The Dow Jones industrial average and S&P 500 index rebounded from key support levels but ended slightly lower. The Nasdaq composite, fueled by Apple (AAPL), rallied. Tesla (TSLA) skidded on cash burn and Elon Musk's strange conference call. Mastercard (MA) hit a buy zone, as new payment stocks struggled. Alibaba (BABA) pulled back despite strong earnings. Sprint (S) merging with T-Mobile (TMUS) headlined several big M&A deals. The jobs report and a "symmetric" Fed stance eased rate-hike fears. Crude oil prices hit record highs as shale operators beat earnings views.
XStocks Rebound As Apple Soars
The Dow Jones and S&P 500 undercut 200-day moving averages, but rebounded by Friday to finish the week down 0.2%. The Nasdaq composite rallied 1.3% to retake its 50-day line. Apple (AAPL), fueled by earnings, a buyback and Warren Buffett buying more shares, soared 13% to drive the major averages higher. Tesla (TSLA) fell while Alibaba (BABA) rallied and Mastercard (MA) entered a buy zone. Treasury yields pulled back, with the yield spread narrowing slightly. Crude oil rose to nearly $70 a barrel as shale earnings were strong. Apparel stocks were losers.
Apple Stock Rallies On Earnings, $100 Billion Buyback
Consumer electronics giant Apple (AAPL) earned $2.73 a share, up 30% year over year, on sales of $61.1 billion, up 16%, in its fiscal second quarter. That was the best EPS gain in years and the latest in a string of accelerating revenue growth reports. Both topped forecasts. Apple sold 52.2 million iPhones, just missing consensus. But services revenue and wearables sales were strong. Apple also announced plans for a $100 billion buyback and big dividend hike. Warren Buffett disclosed that Berkshire Hathaway (BRKB) bought another 75 million Apple shares in the first three months of 2018, bringing its total stake to nearly 5%.
Apple stock surged 13.25%, its best weekly gain in six years, hitting a record high and blasting into a buy zone.
Tesla Burns Cash, Musk Burns 'Boring' Analysts
Tesla reported a smaller-than-expected loss and above-forecast revenue, but the electric car maker's Model 3 production remains low and the company burned $1 billion cash in Q1. In the post-earnings conference call, CEO Elon Musk cut off Wall Street analysts for "boring" questions and spent the next 20 minutes taking questions from a blogger via YouTube. Shares fell sharply Thursday, but closed the week up 1 cent.
Alibaba Earnings, Outlook Strong
Alibaba reported better-than-expected quarterly earnings as core e-commerce revenue swelled 62% to $8.2 billion. Cloud revenue more than doubled to $699 million. Alibaba ended the quarter with 617 million monthly active users on mobile devices. Alibaba also gave a bullish outlook. Shares rose 3.5% Friday.
Jobless Rate Low, Wages Tame
The jobless rate slid to 3.9% in April, the lowest since 2000, as the economy added 164,000 jobs, the Labor Department reported Friday. Meanwhile, average hourly wage growth rose just 2.6% from a year ago, a little below views. The Fed's favored gauge of core inflation climbed to 1.9%, but policymakers sent the message they won't panic if it tops 2% in coming months. The Fed stressed Wednesday that its 2% inflation target is "symmetric."
Cybersecurity Earnings, IPO Strong
Qualys (QLYS), FireEye (FEYE) and Fortinet (FTNT) all topped earnings and revenue views, but shares retreated. CyberArk Software (CYBR) rallied on strong Q1 results and a Q2 outlook that guided slightly higher. Meanwhile Carbon Black (CBLK) jumped 26% in Friday's debut after its IPO priced late Thursday at 19, at the high end of its recently raised 17-19 range.
Business Software
Zendesk (ZEN) popped after Q1 results and Q2 guidance showed the customer-support and sales automation software company is building momentum against rival Salesforce.com (CRM) for larger contracts. Paycom (PAYC) reported strong earnings and sales growth, but forecast in-line June-quarter results, sending the HR and payroll processing software maker lower. Fellow payroll and HR cloud software firm Paylocity (PCTY) broke out Friday on its results. E-commerce software firm Shopify (SHOP) topped Q1 views but the size of the sales beat and updated guidance left some investors unimpressed. Shopify initially fell but rebounded for a strong gain. Ultimate Software (ULTI) reported adjusted EPS of $1.30, topping estimates of $1.13, with revenue growing 21% to $277 million, also beating. Shares rallied Wednesday, but closed below a buy point.
Restaurant Earnings
McDonald's (MCD) surged after scoring a double beat, with EPS rising 22% to $1.79 and revenue falling 9% to $5.14 billion. Shake Shack (SHAK) skyrocketed Friday after it crushed on earnings and beat on revenue. Wingstop (WING) also jumped Friday on its results. Taco Bell parent Yum Brands' (YUM) earnings topped, but shares skidded on weak same-store sales. Yum China (YUMC) tumbled as weak Pizza Hut results in China offset overall strong earnings. Texas Roadhouse (TXRH) slipped after it came in about par with EPS of 76 cents on revenue of $627.7 million.
