The stock market rally approached recent lows this past week, but rebounded somewhat, paring weekly losses. Crude oil prices skyrocketed to 11-year highs amid Russia's ongoing Ukraine invasion, but then slashed gains. Inflation data was hot. Apple unveiled a lower-cost 5G iPhone. Zim Integrated Shipping rallied on booming earnings and a huge dividend. Google parent Alphabet bought cybersecurity firm Mandiant.
Stock Market Falls In Volatile Week
The stock market rally attempt is still going, even as the major indexes lost some ground in another whipsaw week of trading amid Russia's Ukraine invasion and inflation fears. Energy, steel and mining stocks continued to be leaders, while a number of medicals are setting up. Crude oil prices jumped and retreated, along with gold prices. The 10-year Treasury yield surged, moving back to the 2% level.
Crude Prices Soar, Dive Amid Russia Oil Ban
The Biden Administration announced a U.S. ban on imports of Russian oil, gas and coal Tuesday as Russia continues its attack on Ukraine. But European allies, who are highly dependent on Russian energy, are unlikely to join the ban. Crude oil futures spiked to 11-year highs, but then slashed weekly gains. The national average gasoline price hit $4.33 per gallon, according to AAA data, the highest on record. Whiting Petroleum announced it would buy Oasis Petroleum in an all-stock deal that values the new combined company at $6 billion.
Inflation Hits 40-Year High
Inflation pressures continued to build in February, which saw the CPI inflation rate hit a 40-year-high 7.9%. On a monthly basis, the consumer price index rose a hefty 0.8%, fueled by a 1% increase in food prices and 3.5% jump for energy. Core inflation, excluding food and energy, rose 0.5% on the month and 6.4% from a year ago, matching expectations. Economists expect inflation to peak in March, stoked by Russia's invasion of Ukraine, which has taken a few weeks to flow through to gas prices.
Pricing momentum notably cooled for used cars, falling 0.2% on the month. New vehicles rose 0.3% after January's flat reading. While goods inflation may be losing steam, shelter inflation is running pretty strong, rising 0.5% in February. That suggests elevated inflation will persist through 2022, keeping pressure on the Fed to tighten policy.
So far there's no evidence that the inflation spike is sapping growth. New claims for jobless benefits rose 11,000 to 227,000 in the week through March 5, a bit worse than expected. But the level is still historically very low.
Zim Delivers Big Dividend
Zim Integrated Shipping reported Q4 EPS shot up 366% with revenue up 155%, and signaled that operating profit will rise in 2022. The ocean-freight container liner also announced a huge dividend of $17 a share for 2021. The results came after the costs of container shipping rose last year, amid disruptions up and down the world's supply chains. ZIM stock jumped to a new high.
Apple Debuts Cheaper 5G iPhone
Apple introduced a lower-priced 5G iPhone aimed at cost-conscious consumers interested in the faster wireless service afforded by fifth-generation cellular technology. Its third-generation iPhone SE starts at $429 and will be available on March 18. The price is $30 more than the second-generation iPhone SE, which came out two years ago. Apple also debuted a new high-end Mac computer for creative professionals. The Mac Studio desktop computer starts at $1,999. Plus, it unveiled a new iPad Air tablet, which starts at $599.
Gold Prices Near Record Highs
The gold price shot up to $2,050 per troy ounce early in the week, just off the August 2020 record high, as Russia's invasion of Ukraine sparked safe-haven buying. But gold slipped back below $2,000 late in the week. Franco-Nevada, a gold royalty company, reported roughly in-line results, with EPS growing 1%. The results don't reflect the recent price increase. Oil, gas and iron ore gains have offset soft gold prices and should make up for lower precious metals production in 2022. FNV stock has pulled back from a record high, close to a buy point. Wheaton Precious Metals saw EPS slip 12% from a year ago, but sees higher gold production in 2022.
Google Buys Cyber Firm Mandiant
Google-parent Alphabet acquired cybersecurity firm Mandiant for $23 per share in an all-cash $5.4 billion deal. Microsoft also had an interest in buying the company. Mandiant provides cyber-incident response and cybersecurity testing services. FireEye split off Mandiant last year. FireEye then sold its products business to private equity investors. Mandiant will become part of Google's cloud computing business.
Oracle Earnings Miss
Oracle met revenue views but earnings fell short, partly due to losses on two investments, as it continues to make progress on its business transition to a software-as-a-service company. Shares fell modestly. Another database software company, MongoDB, soundly beat analyst estimates on the top and bottom lines, but is still losing money. MongoDB shares tumbled.
Rivian Tumbles On Big Loss, Ongoing Woes
The EV maker posted an adjusted loss of $2.43 per share on revenue of $54 million in Q4 amid rising costs and production woes. Earnings missed and revenue was in line with Zacks' analyst estimates. Rivian delivered 909 EVs in Q4. It expects to produce 25,000 vehicles in 2022, but also expects supply-chain woes to persist. As of March 8, it had produced 1,410 vehicles in 2022, and 2,425 in total. Rivian stock fell sharply to record lows.
Ulta Beauty Shines
Ulta Beauty reported that Q4 earnings rose 57% per share, crushing views. Sales climbed 24% to $2.73 billion, modestly beating. Same-store sales soared 21.4%, fueled by higher average ticket sales. Ulta also announced a $2 billion stock buyback. Shares rose solidly for the week. Upscale hair care company Olaplex reported Q4 earnings and sales growth that topped analyst estimates. But shares hit new lows.
News In Brief
JD.com topped Q4 expectations, but the e-commerce giant plunged along with other U.S.-listed Chinese stocks as the SEC revived delisting threats.
CrowdStrike reported January-quarter profit rose 130% per share while revenue jumped 63% to $431 million, both handily beating estimates. Annual recurring revenue, a metric tied to subscription customer growth, increased 65% to $1.73 billion. The cybersecurity firm issued fiscal 2023 guidance that came in well above expectations.
Ciena reported fiscal Q1 EPS grew 9%, easily beating, while revenue rose 11% to $844.4 million, missing Wall Street targets. Ciena gave cautious Q2 revenue guidance, citing supply-chain woes.
Zumiez EPS rose 1% and sales 5%, both missing views. The board-sports apparel retailer also gave a disappointing outlook for Q1. Shares tumbled.
