Stock Indexes Wrap: Salesforce Sparks Tech Sell-Off; Apparel, Retail Stocks Gain Amid Earnings Beats
May 30, 2024 04:22 PM EDT
The Dow
Verizon (VZ) rose 3.1% after being awarded a 10-year U.S. Navy contract valued at more than $2.6 billion.
Nike (NKE) climbed 2%, possibly getting a boost from better-than-expected earnings from footwear retailer Foot Locker (FL) and sandal maker Birkenstock (BIRK).
Salesforce (CRM) tumbled 19.7% as analysts across the board lowered their price targets on the company’s stock after it reported its first quarterly revenue miss since 2006.
Tech giants Microsoft (MSFT) and Amazon (AMZN) followed Salesforce lower, falling 3.4% and 1.5%, respectively, amid a relatively widespread tech sell-off.
The S&P 500
HP Inc (HPQ) soared 17% after its quarterly earnings report stoked optimism demand for AI personal computers could boost future sales.
Best Buy (BBY) climbed 13.4% after beating earnings estimates in the first quarter.
TJX Companies (TJX) rose 1.9% after discount retail peer Burlington Stores (BURL) reported better-than-expected quarterly results thanks to an uptick in demand.
ServiceNow (NOW) tumbled 12.1%, weighed down by Salesforce’s disappointing sales and guidance. Software stocks were lower across the board Thursday, with Adobe (ADBE) losing 6.6% and Oracle (ORCL) falling 5.4%.
Intuit (INTU) sank 5.9% as the IRS said it would make its free Direct File program permanent and expand access to more taxpayers.
Nvidia (NVDA) fell 3.8% amid reports U.S. officials had slowed the issuing of licenses to advanced chipmakers sending shipments to the Middle East. Fellow chipmakers Broadcom (AVGO) and Qualcomm (QCOM) lost 1.9% and 1.3%, respectively.
The Nasdaq 100
Tesla (TSLA) was one of only two Magnificent Seven stocks to dodge Thursday’s sell-off. It gained 1.5% as the company struck back at proxy advisory firm Glass Lewis for urging shareholders to reject CEO Elon Musk’s proposed pay package. Apple (AAPL), also a Mag Seven stock, ticked up 0.5%.
Cybersecurity stocks followed tech peers lower. Crowdstrike (CRWD) sank 9.6%, while Palo Alto Networks (PANW) and Fortinet (FTNT) shed 4.5% and 2.9%, respectively.
Birkenstock Hits Record High on Booming Demand
May 30, 2024 03:41 PM EDT
Shares of Birkenstock Holding Plc (BIRK) jumped to an all-time high Thursday when the maker of fashion footwear posted record second-quarter revenue and boosted its guidance on strong demand across all its segments.
The company known for its health-focused sandals reported quarterly revenue jumped 22% to EUR481.2 million ($521.7 million), with adjusted earnings per share (EPS) of EUR0.41 ($0.44). Both were solidly above forecasts.
Sales were up 21% in both the Americas and Europe, and 42% in the Asia, Pacific, Middle East, and Africa (APMA) region.
Chief Executive Officer (CEO) Oliver Reichert noted that demand for Birkenstock shoes has continued to outpace supply in all segments, channels, and categories. Reichert said because of the second-quarter performance, Birkenstock is raising its outlook for full-year revenue growth to 20% in constant currency, up from the previous forecast of 17% to 18% higher.
Shares of Birkenstock, which debuted last October on the New York Stock Exchange (NYSE), surged 11% to trade above $55 Thursday afternoon. They have gained about 14% year-to-date.
HP Stock Jumps on Solid Earnings, Optimism for AI-Powered PCs
May 30, 2024 02:24 PM EDT
Shares of HP Inc. (HPQ) surged Thursday, a day after it reported solid earnings and signaled that it could continue to be a beneficiary of the artificial intelligence (AI) boom.
HP reported total revenue for the second quarter of fiscal 2024 of $12.8 billion, down slightly from last year’s $12.91 billion but better than the $12.59 billion analysts had expected, according to estimates compiled by Visible Alpha.
Net income of $607 million, or 61 cents per share, missed estimates of $678.9 million and 69 cents per share thanks to just over $200 million in one-time charges. After stripping out the charges, HP’s adjusted profits of $812 million, or 82 cents per share, beat estimates of $803.5 million and 81 cents per share.
HP’s stock price previously has benefited from optimism around AI, as CEO Enrique Lores has said in past quarters that while it will take time for the company to see widespread adoption of its new products like AI PCs, the new technology could be a significant driver of growth in 2025 and beyond.
HP shares jumped more than 17% Thursday to trade above $38, their highest level in two years.
S&P 500, Dow Creep Higher After Data Outage
May 30, 2024 01:26 PM EDT
The S&P 500 and Dow gained ground Thursday following a data outage that left index watchers partially blind for more than an hour.
FactSet via Wall Street Journal
A disruption to data dissemination caused S&P 500 and Dow Jones Industrial Average pricing data to suddenly stop around 10:40 a.m. on Thursday. Data resumed being published around noon, at which point the indexes had ticked higher slightly.