Shale Earnings Strong
Viper Energy Partners (VNOM), Anadarko Petroleum (APC), Concho Resources (CXO), Noble Energy (NBL), Matador Resources (MTDR), Continental Resources (CLR), Parsley Energy (PE), EOG Resources (EOG) and Pioneer Natural Resources (PXD) topped quarterly Q1 estimates. Integrated energy firm Marathon Oil (MRO) cleared a buy point following its earnings. Oil prices hit fresh multiyear highs. U.S. inventories and production increased but odds are rising that President Trump will withdraw from the Iran nuclear pact.
Sprint, T-Mobile Headline Merger Activity
Sprint (S) and T-Mobile US (TMUS) finally agreed on a merger, but shares fell on the lack of a price premium and fears that antitrust regulators will reject the deal. Meanwhile Marathon Petroleum (MPC) agreed to buy Andeavor (ANDV) and create the largest U.S.-based refiner. Additionally, Walmart (WMT) said its U.K. chain Asda will merge with Sainsbury's. Walmart reportedly is near a $15 billion deal to buy 75% of India's e-commerce giant Flipkart. Prologis (PLD) will buy DCT Industrial (DCT). Finally Marriott Vacations (VAC) revealed it will buy ILG (ILG).
Facebook Eyes A Love Connection
At its annual developers conference Facebook (FB) said it was entering the online dating business. More than 200 million people on Facebook identify themselves as single. Match Group (MTCH), which owns Match.com and dating app Tinder, plunged on the announcement. Facebook also introduced Oculus Go, a stand-alone VR headset announced in October, for $200.
Networking
Arista Networks (ANET) late Thursday reported a 78% EPS gain while revenue swelled 41% to $472.5 million, both beating. The Cisco rival sees Q2 revenue in line with views, sending shares tumbling 8.5% Friday. Turnaround project Juniper Networks (JNPR) late Tuesday reported a 39% Q1 EPS decline that wasn't as bad as expected. Sales of network gear to cloud computing customers rebounded. Juniper forecast Q2 profit slightly above views. Shares popped but pared gains.
Drug, Biotech Earnings
Allergan (AGN), Zoetis (ZTS), Teva (TEVA) and Exelixis (EXEL) all topped quarterly expectations. But Allergan sank on a report it's unlikely to make a transformative deal and Zoetis fell on 2018 adjusted profit guidance that missed by a penny. Dow Jones' components Merck (MRK) and Pfizer (PFE) beat on profit, lagged on sales. Gilead (GILD) missed on sales and adjusted earnings as hepatitis C drugs fell 59% vs. last year. Regeneron (REGN) profit beat while revenue missed, though eye drug Eylea topped views. Celgene (CELG) toppled on an analyst suggestion that a key drug could be delayed by one to three years. But on Friday Celgene said it would refile the application in Q1 2019 for that drug, ozanimod, as a multiple sclerosis treatment. Celgene also topped first-quarter expectations and raised full-year guidance. Sarepta (SRPT) sales missed some views, though losses were better than expected.
Old Payments Trump New Payments
Mastercard (MA) shares jumped after the credit-card giant reported earnings that beat estimates, joining Visa (V) in a buy range. While Square (SQ) sales also topped, with Bitcoin making up 5% of them, the payments technology firm's current-quarter profit outlook came up short. FleetCor (FLT), which provides prepaid fuel cards for vehicle fleets and other payment products, sank on a low 2018 outlook. PayPal (PYPL) tumbled as Amazon (AMZN) reportedly offered merchants discounts to use its own payment service.
Apparel Stocks Fall On Earnings, Kayne
The controversy over Kanye West's comments about slavery have tangled up Adidas (ADDYY), after the CEO of the No. 2 sportswear company distanced himself but would not cut ties with the rapper. West's Yeezy brand is not a significant part of Adidas revenue but contributes to the brand's style image. Shares tumbled below a buy point despite Adidas logging 10% currency-neutral revenue growth, including a solid 21% in North America. Meanwhile, Under Armour (UAA) topped estimates but gave a weak outlook as Susquehanna said inventories are a "ticking time bomb." Coach and Kate Spade parent Tapestry (TPR) topped Q3 consensus. But shares plunged as the upscale purse and accessories maker's raised guidance was still largely below consensus. North Face and Vans parent VF Corp. (VFC) beat views but shares retreated Friday.
News In Brief
Snapchat operator Snap (SNAP) crashed to a record low after missing first-quarter views on revenue, user growth and several other key metrics.
Grubhub (GRUB) topped first-quarter earnings estimates, but food sales missed targets. Shares fell sharply, but pared losses by Friday.
World Wrestling Entertainment (WWE) spiked after WWE body slammed Q1 earnings estimates and continued to attract subscribers, with EPS rising 125% to 18 cents. However revenue of $187.7 million was a miss.
Disk drive maker Seagate Technology (STX) reported quarterly earnings that beat estimates but the stock fell on cautious comments about tariffs.
Ferrari (RACE) zoomed into a buy zone after a double beat, with EPS rising to 96 cents as revenue climbed to $1.02 billion.
Tableau (DATA) reported Q1 sales and earnings above expectations and license revenue was ahead of consensus. The company lowered full-year margin guidance. But the Big Data firm's stock jumped.
The post Dow Jones, S&P 500 Find Support As Apple Soars; Tesla, Alibaba Earnings, Jobs Data Key: Weekly Review appeared first on Investor's Business Daily.
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