The stock market rally tested key support levels this past week, with the S&P 500 rebounding from its 50-day line. Apple (AAPL) debuted its iPhone 13 series and other new products. Crocs (CROX) surged on a bullish outlook, while Microsoft (MSFT) rallied on a huge buyback. On the downside, Macau-focused casinos such as Wynn Resorts (WYNN) plunged as China moved toward big regulatory changes. Economic data was generally positive.
Stock Market Rally Rebounds
The stock market rally, after sliding somewhat over several sessions, bounced back Wednesday, with the S&P 500 once again finding support at the 50-day moving average. The Nasdaq rebounded from below its 21-day line while the small-cap Russell 2000 rallied near its 200-day line. The major indexes largely held gains Thursday. Meanwhile, many leading stocks flashed buy signals. Energy stocks rose sharply as crude oil and other energy prices ran higher. The new Apple iPhone, a Macau casino crackdown, a bullish forecast by Crocs and a hefty Microsoft stock buyback and dividend were in focus.
Apple Debuts iPhone 13
Apple (AAPL) introduced its second-generation 5G handsets, the iPhone 13 series, at a fall product launch event. The new handsets are incremental upgrades to last year’s iPhone 12 family. The iPhone 13 devices feature brighter displays, faster processors, improved cameras and longer battery life. They will be available starting Sept. 24. Apple also unveiled the Apple Watch Series 7 smartwatch lineup and new iPad tablets. The event was largely free of surprises because of news leaks. Apple stock fell slightly after the prior week’s sharp reversal from all-time highs.
Economic Data Gets Touch Of Covid
Economic data this week was partly infected by the delta variant. The consumer price index rose less than expected in August, as the overall CPI rose 0.3% on the month and the annual rate dipped to 5.3% from 5.4%. The core CPI rose just 0.1% on the month, and the annual rate slipped to 4%, easing further from June’s 29-year-high 4.5%. Softer core inflation partly reflected a Covid comedown in travel. Airfares fell 9.1% in August, while prices for lodging away from home fell 2.9%.
Retail sales showed strength, unexpectedly rising 0.7% overall and 1.8% excluding autos. The data had a splash of Covid, as categories that soared early in the pandemic led the way: Sales rose 5.3% at nonstore retailers, 2.1% at grocery stores and 3.5% at general merchandise stores. Meanwhile, restaurant and bar sales were flat on the month and auto sales fell 3.6% amid ongoing chip shortage woes.
Initial jobless claims rose 20,000, to 332,000, but September manufacturing reports from Philadelphia and New York were much stronger than expected.
Data also looked a little sick in China, where August retail sales rose 2.5% vs. a year earlier, far below views and July’s 8.5%. Industrial production cooled to a 5.3% annual gain.
Crocs Jumps On Outlook, Buyback
At an investor day, Crocs said it’s targeting more than $5 billion in sales by 2026. The specialty footwear maker also plans to buy an extra $500 million in Crocs stock by year-end — putting its 2021 repurchase program at $1 billion. Shares jumped to a record high. Deckers Outdoor (DECK) also rallied.
IPOs Return With Big Gains
With the traditional summer break over, initial public offerings are stampeding ahead, making 2021 one of the biggest years ever in terms of proceeds raised, now above $100 billion. About 10 IPOs hit the market this week. The largest was tech consulting firm Thoughtworks (TWKS), which raised $774 million. Running shoe company On Holding (ONON) raised $746 million. Dutch Bros (BROS) reaped $484 million. All three soared in Wednesday’s debuts, then raced higher Thursday. Coming up is payments processor company Toast, looking to raise $685 million, and Freshworks, a business software provider seeking $855 million.
Casino Stocks Plunge Amid Macau Crackdown
Casino operators with major exposure to Macau fell sharply this week as China eyes tougher regulations. The proposed rules would remove the current subconcession system, appoint government delegates to oversee gaming operators and create an illegal deposit crime. The rules could go into effect by year-end. Las Vegas Sands (LVS) and Wynn Resorts (WYNN) plunged. MGM (MGM), which has less exposure to Macau, also tumbled.
Microsoft Stock Buyback
Microsoft (MSFT) announced a $60 billion stock buyback and hiked its quarterly dividend by 11% to 62 cents a share. The tech giant also named President Brad Smith as vice chairman. MSFT stock rose modestly to near record highs.
SpaceX Raises The Bar
SpaceX’s Inspiration4 mission launched from Kennedy Space Center in Florida Wednesday night. The launch, which raised money for St. Jude Children’s Research Hospital, featured an all-civilian crew aboard a Crew Dragon capsule. The crew will spend three days in orbit at 360 miles above Earth. That’s higher than the ISS’s orbit and well above the altitudes reached by Virgin Galactic and Blue Origin’s July flights.
Boeing Bullish On Future Aircraft Demand
The aerospace giant sees demand for 19,000 new commercial aircraft with a book value of $3.2 trillion over the next 10 years. It expects demand for 43,500 commercial aircraft, valued at $7.2 trillion, over the next 20 years. That’s an increase of 500 aircraft over its 2020 outlook. Boeing (BA) expects carriers to need more than 32,500 single-aisle jets over the next two decades, roughly in line with Boeing’s pre-pandemic outlook. But its outlook for widebody aircraft fell by 8%. Boeing recorded 53 orders in August, including 35 gross 737 Max orders. It delivered 22 aircraft last month including just 14 passenger jets, as 787 deliveries remain halted.
Oracle Revenue Falls Short
Oracle (ORCL) earnings rose 11% per share, topping forecasts for the fiscal first quarter. But sales for the business software giant grew 4% to $9.73 billion, slightly missing. Shares fell.
Intuit (INTU), known for TurboTax and QuickBooks, announced a $12 billion cash-and-stock deal to buy Mailchimp. Mailchimp provides a customer engagement and marketing platform for growing small and midsize businesses.
Comcast (CMCSA) fell after CFO Mike Cavanagh signaled a Q3 slowdown in broadband subscriber growth saying he expects net adds to be more in line with historical averages. That means it will fall well short of 2020 and below that of 2019.
Steel Dynamics (STLD) guided third-quarter EPS estimates well above analyst views. It also was bullish on Q4. STLD stock rose Wednesday, joined by other steelmakers. But steel stocks fell Thursday.
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