Stock Market Rally Hits 2019 High On Apple; Boeing 737 Max Grounded; Tesla Model Y Unveiled:

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The Dow Jones rebounded this week as Apple (AAPL) and Microsoft (MSFT) rallied. That’s despite Boeing (BA) tumbling due to a deadly crash that grounded all Boeing 737 Max jets. The S&P 500 and Nasdaq hit 2019 highs. In addition to Apple, Microsoft and other tech giants, many growth names outperformed, including MongoDB (MDB), Ulta Beauty (ULTA) and Broadcom (AVGO) on earnings. Finally, Tesla (TSLA) unveiled the Model Y crossover SUV.

Stock Market Rally Hits 2019 High

The S&P 500 index and Nasdaq composite recouped the prior week’s losses and hit their best levels of the current stock market rally, climbing 2.9% and 3.8%, respectively, for the week. Credit Apple, Microsoft and several growth stocks. Boeing stock plunged after a Boeing 737 Max crashed, leading to a global grounding of the fleet. But the Dow still advanced 1.6%. MongoDB, Ulta Beauty and Broadcom were among notable earnings winners. Nvidia (NVDA) soared on a takeover deal, outbidding Intel (INTC).

Boeing Tumbles As 737 Max Grounded Worldwide

The Boeing 737 Max active fleet of 371 jets were grounded as the U.S. joined the rest of the world in taking action following the Sunday’s crash by Ethiopian Airlines. That follows a deadly crash by Indonesia’s Lion Air in October involving the new version of Boeing’s top-selling jet. Lion Air is mulling a switch to Airbus (EADSY) while a rival is cutting 737 Max orders. Boeing stock fell 10%. Suppliers and customers, such as Spirit AeroSystems (SPR) and Southwest Airlines (LUV), initially tumbled but pared losses. Airbus hit record highs.

Software Earnings Keep Coming

Several more top software makers reported earnings during the week:

Coupa Software (COUP) earnings came in at 5 cents a share, beating break-even views, though that was a smaller beat than in previous quarters. Q4 revenue growth topped. But 2020 profit guidance fell short of estimates. The maker of business spending management software said adjusted earnings. Coupa stock rose modestly.

Adobe (ADBE) beat Wall Street targets for its fiscal first quarter, but the Digital media and marketing software firm gave weak Q2 guidance. Shares fell below buy points Friday.

Domo (DOMO) reported a big Q4 loss but much better than expected. The operating system maker for businesses narrowly topped revenue views. The 2018 IPO stock surged to a new high.

MongoDB (MDB) lost 17 cents per share adjusted vs. forecasts for a 38-cent loss. Revenue growth was well above forecasts. Shares of the database software firm soared to a record highs.

Oracle (ORCL) earnings grew 8% to 87 cents a share, beating by 3 cents. Revenue rose 1% to $9.6 billion, in line.

DocuSign (DOCU) earned 6 cents a share, its fourth straight profitable quarter and beating by a nickel. Revenue rose 34% to $199.7 million, modestly beating. The maker of software to help automate electronic filing of contracts and digital certificates also gave bullish Q1 and full-year revenue guidance. Shares still fell 4% Friday, just below a buy point.

Tesla Model Y Unveiled: Is It An SUV?

Tesla CEO Elon Musk unveiled the Model Y late Thursday night. Billed as a crossover SUV, the Model Y will use many of the same parts as the Model 3 to save money. Several commentators said the Y looked more like a car than an SUV. Tesla says production on a the 300-mile range, $47,000 Tesla Model Y will start in late 2020, with a 230-mile range $39,000 version out in spring 2021. But luxury electric automaker has tended to miss production deadlines considerably. People can pre-order a vehicle for $2,500.

Tesla shares fell 5% Friday.

Nvidia Outbids Intel For Mellanox

Graphics-chip maker Nvidia (NVDA) agreed to buy Mellanox Technologies (MLNX) for $6.9 billion, topping a bid by Intel (INTC). The deal will combine Nvidia’s graphics processing unit, or GPU, computing platform with Mellanox’s high-speed interconnects. The combined company will have a broader offering for the high-performance computing market and cloud data centers. Nvidia and Mellanox shares jumped while Intel cleared a buy point.

Broadcom Earnings Trounce Views

Broadcom (AVGO) earned an adjusted $5.55 a share in its fiscal Q1, beating by 32 cents and up 8% vs. a year earlier. Sales climbed 9% to $5.79 billion, just below views for $5.82 billion. But for the full year, the chipmaker expects sales of $24.5 billion, topping the consensus of $24.3 billion. Shares surged Friday to a new high and past a buy point. Meanwhile, Semtech (SMTC) narrowly beat Q4 views, but guided sharply lower for Q1 EPS and sales. Shares tumbled Thursday but rebounded Friday to close 4.2% higher for the week.

