Market Snapshot
| Dow | 42098.70 | -244.95 | (-0.58%) | | Nasdaq | 19100.93 | -98.23 | (-0.51%) | | SP 500 | 5888.55 | -32.99 | (-0.56%) | | 10-yr Note |
|
|
|
| | NYSE | Adv 697 | Dec 2082 | Vol 1.01 bln | | Nasdaq | Adv 1461 | Dec 2950 | Vol 8.10 bln |
Industry Watch
| Strong: Communication Services, Information Technology |
| | Weak: Real Estate, Utilities, Materials, Energy, Financials, Consumer Discretionary, Consumer Staples, Health Care |
Moving the Market
-- Month-end flows
-- NVIDIA (NVDA) results after the bell
-- Trump admin. tells semiconductor design companies to stop selling to customers in China, according to FT
--10-yr note flirts with 4.50% again, while 30-yr bond flirts with 5.00%
|
Closing Stock Market Summary
28-May-25 16:20 ET
Dow -244.95 at 42098.70, Nasdaq -98.23 at 19100.93, S&P -32.99 at 5888.55
[BRIEFING.COM] The stock market scored some big gains on Tuesday, but there was no follow-through on that effort today. The major indices trudged their way through Wednesday's session, weighed down by a lack of concerted leadership and a pervasive sense of wait-and-see in front of NVIDIA's (NVDA 134.81, -0.69, -0.5%) earnings report after the close.
In effect, it was a consolidation trade influenced by rising Treasury yields, an FT report that the Trump administration told semiconductor software design companies to stop selling to customers in China, and some festering valuation concerns.
All 11 S&P 500 sectors ended the day in negative territory. The biggest losers were the utilities (-1.4%), energy (-1.3%), and materials (-1.3%) sectors.
Small-cap stocks and the value factor also underperformed in a move that could be attributed in part to growth concerns, but to be fair, trading volume was relatively light on a day that saw the market cap-weighted S&P 500 break below 5,900 in late trading and close near its lows for the session.
There were some outliers in today's trade, namely Abercrombie & Fitch (ANF 88.47, +11.32, +14.7%) and Fair Isaac Corp. (FICO 1618.62, +115.01, +7.7%). The former reported better-than-expected earnings results, and the latter was upgraded to Outperform from Neutral at Robert W. Baird.
The tale of the tape, though, was one of weakness. Decliners led advancers by a 3-to-1 margin at the NYSE and by a 2-to-1 margin at the Nasdaq.
There was no U.S. economic data of note today, but it was reported before the open that the Mortgage Bankers Association's Mortgage Applications Index declined 1.2% week-over-week, with purchase applications up 2% and refinance applications down 7%.
Treasuries drew some buying interest after the report, but they eventually reversed course, with the 10-yr note yield scraping 4.50% and the 30-yr bond yield kissing 5.01% at their highs before backing down. The 10-yr note yield settled at 4.48%, while the 30-yr bond yield settled at 4.98%.
The Treasury market didn't react much to a $70 billion 5-yr note auction that was met with decent demand nor to the FOMC Minutes for the May 6-7 meeting, which conveyed increased uncertainty about the outlook and the potential for a difficult trade-off if inflation proves to be more persistent and the outlooks for growth and employment weaken. Those observations were interpreted largely by the market as being known and dated.
- S&P 500: +0.1% YTD
- Nasdaq: -1.1% YTD
- DJIA: -1.1% YTD
- S&P 400: -3.7% YTD
- Russell 2000: -7.3% YTD
No follow-through after yesterday's rally
28-May-25 15:30 ET
Dow -171.27 at 42172.38, Nasdaq -16.97 at 19182.19, S&P -14.17 at 5907.37
[BRIEFING.COM] The market continues to hang out at lower levels, much like it has done for most of today's session.
Just no follow-through coming off yesterday's big gains, which is understandable with Treasury yields pressing higher and NVIDIA's (NVDA 136.85, +1.35, +1.0%) market-moving report on tap.
