- Wall Street opens lower, Russell 2000 leads drop
- US debt ceiling agreement expected to pass into law today
- Advance Auto Parts slumps 30% after earnings release
Wall Street indices launched today's trading lower and some profit taking can be spotted on recent outperformers, like for example AI stocks. There seems to be a feeling that recent stock market rally was overblown and that global macroeconomic picture does not support recent stock market performance.
The US debt ceiling saga looks to be nearing its end. Deal was reached over the weekend and while a number of Republicans vowed to oppose the deal and not vote for it, Republican debt ceiling negotiations said that they have enough votes to pass the bill into law today.
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Create account Try a demo Download mobile app Download mobile appThere is no US data left in the economic calendar for today. Chicago PMI for May was released at 2:45 pm BST and it showed a massive miss. The index dropped from 48.6 to 40.4 while the market expected a drop to just 47.2. This was the lowest reading of the index since November 2022.
Source: xStation5
Small-cap index Russell 2000 (US2000) is a top laggard at the beginning of today's Wall Street session. While index jumped at the start of today's trading, this upward impulse was quickly erased (orange circle). However, the overall technical picture on US2000 is unchanged - the index continues to trade in a 1,715-1,805 pts trading range with recent moves being largely confined to an interior range of 1,740-1,785 pts. Should index continue to slide and drops below the 1,740 pts area, it could be a signal that a large drop is looming. However, this signal would be confirmed once price drops below 1,705 pts as well.
Company News
HP (HPQ.US) trades lower today after reporting mixed earnings for fiscal-Q2 2023 (January-April 2023). Company reported a 22% YoY drop in net revenue to $12.91 billion (exp. $13.03 billion). Adjusted EPS came in at $0.80, down from $1.08 in the year ago quarter but above $0.76. Adjusted operating margin came in at 8.7% (exp. 8.1%). Free cash flow increased 25% YoY and reached $500 million (exp. $313.5 million). Adjusted EPS in fiscal-Q3 2023 is seen in the $0.81-0.91 range (exp. $0.85) while full-year EPS is expected in the $3.30-3.60 range, down from $3.20-3.60 (exp. $3.32).
Hewlett Packard Enterprise (HPE.US) drops after reporting earnings for fiscal-Q2 2023 (January-April 2023). Net revenue increased 3.9% YoY during the period and reached $6.97 billion (exp. $7.29 billion). Adjusted EPS came in at $0.52 (exp. $0.48) while operating cash flow was $889 million (exp. $2.08 billion). Adjusted operating margin improved from 9.3% in year ago quarter to 11.5% now (exp. 10.4%). Miss in revenue can be entirely attributed to miss in Compute segment revenue which came in at $2.76 billion (exp. $3.23 billion). Company expects fiscal-Q3 net revenue in the $6.7-7.2 billion range (exp. $7.22 billion) and adjusted EPS in $0.44-0.48 range (exp. $0.46). Full-year adjusted EPS forecast was hiked from $2.02-2.10 to $2.06-2.14.
Hewlett Packard Enterprise (HPE.US) launched today's trading with an over-10% bearish price gap. Stock opened near the $13.90 support zone that has limited downward moves recently and it looks like bulls may manage to defend the area. Source: xStation5
Share price of Advance Auto Parts (AAP.US) plummets after the company reported disappointing fiscal-Q1 2023 earnings (quarter ended on April 22, 2023). Company reported a drop in adjusted EPS from $3.57 in a year ago quarter to $0.72 now (exp. $2.65). Net sales at $3.42 billion were 1.3% YoY higher and slightly above $3.43 billion. However, comparable sales were 0.4% YoY lower (exp. 0.7% YoY). Company expects competitive dynamics to continue and has cut full-year guidance. Advance Auto Parts now expects full-year EPS at $6.00-6.50, down from previous forecast of $10.20-11.20.
Some weakness can be spotted on US crypto-related stocks today. This comes as Bitcoin takes an over-2% hit today and snaps a recent winning streak. Riot Blockchain (RIOT.US) drops 4%, Coinbase (COIN.US) trades over 2% lower, Marathon Digital (MARA.US) declines 1.5% and CleanSpark (CLSK.US) plunges 6%.
Advance Auto Parts (AAP.US) slumps 30% today after reporting disappointing fiscal-Q1 2023 earnings. Stock plunged below the lower limit of the bearish channel and is closing in on 2020 Covid lows. Source: xStation5
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