The stock market rally showed signs of broadening out. The Nasdaq and S&P 500 were little changed, holding near 2023 highs. But the small-cap Russell 2000 and S&P MidCap 400 jumped to three-month highs, while advancers soundly beat decliners. Apple unveiled its long-awaited mixed-reality headset, the Vision Pro goggles. The SEC filed charges against cryptocurrency exchange giants Binance and Coinbase. GameStop and Smartsheet were big earnings losers.
Small Caps, Midcaps Lead Market Rally
The Russell 2000 and S&P MidCap 400 roared higher, while the equal-weight S&P 500 ETF also made a strong move higher. Those point to a market rally broadening out from a select number of big-cap techs, especially with an AI focus. The S&P 500, Nasdaq and Dow Jones were little changed. Crude oil fell slightly even after Saudi Arabia announced a new production cut.
Apple Debuts Vision Pro Headset
The Consumer electronics giant introduced its long-awaited mixed-reality headset called Vision Pro — its first new hardware platform in more than eight years. The computer goggles will start at $3,499 and be available in early 2024. Apple is pitching the product as a "spatial computer" with applications in entertainment, communications and productivity. Critics derided the headset as "nerd goggles" and said it lacks a compelling use case. However, even skeptics admitted that the device is a technological marvel. Vision Pro combines virtual reality and augmented reality and features a three-dimensional user interface controlled by hand gestures, eye movements and voice. The headset has an ultra-high-resolution display system and uses a dual-chip design. It is packed with 12 cameras, five sensors, and six microphones.
SEC Sues Crypto Giants Binance, Coinbase
The Securities and Exchange Commission ramped up its crackdown on cryptocurrency companies this week. The SEC filed 13 charges vs. Binance, the world's top crypto exchange, and CEO Changpeng Zhao on Monday. The regulator claims Binance operated illegally in the U.S. via its affiliate, BinanceUS, commingled customer funds, sold unregistered securities and artificially inflated the platform's trading volume. Binance denied the charges. The SEC followed up with charges vs. Coinbase on Tuesday, claiming it operated as an unregistered securities exchange since at least 2019. The regulator reviewed Coinbase's business in 2021 and allowed it to go public. After the official complaint was lodged, a federal appeals court ordered the SEC to respond to a June 2022 petition from Coinbase requesting clarity on crypto regulations. COIN stock plunged on Monday and Tuesday, prompting Cathie Wood's Ark Invest to snap up another $21 million worth of shares. Bitcoin dove near $25,400 early in the week after the SEC news but recovered somewhat.
Software
Smartsheet reported better-than-expected Q1 EPS, but guidance disappointed somewhat. Sprinkler reported a small Q1 profit that was better than expected. Revenue growth slowed to 20%, but also topped. The marketing software maker guided up on full-year EPS and in line for revenue. Shares soared but then pared gains. Yext skyrocketed after reporting a surprise profit and a 1% revenue gain that edged past views for the data-management software tool. DocuSign reported better-than-expected first-quarter profit, with the digital documents and e-signature software specialist guiding higher. Shares rose.
Novocure Dives On Cancer Trial
A number of medical stocks moved following various reports out of the American Society of Clinical Oncology annual meeting. Novocure crashed 43% on Tuesday on somewhat muddy results for its medical device, Optune, which is added to checkpoint inhibitors like Keytruda and Opdivo. Lung cancer patients who received the combination lived a median of 7.7 months longer than those who received a checkpoint inhibitor alone. Novocure called the results "profound," but critics noted it tested the combination in patients who previously worsened while undergoing chemotherapy. Most patients first receive checkpoint inhibitors. So, it's unclear how big of a market Novocure will have. Meanwhile, ImmunoGen and Day One Biopharmaceuticals surged on test results in ovarian cancer and brain cancer, respectively. Replimune gained a whopping 19% following a promising study of its treatment for melanoma. But Arcus Biosciences initially after its updated results in lung cancer diminished from an earlier study, but shares rebounded higher.
News In Brief
Tesla surged to 2023 high, extending a win streak to 11 days as of Friday, June 9. General Motors will use Tesla's Superchargers and adopt Tesla charging standards. That follows a similar Tesla deal with Ford Motor. The base Model 3 is now eligible for the full $7,500 EV tax credit.
GameStop reported a wider-than-expected Q1 loss with a 10% revenue drop also missing. The mall-based video game retailer also fired CEO Matt Furlong, naming big investor Ryan Cohen executive chairman. The meme stock pioneer plunged on the news.
Trip.com easily beat Q2 EPS views vs. a year-earlier loss, while revenue surged 107% for the Chinese online travel site. TCOM stock jumped.
Nio reported a smaller-than-expected Q1 loss, but the 7.7% revenue gain to $1.55 billion slightly missed. Nio expects to sell 23,000-25,000 vehicles in Q2, down significantly vs. Q1's 31,041, which was down 22.5% vs. Q4. But after already reporting deliveries of 6,658 EVs in April and 6,155 in May, Nio essentially guided for June sales to jump to 10,187-12,187.
Thor Industries reported a 65% EPS decline while revenue tumbled 37% to $2.93 billion, both better than Q3 views. The bright spot was RV sales in Europe, which rose 19.7% to $866.8 million. The Airstream-maker warned the current economic environment is taking its toll on business, cutting its full-year revenue target.
Ciena beat Wall Street's targets on the top and bottom lines for its fiscal second quarter but signaled a slowdown in business from cloud data centers. The maker of optical communications gear guided low on sales for the current quarter and full year.
Academy Sports and Outdoors reported adjusted earnings tumbled 24. while sales slumped 5.7% to $1.38 billion, both missing views. Executives slashed full-year guidance but expect sales to improve in the back half of the year.
Ollie's Bargain Outlet reported a 145% EPS gain while revenue climbed 13%, both showing accelerating growth for a second straight quarter. The closeout retailer slightly raised full-year guidance. Shares fell after earnings, but rose solidly for the week.