Breadth figures convey the lack of buying interest, as decliners outpace advancers by a better than 2-to-1 margin at the NYSE and by a roughly 7-to-4 margin at the Nasdaq.
Notably, there hasn't been any rush to hedge against downside market protection. The CBOE Volatility Index is down 0.8% to 18.80.
Support at 5,900
28-May-25 15:00 ET
Dow -148.29 at 42195.36, Nasdaq -10.94 at 19188.22, S&P -12.00 at 5909.54
[BRIEFING.COM] The indices hit a little air pocket, yet the S&P 500 managed to find support at 5,900, although it is near its lows for the day.
Not seeing a news catalyst to account for the recent weakness, as it may just be a case of some skittishness and consolidation interest in front of NVIDIA's (NVDA 136.77, +1.27, +0.9%) earnings report after the close.
The bar is high for NVIDIA, which is up 58% from its low on April 7. Some sell-the-news action to a good report wouldn't be a surprise, but given the scope of gains since the April low, a disappointment of some kind could produce a material selloff that has a domino effect across the AI landscape.
NVIDIA's relative strength in today's session, though, has been an important underpinning factor for the information technology sector (+0.3%), which is today's best-performing sector. In a related trade, the Philadelphia Semiconductor Index is up 0.3%.
Stocks hold steady as Fed Minutes reveal cautious stance amid elevated economic uncertainty
28-May-25 14:30 ET
Dow -119.90 at 42223.75, Nasdaq +4.02 at 19203.18, S&P -8.67 at 5912.87
[BRIEFING.COM] Markets are a hair higher following the release of the FOMC's Minutes from the May meeting which showed Fed officials agreed that given solid growth and a strong labor market, it's appropriate to take a cautious, data-dependent approach to policy amid rising uncertainty about the economic outlook.
Currently, the S&P 500 (-0.15%) is in second place, down less than 9 points.
Other important points from the Minutes included:
- In discussing risk-management considerations that could bear on the outlook for monetary policy, participants agreed that the risks of higher inflation and higher unemployment had risen.
- Participants agreed that uncertainty about the economic outlook had increased further, making it appropriate to take a cautious approach until the net economic effects of the array of changes to government policies become clearer.
- Participants noted that the Committee might face difficult tradeoffs if inflation proves to be more persistent while the outlooks for growth and employment weaken.
Taken together, participants saw the uncertainty about their economic outlooks as unusually elevated. Overall, participants judged that downside risks to employment and economic activity and upside risks to inflation had risen, primarily reflecting the potential effects of tariff increases.
Yields are little changed compared to their pre-Minutes levels, the yield on the benchmark 10-yr note now up about three basis points at 4.485%.
Gold slips as stronger dollar and profit-taking weigh on prices
28-May-25 13:55 ET
Dow -134.51 at 42209.14, Nasdaq -10.58 at 19188.58, S&P -12.07 at 5909.47
[BRIEFING.COM] With about two hours to go on Wednesday the tech-heavy Nasdaq Composite (-0.06%) is the "best" performing major average, albeit in a modestly lower effort.
Gold futures settled $5.50 lower (-0.2%) at $3,300.40/oz, as investors took profits after an early-session rally and a stronger U.S. dollar reduced demand.
Meanwhile, the U.S. Dollar Index is up about +0.3% to $99.87.
Abercrombie & Fitch surges despite tepid results/guidance, sentiment was very low (ANF)
Abercrombie & Fitch (ANF +17%) is bouncing back in a big way. The stock has been under pressure in recent months, fueled by very weak back-to-back guidance announcements on January 13 and again in early March. Investors were pleased to see upside results for Q1 (Apr) and in-line revenue guidance for Q2 (Jul) although EPS guidance was weak. It was a similar story for FY26 with lowered EPS guidance, but at least revenue guidance ticked higher to +3-6% from +3-5%.
- Also, its mall-based peer American Eagle (AEO) withdrew guidance on May 14. So, there was definitely some nervousness heading into this report. And while not a great result, the key takeaway is that this report was better than feared. Investors are taking this report as a win in light of the recent ugly guidance.
