The stock market rally continued to lose ground Tuesday, but bounced back for solid gains later in the week, with the major indexes moving back toward their 50-day moving averages. Apple unveiled its iPhone 14 and other products. Solar, pollution control and medical stocks led the way. Crude oil and natural gas futures fell sharply, despite an OPEC+ production cut and Russia keeping its Nord Stream 1 pipeline to Europe shut down. Treasury yields ran up. Academy Sports & Outdoors surged and Chinese EV startup Nio rose after reporting mixed earnings but providing upbeat guidance and commentary.
Stock Market Rally Battles Back
The stock market rally, after sinking Tuesday, rebounded solidly, with the major averages coming up to their 50-day moving averages. Solar, pollution control and medical stocks led the way, along with a few retailers such as Academy Sports. Apple unveiled its iPhone 14, but that didn't help the stock much. Crude oil futures fell despite a symbolic OPEC+ production cut, while natural gas prices tumbled despite Russia keeping its Nord Stream 1 pipeline to Europe shut. Treasury yields jumped.
Economic Data Strong
Economic data over the past week has run mixed to strong, generally supporting expectations of a Q3 GDP growth rebound and a continuation of rapid Federal Reserve tightening. Initial jobless claims fell 6,000 to 222,000 in the week through Sept. 3, the lowest since late May. However, continuing claims unexpectedly jumped 36,000 to 1.473 million, a five-month high. The combination suggests few layoffs but subdued hiring.
Meanwhile, the ISM's nonmanufacturing index continued to show robust service-sector growth, rising to a four-month high 56.9.
The shift in the trade balance also looks likely to add to growth in Q3, as exports rose 0.2% to a record $259.3 billion in July, while imports fell 2.9% to $329.9 billion, a five-month low. The goods and services trade deficit fell 12.6% to $70.6 billion, a nine-month low.
Apple Unveils iPhone 14 Handsets
Consumer electronics giant Apple announced its iPhone 14 smartphone lineup, Apple Watch Series 8 smartwatches and new AirPods Pro wireless earbuds. The iPhone 14 handsets include satellite communications links for emergencies when users are out of the reach of cellular networks. Globalstar is providing the satellite connectivity for the iPhone 14 starting in the fourth quarter. The higher-end Pro models of the iPhone 14 got more feature upgrades, including a 48-megapixel camera, speedier A16 processor and display alert technology called the Dynamic Island. Apple added a ruggedized version of its smartwatch, called Apple Watch Ultra, to take on sports watchmaker Garmin.
Academy Sports Jumps On Guidance
Academy Sports & Outdoors topped second-quarter earnings estimates with a 2% decline while revenue fell 6% to $1.69 billion, narrowly missing. The sporting goods retailer also upped its full-year EPS forecast while reiterating its net and same-store sales guidance. Dick's Sporting Goods and Hibbett raised full-year revenue outlooks late last month. ASO stock surged from its 50-day line on earnings.
Nio Sees Strong Finish To Year
Nio reported a wider-than-expected Q2 loss while revenue climbed 22% to $1.54 billion, just beating, as Covid shutdowns slammed the EV startup and the Chinese economy for much of the quarter. The Chinese EV maker gave disappointing Q3 revenue guidance. But it cited robust demand for multiple new electric vehicles as well as big expansion in Europe in the coming months. Nio expects production to ramp up in Q4, with record deliveries every month in the quarter. Shares rose.
Will Market Rally Yield To Bonds? Musk, Buffett Make Moves
Disney+ Discount Unveiled
Disney held its Disney+ Day and kicked off its D23 Expo events. The media and entertainment conglomerate once again offered a Disney+ promotion for $1.99 for one month. An ad-free Disney+ subscription is set to increase to $10.99 a month from $7.99 in November. Disney also will introduce an ad-supported, lower-priced tier, like Netflix's. The Disney+ Day event included the much-anticipated debut of "Marvel's Thor: Love and Thunder" on the streaming network and the premiere of the live-action version of the classic "Pinocchio" and a sneak peek into "Andor," a prequel to the Star Wars spin-off film "Rogue One." Meanwhile, Disney's multiday D23 Expo features presentations on its media businesses, theme parks and cruises. The event runs from Sept. 9 to 11. Disney stock rose.
Software
Zscaler reported fiscal Q4 earnings, revenue and billings that handily beat Wall Street targets, with EPS up 78%, revenue 61% and billings 57%. The cybersecurity firm also guided higher on fiscal 2023.
DocuSign reported July-quarter earnings and revenue that topped estimates amid lowered expectations. Q2 EPS fell 6% while revenue rose 22% to $622.2 million. For the current Q3, DocuSign forecast revenue and billings that were roughly in line with views, signaling ongoing growth.
Coupa Software reported Q2 EPS fell 23% while revenue rose 18% to $211 million, both topping. For the October-ending third quarter, the maker of business spending management software guided up on adjusted EPS but slightly lower on revenue. Coupa also announced a $100 million share repurchase program.
UiPath reported a 2-cent per-share loss vs. a 1-cent gain a year earlier, but that beat consensus. So did revenue, which was up 24% to $242.2 million. But the maker of robotic process automation software guided low on full-year revenue. Shares plunged to a record low.
Dave & Buster's Earnings Miss
The sports bar and games operator reported a 45% EPS drop to 59 cents a share, far below views. Revenue rose 24% to $468.9 billion, comfortably beating. It was Dave & Buster's first financial update under CEO Chris Morris, who took over following the company's $835 million acquisition of rival Main Event in June. Morris said Dave & Buster's faced "substantial headwinds" from wage and commodity inflation and the company will focus on driving revenue and cash flow. PLAY stock fell back below a buy point following results.
In Brief
United Airlines now sees Q3 revenue up 12% vs. pre-pandemic Q3 2019, up slightly from its prior target, still seeing "strong demand" after a "robust summer." The carrier also slightly raised its jet-fuel cost estimate. Shares rose.
Kroger earnings rose 13% while same-store sales, excluding fuel, climbed 5.8%, both above consensus. The grocery chain giant also raised full-year guidance and authorized a new $1 billion share buyback program. Shares rose.
Copart earnings rose 10% as sales climbed 18% to $883.4 million, an overall beat.
Twitter jumped as a Delaware Chancery Court judge denied Elon Musk's request to delay his trial with Twitter over his $44 billion acquisition. The trial is set to run for five days starting Oct 17. The judge did let Musk add a whistle-blower's claims to his lawsuit.
