The S&P 500 index, Nasdaq composite and Dow industrials sold off on Monday, rebounded Wednesday on President Trump's tax plan, and closed the week with decent gains. Roku ( ROKU ) had a stellar IPO debut while Nike ( NKE ) is struggling in North America. Boeing ( BA ) scored a tariff victory vs. Bombardier but may lose key sales. Micron Technology ( MU ), Red Hat ( RHT ) and Thor Industries (THO) rallied on earnings.
S&P 500, Nasdaq Hit Record Highs
[ibd-display-video id=2324564 width=50 float=left autostart=true]The major averages fell Monday, but rebounded on President Trump's tax plan. The Nasdaq and S&P 500 hit record highs Friday, closing with weekly gains of 1.1% and 0.7%, respectively. The Dow industrials rose 0.2%. For Q3, the Nasdaq rose 5.8%, the S&P 500 4% and the Dow 4.8%. Many leading stocks that undercut buy points moved back above, but Universal Display (OLED) and Tesla (TSLA) were among those that had failed breakouts while Apple (AAPL) is still underwater. Bank stocks nudged above or just under buy points as Treasury yields continued to rise. Several homebuilders broke out. Oil stocks kept rising with crude.
Roku Doubles In 2 Days
Roku ( ROKU ) shares surged 68% on its first day of trading, then added nearly 13% on Friday to 26.54, hitting 29.80 intraday. Late Wednesday, the set-top box maker for streaming TV services priced shares at the high end of its 12-14 price range, giving Roku an initial $1.3 billion valuation. Roku closed the week with a $2.5 billion market cap. Roku sees advertising and platform revenue as the future, with its hardware essentially stagnant.
Nike Struggles At Home
Nike ( NKE ) topped Q1 earnings estimates even as profit fell 22% to 57 cents a share and revenue edged up 0.1% to $9.07 billion, about in line with forecasts. But a disappointing 3% revenue drop in the key North America market, despite growth in all other regions, hung over the stock. Management expects more sales declines in North America for the current quarter. Meanwhile, Adidas (ADDYY) overtook Jordan Brand as the no. 2 athletic shoe brand in the U.S., adding to concerns about Nike's stamina in the region. Nike shares fell xx% while Under Armour (UAA) edged 0.4% higher. Adidas lost 1.6% as a key executive was implicated in a corruption scandal involving several big NCAA basketball programs.
Home Sales Fall But Builders Rise
New-home sales unexpectedly fell to an eight-month low in August, while pending home sales for existing homes neared a two-year low. Hurricanes took their toll and will likely continue to do so. But KB Home (KBH) reported stronger than expected earnings and revenue growth late Thursday, sending shares soaring 8.55% Friday to flirt with a buy point. Rival builder D.R. Horton (DHI) said earlier in the week that hurricanes would have modest impact on results, but D.R. Horton shares retook a buy point, vaulting 8.2% for the week. LGI Homes (LGIH) and Toll Bros. (TOL) also broke out.
Chinese internet stocks took a hit Monday after government regulators fined social media companies for violating a new cybersecurity law that tightened oversight over web content. Among the China stocks that fell were Alibaba (BABA), Baidu (BIDU) and Weibo (WB). However, YY (YY) surged Tuesday, breaking out.
Thor Brings Q4 Lightning
RV maker Thor Industries (THO) topped fiscal fourth-quarter estimates, citing in part the popularity of its more affordable RVs and demand from Boomers and millennials. The company said recently added production capacity was starting to be put to use. It also said that dealers appeared to be excited about to its new and redesigned offerings, such as "lightweight and entry-level products" and features "to provide greater connectivity, comfort and convenience."
Thor shares rose 2.6% on Thursday to a record high. Thor jumped 9.5% for the week and 15.9% for September.
Micron Trounces Q4 Views, Guides Higher
Memory-chip maker Micron Technology ( MU ) earned $2.02 a share excluding items, reversing a year-earlier loss of 1 cent a share, in its Q4 ended Aug. 31. Sales rose 91% to $6.14 billion. Wall Street analysts expected adjusted earnings of $1.84 a share and revenue of $5.96 billion. For the current quarter, Micron guided to adjusted earnings per share of $2.16 on sales of $6.3 billion, compared with consensus views of $1.85 and $6.06 billion. Micron is benefiting from "robust demand" for its memory and storage products, the company said. Micron shares shot up 9% to a 15-year high.
Carnival Shores Up Earnings
Carnival (CCL) beat Q3 earnings and sales estimates, a sign that the impact from hurricanes and major earthquakes in Mexico could be limited. Temporary port closures resulting from the storms affected some travel, taking 10-12 cents off Q4 earnings. But the company said bookings for the first half of next year were ahead of the prior year on price and occupancy. The company said its "owned destinations," including those in Mexico, "are fully operational and welcoming guests." Carnival shares popped Tuesday but closed the week up just 0.4%.
