Wednesday 7/31/19=DJIA -325 NASDAQ +80
B+ or better ranked stocks today: 366.
A+ or better Momentum Stocks today:113
Daily Wrap: Sometimes the market can be downright ridiculous! The market got what it wanted in the way of a rate cut, but it now wants promises of more rate cuts going forward! Can’t it just be happy with the current rate cut? Oh, well, the market is the market.
I heard one market analyst predict earlier this week that a rate cut during a bull market would be the top of the market. That is an interesting concept. This was the first rate cut since 2008. It comes at a very unusual time, but I will continue to focus on earnings, earnings, earnings.
Apple obviously had a good earnings report last night, while AMD had a bad one. I will call it a draw.
I sent out tweets on the following stocks today: SPY, GSB, SPGI, TEAM, TTD, TWTR, WIX, and ZIOP.
Daily Buys: I replaced a stock in my EMERGING GROWTH portfolio today. The new buy looks like a very interesting company. It is one that I have never talked about before.
TODAY’s MARKET NEWS:
Here was the mood of the market as we started a new trading day.
Futures edge higher ahead of likely Fed rate cut
• Market focus is largely attuned to the U.S. central bank, with policymakers at the Fed seen cutting rates for the first time in more than a decade later this afternoon.
• U.S. stock index futures are pointing to gains on the expectations, with contracts linked to the DJIA up 79 points, and S&P 500 and Nasdaq ahead by 0.2% and 0.4%, respectively.
• Don't forget about earnings season! More than half of the S&P 500 have now reported Q2 results and it looks like investors are going to dodge the feared profit recession. According to Refinitiv, earnings are expected to be up a modest 0.9%.
• Big names reporting today include General Electric and Qualcomm.
Global markets mixed ahead of Fed rate decision
• Japan -0.86%.
• Hong Kong -1.31%.
• China -0.67%.
• India +0.23%.
• London -0.47%.
• Paris +0.10%.
• Frankfurt +0.04%.
Consumer confidence blast though estimates
• July Consumer Confidence: 135.7 vs. 125.0 consensus; 124.3 prior in June (revised).
• Present situation Index 170.9 vs. 164.3 prior.
• Expectations Index 112.2 vs. 97.6 prior.
Pending home sales sail past estimate
• June Pending Home Sales: +2.8% to 108.3 vs. 0.5% expected and +1.1% prior.
ADP jobs squeaks past estimate
• July ADP Jobs Report: +156K vs. +150K consensus, 102K prior (unrevised).
Fed to cut rates for first time since 2008
• Delivering a mild jolt to an economy that's facing headwinds from tame inflation at home to trade disputes and a global slowdown, the Federal Reserve is almost certain to cut interest rates today for the first time in more than a decade.
• The decision at 2 p.m. ET, which many expect to be a quarter point reduction, will be followed by a news conference from Jerome Powell, who'll explain why the move was necessary, and what comes next.
• It is still unlikely to assuage President Trump's increasingly strident demands for easy monetary policy, as well as critics who say that cutting rates now will sap the Fed's firepower in the event of an actual recession.
Eurozone Q2 growth halves, inflation slows
• Growth in the eurozone has returned to the anemic rates seen in the third and fourth quarters of last year, with GDP growth halving in the April-June period to 0.2% Q/Q (or 1.1% on an annualized basis).
• Inflation slowed sharply as well in July (from 1.3% to 1.1%) even though the unemployment rate fell to its lowest in 11 years.
• That strengthens market expectations that the ECB, which wants to keep inflation below, but close to 2%, will further loosen monetary policy in September.
Trade talks to nowhere?
• China and U.S. negotiators have concluded a new round of trade talks in Shanghai, with little immediate evidence of progress being made toward ending their year-long dispute.
• It follows yesterday's tweets from President Trump, who let fly at China's perceived unwillingness to buy American agricultural products and said it continues to "rip off" the U.S.
• Data overnight also showed China's factory sector still contracting, though the manufacturing PMI edged up slightly to 49.7 in July, from last month's reading of 49.4.
Apple EPS beats by $0.08, beats on revenue
• Apple (NASDAQ:AAPL): Q3 GAAP EPS of $2.18 beats by $0.08.
• Revenue of $53.81B (+1.0% Y/Y) beats by $390M.
Apple +2.8% on Q3 beats, upside revenue view
• Apple (NASDAQ:AAPL) +2.8% reports Q3 beats with record Services revenue and upside revenue guidance.
• Revenue breakdown: iPhone, $26B (consensus: $26.31B); iPad, $5B (consensus: $5.17B); Mac, $5.8B (consensus: $5.45B); Wearables, Home, and Accessories, $5.5B (consensus: $4.82B); Services, $11.5B (new record revenue; consensus: $11.68B).
Apple declares $0.77 dividend
• Apple (NASDAQ:AAPL) declares $0.77/share quarterly dividend, in line with previous.
• Forward yield 1.48%
• Payable Aug. 15; for shareholders of record Aug. 12; ex-div Aug. 9.
Analysts lift Apple targets after earnings
• Cowen cites the Wearables upside and stabilizing iPhones as positives from Apple's (NASDAQ:AAPL) earnings report yesterday.
• The firm thinks Wearables have more room to run due to the low attach rate to iPhones and thinks the pricing of Apple TV+ and Arcade this fall will provide the first clues to the competitiveness and potential to drive Services growth.
• Cowen says next year's 5G iPhone launch could drive a new cycle.