- ANF saw sales growth across all regions in Q1, with the Americas up 7% on good traffic levels in both stores and digital and this is despite lapping a very robust Q1 last year when regional sales grew 23%. In EMEA, sales grew 12% on top of 19% growth last year with continued strength in the UK and Germany. In APAC, sales grew 5% on top of 10% growth last year, with nice comps in China.
- Same store comps came in at +4%, which was decent but not great. Comps were clearly led by its Hollister brand at +23% vs -10% for its namesake Abercrombie brand. This compares to +24% and +5% in Q4. This was Hollister's eighth consecutive quarter of comp growth. Both AUR and units were up in Q1 and growth was balanced across genders and categories. ANF is excited about Hollister ahead of the summer season.
- At its Abercrombie Brand, results fell short of expectations with comps at -10%. In fairness, Abercrombie was lapping a huge +29% comp last year. Another factor was that Abercrombie was moving through its winter carryover inventory. It also saw softer results in some of the spring categories that produced standout growth in Q1 last year. The brand continues to see good traffic trends.
While ANF's Q1 report and guidance did not blow us away, sentiment was so low coming into this report that a Q1 beat and in-line guidance was seen as a win. That is even despite downside EPS guidance. On a final note, and something to not be overlooked, ANF was a busy buying back stock in recent months with the stock under pressure. In Q1, it repurchased 2.6 mln shares for $200 mln, representing 5% of shares outstanding. That is a huge amount in one quarter and tells us management saw its stock price as undervalued.
Box soars as beat-and-raise Q1 report highlights improving AI-based growth opportunity (BOX)
Box (BOX) is surging to record highs following a solid beat-and-raise 1Q26 earnings report, marking a significant improvement from last quarter's lackluster performance where the company narrowly beat EPS expectations and issued Q1 guidance well below consensus estimates. The upside Q1 EPS result was driven by strong demand for BOX’s AI-driven Intelligent Content Management solutions, improved operating margins of 25.3% (up from guidance of 25.0%), and disciplined cost management, which offset a challenging enterprise spending environment.
- Billings growth of 17% in constant currency and Remaining Performance Obligations (RPO) of $1.469 bln, also up 17% in constant currency, are critical metrics for BOX as they reflect future revenue potential and customer commitment to its cloud content management platform.
- Compared to recent quarters, the 17% billings growth in Q1 is a notable acceleration from Q4's 7% and Q3’s 3% growth, underscoring improving momentum driven by enterprise adoption of BOX’s premium suites. These metrics are key for BOX because they provide visibility into recurring revenue streams and customer retention, critical for a subscription-based SaaS business navigating competitive pressures in the enterprise software market.
- BOX’s growth is significantly catalyzed by the broader AI megatrend, particularly the need for enterprises to unlock value from unstructured data, which constitutes up to 80% of corporate data. BOX’s Intelligent Content Management platform, enhanced by AI integrations like Box AI and partnerships with Microsoft Azure OpenAI, enables businesses to analyze, classify, and derive actionable insights from vast datasets, driving efficiency and innovation. The platform’s ability to securely manage and process unstructured content—such as documents, images, and videos—positions BOX as a critical enabler for enterprises adopting generative AI and automation.
- The company's upbeat Q2 and FY26 guidance, which now calls for EPS of $1.22-$1.26 and revenue of $1.165-$1.170 bln compared to its prior outlook of $1.13-$1.17 and $1.155-$1.160 bln, is driven by sustained demand for AI-powered content management solutions, strong billings growth, and increasing adoption of high-margin suites, which are expected to drive operating margins to 28% for FY26. Management highlighted robust deal activity, including large enterprise contracts and renewals, alongside operational efficiencies from scaled AI deployments, as key factors supporting the raised guidance.
BOX’s Q1 performance and raised guidance reflect accelerating momentum fueled by AI-driven demand, robust billings, and RPO growth, positioning the company to capitalize on the enterprise need for unstructured data management. The strong adoption of its Intelligent Content Management platform and operational discipline signal improving growth prospects for BOX.