Traders weren’t left entirely in the dark. Exchange-traded funds that track the indexes continued to publish prices, effectively acting as a proxy for the official data from S&P Dow Jones Indices.
FactSet via Wall Street Journal
The S&P 500 had recovered some of its earlier losses to trade 0.2% lower mid-afternoon Thursday. The Dow also recovered somewhat to trade down 0.7%.
Best Buy Beats Profit Estimates on Services, Membership, and Laptop Demand
May 30, 2024 12:10 PM EDT
Shares of Best Buy (BBY) jumped Thursday after the electronics retailer beat profit forecasts on growing demand for services and laptop computers.
The company posted fiscal 2025 first-quarter diluted earnings per share of $1.13, well above analyst estimates compiled by Visible Alpha. Revenue fell 6.5% from the year-ago period to $8.85 billion, short of expectations. Comparable store sales declined 6.1%, though that was an improvement from the 10.1% drop reported in the same period a year earlier.
Domestic revenue slid 6.8% to $8.20 billion, but domestic gross profit rose to 23.4% from 22.6%, which the company credited to gains in the services category, including membership offerings. Laptop sales helped offset pullbacks in purchases of appliances, home theater, gaming, and mobile phones. International revenue was 3.3% lower to $6.44 million, with a gross profit rate of 22.6% versus 23.7% in fiscal 2024.
Shares of Best Buy were 11% higher, bringing their year-to-date gain to almost 3%.
Kohl’s Tumbles on Surprise Loss, Lowered Guidance
May 30, 2024 11:11 AM EDT
Kohl’s Corp. (KSS) shares tumbled Thursday after the retailer reported an unexpected net loss for the first quarter and lowered its guidance for the full year.
Revenue fell 5% year-over-year to $3.38 billion, missing analyst expectations of $3.54 billion. Kohl’s said regular-price sales increased 2.4% year-over-year, but were offset by a large drop in clearance sales that represented a more than 600-basis-point hit to comparable sales, which decreased 4.4%.
While analyst estimates compiled by Visible Alpha only expected Kohl’s to post a small profit of $2.41 million, or 2 cents per share, the retailer reported a net loss of $27 million, or 24 cents per share. In the first quarter of 2023, Kohl’s made $14 million in profit, or 13 cents per share.
Kohl’s also lowered its full-year guidance, as Kingsbury said the company is opting to be conservative in its outlook considering “ongoing uncertainty in the consumer environment.”
For the fiscal year, Kohl’s now projects net sales to decrease from 2% to 4%, down from its last earnings report projecting a 1% decrease to a 1% increase.
In addition to lower sales, Kohl’s also projects smaller profits for the year, with an EPS range of $1.25 to $1.85, down from the $2.10 to $2.70 range it guided last quarter. The new range is also below the $2.10 per share analysts had projected for the year.
Kohl’s shares plummeted 27% Thursday, bringing their year-to-date loss to 31%.
Salesforce Stock’s Post-Earnings Plunge
May 30, 2024 10:27 AM EDT
Salesforce (CRM) shares plunged 19% Thursday after the cloud-based software company reported its first quarterly revenue miss in 18 years and issued weak annual sales guidance amid enterprise customers reining in their IT budgets and longer-than-average deal cycles.
Salesforce shares trended steadily higher for 12 months following the 50-day moving average (MA) crossing above the 200-day MA in March last year to form a bullish golden cross pattern. However, since topping out in March this year, the price has fallen below the 50-day MA, with the indicator also acting as a line of resistance during a recent countertrend rally earlier this month. Moreover, earnings-related selling on Thursday could confirm a head and shoulders, a chart pattern that indicates a possible market top.
Investors should keep an eye on two key levels amid weakness in the stock. Firstly, monitor the $226 region, an area on the chart where the price may encounter supportfrom a horizontal line connecting several peaks over the past year, which also sits in close proximity to a late November price gap. Finally, it’s worth watching the $192 level, a location that finds longer-term support from a trendline stretching back to June 2022.
Stocks Making the Biggest Moves in Early Trading
May 30, 2024 09:43 AM EDT
Gains:
- HP (HPQ): Shares of the PC maker surged 9% after it reported higher-than-forecast quarterly earnings. The company last week unveiled an AI -powered laptop and has benefited from investors’ hunger for devices tailored to work with AI.
Losses:
- Salesforce (CRM): Shares plunged 17% after the cloud-based software company reported its first quarterly revenue miss in 18 years and issued a soft annual sales outlook.
- Oracle (ORCL): Shares fell 3% as Salesforce’s weak guidance weighed on the software company.
- UiPath (PATH): Shares tumbled 35% after the AI software provider announced an unexpected CEO shakeup and provided current-quarter sales guidance that came in significantly below Wall Street estimates.
U.S. Stock Futures Fall as Salesforce Tumbles
May 30, 2024 08:48 AM EDT
Dow futures were down 0.9% in premarket trading Thursday.
S&P futures were down 0.4%.
Nasdaq futures were down 0.3%.
