Market Rally Holds Key Levels, But Breakouts Struggle; Walmart, Target, Nvidia In Focus: Weekly Review

Major indexes rose to market highs on Tuesday but then retreated amid hawkish comments from the Federal Reserve and mixed earnings. However, indices found support near key levels and rebounded on Friday. Walmart (wmt), Ross Stores (Rust) And the foot locker (fl) among the winners while their colleagues were from the opponent targeting (TGT) And the Wholesale BJ’s (BJ) had poor results, directives, or both.


Chinese e-commerce giants Ali Baba (Baba) And the (Dinar) jumped on strong earnings. nvidia (NVDA) reported mixed results and low evidence. The 10-year Treasury yield fell amid more alarming inflation data, which briefly lowered the current federal funds rate last night, but rebounded somewhat. Crude oil prices fell.

Market rebound from key levels

After rallying in the previous week, major indices initially rose, but then fell amid hawkish comments from the Fed. However, they held key support levels and bounced modestly, trimming losses. Recent breakouts have struggled amid market volatility, but they haven’t necessarily broken. Treasury yields fell, but then rebounded. Crude oil prices sold off sharply.

Inflation cooling, consumer power

The producer price index showed wholesale inflation slowing to 8% from a downwardly revised 8.4% in the previous month. Core producer price inflation fell to 6.7% from 7.1%. This comes after the CPI was cooler than expected last week.

Retail sales, however, rose 1.3% stronger than expected in October at 0.9% excluding autos and gas. Sales at restaurants and bars grew 1.6% during the month and 14.1% from a year ago, indicating a healthy appetite for discretionary spending. However, economic vulnerability extends beyond housing. Industrial production fell 0.1% in October, after September’s gain was revised to 0.1% from 0.4%. New jobless claims fell by 4,000 to 222,000 in the week through November 12, but the number of people continuing to claim benefits rose by 13,000, passing 1.5 million for the first time since March.

But a group of Fed speakers made it clear that the data is nowhere near weak enough to consider a pause in rate hikes. The stark comments came from St. Louis Federal Reserve Bank President James Bullard, who said the Fed’s key interest rate may have to rise to a 5%-7% range to be sufficiently restrictive.

Wal-Mart, Target offer sharp contrast

The discount giants diverged sharply on results, guidance and share prices. Walmart’s unexpected profit rose 3% as revenue rose 9%, amid strong same-store sales and inventories coming under control. The retailer also raised guidance. targeting (TGT) reported a 49% drop in earnings per share, much worse than expected. Sales rose by a narrow 3%. But Target has also been misdirected in terms of holiday sales. WMT stock jumped past the buy handle point. TGT stock fell 13% on Wednesday, but trimmed weekly losses somewhat.

Nvidia, Micron show weakness

Graphics Slideshow Maker nvidia (NVDA) and memory chip maker Micron Technology (mo) to weak near-term sales in their respective markets in separate reports. Nvidia delivered a mixed third-quarter financial report and provided sales guidance just below Wall Street expectations. Micron has announced that it will cut production of memory chips, citing bloated inventories. Elsewhere, chipmaker Applied Materials (AMAT) Winning and Lifting Report for the fourth quarter of the fiscal year.

BJ’s wholesale drops when directed

The membership warehouse chain led the way in the third quarter with an EPS gain of 9% and an increase in sales of 12%, though that capped exponential growth for both. Wholesale BJ’s (BJ) sees weakness in the coming year, which has sent stocks down in significant volumes.

TJX, Ross flying over the results

TJX’s earnings topped views in the third quarter with a 2% gain, which was enough to offset weak revenue and disappointing guidance in the holiday period. Ross Stores (RustEarnings per share were down 8% while sales were flat and comp down 3%, but these all easily beat expectations. The non-price apparel series also raised targets for the full year. TJX (TJX) rose sharply, out of range. ROST stock has exited the overbought zone.

Home Depot, Lowe’s Summit

Home improvement retailers outperformed third quarter opinions amid challenging environment. Home Depot (HD) posted 8% EPS growth, while revenue increased 5.6% to $38.87 billion. Louie (a little) Earnings rose 20% on revenue growing 2.2% to $23.5 billion, marking its first positive revenue quarter since January. Stocks changed little after big gains in the previous week.

Cisco earnings, routing peaks

Cisco systems (CSCO) Reported fiscal Q1 earnings were up 5% with revenue up 6% to $13.6 billion, both outperforming modestly. The networking giant trended up slightly in the current quarter. Cisco also announced a restructuring plan.

China’s e-commerce giants win

Ali Baba (Baba) And the (Dinar) earnings views topped but both did not generate profits which were almost flat compared to the previous year. This is in stark contrast to the past, where the two Chinese e-commerce giants have consistently reported double-digit revenue gains. Alibaba and JD, along with all the other internet companies in China, continue to struggle amid weak macroeconomics, resurgence of Covid-19 lockdowns, onerous regulations and more. Both stocks jumped above their 200-day moving averages.

LNG earnings are mixed

Two more LNG shippers last week reported mixed results amid volatile natural gas prices, as European gas storages mostly fill up for the winter. Golar LNG (GLNG) beat third-quarter earnings views but missed revenue, which fell 35% to $68.6 million. early, Flex LNG (FLNG) posted a 32% gain in EPS while revenue rose 11% to $91.3 million, both outperforming, as a strong LNG market boosted a backlog. The reports come on the heels of mixed results from the LNG giant Cheniere Energy (liquefied natural gas) And the New Fortress Energy (NFE) earlier this month.

Building products makers

Griffon Corporation. (gff) reported a 230% increase in earnings per share for the fiscal fourth quarter, handily beating consensus, with growth accelerating for the fourth consecutive quarter. Sales rose 24% to $708.9 million, respectively. The manufacturer of construction products and tools also raised its quarterly profit by 10%. Stocks tumbled on Thursday morning, but quickly pared losses. I reckon (ATKR) jumped after EPS grew 26%, while Q1 EPS jumped.

News summary

Warren Buffett Berkshire Hathaway (BRKB) reported a large new share in the third quarter in Taiwan Semiconductor (TSM), sending shares of the chip foundry giant soaring. Berkshire also took on new positions at Jefferies Group (JEF) And the Louisiana and the Pacific (lpx). Both appeared in the news but pared back the winnings.

Palo Alto Networks (Banu) Earnings per share in the fiscal first quarter increased 50%, while revenue grew 25% to $1.6 billion and billings increased 27% to $1.7 billion. The cybersecurity company guided higher in second quarter EPS. Palo Alto also announced the acquisition of Cider Security for $195 million in cash.

Moderna (mRNA) rose on Monday, pull Pfizer (PFE) And the Biotechnology (BNTX) shares higher, after promising data for the bivalent Covid booster dose was reported. The updated vaccine resulted in a 15.1-fold increase in antibodies able to transact against the BA.4 and BA.5 sub-variants of the omicron as well as the ancestral strain compared to pre-boost levels.

Freer battery (Free) increased its net loss more than expected, but management expects to begin production of sample cells in early 2023, a major milestone. KKR (KKR) is looking to invest in a Norwegian start-up company.

general motors (GM) raised its free cash flow target for 2022 and said it expects electric vehicles to become profitable by 2025.

Foot Locker’s earnings per share decreased by 34% while revenue decreased by 0.5%. Same-store sales were up 8% versus views, which were down 6%. The mall-based sneaker retailer also steered it for the holiday in the fourth quarter of the year.

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