Markets Stay on a Roll; COST, LEN Beat on Earnings

Don’t look now, but all major stock market indices are up double digits year to date — even the previously beleaguered Russell 2000. This is thanks to a nearly +11% run-up in the past month on the small-cap index — 2.6% just today — as higher interest rate levels previously expected through much of next year are on the wane, thanks to a newly dovish Fed, as of yesterday. In fact, at +14% year to date, the Russell has pushed past the blue-chip Dow’s +12%, which itself is nothing to sneeze at.

Today, the Dow gained another +158 points, +0.43%, while the S&P 500 grew +0.26% and the Nasdaq +0.19% on the session. But these indices, particularly the Nasdaq, roared ahead of the pack last summer during the A.I. boom. The tech-heavy index currently resides at +42% for the year with only a couple trading weeks remaining. The S&P is up +23% since early January.

Of course, running up valuations now is going to lead to less available later — such are the ways of our market. And even though economic data currently depicts pending economic data to continue shedding excess inflation like a recent prescription of Ozempic can do for one’s physique, we may see some stickier elements of the economy emerge for various reasons over time, which might put the cork back in this bottle at some point.

For now, though, market participants and the Fed are celebrating a well-earned respite following 2022 pressures that kept big gains at bay and carried a looming dark cloud of recession ahead of it at all times. Now it looks like the clouds are parting, but only a fool would expect it to stay sunny forever.

Costco COST reported fiscal Q1 earnings results after the closing bell today, outperforming estimates on both top and bottom lines. Earnings of $3.58 per share easily surpassed the $3.45 in the Zacks consensus, while $57.799 billion in total revenues (sales and subscriptions) outpaced the $57.67 billion analysts were looking for, and grew +6.1% year over year. Shares are back up +1% in late trading on the news after lowering ahead of the report, but this is after hitting all-time highs yesterday.

Luxury homebuilder Lennar Home LEN also beat estimates on earnings and sales for its fiscal Q4 out this afternoon, with $4.82 per share coming in ahead of the $4.64 expected, while revenues of $11.0 billion soundly outperformed the $10.34 billion in the Zacks consensus. Starts were up +43% and New Orders +32%, but shares are trading down -3.5% on this news. Call it booking profits after the stock shot up +50% in just the past six weeks.

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