Dick's Sporting Goods reaffirmed FY26 outlook bolsters confidence after Foot Locker acquisition(DKS)
Dick's Sporting Goods (DKS) is displaying relative strength following its in-line 1Q26 earnings report and reaffirmed FY26 guidance. On May 15, the company pre-announced upside Q1 EPS and comparable sales, coinciding with the announcement of its $2.4 bln acquisition of Foot Locker (FL), which effectively removed the surprise factor from the Q1 results. Consequently, market attention has shifted to the reaffirmed FY26 guidance, which signals confidence in sustained growth and operational stability amid macroeconomic uncertainties and the complexities of integrating FL.
- The reaffirmed FY26 guidance -- EPS of $13.80-$14.40, net sales of $13.6-$13.9 bln, and comparable store sales growth of +1-3% -- is viewed as a positive signal, particularly given the macroeconomic headwinds and potential disruptions from the FL acquisition. Investors see the unchanged guidance as an indication of DKS’s confidence in its ability to navigate inflationary pressures, shifting consumer spending, and integration challenges, though concerns linger about FL’s underperformance, with its stock down 41% in 2025, potentially weighing on short-term financials.
- DKS reported a robust 4.5% comparable store sales growth in 1Q26, marking its fifth consecutive quarter of comps exceeding 4.0%, driven by an increase in both average ticket size and transactions. Strength in high-demand categories such as athletic footwear, team sports equipment, and outdoor gear, combined with the expansion of large-format House of Sport and Field House locations, has fueled this growth, enabling DKS to capture market share from competitors like Academy Sports (ASO) and smaller retailers.
- The company’s differentiated in-store experiences and strong product assortments, particularly in premium and exclusive offerings, also continue to resonate with consumers, reinforcing its competitive edge in the sporting goods sector.
- Gross margin improved to 36.7% in Q1 from 36.29% in the prior-year quarter, reflecting disciplined inventory management and reduced promotional activity. Favorable product mix, with strength in higher-margin categories like apparel and footwear, along with operational efficiencies in supply chain and merchandising, supported this steady margin expansion despite inflationary pressures.
In conclusion, DKS’s reaffirmed FY26 guidance is the primary catalyst for today’s rally. The company’s momentum, driven by strong comparable sales and margin improvement, remains robust, but the next few quarters will be pivotal as investors monitor the integration of FL and its impact on financial performance.
Okta under pressure on muted guidance, also sentiment was running high (OKTA)
Okta (OKTA -13%) is under pressure today despite reporting solid upside results for Q1 (Apr) last night. Okta, which is a cybersecurity company focused on identity and access management, grew revenue 11.5% yr/yr to $688 mln. That was above analyst expectations, but the upside was a bit more muted than recent quarters and it marked the fourth consecutive quarter where yr/yr revenue growth got smaller. To its credit, Okta provided upside EPS and revenue guidance for Q2 (Jul).
- However, based on the questions on the call, it is clear analysts were disappointed to see Okta only reaffirm full year revenue guidance despite the Q1 upside. That seems to be the main issue for the weakness today. Okta said that it's now factoring in potential risks related to the uncertain economic environment for the remainder of FY26.
- Management elaborated a bit more during the Q&A. Okta said it was very happy with its Q1 result and it made a lot of great progress. However, the macro played a role in the guidance. While Okta did not see any macro impact on Q1, the decision to reaffirm was more based on customer conversations, reading the news, talking to the sales teams etc. Okta said it feels like the tone in the market has changed a bit, so it decided to be conservative.
- Another potential concern was its cRPO metric. It rose 14% yr/yr to $2.227 bln, which was above the $2.185-2.190 bln prior guidance. However, the Q2 cRPO guidance of $2.200-2.205 bln computes as +10-11%, which is a bit of a slowdown and the hard number represents a sequential decline from Q1, which is not typical for Q2. In fairness, Okta tends to guide conservatively with cRPO, so it may just be them low balling guidance a bit. But the guide did spark some discussion on the call.
