Stock Indexes Wrap: First Solar Soars on Potential AI Benefits; High-Flying Utilities Slip Ahead of Nvidia Earnings
May 22, 2024 04:15 PM EDT
The Dow
Tech stocks were mixed ahead of Nvidia’s earnings. AI giant Microsoft (MSFT) rose 0.3% while Amazon (AMZN) finished flat.
Walmart (WMT) ticked up 0.1%, following fellow discount retailer TJX higher after the latter’s better-than-expected earnings report.
Home Depot (HD) slid 1.7% after data showed existing home sales declined in April.
The S&P 500
First Solar (FSLR) surged 18.7%, leading the S&P 500 for a second consecutive day after analysts at UBS raised their price target on the stock, citing its potential to benefit from the proliferation of energy-hungry AI data centers. Peer Enphase Energy (ENPH) rose 8.7%.
Analog Devices (ADI) rose 10.9% after the semiconductor manufacturer reported better-than-expected quarterly results and suggested an industry recovery was on the horizon.
TJX (TJX) climbed 3.5% after the company beat quarterly profit estimates as cost-conscious consumers turned to it and other discount stores.
Target (TGT) shed 8% after reporting revenue declined in the first quarter as shoppers cut back their spending on both essential and discretionary items.
Lululemon (LULU) slumped 7.2% after the athletic apparel maker said its Chief Product Officer was departing the company for a new opportunity, adding to its concerns amid a North American sales slump.
Freeport McMoRan (FCX) slid 5.7% as copper prices slumped after a months-long run-up.
Oilfield services providers fell as oil prices declined amid concerns about elevated interest rates. SLB (SLB) fell 3.8%, while Halliburton (HAL) shed 3.3% and Baker Hughes (BKR) declined 2.8%.
Nvidia (NVDA) slipped 0.5% ahead of its much anticipated quarterly earnings report.
The Nasdaq 100
Moderna (MRNA) shares climbed 13.7%, rising for an eighth consecutive day.
PDD Holdings (PDD) rose 1.1% after the Temu parent reported its earnings more than doubled in the first quarter of the year.
Paypal (PYPL) shares fell 3% after the Consumer Financial Protection Bureau issued a rule stipulating that Buy Now, Pay Later users are entitled to the same consumer protections as credit card users.
AI beneficiaries, like utilities Xcel Energy (XEL) and Exelon (EXC) followed Nvidia lower as jitters about the AI bellwether—and market mover’s—earnings report set in.
TJX Stock Surges as Bargain Shoppers Drive Sales Gains
May 22, 2024 03:36 PM EDT
TJX Companies (TJX) shares soared to a record high Wednesday as the discount clothing and home goods retailer reported better-than-expected quarterly profit and boosted its guidance as comparable store sales advanced across all its divisions.
The parent of T.J. Maxx, Marshalls, HomeGoods, and other stores posted fiscal 2025 first-quarter diluted earnings per share (EPS) of $0.93, beating forecasts. Revenue rose 6% to $12.48 billion, in line with estimates.
Sales at Marmaxx, a combination of T.J. Maxx, Marshalls, and Sierra stores, were up 5% to $7.75 billion. HomeGoods sales were up 6% to $2.08 billion. TJX Canada sales rose 7% to $1.11 billion, and they were 9% higher to $1.54 billion at stores in Europe and Australia.
For the full year, TJX sees EPS in the range of $4.03 to $4.09, up from its previous prediction of $3.94 to $4.02. It anticipates pretax profit margin at 11.0% to 11.1%, up from its earlier expectation of 10.9% to 11.0%.
Shares of TJX were up 3.7% late in the session after reaching a record-high of $104.98 earlier in the session. They are up about 8% year-to-date.
How Nvidia’s Earnings Could Affect the Broader Market
May 22, 2024 02:32 PM EDT
Ahead of Nvidia’s (NVDA) highly anticipated earnings report Wednesday, investors were bracing for significant share movement following the results that could affect major indexes and exchange-traded funds (ETFs).
Given rising expectations for Nvidia’s financial results, Susquehanna analysts warned Nvidia may need “at least a $1.5B beat” for a muted share price reaction, suggesting a large reaction could be likely. Options trading activity implied traders were expecting shares to move 10% in either direction.
Firstrade President Don Montanaro told Investopedia that the online brokerage has seen options trading clients expecting a near-term pullback after the earnings announcement.
Read more about what a big move in Nvidia’s stock price could mean for the market as a whole.
Lululemon Stock Sinks as Chief Product Officer Resigns
May 22, 2024 01:47 PM EDT
Shares of Lululemon Athletica (LULU) fell to their lowest level in more than a year Wednesday, a day after the maker of fashion workout clothes shook up its organizational structure and announced the departure of Chief Product Officer Sun Choe.
Sebastian Ng / SOPA Images / LightRocket via Getty Images
The company said Choe, who has been CPO for more than five years, had resigned and would leave later this month “to pursue another opportunity.”
Lululemon noted that its organizational changes are designed to “support the company’s near- and long-term growth plans, accelerate product innovation, and further enable its go-to-market strategies.” It added that it will not replace the CPO position.
