The stock market rally diverged somewhat in the latest week. The Dow Jones rose to a 2023 high, fueled by Salesforce earnings and broad gains among its medical, industrial and financial components. The S&P 500 was little changed and the Nasdaq slightly lower, near 2023 highs as well, despite a slew of upbeat software results from CrowdStrike, Workday and more. Nvidia fell below a buy point as megacaps slumped. Tesla began Cybertruck deliveries, but prices, range and other details didn't wow.
Dow Jones Hits 2023 High
The Dow Jones rose above its summer highs, led by Salesforce, UnitedHealth and many other components. The S&P 500 and Nasdaq fell back from their efforts to hit new highs. Software earnings were strong, while Treasury yields continued to slide as the Fed starts a shift toward rate cuts. But megacaps and many other growth names struggled somewhat.
Fed Eyes Rate Cuts As Inflation Keeps Slowing
The PCE price index was flat in October, with the annual gain slowing to 3% from September's 3.4%. The core PCE inflation rate cooled to 3.5% from 3.7%. Both are two-year lows. On a six-month annualized pace, both overall and core PCE inflation are down to 2.5%. That came after Fed Gov. Christopher Waller, who had a been a stalwart policy hawk, signaled a possible shift toward rate cuts.
In other economic news, third-quarter GDP growth was revised up to a hot 5.2% annual rate. But underlying growth was more modest and reliant on consumers that are starting to show signs of slowing. Initial jobless claims rose slightly, while continuing claims are at two-year highs.
Tesla Delivers Cybertrucks
Tesla on Thursday delivered its first 12 Cybertrucks. It's the EV giant's first new passenger vehicle since the Model Y in early 2020. The Cybertruck will start at an estimated $60,900 with a 250-mile range, but deliveries of the base model won't start until 2025. The all-wheel drive version and the Cyberbeast are expected to start deliveries in 2024. The AWD Cybertruck has an estimated prices of $79,990 — just under the $80,000 cap for IRA tax credits — with a 340-mile range. The top-end Cyberbeast starts at $99,990 with a 320-mile range. Meanwhile, Tesla vehicle insurance registrations in China continue to pick up as the EV giant attempts to reach record Q4 sales worldwide and full-year targets. But Tesla also began insurance subsidies and low-rate loans to boost China demand amid an intensifying EV price war. Tesla stock fell on the Cybertruck news, erasing weekly gains.
Li Auto delivered a record 41,030 EVs in November, up 173% vs. a year earlier and the 10th straight month-to-month gain. XPeng delivered 20,041, edging above October's record and up 245% vs. a year earlier. Nio delivered 15,959, up 12.6% vs. a year earlier but down 0.8% vs. October. EV and battery giant BYD just set a record of 301,903 EVs, buoyed by discounts that will be even larger in December.
Salesforce Leads Software Winners
Salesforce said Q3 earnings jumped 51%, modestly beating while revenue climbed 11% to $8.72 billion, just nosing past views. A key financial metric, current remaining performance obligations, known as CRPO bookings, topped views with a 14% gain to $23.9 billion. Shares blasted out of a base.
Snowflake reported Q3 EPS up 127% from a year earlier. Revenue climbed 32% to $734.2 million. Both beat views. Analysts projected EPS of 16 cents on revenue of $713.8 million. For the current quarter ending in January, the data analytics play guided product revenue estimates higher.
Workday reported a 57% EPS gain in Q3, easily beating, while a 17% revenue rise to $1.87 billion narrowly topped forecasts. Shares of the human capital management software maker jumped out of a base.
Nutanix said fiscal Q1 earnings were 29 cents a share on an adjusted basis vs. 3 cents a year earlier, easily beating. Revenue rose 18% to $511.1 million, also ahead of views. The cloud-computing network management software maker guided higher for the current-quarter revenue.
Cybersecurity Earnings Top
CrowdStrike reported a 105% EPS gain while revenue climbed 35% to $786 million. For the current quarter ending in January, CrowdStrike predicted revenue of $838.3 million at the midpoint of guidance, just above estimates. Zscaler delivered a 131% per-share profit gain while fiscal Q1 sales leapt 40% to $496.7 million, comfortably topping. Zscaler guided up on Q2 revenue. Okta reported Q3 EPS of 48 cents vs. a break-even quarter a year earlier, while revenue advanced 21% to $584 million. Both easily beat. Okta also guided up for the current quarter. But the company said that a recent hacking incident impacted more customers than previously disclosed. Okta shares skidded lower, while CrowdStrike and Zscaler rose to 52-week highs.
Synopsys Beats Q4 Goals
Synopsys beat analyst estimates for its fiscal fourth quarter with a 66% EPS gain and a 25% sales pop. The chip design software maker guided up sharply for fiscal Q1 EPS and sales. Executives said artificial intelligence initiatives are fueling greater chip design activity, boosting sales of its electronic design automation software and semiconductor intellectual property.
