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Market Moves Yesterday
S&P 500 @ 5,266.95 ( ⬇️ 0.74%)
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Bitcoin @ $67,989.12 ( ⬇️ 0.18%)
Hey Scoopers,
Happy Thursday! Here’s what we’re covering today:
👉 Abercombie’s blockbuster results
👉 Salesforce’s massive miss
👉 A big oil acquisition
So, let’s go 🚀
Market Wrap 📉
Stocks pulled back on Wednesday as pressure from rising Treasury yields outweighed a rally in chip giant Nvidia.
The AI darling gained 0.8%, reversing an early loss of 2.6%. Valued at $2.9 trillion, Nvidia has risen every trading session since its stellar Q1 results last week.
All 11 sectors of the S&P 500 index retreated, showcasing broader market weakness. In fact, 440 stocks in the index traded in the red, while 27 of the 30 stocks in the Dow Jones index declined.
The 10-year Treasury note yield ticked higher for the second consecutive day, trading above 4.6%. The benchmark yield popped following a Treasury Department auction on Tuesday that was met with weak demand.
Typically, higher yields lower the multiples investors are willing to pay for stocks, increasing borrowing costs and reducing consumer spending while making T-bills and money market instruments attractive.
Trending Stocks 🔥
UiPath - The software company is down 29% in pre-market after it announced that CEO Rob Enslin would resign on June 1.
HP Inc- The personal computer manufacturer rose 3% after it posted revenue of $12.8 billion and earnings of $0.82 per share in fiscal Q2, above estimates of $12.6 billion and $0.81 per share, respectively.
American Eagle Outfitters - Shares of the retail company are down 10% after it missed consensus revenue estimates in Q1.
Salesforce Disappoints In Q1
Salesforce announced its fiscal Q1 of 2025 (ended in April) results and reported:
👉 Revenue of $9.13 billion vs. estimates of $9.17 billion
👉 Earnings of $2.44 per share vs. estimates of $2.38 per share
While the SaaS giant beat earnings estimates, its revenue miss sent shockwaves through Wall Street as it was the first time Salesforce missed top-line estimates since 2006.
Moreover, Salesforce forecasts sales between $9.2 billion and $9.25 billion in Q2, below estimates of $9.37 billion. Its adjusted earnings forecast of $2.35 per share was also lower than the consensus forecast of $2.40 per share.
Salesforce stock is down 16% in pre-market trading and the drawdown is likely to push the Dow Jones index lower by 315 points.
Salesforce attributed its revenue miss in Q1 to budget scrutiny and longer-than-usual deal cycles. It also implemented go-to-market changes that cut into bookings.
Abercombie & Fitch Crushes Estimates
Apparel retail entity Abercombie & Fitch reported its strongest first quarter in company history as sales were up 22% while profits surged close to 600% year over year.
Abercombie & Fitch shares rallied 24% higher yesterday, continuing its winning streak that began in 2023. Over the last 17 months, the stock has surged more than 700%, valuing the company at a market cap of $9.68 billion.
In fiscal Q1, the Abercombie reported:
👉 Revenue of $1.02 billion vs. estimates of $963.3 million
👉 Earnings per share of $2.14 vs. estimates of $1.74
Its net income surged to $114 million, up from $16.6 million in the year-ago period.
While most retailers have provided a tepid Q2 guidance in recent weeks, Abercombie is bucking the trend. The retailer expects sales to grow at a mid-teens rate in Q2, above Wall Street estimates of 9%.
Our Take
In the last six years, Abercombie has transformed itself to focus on inclusivity and geared toward working millennials.
In addition to revamping its product assortment and overhauling its stores, the company’s recent success can be tied to a robust marketing engine. For instance, Abercombie & Fitch relies on influencers and affiliates to communicate its brand and market its products.
ConocoPhillips to Acquire Marathon Oil
ConocoPhillips just agreed to acquire Marathon Oil in an all-stock transaction worth $17 billion, a move that should boost its shale assets as the broader oil and gas industry undergoes a wave of consolidation.
The deal is likely to add 2 billion barrels of resources to Conoco’s inventory in the U.S. while extending its reach across shale fields in Texas, New Mexico, and North Dakota.
It will also add 2 million metric tons per year of net liquid natural gas capacity in the west coast of Africa.
ConocoPhillips is the last of the top three U.S. companies to pull the trigger on a big acquisition, following blockbuster deals announced by rivals such as Exxon Mobil and Chevron.
Headlines You Can't Miss!
Singapore pushes for green data centers amid high energy demand for AI
Nelson Peltz offloads Disney stake after losing proxy battle
PDD dethrones Alibaba and is China’s most valuable e-commerce company
BHP abandons Anglo American takeover bid
Mt. Gox transfers 140,000 BTC to investors
Chart of The Day
Apple is Berkshire Hathaway’s largest position. Berkshire’s $150 billion stake in the tech giant accounts for almost 40% of its total portfolio.
Warren Buffett once referred to Apple as the best business in the world, but Berkshire recently trimmed its position in the iPhone maker by 13% in Q1 of 2024. However, Berkshire still has a 1.5% stake in Apple.
Moreover, Berkshire has a sizeable exposure to Japanese stocks such as Itochu, Mitsui, Sumitomo, Mitsubishi, and Marubeni. Each of these companies is well diversified and poised to benefit from low interest rates going forward.
Meme of the Day
DISCLAIMER: None of this is financial advice. The newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.