Lululemon shares were down more than 7% in afternoon trading. They have tumbled more than 40% since hitting their all-time high of $516.39 at the end of last year.
First Solar Soars After Analysts Dub It an AI Play
May 22, 2024 12:37 PM EDT
First Solar (FSLR) was the best-performing stock in the S&P 500 for a second consecutive day on Wednesday after UBS analysts on Tuesday said the company stands to benefit from the proliferation of energy-hungry AI data centers.
“In our view, FSLR is an overlooked, direct beneficiary of increasing AI-driven electricity demand,” wrote a team of analysts led by Jon Windham.
Artificial intelligence is incredibly power-intensive and many of the big tech companies investing in it, like Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL), have made aggressive carbon neutrality pledges.
Microsoft, which has vowed to be carbon neutral by 2030, last week reported that its carbon emissions in 2023 were 29% higher than in 2020 primarily because of the company’s massive investments in the data centers required to train and run AI models.
“Under ’100% Renewable’ sustainability policies the large tech companies match their nonrenewable electricity consumption through Power Purchase Agreements (PPAs),” the analysts wrote.
And First Solar, one of America’s largest solar tech companies, stands to benefit. That will be especially true if, as UBS analysts predict, it continues to grow its market share at home. Analysts see AI spending, increasing U.S. protectionism, and tax credits enacted by the Inflation Reduction Act, boosting First Solar’s earnings to nearly $37 per share in 2027 from $7.74 in 2023.
First Solar also got a boost from Piper Sandler analysts, who raised their price target on the stock to $219 from $195 on Monday.
Shares of First Solar were up 17% Wednesday afternoon, and have gained more than 26% so far this week.
Analog Devices Sees a Business Recovery Ahead, and Stock Hits a Record High
May 22, 2024 11:51 AM EDT
Analog Devices (ADI) shares soared to a record high Wednesday after the semiconductor maker posted better-than-expected results and guidance as inventory backlogs eased.
The company reported fiscal second-quarter adjusted earnings per share (EPS) of $1.40, beating estimates. Revenue slumped 34% year-over-year to $2.16 billion, but that, too, was above forecasts.
Chief Executive Officer (CEO) Vincent Roche explained that revenue exceeded the midpoint of its outlook “despite continued macro and inventory headwinds.” Roche added that an improving inventory picture, along with a rise in new orders, “gives us optimism that we are at the beginning of a cyclical recovery.”
Analog Devices sees current-quarter adjusted EPS of $1.50, plus or minus $0.10, with revenue of $2.27 billion, plus or minus $100 million. Both midpoints were higher than anticipated.
Shares of Analog Devices were up 8% Wednesday morning, gaining around 18% so far in 2024.
Target Slides As Inflation Continues To Impact Sales, Guidance Disappoints
May 22, 2024 10:36 AM EDT
Target (TGT) shares tumbled Wednesday morning, after the retailer indicated inflation and lower discretionary spending weighed on sales in the first quarter, overshadowing a small earnings beat.
Target reported total revenue in line with analyst estimates at $24.53 billion, down 3% from last year’s first-quarter mark of $25.32 billion. Profit ticked lower to $942 million, or $2.03 per share, from last year’s $950 million, or $2.05 per share, but above expectations of $930.3 million, or $2.00 per share.
The company said it is still feeling the impact of shoppers lowering their discretionary spending, but added that “discretionary sales trends continued to improve” from previous quarters.
For the current quarter and full fiscal year, Target projects that comparable store sales will range from flat to 2% yearly growth, with second-quarter diluted earnings per share (EPS) expected in a range from $1.95 to $2.35, with the midpoint below the $2.19 analysts currently project. For the full year, Target projects EPS between $8.60 to $9.60, with the midpoint also below the $9.37 analysts expect.
Shares fell about 8% Wednesday morning bringing their year-to-date return to just 1%.
Stocks Making the Biggest Moves at the Open
May 22, 2024 09:37 AM EDT
Gains:
- Williams-Sonoma (WSM): Shares of the home goods retailer rose more than 7% after its quarterly earnings blew past analyst estimates despite revenue declining year-over-year.
- PDD Holdings (PDD): Shares of the Chinese e-commerce company climbed 6% after reporting revenue more than doubled in the first quarter.
- Analog Devices (ADI): Shares of the chipmaker rose 5% after reporting better-than-expected earnings and forecasting current-quarter results ahead of Wall Street’s estimates.
Losses:
- Target (TGT): Shares of the discount retailer tumbled 9% after it reported a year-over-year decline in sales as consumers spent less on both essentials and discretionary items.
- Lululemon (LULU): Shares of the athletic apparel brand fell 4% after it announced the departure of Chief Product Officer Sun Choe, adding to the company’s concerns after forecasting disappointing current-quarter sales in March.
- Freeport-McMoRan (FCX): Shares of the mining giant slipped 3% as copper prices fell after a months-long run-up that has taken the industrial metal to record highs.
US Stock Futures Decline
May 22, 2024 08:55 AM EDT
Dow futures were down 0.2% in premarket trading Wednesday.
S&P futures were down 0.2%.
Nasdaq futures were down 0.1%.
