The S&P 500 index and Dow Jones industrial average fell back below their 50-day moving averages while the Nasdaq composite strung together several modest losses. Walmart (WMT) sold off as earnings, guidance and online sales were weaker than expected. Hot recent IPO Roku (ROKU) tumbled on its revenue outlook. Home Depot (HD) beat and gave bullish guidance. Fed policymakers seemed slightly hawkish. Rite Aid (RAD) agreed to an Albertsons buyout.
S&P 500 Index, Dow Jones, Nasdaq Retreat
X The major averages suffered modest losses through Thursday, with some worrisome trends. They closed near session lows several times, with the Nasdaq extending its losing streak to four sessions as of Thursday. The Dow Jones and S&P 500 index fell back below their 50-day moving averages, with Walmart (WMT) acting as a drag. Treasury yields popped to fresh four-year highs on Fed minutes, but they backed off somewhat.
Walmart Crashes On Earnings, Online Sales, Guidance
The world’s largest retailer reported better-than-expected Q4 sales and same-store sales, but earnings missed estimates. U.S. online sales grew 23%, less than half Q3’s 50% annual rise, as Walmart (WMT) struggles to compete with Amazon.com (AMZN). Walmart still sees 40% e-commerce growth this fiscal year. But its earnings guidance was light. Walmart online chief Marc Lore denied a report he might leave the retailer. Walmart said it will roll out a more-upscale home furnishings shopping portal. Walmart stock crashed 10% on Tuesday.
Amazon, for its part, reportedly plans to roll out six more cashierless Amazon Go convenience stores after recently opening its first Go store in Seattle to the general public.
Fed Minutes Have A Hawkish Hint
Federal Reserve policymakers still backed gradual interest rate hikes in 2018 at their Jan. 30-31 meeting. But they see stronger growth prospects in 2018 than they did in December, in part due to the Trump tax cuts. Fed officials see inflation rising to 2% over time. The 10-year Treasury yield, already up sharply this year, rose to fresh four-year highs, pushing stocks lower Wednesday. Meanwhile, existing-home sales posted their biggest annual drop in 3 years, while applications for loan to buy a home tumbled again.
Roku Outlook Disappoints
Streaming video platform Roku (ROKU) earned an adjusted 6 cents a share on sales of $188.3 million in Q4, vs. expectations for a loss of 11 cents a share on sales of $183 million. But for the current quarter, Roku expects revenue of $125 million, based on the midpoint of its guidance, vs. Wall Street expectations for $130 million. Roku said its active user base rose 44% year over year to 19.3 million in the fourth quarter. Roku stock plunged on weak guidance.
Home Depot (HD) reported adjusted earnings per share advanced 17% to $1.69 as sales climbed 7.5% to $23.88 billion. Home Depot expects recent tax cuts will fuel continued growth in the housing sector even as mortgage rates climb. Home Depot expects EPS to jump 28% to $9.31 this year. It’s projected to buy back $4 billion in shares. Shares initially popped Tuesday morning, but closed slightly lower that day and through Thursday.
Broadcom Lowers Bid For Qualcomm
Chipmaker Broadcom (AVGO) cut its offer to buy Qualcomm (QCOM) to $79 a share in cash and stock from $82 after Qualcomm raised its bid for NXP Semiconductors (NXPI). Broadcom said Qualcomm’s revised NXP offer amounted to a transfer of value to NXP shareholders. If Qualcomm’s purchase of NXP doesn’t go through, Broadcom will pay $82 a share. Broadcom has asked Qualcomm investors to vote for its slate of six nominees to Qualcomm’s board at the company’s March 6 shareholder meeting.
Grocery giant Albertsons, under private ownership for over a decade, announced it would merge with Rite Aid (RAD). The combined company, which will be public will have a value of $24 billion, including debt. The deal comes after Walgreens Boots Alliance (WBA) gave up on an effort last year to buy all of Rite Aid due to regulatory objections, instead acquiring less than half of the smaller rival’s stores. Merger activity is heading up in the sector as pharmacies look to keep market share in the face of growing competition from Amazon (AMZN).
