The stock market rally rebounded this week with solid gains after the prior week's general decline. Bob Iger returned as Disney CEO, while Best Buy, Dick's Sporting Goods and Dollar Tree headlined a continued wave of retail earnings. Black Friday kicked off the holiday shopping season, officially, but ever-earlier sales, e-commerce and a cash-curbed consumer have lowered expectations. Crude oil prices tumbled while natural gas futures soared. Treasury yields fell.
Stock Market Rally Advances
The major indexes gained ground this week, with the S&P 500 moving close to a test of its 200-day moving average. The Dow Jones is testing three-month highs while the Nasdaq lags. More stocks flashed buy signals, while a greater number set up. Treasury yields fell amid lackluster economic data and China Covid concerns while crude oil tumbled.
Fed Signals Slowing; So Does New Data
Minutes from the Nov. 1-2 Fed meeting out Wednesday did nothing to alter expectations that the pace of rate hikes will slow, with several policymakers warning continuing rapid hikes would increase risks to financial stability. Meanwhile, new jobless claims for the week through Nov. 19 jumped 17,000 to 240,000, the highest since mid-August. Continuing claims in the week to Nov. 12 jumped 48,000 to 1.551 million. The S&P Global flash manufacturing index for November fell into contraction, hitting a 30-month low as production and new orders fell, as did price pressures. The services index fell further into contraction. Durable goods orders for October, though not quite as fresh, did show some underlying economic strength. Nondefense capital goods orders, a proxy for capital spending, rose a strong 0.7%.
Bob Iger Returns As Disney CEO
In a surprise move, Disney reappointed Bob Iger to return as chief executive for a two-year term, effective immediately. He preplaces Bob Chapek, Iger's hand-picked successor who took over in February 2020. Iger served at the helm of Disney for 15 years, including nearly two years as executive chairman before his retirement at the end of 2021. During his short tenure, Chapek faced a pandemic that shut down theme parks and theaters and an expensive battle for streaming supremacy. DIS jumped on Iger's return. It's not clear what Iger's strategy will be to revive earnings, given that Chapek was largely following his plan.
Deere Earnings, Guidance Strong
The agriculture and construction equipment maker beat quarterly estimates as chip and other supply-chain headwinds eased. Year over year, EPS leapt 81% while revenue popped 37% to $15.54 billion. Both earnings and sales growth accelerated from the prior quarter. Deere tied its upbeat 2023 guidance to positive farm fundamentals and infrastructure spending. The IBD Leaderboard stock gapped out of a buy zone.
Dick's, Dollar Tree Diverge On Guidance
Dick's Sporting Goods reported a 19% EPS decline as sales grew 8%, while Dollar Tree earnings bounced 25% with sales also up 8%. Both topped Q3 views. But Dick's raised full-year guidance while DLTR gave a soft profit outlook. DKS stock surged toward a buy point while DLTR tumbled.
Best Buy Tops Q3 Views
The consumer electronics retailer beat fiscal Q3 views, but sales and earnings declined on a year-over-year basis for the fourth straight quarter as it faces tough comparisons to heightened spending during the pandemic. Best Buy maintained its prior guidance for the holiday shopping season. "We feel confident heading into what could be an uneven holiday season," CEO Corie Barry said. Shares jumped.
Dell, HP See PC Sales Declines
Dell Technologies and HP reported sharp declines in personal computer sales amid slumping demand in their October-ended quarters. Dell's PC sales dropped 17% while HP's PC sales sank 13%. Dell beat Wall Street's targets thanks to stronger-than-expected sales of servers and data storage gear. Shares jumped. HP edged above analyst estimates for its fiscal Q4 but guided lower for earnings in the current quarter and full year ahead. However, investors cheered its restructuring plan.
Youth Apparel Chains Soar
American Eagle Outfitters, Abercrombie & Fitch and Urban Outfitters all reported significant EPS declines vs. a year earlier. But shares of all three young adult chains surged on better-than-expected results, or at least better than feared.
Medtronic tumbled Tuesday after the medical giant reported lighter-than-expected sales, though earnings beat forecasts. Organic sales climbed 2% to $7.59 billion. Adjusted profit fell 2%.
Baidu reported a 2.5% EPS decline while revenue fell 1% to $4.6 billion, but that topped views for China's search engine giant. Baidu also won approval for driverless testing in Beijing.
Canadian Solar reported Q3 EPS surged 167%, crushing views. Revenue leapt 58% to $1.93 billion but missed views. Shares initially plunged but slashed losses.
Autodesk, a maker of design software and tools for project workflow, matched fiscal Q3 estimates but guided below views for the current quarter. ADSK stock tumbled.
Analog Devices handily topped fiscal Q4 estimates with a 58% EPS gain and 39% revenue rise, amid strength in industrial and auto markets. The chipmaker guided higher for the current period.
Dycom Industries reported Q3 earnings jumped 89% while revenue grew 22% to $1.04 billion, both easily beating estimates. But shares tumbled on weak Q4 revenue guidance.
Zoom Video Communications reported Q3 EPS and revenue that topped estimates amid lowered expectations, with EPS down 3% and revenue up 5%. But Zoom guided lower on the current Q4. Shares fell.
The Microsoft deal to buy Activision Blizzard for nearly $69 billion reportedly will likely face FTC opposition, with an antitrust lawsuit before year-end. ATVI stock fell.
Tesla expanded FSD Beta access to all Full Self-Driving owners in North America. That may let Tesla recognize more deferred revenue for Full Self-Driving, which does not offer full self-driving.
