A Wrap For Powell, But Big Late Trading Day

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Following a couple days of selling off ahead of critical economic data this week has paid off for those paying attention: for the second session in a row, we’ve gone up on relatively favorable monthly prints. We’re still not at last week’s highs, save for the small-cap Russell 2000, but of the four major indices, only the Dow is in the red over the past five trading days. The Dow closed +130 points, +0.34%, the Nasdaq +241, +1.51%, while the S&P 500 and aforementioned Russell reached +1.03% and +0.84%, respectively.

Lots of this good feeling came courtesy of Fed Chair Jerome Powell’s testimony on Capitol Hill over the past couple days. While he had caveats aplenty, as we’ve become used to in his now-six years presiding over the monetary policy body, he did say interest rate cuts “can and will begin” this year, as inflation has “eased notably.” If nothing else had happened all week, Wall Street would have seen this as a bullish sign.

We also saw steady jobless claims and productivity data early this morning, as we continue on our overall “soft landing trajectory for the domestic economy. And assuming we don’t get shocking numbers from tomorrow’s nonfarm payroll results from the U.S. Bureau of Labor Statistics (BLS) before the bell, it may be that Powell’s relative dovishness may carry the entire week.

Meanwhile, Broadcom (AVGO) reported beats on both top and bottom lines in its fiscal Q1 report after the closing bell today: earnings of $11.06 per share outpaced the $10.25 expected, and swung to a year over year gain from $10.33 per share is Q1 of 2023. Revenues came in at $11.96 billion in the quarter, surpassing the $11.72 billion analysts were expecting. Shares are bouncing around in late trading, as full-year guidance was actually a smidge below Zacks consensus of $50.07 billion.

Costco (COST) shares are down close to -5% following its fiscal Q2 results this afternoon. While earnings per share of $3.92 represent a 32-cent beat over expectations, revenues of $57.33 billion missed the $59.20 billion in the Zacks consensus. February comps look good, however: up +5%, but the company did not raise membership fees as some had expected, and trading at 47x earnings is tough to maintain unless they blow out expectations routinely.

DocuSign (DOCU) shares had been up as much as +17% moments after Q4 results were reported today, but have since cooled down a bit. Earnings of 76 cents per share on $712.4 million in the quarter easily surpassed the 64 cents and $698 million analysts had been expecting. Next-quarter earnings guidance has been ratcheted up to a range of $704-708 million; we had originally projected $702 million and change. Subscription revenue was up +10% year over year.

The Gap Inc. (GPS) is our final success story of the afternoon — earnings of 49 cents per share versus 20 cents expected, on $4.298 billion as compared with the $4.21 billion analysts were expecting, The company also bumped up its full-year earnings guidance on the top line to $14.9 billion, and gross margins of +38.9% — and forecasted 100 basis points in higher gross margin for the coming quarter. Shares are up +7% in today’s late trading session.

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