The stock market rally gained momentum, with the Nasdaq and S&P 500 hitting 2023 highs. The Nasdaq 100 rallied to a 52-week high, as big techs dominate the uptrend. The Dow Jones rose modestly, after briefly undercutting the 50-day line. The small-cap Russell 2000 also rebounded, helped by bank stocks surging. Chips and software were strong, especially those with an AI spin such as Nvidia (NVDA) and ServiceNow (NOW). Tesla (TSLA) rallied on its shareholder day event. Walmart (WMT) and Dynatrace (DT) were earnings winners, while On Holding (ONON) tumbled as guidance wasn’t strong enough.
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Techs Drive Market Rally Higher
The Nasdaq composite and S&P 500 rose to 2023 highs, while the big-cap Nasdaq 100 rallied to a 52-week best. The Dow Jones rose, after closing Tuesday below its 50-day line. Many chip and software plays boomed on AI hopes. Walmart (WMT) led discount retailer earnings. Treasury yields and the dollar rose sharply to two month highs.
Economy Strengths, And So Do Rate Hike Odds
The latest batch of economic data generally showed improvement from recent trends, keeping hope for a soft landing alive. But that’s also raising the possibility of a June rate hike and fading hopes for quick rate cuts.
Retail sales rose 0.4% in April, below expectations but better than the prior month’s revised 0.7% decline. Still, the recent trend isn’t great, with sales lower in April than they were in January. Industrial production unexpectedly rose 0.5% last month, led by a 1% gain in manufacturing. However, the increase was driven by a 9.3% rise in autos and parts, which may not be sustainable. New claims for unemployment benefits fell 22,000 to 242,000 in the week through May 13. However, more than half the decline came from Massachusetts, which has indicated a problem with claims fraud.
Shoe Stocks Stumble
Early Tuesday, On Holding (ONON) reported a 203% EPS gain with sales up 80%, both beating views. The Swiss athletic shoe maker sees sales growth slowing in the second half of the year. ONON stock, which had boomed for much of 2023, fell sharply. On Friday, athletic shoe retailer Foot Locker (FL) missed views and slashed full-year guidance. FL stock dived, with partners Nike (NKE), Crocs (CROX), Adidas (ADDYY) and others retreating as well.
Tesla Shareholder Day
Tesla (TSLA) held its annual shareholder meeting Tuesday where Chief Executive Elon Musk hinted two new Tesla vehicles are coming but “this is not the time” to reveal them. Musk also said Tesla will “try a little advertising,” a big shift. He also reiterated that a Cybertruck delivery event will take place this year. He shot down rumors that he would step down as Tesla CEO. TSLA stock jumped on earnings but is still below the 50-day line.
Walmart, Target Top Views
The discount giants topped views, but Walmart (WMT) appears to have the edge over its rival as consumers trade down to affordable options. Target (TGT) reported adjusted earnings fell 6% while revenue ticked up 0.5% to $25.32 billion, But Target guided low, citing profit-shrinking inventory cuts as well as increased theft and organized crime Meanwhile, Dow Jones giant Walmart reported a 13% EPS gain with revenue up nearly 8% to $152.3 billion. Walmart guided low on fiscal Q2 EPS but raised full-year guidance. raised its current fiscal 2024 guidance following the results by up to 15 cents per share to range from $6.10 to $6.20, which is in-line with FactSet estimates of $6.14. WMT stock rose in a buy zone on earnings, edging lower for the week. TGT stock fell from key moving averages.
FTC Opposes Amgen-Horizon Thera Deal
Horizon Therapeutics (HZNP) tumbled on Tuesday after the Federal Trade Commission filed a lawsuit to block its acquisition by Amgen (AMGN). According to the FTC, the acquisition would allow Amgen to use rebates on its existing blockbuster drugs to pressure insurers and pharmacy benefit managers into favoring Horizon’s two biggest products, treatments for thyroid eye disease and gout. Amgen said it remains committed to closing the deal and has no plans to “bundle” Horizon’s products. The news had a widespread impact on biotechs, at least initially, with shares of other pending takeovers falling as the FTC takes a more aggressive stance.
Applied Materials Tops Views
The semiconductor-equipment maker beat Wall Street’s targets for its fiscal second quarter and guided higher than views for the current period. But executives gave cautious commentary about capital equipment spending by chipmakers, especially memory-chip firms. Applied Materials (AMAT) earnings grew 8% with sales up 6% to $6.63 billion. But it sees Q3 EPS and sales declining in Q3, but topped views. Meanwhile, several major semiconductor stocks broke out of bases, including Advanced Micro Devices (AMD), Broadcom…
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