Google Tries To Appease EU
To dodge further fines by the European Union, Alphabet (GOOGL)-unit Google will allow rival marketplaces to be placed next to its product listing ads at the top of search results. Google will bid against rivals for the ad slots. EU antitrust regulators had ordered the search giant to give equal treatment to comparison-shopping sites. Morgan Stanley estimated that European PLAs are less than 5% of global gross revenue. The EU also is probing Google's Android operating system, its AdSense online ad service and Google Maps.
Boeing Wins, Loses With Bombardier Tariff
The Commerce Department recommended that a 220% tariff be imposed on each Bombardier C Series jet delivered to the U.S. after Boeing accused the Canadian aerospace giant of receiving unfair government subsidies. A second ruling is expected on Oct. 5 that could add even more to the duty. U.K. Prime Minister Theresa May said the ruling "undermines" Britain's relationship with Boeing and puts commercial and government orders at risk as 4,200 Bombardier jobs in Northern Ireland could be affected by the decision. Defense Secretary Michael Fallon said the U.K. wouldn't cancel its pending P-8 maritime surveillance plane or Apache helicopters orders. But Fallon said he would take a look at two future contracts Boeing was likely to bid on. Canadian officials also threatened to cancel a planned purchase of 18 Boeing F/A-18 Super Hornets.
Boeing shares fell 0.9%, still in buy range.
Crude Futures, Oil Stocks Rise As Supply Falls
U.S. crude rose about 2% to $51.67 a barrel, setting a five-month high during the week, with big monthly and quarterly gains. U.S. crude stockpiles fell by 1.846 million barrels in the latest week, the Energy Information Administration said, the fourth straight decline. Analysts expected a 1.3 million barrel increase. Gasoline supplies rose by 1.107 million while distillates sank by 814,000. Crude production rose slightly to 9.547 million barrels per day, a two-year high and nearing record levels. Turkey said it would shut down a pipeline that carries 500,000-600,000 barrels of oil per day out of Iraq, after an independence vote in the Kurdistan region of Iraq overwhelmingly passed. Nigeria could start adding more supply to oil markets after a pipeline was set to reopen after being shut down in July. Chevron (CVX) named Michael Wirth CEO and chairman as John Watson stepped down. Chevron shares rose 0.2% for the week and BP (BP) 1.6%, both just below buy points.
Darden Restaurants Misses On Comps
Darden Restaurants (DRI) reported Q2 earnings of 99 cents per share on revenue of $1.94 billion, beating analysts' views for EPS of 98 cents on sales of $1.93 billion. But same-store sales only rose 1.7%, below estimates for a 2.1% increase. Olive Garden's comps rose but fell short of views while Longhorn and Capital Grille same-store sales beat expectations. Shares fell 6.5% on Tuesday about 5% for the week.
Target Aims For $15 Minimum Wage
Target (TGT) said it would raise its minimum wage to $11 per hour in October for its 323,000 current employees as well as the over 100,000 season workers it plans to hire for the holiday season. The retailer set a goal of $15 per hour by 2020 as labor markets tighten. That follows wage hikes from Wal-Mart (WMT), as well a push from many states for a $15 minimum.
Red Hat Beats, Guides Higher
Red Hat ( RHT ) reported fiscal Q2 earnings and revenue that topped estimates. Adjusted earnings were 77 cents a share, up 40% from a year ago, with revenue rising 21% to $723 million. Red Hat's Linux software runs computer servers in corporate data centers. Management disclosed that cloud computing revenue has passed a $200 million annual run rate, growing at about 40% quarterly. Red Hat raised its full-year revenue outlook by $75 million to a range of $2.880 billion to $2.895 billion. Red Hat climbed 4.3% to a 17-year high.
News In Brief
Cintas (CTAS) profit grew 32% to $1.48 a share on 25% revenue growth to $1.61 billion in Q1, surpassing expectations, prompting shares to break out into buy range after clearing a 139.84 entry point.
Amazon (AMZN) rolled out a bevy of new gadgets, including a new Amazon Fire TV, camera-enabled Echo Spot, smart-home centralizer Echo Plus, and Echo Connect, a $35 landline adapter.
HubSpot (HUBS) stock jumped 13% for the week after the online-marketing software raised September quarter guidance at its annual customer conference and investor day held in Boston.
Tesla (TSLA) reportedly will switch from Nvdia (NVDA) to Intel (INTC) for chips in Tesla's infotainment systems. Intel rose 2.4%, nearing a buy point. Nvidia initially extended a recent retreat but largely erased losses by Friday. Tesla slid amid concerns about Model 3 production and cash burn.
Twitter ( TWTR ) will double the number of characters allowed in a tweet to 280 in a test involving a small group of users, before potentially rolling out the change to users at large.
Equifax (EFX) CEO and Chairman Richard Smith announced his retirement Sept. 26, effectively becoming the latest victim of the massive hack at the credit reporting agency that may have exposed private data of up to 143 million Americans. Equifax president of Asia-Pacific Paulino do Rego Barros is interim CEO as the company searches for a permanent chief.
Alibaba (BABA) paid $807 million for a majority stake in a logistics and product delivery affiliate, called Cainiao, as part of a plan to spend $15.2 billion over the next five years to strengthen its logistics and delivery expansion.
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