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Stock Market Today: Stocks, Oil Slump in Seesaw Session
The major indexes lurched between positive and negative territory as investors flailed about on a relatively slow-news Thursday.
Russia’s attacks on numerous Ukrainian regions continued even as negotiators sat for a second round of peace talks; the two sides agreed that it was necessary to establish “humanitarian corridors” for Ukraineâs civilians. No cease-fire was reached, but both parties agreed to meet for a third round of discussions.
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Also Thursday, the Labor Department reported that initial jobless claims for the week ended Feb. 26 declined to 215,000, 10,000 below expectations. And the Institute for Supply Management showed that service activity continued to expand again in February, though the pace has slowed for the fourth consecutive month.
“February’s 56.5 headline reading came in well below expectations, which generally anticipated that service sector activity would reaccelerate with fading omicron infection risks. The opposite appears to have occurred,” say Barclays economists. “Although February’s reading still points to moderate growth, it is the lowest in 12 months.”
The Nasdaq Composite (-1.6% to 13,537) led the major indexes lower on a back-and-forth day, while the S&P 500 (-0.5% to 4,363) and Dow Jones Industrial Average (-0.3% to 33,794) closed with more modest declines.
Commodities, most notably oil, also saw their share of swings. U.S. crude oil futures jumped above $116 per barrel intraday for the first time since early 2011 before pulling back to $107.67 per barrel (a 2.7% drop).
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“The volatility in commodities markets continues to be astounding,” says Michael Reinking, senior market strategist for the New York Stock Exchange. “Given Russia’s importance in the commodities complex, we’ve seen metals, agriculture and energy-related commodities all moving higher. This week alone wheat and oil futures are up greater than 20%.”
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Barclays points out that business activity, new orders and employment all fell “to levels not seen since 2020.”
YCharts
Other news in the stock market today:
- The small-cap Russell 2000Â also headed lower, off 1.3% to 2,032.
- Gold futures closed 0.7% higher to $1,935.90 per ounce.
- Bitcoin sharply tailed off, shedding 4.6% to $41,811.00. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- Best Buy (BBY, +9.2%) reported in-line fiscal fourth-quarter adjusted earnings of $2.73 per share, while revenue of $16.4 billion fell short of the $16.6 billion analysts were expecting. The big-box retailer also said same-store sales declined by a wider-than-anticipated 2.3% for the three-month period, and gave lower-than-expected top- and bottom-line guidance for the full fiscal year. However, the company did boost its quarterly dividend by 26% and said it will spend $1.5 billion on share buybacks over the next year. After the results, CFRA Research analyst Kenneth Leon downgraded BBY stock to Sell from Hold. In the upcoming fiscal year, the analyst expects revenue growth to decline, whiel higher wages and inventory costs will pressure margins.
- Snowflake (SNOW) spiraled 15.4% after earnings. In its fourth quarter, the data-analytics cloud company said revenue doubled from the year prior to $383.8 million, while its adjusted per-share loss narrowed to 43 cents. It also reported lower-than-anticipated gross margin of 70% and slowing current-quarter revenue growth. Still, Oppenheimer analyst Ittai Kidron maintained an Outperform (Buy) rating on SNOW. “While management’s initiatives to optimize price/performance in hardware/software are a near-term headwind to consumption and revenue, they can drive incremental workloads to Snowflake’s platform,” Kidron says. “We see a long trajectory of rapid revenue increases fueled by an IT shift to a cloud-centric model, digital transformation, and higher spend on machine learning/data science.”
- While SNOW sold off after earnings, Kroger (KR) â another member of the Berkshire Hathaway equity portfolio â surged 11.6% in the wake of its results. The grocery chain reported adjusted earnings of 91 cents per share in its fourth quarter on revenue of $33.1 billion. This was higher than the 74 cents per share and $32.9 billion analysts were expecting. Nevertheless, CFRA Research analyst Arun Sundaram maintained a Sell rating on KR stock. “We think wage pressures will persist longer than the net positive impact of higher food prices, noting KR typically has several labor agreements up for renewal each year,” the analyst writes in a note. “There is also risk that we could see strikes like King Soopers. Competition and less stimulus, government aid and vaccine benefits will also be headwinds in 2022. Overall, we view the risk/reward as unfavorable with the shares now trading at 14x our fiscal 2023 earnings-per share-estimate vs. 12x historical average.”
Billionaires Have Been Unloading These 15 Stocks
Our exploration of institutional investors’ recent trades continues today ⦠with a bearish tilt.
- SEE MORE 5 Stocks to Sell for 2022
Individual investors can find something both educational and entertaining in exploring what the “smart money” is up to, made available on the regular thanks to required quarterly Form 13F filings.
Of late, we’ve looked into what Warren Buffett has been buying and selling in his Berkshire Hathaway equity portfolio, as well as the most popular blue chips among Wall Street’s hedge fund managers. And tomorrow, we’ll take one last look at buying activity, this time among bona fide billionaires.
But first, we’re going to see what those billionaires have been selling.
