Despite the release of the August jobs report on Friday, it was relatively calm waters in the stock market today.
We saw that the SPDR S&P 500 ETF (NYSEARCA:SPY), SPDR Dow Jones Industrial Average (NYSEARCA:DIA) and PowerShares QQQ ETF (NASDAQ:QQQ) were all within 25 basis points of flat for the day.
Movers in the Stock Market Today
Shares of Lululemon Athletica (NASDAQ:LULU) climbed more than 7.5% on Friday after the company beat on earnings and revenue expectations. It helped that comp-store sales of 11% crushed estimates of 5.2%, while management’s guidance topped consensus expectations. It’s no wonder LULU stock is at new highs.
Zoom Video (NASDAQ:ZM) also beat on earnings and revenue, as the latter grew 95% year-over-year. Further, management guided for third-quarter earnings of 3 cents per share and revenue in the range of $155 to $156 million, easily topping estimates of a penny per share loss, and sales of $140.94 million.
For management’s full-year outlook, they expect earnings of 18 to 19 cents per share versus expectations of just 3 cents per share. For revenue, they expect between $587 million to $590 million versus estimates of $546.73 million. In short, ZM crushed forward estimates, yet shares fell more than 6%.
ZM was one of our “Top Stock Trades,” along with four other notable movers from Friday.
Like Zoom, CrowdStrike (NASDAQ:CRWD) delivered strong headline results and better-than-expected guidance. Yet, shares shed more that 12% in Friday’s session. Are valuations finally catching up to some of these hot initial public offerings?
DocuSign (NASDAQ:DOCU) missed on earnings estimates, but guidance came in above consensus expectations. Thus, shares rocketed higher by more than 21% on Friday. The 52-week high of $59.90 isn’t all that far away now.
Up almost 5% on Friday and Canopy Growth (NYSE:CGC) is now up more than 20% from its lows six trading sessions ago. If it can maintain momentum, perhaps it can fill the gap back up toward $32. That’s also where its 50-day moving average comes into play.
Jobs Report, Rate Cut
The non-farm payrolls report for August showed that 130,000 jobs were added to the economy, short of economists’ expectations for 160,000. Bulls needed a report that was strong enough to show that the economy is okay, but not so strong that it may discourage the Federal Reserve from cutting interest rates later this month.
Aside from missing estimates this month, the labor figures for the previous two months were also revised lower. Hurricane Dorian won’t help jobs growth this month either, although it may provide a nice boost over the next few months. On the plus side, the participation rate was strong, while wage growth topped expectations for the third time in a row.
Along with midday comments from Fed Chair Jerome Powell, investors had a lot on their plate to digest on Friday.
Earlier this week, we noted that the market was pricing in a 97% chance of a 25 basis point (bps) cut in the Fed Funds rate, and a 3% chance of a 50 bps cut. After Friday’s news, the probability of a 25 bps cut fell to 91.2%, while the probability of no cuts jumped to 8.8%.
That’s certainly a notable shift, although Powell’s comment that the Fed will “act as appropriate,” likely signals a cut later this month.
Merger Monday?
Remember Symantec (NASDAQ:SYMC) stock? The name found itself making headlines earlier this summer on speculation that Broadcom (NASDAQ:AVGO) would acquire the name. AVGO eventually agreed to acquire SYMC’s enterprise business.
Now though, speculation suggests that private equity firms Advent and Permira are looking to acquire the company, according to the Wall Street Journal. The deal, should one materialize, would still reportedly allow the AVGO-SYMC enterprise deal to go through. The news sets us up for a possible “Merger Monday.”
Symantec stock climbed more than 4% on Friday.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AVGO.