U.S. markets were walloped today, as traders were disappointed with news out of Europe, and a number of mixed economic reports were released.
The No. 1 problem today was Mario Draghi’s announcement that, although the ECB will extend its monthly purchase of 60 billion euro ($63.5 billion) worth of bonds into 2017, it will not increase the purchase amounts, as traders had hoped. When markets become addicted to economic stimulus, any reduction is seen as a negative.
In U.S. financial news, the Institute for Supply Management (ISM)’s November non-manufacturing activity number was 55.9, a decline from 59.1 in October. Economists were looking for 58.0. Any number above 50 still indicates expansion.
Also in October, U.S. factory orders were up 1.5%, ahead of the street’s view of 1.3%. But the U.S. Labor Department reported that initial jobless claims were up 9,000 to 269,000 — topping estimates by 1,000.
Given the recent weakness in economic readings, traders are concerned that a rate hike this month could easily throw the economy back into recession.
The Dow Jones Industrial Average was off 300 points intraday, and finished the day down 1.4%, as did the S&P 500. The Nasdaq was smashed the most, losing 1.7%. As was the case yesterday, all sectors were in the red, but today it was healthcare that was the weakest sector, losing 2%.
Strong earnings were still driving many stocks higher, however. Kroger Co (NYSE:KR), Avago Technologies Ltd (NASDAQ:AVGO) and Pure Storage Inc (NYSE:PSTG) are three who benefited from earnings. Here are the complete details.
Kroger Co (KR)
Supermarket chain Kroger hustled up almost 5% today after reporting third-quarter 2015 earnings of 43 cents per share and revenue of $25.1 billion — ahead of the Zacks Consensus Estimate of 39 cents per share, but below the estimate of $25.2 billion.
Kroger also lifted its guidance for fiscal 2015 from $1.92-$1.98 per share to $2.02-$2.04 per share. During the past quarter, KR repurchased some 853,000 shares of stock for a total of $31 million.
The stock’s action today lifted it above recent resistance at $38 per share, hitting an intra-day, split adjusted record price of $40.33.
Avago Technologies Ltd (AVGO)
AVGO stock was also a big winner today after the cell phone chipmaker reported fourth-quarter earnings of $2.51 per share late on Wednesday, ahead of analysts’ expectations for $2.38. Revenue was 16% higher from a year ago, at $1.84 billion. In addition, full-year EPS were up 83% from a year ago.
Also boosting the stock was the fact that five different analysts raised their price targets for AVGO stock. Topeka Capital Markets boosted their price from $130 to $153 per share. AVGO stock finished the day at $144.88, up more than 9%.
Avago, which boasts Apple Inc (NASDAQ:AAPL) as one of its customers, is also set to acquire fellow chipmaker Broadcom Corporation (NASDAQ:BRCM) for $37 billion.
Pure Storage Inc (PSTG)
Pure storage stock was pure gold today after the data storage company posted third-quarter earnings of 18 cents per share, trouncing analysts estimates that the company would lose 30 cents per share.
In addition, revenue increased 167% from a year ago to $131.36 million, well ahead of street estimates for $106.95 million.
This was the first financial results posted as a public company. PSTG went public in October, 2015. The closing price of $15.69 today is still well below the IPO price of $17.00. PSTG stock reached a high of $19.49 a few weeks after going public, but had been drifting lower and broke below $13.00 just a few days ago.
It’s likely that this earnings report will propel the stock higher over the next few weeks. PSTG stock surged 12% today on strong volume of 4.1 million shares.
As of this writing, Ethan Roberts does not hold a position in any of the aforementioned securities.