Checking out what high-net-worth investors have been cutting loose can be every bit as informative as their buys â sure, sometimes a sell might just be taking prudent profits on a successful trade, but other times it can signal that an equity’s story has changed or that headwinds are on the horizon. So read on as we zoom in on 15 stocks getting the cold shoulder by at least one billionaire investor:
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Salesforce.com (CRM): Slowdown Worries Ease Ahead of Earnings
While the bulk of S&P 500 companies have already unveiled earnings, there are still several noteworthy components of the broad-market index left to report. Among those on this week’s earnings calendar are cloud company Salesforce.com (CRM, $207.08), discount retailer Dollar Tree (DLTR, $139.96) and chipmaker Broadcom (AVGO, $585.02).
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“The numbers this earnings season have been great even without considering that the bar has been raised consistently throughout the pandemic,” says Jeff Buchbinder, equity strategist for independent broker-dealer LPL Financial. “S&P 500 earnings per share are tracking to a 31% year-over-year increase, roughly 10 percentage points above the consensus estimate when earnings season began.”
This will likely fall short of the 12 percentage points of upside S&P 500 companies posted in the third quarter, Buchbinder adds. Still, it’s well above the long-term average and is pretty impressive considering the pandemic-related challenges that hit during Q4.Â
If that 31% is the final number, “it will mark the fourth straight quarter of earnings growth above 30% for the index,” says John Butters, senior earnings analyst at FactSet Research Systems.Â
According to Butters, the last time the S&P 500 index reported four consecutive quarters of earnings growth above 30% was in the final quarter of 2009 through the third quarter of 2010.Â
This time around, the “unusually high growth rate is due to a combination of higher earnings in Q4 2021 and an easier comparison to lower earnings in Q4 2020 due to the negative impact of COVID-19 on a number of industries,” he adds.
Analyst: Salesforce.com Demand Remains “Healthy”
Salesforce.com is one of the last remaining Dow Jones stocks left to report its quarterly results. The enterprise software solutions firm will unveil its fourth-quarter results after the March 1 close.
In the months that have passed since CRM’s late-November report (in which the company reported top- and bottom-line beats, but gave lower-than-expected Q4 earnings guidance), there has been some debate about a potential slowdown in digital transformation spending by global firms, says Stifel analyst J. Parker Lane (Buy).Â
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But in recent weeks, it seems those concerns have dissipated, with the Salesforce partners Lane spoke to “all striking an optimistic tone around the growth of their Salesforce practices in 2022 and beyond.”
This optimism is echoed by Oppenheimer analyst Brian Schwartz, who has an Outperform (Buy) rating on CRM. “Takeaways from recent field checks and enterprise CIO surveys reveal good business activity and healthy overall demand for Salesforce in the fourth quarter and a strong pipeline in fiscal 2023,” he writes in a note.
However, Schwartz warns of “cloudy parts” in the CRM story. Among them is the company’s inclusion of MuleSoft, a systems integration firm that was acquired by Salesforce for $6.5 billion in 2018, which the analyst calls “a work in progress.”
For CRM’s fourth quarter, analysts, on average, expect earnings to arrive at 75 cents per share, a 27.9% year-over-year (YoY) decline. Revenue, meanwhile, is forecast to land at $7.2 billion, up 24.4% from the year-ago period.
Dollar Tree’s Price Hike in Focus Ahead of Q4 Earnings
Like many other consumer staples stocks, Dollar Tree has held up well during the recent market turbulence. Shares of the discount retailer â which has been a frequent target of activist investors â are up more than 5% in the past month, compared to a roughly 1.2% drop for the broader S&P 500.Â
Can DLTR’s fourth-quarter earnings report â due out ahead of the March 2 open â keep the wind at the stock’s back?
“We think DLTR’s shares are compelling,” writes UBS Research analyst Michael Lasser (Buy). “The market has not fully reflected the benefit of DLTR’s pricing actions in the stock.”
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Lasser’s referring to the company’s announcement in late November that it was hiking prices on the bulk of its inventory to $1.25 from $1.00, which he believes “should provide meaningful lift.”
And even if the shift in strategy doesn’t benefit sales, the retailer should still see a notable expansion in gross merchandise. Specifically, the analyst expects merchandise and supply-chain costs to remain stable.Â
Consensus estimates among Wall Street pros for Dollar Tree’s Q4 are for earnings per share (EPS) of $1.77 (-16.9% YoY) and revenue of $7.1 billion, a 5.2% improvement from the year prior.
Strong Growth Expected in Broadcom’s Earnings Report
Broadcom will unveil its fiscal first-quarter earnings report after Thursday’s close.Â
Oppenheimer analyst Rick Schafer sees an “upside setup” relative to consensus estimates due to core networking, which is expected to be 30% higher than it was in the year-ago period.
“Management has been exemplary in a tight supply environment,” Schafer writes. And while lead times remain stretched at 50 weeks, “We believe AVGO has nearly ~100% backlog coverage for 2022. We see upside potential as supply eases through the year.”
As for the semiconductor stock’s fiscal first-quarter, Schafer expects the tech name to report earnings of $8.15 per share and revenue of $7.6 billion. For the sake of comparison, consensus estimates among analysts are for EPS of $8.08 (+22.2% YoY) and revenue of $7.6 billion, a 14.3% improvement over last year’s number.
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Digit App Review 2022: Is the Automated Neobank Right for You?
This Penny Hoarder (and self-proclaimed Bad Saver) shared his honest Digit review, and how it helped him passively save $4,300 in a little over two yearsâ¦
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.