Stockpiles Fall But Shale Firms Plan Higher Output
The Energy Information Administration said U.S. crude stockpiles fell by 1.6 million barrels vs. the week prior vs. analyst expectations for a 1.9 million barrel increase, while production was steady at 10.27 million barrels per day. U.S. shale firms Parsley Energy (PE), Continental Resources (CLR), Matador Resources (MTDR) and Concho Resources (CXO) see higher production this year as oil prices rebound.
Planet Fitness Pumped Up
Planet Fitness (PLNT) saw EPS climb 20% to 24 cents a share as revenue grew 16% to $134 million. The fitness-chain operator, whose affordable offerings have resonated with casual and first-time gym users, expects full-year sales to increase by roughly 20% and adjusted EPS to grow by about 40%. Planet Fitness also added $80 million to its stock buyback program. Shares rallied Friday.
HP Enterprise, HP Earnings Strong
The two halves of the former Hewlett Packard reported better-than-expected fiscal first-quarter earnings. HP Enterprise (HPE), the server, networking equipment and data center gear maker also gave upbeat Q2 guidance, hiked its dividend 50% and boosted its stock buyback program. Printer-and-PC maker HP Inc. (HPQ) also guided higher for Q2 and the full year. HPE and HP Inc. shares jumped Friday morning.
Domino’s Pizza (DPZ) came up short on sales, but its stock appeared to be propped up by a report saying that Burger King-parent Restaurant Brands International (QSR) was thinking about making a bid. Quarterly same-store sales at Wendy’s (WEN) also missed estimates. Jack in the Box (JACK) met expectations, and the company said it had declared a cash dividend of 40 cents per share. Cheesecake Factory (CAKE) was just shy on same-store sales. Wingstop (WING) shares fell on a weak 2018 EPS outlook.
News In Brief
MGM Resorts International (MGM) missed Q4 earnings per share estimates, while sales topped, helped by the casino-resort operator’s opening of MGM National Harbor in December 2016. But U.S. same-store casino revenue was flat, and MGM sees weaker sales on the Las Vegas Strip in Q1.
Norwegian Cruise Line (NCLH) reported Q4 EPS that beat estimates, revenue that just missed. The cruise line operator forecast Q1 and full-year EPS above views.
Stamps.com (STMP) earned $4.30 a share, up 73% from a year ago, on revenue of $132 million, up 25%. Shares jumped 11%, near 205, within a consolidation with a 233.23 buy point and 211.50 early entry.
Medtronic (MDT) on Tuesday reported adjusted income of $1.17 per share on $7.37 billion in sales, beating expectations. But shares fell after Medtronic said integration and testing of its surgical robot is taking longer than expected.
Shares in Ubiquiti Networks (UBNT) plunged after the maker of wireless internet equipment disclosed an ongoing SEC probe into its business and accounting practices.
BHP Billiton (BHP) reported a profit of $4.05 billion for the second half of 2017, up 25% from a year ago but below some estimates. Copper revenue surged 52% on higher prices and an output boost, while BHP’s iron ore division saw 4% growth.The mining giant pushed back against structural changes sought by activist hedge fund Elliott Advisors but boosted its dividend and said it’s expediting the sale of its $10 billion in U.S. shale assets.
Intuit (INTU) earned 35 cents a share in its Q2, beating views by a penny. The Turbo Tax software maker also narrowly exceeded revenue expectations with $1.165 billion.
OLED technology provider Universal Display (OLED) posted better-than-expected December-quarter results, but shares fell on disappointing sales guidance for 2018. For 2018, Universal Display expects revenue of $350 million to $380 million, vs. analyst expectations for $400 million.
Sprouts Farmers Market (SFM) offered bullish 2018 EPS guidance of $1.22-$1.28 vs views for $1.20 a share, on sales growth of 11.5%-12.5%, after reporting 33% Q4 profit growth to 16 cents on a 16% sales rise to $1.14 billion.
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