• Target changes: Wedbush from $235 to $245, Deutsche Bank from $205 to $210, Canaccord Genuity from $202 to $240, and Citi from $205 to $210.
General Electric EPS beats by $0.05, revenue in-line
• General Electric (NYSE:GE): Q2 Non-GAAP EPS of $0.17 beats by $0.05; GAAP EPS of -$0.03 misses by $0.12.
• Revenue of $28.83B (-1.3% Y/Y) in-line.
GE +4% after EPS beat, guidance raise; CFO to resign
• Adjusted Q2 EPS of $0.17, down 6% from the same period in 2018, but the figure beats low earnings expectations of $0.12.
• Adjusted industrial free cash flow was negative $1B during the quarter, coming in at the strong end of company guidance. Investors are closely monitoring the outflow to gauge the health of the company, which is in the midst of a multi-year turnaround plan.
Advanced Micro Devices EPS in-line, beats on revenue
• Advanced Micro Devices (NASDAQ:AMD): Q2 Non-GAAP EPS of $0.08 in-line; GAAP EPS of $0.03 misses by $0.01.
• Revenue of $1.53B (-13.1% Y/Y) beats by $10M.
• Shares -8%.
AMD -3.9% on downside revenue view
• AMD (NASDAQ:AMD) -3.9% reports Q2 revenue that beat analyst estimates with in-line EPS but included downside guidance.
• Computing and Graphics reported revenue of $940M (consensus: $961M), down-13% Y/Y due to lower graphics channel sales but up 13% Q/Q on higher GPU sales. Client processor ASPs dropped on the quarter due to the product mix. GPU ASPs dropped slightly on the quarter on lower data center GPU sales.
Airbus SE reports 1H results
• Airbus SE (OTCPK:EADSY): 1H GAAP EPS of €1.54.
• Revenue of €30.9B (+23.7% Y/Y)
Airbus Q2 profits rise, delivery challenges ahead
• Airbus (OTCPK:EADSY) posted stronger-than-expected core second-quarter earnings, led by the switch to efficient new single-aisle jets, and maintained its profit forecast for the year while warning of delivery challenges in the second half.
• Adjusted operating profit rose 72% to €1.98B, led by a more-than-twofold rise at the company's commercial planemaking arm. Revenues rose 23% to €18.32B.
• Airbus is nonetheless on course to be the world's largest planemaker in 2019 as U.S. rival Boeing faces a longer-than-expected grounding of its 737 MAX, ordered by worldwide regulators in March in the wake of two fatal accidents.
Positive report on Lululemon's giant concept store
• Placer.ai issues a report on early traffic patterns at Lululemon's (LULU) new concept store in Chicago that includes a restaurant and workout classes.
• The data suggests the new branch managed to drive visits in off-hours with major increases in the percentage of visitors in the morning and evening. The store also showed a greater proclivity for driving traffic during weekdays and off-peak shopping days.
• As expected, the new Lululemon location impacted negatively traffic at a nearby LULU store, meaning the company will have to be strategic in the placement of more concept stores.
• "The roll-out of new formats is going to be critical to determining whether Lululemon can maximize its retail footprint throughout the country," concludes Placer.ai.
Scotts Miracle-Gro EPS beats by $0.37, beats on revenue
• Scotts Miracle-Gro (NYSE:SMG): Q3 Non-GAAP EPS of $3.11 beats by $0.37; GAAP EPS of $3.15 beats by $0.48.
• Revenue of $1.17B (+17.6% Y/Y) beats by $100M.
Automatic Data Processing EPS beats by $0.01, revenue in-line
• Automatic Data Processing (NASDAQ:ADP): Q4 Non-GAAP EPS of $1.14 beats by $0.01; GAAP EPS of $1.09 misses by $0.01.
• Revenue of $3.5B (+5.4% Y/Y) in-line.
American Tower FFO beats by $0.27, beats on revenue
• American Tower (NYSE:AMT): Q2 FFO of $2.01 beats by $0.27.
• Revenue of $1.89B (+6.2% Y/Y) beats by $60M.
Paycom EPS beats by $0.05, beats on revenue
• Paycom (NYSE:PAYC): Q2 Non-GAAP EPS of $0.75 beats by $0.05; GAAP EPS of $0.83 beats by $0.22.
• Revenue of $169.3M (+31.4% Y/Y) beats by $5.42M.
Paycom +5.8% after beat-and-raise
• Paycom Software (NYSE:PAYC) +5.8% after Q2 beats with revenue up 31% Y/Y. The company raises its FY19 adjusted EBITDA estimate to $306-308M from $296-298M (consensus: $297.4M).
• PAYC reported Q2 adjusted EBITDA of $69.4M compared to the $63.9M consensus.
• Recurring revenue totaled $166M (consensus: $161.2M) with Other revenue coming in at $3.3M (consensus: $2.7M).
• Gross margin was 85.3% versus the 83.7% estimate.
Zendesk EPS in-line, beats on revenue
• Zendesk (NYSE:ZEN): Q2 Non-GAAP EPS of $0.05 in-line; GAAP EPS of -$0.50 misses by $0.11.
• Revenue of $194.59M (+37.2% Y/Y) beats by $2.12M.
Veracyte EPS beats by $0.05, beats on revenue
• Veracyte (NASDAQ:VCYT): Q2 GAAP EPS of -$0.05 beats by $0.05.
• Revenue of $30.14M (+32.5% Y/Y) beats by $1.3M.