U.S. markets bounced back today after a pause on Thursday, as retail and health stocks performed well, and investors focused on some interesting comments by European Central Bank President Mario Draghi.
7 Draghi noted that the ECB is “ready to do what it must to raise inflation as quickly as possible.” This would be done if the ECB decides that current policies are not stimulating the euro zone economy enough. The ECB has been dropping hints about another boost to the euro asset purchase program in December.
The Dow Jones Industrial Average was 0.5% higher at the closing bell, with the S&P 500 close behind, up 0.4%. The Nasdaq was today’s champ, higher by 0.6%. Sectors were mixed, with some weakness in energy and basic materials, but strength in consumer goods and technology.
Retail stocks were especially hot today, with companies such as Abercrombie & Fitch Co. (NYSE:ANF), Nike Inc (NYSE:NKE) and Gap Inc (NYSE:GPS) soaring higher on good news. Those three names are among today’s best stocks. Here’s why.
Abercrombie & Fitch Co. (ANF)
ANF stock was a huge winner today after the company reported third-quarter earnings of 48 cents per share that trounced analysts’ forecasts for 22 cents.
Revenue was down 3.6% to $876.6 million year-over-year, but still easily surpassed the street’s view of $863.4 million with room to spare.
Also boosting the share price was Stifel Financial Corp’s (NYSE:SF) analyst Richard Jaffe, who reiterated a “buy” rating and $24 price target on ANF stock. Other Wall Street analysts were a bit less bullish, but the street still liked what it was hearing, sending ANF stock up an eye-popping 25% today.
Nike Inc (NKE)
ANF wasn’t the only retail winner today. NKE stock was also up more than 5% after announcing a trifecta of good news after Thursday’s closing bell. The athletic footwear company said it will be initiating a two-for-one stock split, a stock buyback over the next four years of up to $12 billion, and a 14% dividend increase.
The quarterly dividend of 28 cents will increase to 32 cents, and is payable Jan. 4, 2016 to shareholders of record on Dec. 9. Nike has raised its dividend every year since 2001.
The stock split will be done as a dividend on Dec. 23, also for shareholders of record on Dec. 9.
Gap Inc (GPS)
And speaking of trifectas, GPS stock was also soaring today — up 7% after posting third-quarter earnings of 63 cents per share that merely met analysts’ expectations.
In fact, revenue of $3.86 billion was below the estimates for $3.93 billion. In addition, Gap lowered its fiscal 2016 guidance from a range of $2.75 – $2.80 per share, to $2.38 – $2.42 per share. Analysts were looking for $2.52.
Perhaps the GPS earnings report was simply in the right place at the right time, because this was quite a day for the retail sector.
As of this writing, Ethan Roberts does not hold a position in any of the aforementioned securities.