U.S., China Economic Data Just So-So

A slew of mixed-to-soft economic data out of both the U.S. and China didn’t exactly bolster confidence that the global economy is ready to rev back up after slowing at the end of last year.

U.S. January retail sales rose 0.2%, or 1.2% excluding food and gas, but that followed a downwardly revised 1.6% tumble in December that was the worst since 2009. Durable goods orders rose 0.4%, boosted by volatile aircraft orders. Core capital goods orders grew 0.8% after falling in four of the prior five months. Industrial production rose just 0.1%, below views, as manufacturing slumped. The consumer price index showed core inflation slowing to 2.1% in February. January new home sales came in at a 607,000 annual rate, just below views. But sales were revised up in the prior two months.

In China, industrial production slowed to a softer-than-expected 5.3% annual gain in January-February, after rising 5.7% in December. Retail sales held at a 8.2% annual gain, in line with expectations.

Oil Conference Addresses Foreign Policy

During CERAWeek by IHS Markit in Houston, Secretary of State Mike Pompeo called on the oil and gas industry to help advance the Trump administration’s foreign policy and said U.S. adversaries like Russia and Iran were using their energy exports for “malign” purposes. He added that the U.S. seeks to bring Iranian oil exports down to “zero.” Meanwhile OPEC officials met with U.S. executives and warned that the No Oil Producing and Exporting Cartels (NOPEC) bill, which would allow the U.S. Attorney General to sue OPEC members for collusion, would also hurt the U.S. oil industry.

China Internet Results Mixed

E-commerce platform Pinduoduo (PDD) posted a wider-than-expected Q4 loss even though revenue beat expectations. Shares fell. Momo (MOMO), one of China’s top mobile social networking platforms, beat views, causing the stock to jump. ZTO Express (ZTO), a delivery service company backed by Alibaba (BABA), reported fourth-quarter results that met views on the bottom line and beat on revenue. Shares fell.

Peltz Joins Aurora Cannabis

Aurora Cannabis (ACB) named activist investor Nelson Peltz as an advisor, potentially helping it collaborate with mainstream consumer-goods companies. U.S. pot grower Harvest Health & Recreation agreed to buy Verano in an all-stock deal valued at $850 million, the latest massive tie-up in a nation where pot is not yet federally legal. Hexo (HEXO), Canadian producer, agreed to buy Newstrike Brands in an all-stock deal valued at 263 million Canadian dollars.

News In Brief

Guardant Health (GH) reported a loss of 30 cents a share for the fourth quarter, beating views by a nickel. Revenue rose 64% to $32.87 million, also beating. For 2019, The maker of cancer diagnostics tests sees revenue rising 43%-39% to $130 million to $135 million vs. views for $116 million. The red-hot October IPO stock skyrocketed.

F5 Networks (FFIV) agreed to buy Nginx for $670 million in cash. The private software firm sells open-source application delivery software.

PayPal (PYPL) will take a $750 million stake in MercadoLibre (MELI) as part of the South American e-commerce firm’s $1.8 billion equity offering. MercadoLibre faces more competition from Amazon.com (AMZN) in Brazil, its largest market. Amazon threatens to compete with PayPal in payments.

Stitch Fix (SFIX) soared after the online provider of apparel purchasing services beat quarterly estimates and guided higher.

Ulta Beauty (ULTA), a beauty-product retailer and salon chain, reported fourth-quarter results after the close that beat expectations, helped by strong holiday demand. Shares jumped Friday.

Adidas (ADDYY) warned of slowing growth and supply chain issues. Earnings met views.

Dick’s Sporting Goods (DKS) plunged after it announced it will stop selling firearms at 125 stores, missed same-store sales estimates and guided low on earnings.

Dollar General (DG) gapped down after earnings and earnings guidance missed views. Revenue and same-store sales topped consensus.

Facebook (FB) Chief Product Officer Chris Cox and Chris Daniels, vice president of the Facebook messaging app WhatsApp, are leaving. Meanwhile, federal prosecutors are conducting a criminal probe over the social media giant’s data deals with electronics makers, according to the New York Times.

General Electric (GE) sees earnings below views in a “reset” 2019. But the ailing manufacturer sees a “meaningfully better” 2020 and 2021, with industrial free cash flow positive again. GE shares rose.

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2019-03-15 20:14:22

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