Lilly Weight-Loss Drug Bests Novo's
Novo Nordisk fell back below a buy point, after Eli Lilly's weight-loss drug outperformed Novo's in a first-of-its-kind study. Patients with type 2 diabetes who took Lilly's tirzepatide for a year were three times more likely to have lost at least 15% of their body weight compared to recipients of Novo's semaglutide. Eli Lilly sells tirzepatide as a diabetes treatment called Mounjaro and in weight loss as Zepbound. Novo's drug sells as Ozempic in diabetes treatment and for weight loss as Wegovy. Tirzepatide recipients were also 2.6 times and 1.8 times more likely to lose at least 10% and 5% of their weight, respectively.
Altimmune reported strong phase 2 trial results for its weight-loss drug. ALT soared Friday.
Pfizer will discontinue efforts with its experimental weight-loss pill danuglipron, due to adverse side-effects.
Online Holiday Sales Start Strong
Shoppers spent $9.8 billion online on Black Friday and an additional $12.4 billion on Cyber Monday, according to Adobe Analytics. Shopify jumped, saying merchants using its platform saw a record $4.1 billion in Black Friday sales, up 22% from last year. Affirm also was a big gainer. Adobe estimated that spending through so-called buy now, pay later options rose 20% year over year for the post-Thanksgiving shopping weekend. Amazon, meanwhile, called the shopping weekend its biggest ever.
PDD Surges On Earnings
PDD Holdings reported a 31% EPS gain, easily beating views. Revenue surged 89% $9.43 billion, the third straight quarter of faster sales growth. PDD Holdings includes the China-focused e-commerce platform Pinduoduo, fast-growing overseas site Temu and several subsidiaries, including real estate and technology companies. PDD stock surged, but Alibaba and JD.com fell.
GM Hikes Shareholder Returns
General Motors reinstated 2023 guidance following the UAW strike, with EBITDA targets lower but cash-flow targets raised. The automaker hiked its dividend 33% and announced a $10 billion buyback. GM also will curb spending on its self-driving Cruise unit, which has halted autonomous driving following a recent accident. Ford lowered its adjusted EBIT targets due to the strike. GM stock surged while Ford reversed lower on its guidance.
NetApp Soars While Pure Storage Dives
NetApp gapped out of a base as the data storage giant reported a surprise 7% EPS gain. Sales fell 6% to $1.6 billion, but also topped views, along with Q4 revenue guidance. Meanwhile, Pure Storage reported a 61% EPS jump while sales climbed 13% to $763 million. But Q4 guidance was far below consensus, which Pure Storage said reflected a shift to a consumption-based subscription model. PSTG tumbled.
News In Brief
Argenx tumbled more than 10% Tuesday after its experimental treatment for a rare blood disease called chronic or persistent primary immune thrombocytopenia, or ITP, failed to pass muster in a final-phase study. Argenx needed that study to clinch approval in the U.S. and Europe, according to one analyst. Immunovant, which has a rival treatment, surged 14% for the week.
AbbVie will buy ImmunoGen, a maker of a new class of cancer fighters, for $31.26 a share in cash. The deal has a $10.1 billion enterprise value.
Frontline reported EPS tumbling well below views, though the 1% revenue drop to $252 million easily beat. CEO Lars Barstad said in the earnings release that the oil tanker firm saw freight demand pick up toward the end of Q3. FRO stock tumbled.
Intuit beat Wall Street's targets for its fiscal first quarter but missed estimates for the current quarter. The financial software firm reported a 49% EPS gain with revenue up 15% to $2.98 billion.
Jabil stock plummeted after the contract electronics manufacturer lowered its revenue outlook for its fiscal 2024, which ends in August. It cited softening demand and inventory corrections in certain end markets.
Dell Technologies beat Q3 EPS views with an 18% decline. Revenue sank 10% to $22.25 billion, falling short. Sales now have declined for five straight quarters.
Marvell Technology edged past Q3 views with a 28% EPS decline while sales slid 8%. For Q4, the chipmaker forecast flat profit and revenue, both below consensus.
Samsara reported Q3 profit of 4 cents per share on an adjusted basis vs. a 2-cent loss a year earlier. Revenue rose 40% to $237.5 million, the company said. Analysts expected Samsara to record a 1-cent profit on sales of $224.7 million. Annual recurring revenue from subscriptions rose 39% to $1 billion, topping estimates. Samsara guided higher for Q4 revenue. IOT stock soared.
UiPath reported adjusted Q3 EPS spiked 140%, easily beating. Revenue rose 24% to $325.9 million, also topping. PATH surged to a 52-week high.
Elastic skyrocketed Friday after the data software firm easily beat Q3 views and guided higher for Q4. Q3 EPS came in at 37 cents vs. break-even a year earlier. Revenue rose 16% to $311 million.
