A sharp upward revision to Q1 GDP estimates and early strength in some retail names could not keep stocks from opening with tight losses Friday, as the market prepared for a three-day weekend.
The Dow Jones industrial average and the S&P 500 traded a fraction below breakeven. The Nasdaq dipped 0.1%. Both the Nasdaq and the S&P 500 opened less than 0.5% above their prior highs.
Deckers, Big Lots, Veeva Jump; Splunk, GameStop Dive
The mood turned mixed for retail stocks continued early Friday, with Big Lots (BIG) spiking 4% on earnings, Costco (COST) climbed 2% and Ulta Beauty (ULTA) swung up 4% after reporting strong results late Thursday. On the downside, GameStop (GME) dropped 8% and Zoe’s Kitchen (ZOES) took an early 24% loss following Q1 results.
Nasdaq 100 stock Ulta reported Q1 earnings growth of 41%, well above expectations, on a stronger-than-expected 22% gain in sales. Friday’s gain lifted shares out of buy range above a flat base buy point at 289.37.
Costco topped analyst fiscal third-quarter targets on both its top and bottom lines, and same-store-sales growth of 5% beat consensus views for a 4% gain. The stock has pulled backed to test 10-week support, dipping 5% below a cup-base buy point of 178.81.
Uggs maker Deckers Outdoor (DECK) leapt 18%, despite a fiscal fourth-quarter earnings miss, as revenue topped expectations and management raised its Q1 and full-year earnings guidance above consensus views.
IBD 50 stock Veeva Systems (VEEV) sparked up 5% in opening trade. A 47% rise in adjusted Q1 earnings, a 32% sales gain and a 33% advance in subscription sales whomped analyst expectations. The stock is extended after a flat base breakout in March.
Data cruncher Splunk (SPLK) dropped 7% at the open. The San Francisco-based company reported Q1 results that met or beat analysts targets late Thursday, although unable to break above a one-cent per-share loss and book a profit as sales growth slowed to 30%. The loss sent the stock back below a flat base buy point of 66.56.
Q1 GDP, Consumer Spending Revised Higher; Oil Ekes Higher
Orders for durable goods dipped 0.7% in April, the Commerce Department reported, down from a 2.3% jump in March, but better than consensus views for a 1% decline. Minus transportation, orders were down 0.4%, vs. expectations for a 0.4% gain. Core capital goods orders were flat, below views for a 0.2% increase.
Commerce bumped up its estimate for Q1 GDP growth to 1.2%, vs. its initial estimate of 0.7% growth. Economists had projected a mild upgrade, to 0.8%. The GDP Price Index rose 2.2%, essentially in line with estimates. Consumer spending was revised to a 0.6% gain, double the initial estimate and above consensus targets for a 0.4% increase.
The University of Michigan’s Consumer Sentiment Index for May is set for a 10 a.m. release.
Oil prices have one last hurdle to jump in a busy week, with Baker Hughes (BHI) rig count report due at 1 p.m. ET. Oil was volatile early Friday, with West Texas Intermediate up a fraction, holding below $49 a barrel and down more than 2% for the week. Gold popped 0.7% to above $1,269, up more than 1% on the week.
The dollar eased and showed little change for the week vs. the euro and the yen. Bonds edged up, leaving the 10-year yield down 2 basis points at 2.24% and flat for the week.
Hong Kong’s Hang Seng Index inched ahead a fraction on Friday, but ended the week ahead 1.8% and at its highest mark since July 2015. In Japan, Tokyo’s Nikkei 225 fell 0.6%, leaving it with a 1.1% gain for the week but still fighting to break above 20,000.
In Europe, benchmarks in Frankfurt and Paris traded lower near midday and were tracking toward modest declines for the week. London’s FTSE 100 added 0.4% intraday Friday, up about 1% for the week.