The stock market rally rebounded last week, with the S&P 500 and Dow Jones staging follow-through days on Wednesday to confirm the new uptrend. China signaled it'll back off a tech crackdown and will ease delisting fears, sending U.S.-listed Chinese stocks soaring after plunging for several days. The Federal Reserve hiked rates for the first time since 2018 and signaled six more increases in 2022, but Fed chief Jerome Powell said he expects the economy to take that in stride. Economic activity remains strong.
Market In Confirmed Uptrend
The Nasdaq on Monday broke below its Feb. 24 lows, ending its ailing rally attempt. But then stocks rebounded, with the S&P 500 and Dow Jones staging follow-through days to confirm the new uptrend, as investors bought into Fed chief Jerome Powell's optimism. All the major indexes reclaimed their 21-day moving averages. Crude oil prices plunged, but then bounced back. The 10-year Treasury yield hit a fresh two-year high, but then pared gains.
Fed Hikes Rates, Sees Six More
The Federal Reserve ratcheted up its battle against inflation, hiking its key interest rate a quarter-point to a range of 0.25%-0.5%. New Fed projections penciled in six more hikes this year — one for every Fed meeting left. While policymakers didn't detail their plan for shrinking the balance sheet, they will soon, and Fed chief Jerome Powell said that gradually unloading bonds purchased during the Covid crisis might be the equivalent of another rate hike.
Powell expressed confidence that the Fed will be able to tighten policy just enough to tame inflation without derailing the strong labor market. "But we have to restore price stability," he said. New data on manufacturing, retail sales and jobless claims signaled economic strength.
Left unsaid: If it proves necessary to keep high inflation from becoming a chronic problem, the Fed will keep hiking and trimming its asset holdings, even at the cost of rising unemployment and lower stock prices.
Chinese Stocks Soar As Beijing Signals Support
Chinese stocks surged to their best day since 2008 as government officials signaled their regulatory crackdown on technology companies could end soon. They also plan to support overseas stock listings and build stability in capital markets "as soon as possible." The stocks have been repeatedly hammered for more than a year, due largely to regulations, Covid-19 fears, and macroeconomic concerns. Shares had been melting down before Beijing's positive signals. Alibaba, JD.com, Baidu, Pinduoduo, Xpeng and more jumped in the double digits.
Tesla Hikes Prices; Berlin Plant Deliveries Loom
The EV maker raised its vehicle prices 3% to 5% per unit in both the U.S. and China, likely due to the rising costs of raw materials and other components used to make its vehicles. Several automakers have hiked prices in recent weeks. Meanwhile, Tesla is set to begin deliveries from Giga Berlin by March 22. The Tesla Shanghai factory shut down for two days amid a spike in Covid infections has prompted widespread lockdowns in China. Tesla stock rose for the week.
Commercial Metals Earnings Beat
Commercial Metals reaffirmed a strong full-year outlook after reporting fiscal Q2 EPS leapt 132% and revenue jumped 37% as average selling prices rose. Steel giant Nucor and U.S. Steel guided lower for Q1. Steel Dynamics gave a bullish Q1 update.
Dollar Store Fights Inflation
Dollar General reported Q4 EPS fell 2% and sales grew 3%, in line with views, but same-store sales missed. The specialty retailer guided up on current-year EPS and revenue. The results come as Wall Street raises questions about whether discounters and their consumers can manage the rising cost of gasoline and other goods. Shares rose, helped by a 31% dividend hike.
Wages, Omicron Hit FedEx Profit
FedEx earnings rose 32% vs. a year earlier, but fell short of views. The shipping giant benefited from higher prices, but the omicron Covid variant affected package volume while higher wage costs weighted on profit. Revenue rose 10%, beating views. FedEx stock fell Friday.
J.B. Hunt Transport Services will partner with BNSF Railway, owned by Warren Buffett's Berkshire Hathaway to grow its intermodal container fleet capacity by 40% over the next three to five years. JBHT stock soared.
Accenture Guidance Strong
Accenture said fiscal Q1 EPS rose 14% while revenue climbed 24% to $15 billion, both beating. The global tech consulting and services company guided higher for Q1 and 2022 revenue. Accenture said near term wage hikes may continue to pressure profit margins. Shares reversed lower on earnings, but rose for the week.
News In Brief
Coupa Software said Q4 EPS rose 12% while revenue climbed 18% to $193.3 million, both beating. But the maker of business spending management software guided well below views for fiscal 2023. Shares plunged.
SentinelOne reported an adjusted loss that was slightly better than views. Revenue rose 120% to $65.6 million, The cybersecurity firm guided up for fiscal 2023 revenue. Also, SentinelOne will buy Attivo Networks in a cash-and-stock deal valued at $616.5 million. Attivo was not included in fiscal 2023 guidance. Shares jumped, but are far off highs.
Williams-Sonoma reported a 37% EPS gain in Q4, beating views, but revenue and same-store sales missed. Analysts were encouraged by Q1 guidance, but worry about inflation and stock market volatility's impact on the housewares retailer's upscale customers. Shares rose slightly.
Lockheed Martin led a decline in defense stocks as the Pentagon cut its order for F-35 fighter jets by 35%. That comes as allies buy up more F-35 jets.
