Investors enjoyed a first green week after an almost 2-month long selloff that had taken the Nasdaq Composite solidly into bear territory and the S&P 500 20% below its record high. The Dow Jones index surged 6.2% for the week to snap an eight-week decline, its longest losing streak since 1932, while the S&P climbed 6.5% and the Nasdaq jumped 6.8%, both ending seven-week slides. Much of the week's gains came Thursday and Friday, as stocks rallied with strong retail earnings and a slowing inflation report sparking hopes entering the three-day weekend that the Federal Reserve's tightening policy can avoid tipping the U.S. economy into a recession. The question now is whether the market has found a bottom, with the Nasdaq now 25% below its peak, the S&P off 13%, and the Dow down 10%.
News:
- Dollar Tree and Dollar General boost their outlook: Shares of Dollar General and Dollar Tree popped Thursday, as the discounters beat Wall Street’s quarterly earnings expectations, raised outlooks for the coming year and spoke of consumers flocking to lower prices during inflationary times. Dollar General shares rose 13.71% to close at $222.13 on Thursday. Dollar Tree shares jumped 21.87% to close at $162.80. The two retailers said they see opportunity to grow as Americans weigh value more heavily in their purchasing decisions, whether buying groceries or seasonal decor. Dollar Tree, said it now expects net sales for the year to range from $27.76 billion to $28.14 billion compared with its previous expectations between $27.22 billion to $27.85 billion. Dollar General said it expects net sales growth of about 10% to 10.5% compared with its previous expectation of about 10%. Both retail stores will be taking advantage of these economically challenging times: Dollar General, which has more than 18,000 stores, will open 1,100 new locations this year and Dollar Tree, which includes more than 15,500 stores, is opening 590 stores this year. Another retailer that also that also had a great week was Macy's, rising almost 30% during the week.
- Alibaba Beats Earnings Estimates: Alibaba Group Holding Limited (NYSE:BABA) has easily beaten earnings estimates for the most recent quarter. The results showed a wide range of improving fundamentals, and management's comments were encouraging. Earnings per share estimates were beaten by more than 10%, while the company also managed to increase revenue by about 10%. Due to tough comparables with the shopping-from-home period one year earlier, it was not an easy task to grow the revenue meaningfully. Amazon.com, Inc. (AMZN), for example, grew its revenue by just 7% during the most recent quarter. BABA jumped 14.5% on Thursday.
- Cathie Wood's ARK bought $44 million worth of Nvidia shares: Nvidia’s results for the fiscal first quarter ended April 30 were actually ahead of expectations. Nvidia posted revenue of $8.29 billion, up 46% from a year ago, and well ahead of the company’s forecast and Wall Street’s estimate, both $8.1 billion. Cathie Wood's ARK Invest bought almost $44 million in shares of Nvidia on Thursday, according to a trading update, after the tech company reported its first-quarter earnings. ARK's purchase of 245,286 Nvidia shares at Thursday's closing price of $178.51 were worth $43.7 million. Nvidia's earnings report showed stronger than expected revenues, but the chip maker warned that tough macroeconomic conditions would reduce its sales. The company said the Russia-Ukraine war and COVID restrictions in China would have a $500 million hit on its revenue for the current quarter. The company's shares dropped over 10% after the report on Wednesday, however they climbed back up, helped by the ARK’s buying spree. NVDA shares are up almost 16% during the week.
