Alto Networks (PANW) shot up 17% on Thursday.
HP Enterprise Guidance Light
Hewlett Packard Enterprise (HPE) reported in-line fiscal Q2 EPS but its profit outlook for the current quarter was below expectations amid weakness in its computer server business. HPE holds an investor day June 6. HPE said adjusted Q2 earnings were 35 cents a share, down 16% from a year earlier but in line with views, with revenue falling 22% to $9.9 billion. Results reflected the spin off of HPE's enterprise services business. For the current quarter, HPE forecast unadjusted profit of 26 cents at its mid-point of guidance vs. consensus estimates of 31 cents.
Box Pockets Cash
Box (BOX) reported a non-GAAP loss of 13 cents, down from 18 cents a year earlier, a penny less than analysts had estimated. Revenue rose 30% to $117 million vs. consensus estimates of $114.7 million. It was Box's second straight quarter of free cash flow generation. The online data storage and file-sharing service provider forecast current quarter profit and revenue in-line with expectations.
Ciena Earnings Sprint 32%
Shares in Ciena (CIEN) reported adjusted Q2 earnings of 45 cents a share, up 32% from a year ago. Revenue climbed 10% to $707 million. Analysts expected the maker of optical communications systems to report earnings of 37 cents on sales of $695.3 million. For the current quarter, Ciena forecast midpoint revenue of $725 million vs. consensus estimates of $724 million.
The virtualization software vendor reported a 9% increase in revenue to $1.74 billion, beating the first-quarter consensus of $1.7 billion. VMware (VMW) reported adjusted earnings of 86 cents, down 11% and missing the consensus estimate of 95 cents.
RH Inc. (RH), formerly Restoration Hardware, reported earnings and sales modestly above Wall Street forecasts, but the home furnishings retailer's earnings guidance was well below analyst estimates. RH crashed early Friday.
Lululemon Athletica (LULU) earnings unexpectedly edged higher while revenue also modestly rose and topped forecasts. The yoga-themed athletic apparel maker's stock soared early Friday.
Michael Kors (KORS) reported lower fiscal Q4 earnings and a sharp sales decline, though both topped forecasts. Same-store sales tumbled 14.1%. The struggling fashion house guided current-quarter forecasts lower. Shares fell xx%.
Vera Bradley (VRA) missed on revenue though its quarterly loss was less than expected. The maker and retailer of handbags, luggage and other accessories climbed 10.7% to 9.41 on Wednesday.
J. Jill (JILL) earnings and sales growth topped estimates by solid margins. Shares of the women's apparel retailer, which came public at 13 in early March, rose 13.2% to 12.76 on Wednesday.
Casino stocks rallied Thursday after Macau said gaming revenue rose 23.7% vs. a year earlier, the 10th straight month of year-over-year gains and improving from April. Macau is the world's largest gambling site and the only place in China where it's legal. Las Vegas Sands (LVS) broke out into buy range while Wynn Resorts (WYNN) and MGM Resorts (MGM) continued to run up.