- Okta responded that there was no softness in April, it was very predictable. And the company is coming off a blow-out Q4 where Okta says it ran the table. Even despite that, Okta had a solid performance in Q1, including through April. Okta said it has heard some chatter about the industry seeing some softness in April, but the company did not see that. The cRPO guidance is mainly factoring in uncertainty in the macro going forward.
Our sense is that Okta is under pressure today mainly because the reaffirm for FY26 revenue is being seen as a letdown. The muted cRPO guidance is likely playing a role as well. Sentiment is likely also likely having an impact. Recall that Okta is coming off a blowout Q4 result, so expectations were running high heading into this report. Unlike most tech names, Okta came into this report trading near a 2+ year high, which tells us sentiment was elevated. As such, it's not surprising that the stock is pulling back sharply on the muted guidance.
Salesforce climbs higher as Informatica acquisition sets clear path for more scalable AI (CRM)
Before the open, Salesforce.com (CRM) announced a definitive agreement to acquire Informatica (INFA) for approximately $8.0 bln, driving shares of INFA sharply higher. However, INFA had already surged last Friday, following a Bloomberg report indicating that CRM was in advanced talks to acquire the data management firm. Still, shares of INFA are trading moderately below the $25/share acquisition price, which represents a premium of approximately 30% over the unaffected price from Thursday, May 22. This suggests that while the market views the deal positively, some investors may be factoring in risks such as integration challenges or potential regulatory scrutiny.
CRM's stock is also trading higher on the acquisition news, an uncommon reaction for an acquiring company, signaling market confidence in the deal’s strategic fit and valuation. The company has a well-established history of transformative M&A, including its $27.7 bln acquisition of Slack in 2021, $15.7 bln purchase of Tableau in 2019, and $6.5 bln deal for MuleSoft in 2018, demonstrating its expertise in integrating large businesses to expand its ecosystem.
- The $8 bln price tag for INFA, equating to a multiple of 4.5x expected FY26 sales, appears reasonable to investors, particularly when compared to CRM’s historical deals and the strategic value INFA brings to its AI and data management capabilities. This modest multiple likely contributes to the positive market response.
- Strategically, the acquisition of INFA, a leader in enterprise AI-powered cloud data management, enhances CRM’s ability to deliver a unified data architecture critical for its AI-driven solutions. INFA’s platform, which includes data integration, governance, quality, metadata management, and Master Data Management (MDM), serves over 5,000 organizations, including major clients like Unilever and Deloitte. This complements CRM’s Data Cloud and Customer 360 platform by enabling seamless data connectivity across enterprise systems, a key enabler for deploying responsible and scalable AI agents, such as CRM’s Agentforce.
- By integrating INFA’s capabilities, CRM can enhance its AI offerings, allowing customers to leverage cleaner, more accessible data to power generative AI applications, thereby strengthening its competitive position against rivals like Snowflake (SNOW) and positioning it to capitalize on the growing demand for AI-driven CRM solutions.
- Financially, the acquisition is expected to bolster CRM’s revenue by expanding its data management offerings and creating cross-selling and up-selling opportunities across its customer base. INFA’s subscription-based revenue model also aligns well with CRM’s recurring revenue streams. For some context, INFA generated $1.64 bln in total revenue in FY24, which is a drop in the bucket compared to the near $35.0 bln in revenue that CRM generated.
- Key drivers of accretion include enhanced AI-driven product offerings, increased adoption of CRM’s Data Cloud, and operational efficiencies from streamlined data management processes.
The market’s favorable reaction to CRM’s acquisition of INFA stems from the strategic alignment of INFA’s data management capabilities with CRM’s AI and CRM ecosystem, coupled with a reasonable valuation. The potential for revenue growth through cross-selling and AI-driven innovation further supports investor optimism. Nevertheless, risks such as integration complexities and potential regulatory challenges do exist.
|
