The stock market rally had impressive gains following tame inflation reports and cooling economic data, with the Dow Jones, S&P 500 and Nasdaq composite all hitting record highs. That, along with Wednesday's follow-through day, finally confirmed the rally attempt. But leading stocks have been acting well for weeks, with many more flashing buy signals in the latest week. Walmart, Alibaba and Sea were earnings winners.
Stock Market Rally Hits Highs
The Dow Jones, S&P 500 and Nasdaq hit record highs, with a large number of leading stocks flashing buy signals. Meme stocks skyrocketed, but slashed weekly gains. Investors cheered relatively tame inflation data and other economic reports. Treasury yields fell significantly on the economic data, but pared weekly losses.
Inflation Cools, Retail Sales Slow
Inflation moderated and retail sales slowed more than expected in April, providing hope that the Fed's pivot to rate cuts will come in the third quarter. After three straight 0.4% monthly increases, the core consumer price index rose 0.3% in April, lowering the 12-month rate to 3.6%, a three-year low. After the PPI and CPI, economists estimated that the Fed's primary inflation gauge, the core PCE price index, will rise 0.2%-0.25% when it's released later this month. That's still a bit high for the Fed. But it would back the idea that hot inflation to start the year was mostly a one-time adjustment. Meanwhile, retail sales were flat, trailing forecasts for a 0.4% gain. March's gain was revised down slightly to 0.6%. Further, various manufacturing reports and housing starts came in below views.
Walmart Earnings Jump On E-Commerce
First-quarter earnings rose 22%, the second straight quarter of accelerating growth and the best gain in three years. Revenue rose 6% to $161.51 billion. Both beat views. Global e-commerce sales jumped 21%. Walmart-only same-store sales, excluding fuel, rose 3.8%. The Dow discount giant said it's winning over more higher-income customers, while high-margin ad revenue doubled. Walmart raised full-year views. Shares jumped.
Sea Rides E-Commerce Wave
Singapore-based internet services company Sea Limited reported better-than-expected first quarter revenue of $3.7 billion, up 23%. Investors shrugged off an earnings loss that was slightly wider than expected. E-commerce revenue growth accelerated to 33% year over year, a sign that Sea's Shopee business is fending off growing competition from Temu, AliExpress and others. After a rough 2023, Sea stock surged to a 70% gain so far in 2024. Shares rose solidly to an 11-month high.
Applied Materials Tops Views
Applied Materials beat estimates for its fiscal second quarter ended April 28 and guided above views for the current period. The chip-equipment giant's earnings rose 5%. Sales edged higher to $6.65 billion, helped by strong demand for equipment to make DRAM memory chips. For the current Q3, Applied Materials sees EPS up 6% with sales climbing 3% to $6.65 billion.
Alibaba, JD.com Rise Following Earnings
Alibaba tumbled on a March-quarter earnings miss, but made it up later in the week, with an assist from rival JD.com. Alibaba said adjusted earnings per U.S. share fell 10%, slightly below views. Sales increased 7% in local currency to $30.6 billion, just ahead of views. JD sales increased a better-than-forecast 7% in local currency, totaling $36 billion. Earnings of 78 cents per U.S. share, up 19% in local currency, also beat views. JD stock rose solidly for the week.
Home Depot Earnings
Home Depot announced better-than expected first-quarter earnings while revenue came in just below expectations. EPS fell 5% while sales sank more than 2% to $36.42 billion. Same-store sales fell 2.8%, the sixth straight year-over-year decline. The Dow Jones giant also reaffirmed 2024 guidance.
Buffett Mystery Stock Is Chubb
Warren Buffett's Berkshire Hathaway revealed a $6.7 billion equity position in Chubb, a 13F filing revealed, ending months of fevered speculation about a "mystery stock" bet by the investing legend. Chubb stock jumped. The Swiss property and casualty insurer aligns with Berkshire's vast insurance operations, prompting some speculation about an outright acquisition, given Berkshire's Alleghany takeover in 2022. The 13F filing also confirmed that Berkshire cut its positions in Apple and Paramount for a second straight quarter. It also reduced Dow energy giant Chevron and added to Occidental Petroleum. Apple now makes up roughly 41% of Berkshire's equity portfolio vs. 50% at the end of 2023.
Latin American Fintechs Diverge
Brazilian digital bank Nu Holdings reported a fifth straight quarter of triple-digit earnings per share growth, while revenue growth accelerated for a third straight quarter to 69%. Shares broke out, but then pared gains. Brazilian payments firm StoneCo tumbled after reporting strong but slowing earnings and revenue growth that fell short of estimates. Meanwhile, Uruguay-based dLocal plunged after reporting a big earnings drop that was far below views.
In Brief
Dynatrace reported adjusted fiscal Q3 EPS of 30 cents vs. 31 cents a year earlier. Revenue climbed 21% to $381 million. Both just beat views. For full-year fiscal 2025, Dynatrace guided lower. The software maker announced a $500 million buyback. Shares rose.
Monday.com topped Q1 estimates, with EPS surging 335% and revenue up 34% to $216.9 million. The maker of project management software guided slightly higher on Q2 revenue. Shares soared within a base.
Tencent reported better-than-expected Q1 earnings with the Chinese e-commerce and gaming giant also reporting a doubling of ad sales. In dollar terms, EPS growth has accelerated for six straight quarters, to 51%. Shares jumped, continuing to move toward a buy point.
On Holding sprinted higher after the Swiss athletic shoemaker easily beat Q1 views. Earnings more than doubled to 36 cents a shares, defying views for a decline. Revenue popped nearly 20% to $561 million, though growth slowed once again. On maintained its outlook of at least 30% sales growth for the full year.
Nio formally launched the L60 SUV, the first model from its mainstream Onvo subbrand. The crossover undercuts the Model Y price in China by 12%, as Tesla's aging models struggle under increasing competition in the No. 1 EV market. Nio has opened preorders for the L60, with deliveries likely to start late in the third quarter. Shares rose for the week.
Deere EPS and revenue fell 12%, but both beat fiscal Q2 views. However, the farm-equipment giant guided lower as weaker crop prices weigh on demand.
Baidu reported better-than-expected sales and earnings for its first quarter. Earnings increased 24% in local currency while sales edged up 1%. Earlier in the week, the internet search giant and self-driving technology firm unveiled a much-cheaper robotaxi and said that business should be profitable in 2025. Shares rose.
