Stock prices posted two straight gains on Friday, with today’s uptrend enough to offset weekly deficits in most major indices caused by Monday’s market slump.
Against the backdrop of a sparse economic calendar, headlines from individual stocks influenced sentiment. Palantir Technologies (PLTR), for example, continued its impressive rise after the Wedbush analyst Daniel Ives called the data analysis company new partnership with Microsoft (MSFT, +0.8%) “groundbreaking.” PLTR stock rose 2.5%, for a weekly gain of 21%.
Sweetgreen records strong increase in profits
Sweet green (SG) was another stock that made waves on Friday, rising 33.4% after releasing results. The fast-casual restaurant chain specializing in salads said second-quarter revenue rose 21% year over year to $184.5 million, while its quarterly loss narrowed to $14.5 million. The company also raised its full-year revenue and sales guidance.
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“We are particularly encouraged by positive traffic as menu innovation and marketing initiatives accelerated trends in the second quarter despite industry pressures,” says analyst at UBS Global Research Dennis Geigerwho recommends buying the Consumer cyclical stocks but increased its price target from $31 to $37. For comparison: SG closed today at $35.01.
Intel falls after Moody’s lowers credit outlook
Intel (INTC) plunged after Moody’s cut the outlook on the chipmaker’s senior unsecured ratings to negative from stable. The firm also downgraded INTC’s senior unsecured rating to BAA1 from A3. “The ratings downgrade reflects our expectations of significantly weaker profitability for Intel over the next 12 to 18 months,” Moody’s said.
Today’s 3.8% decline made Intel the worst Dow Jones shares on Friday, although this is nothing new for INTC. In fact, shares have fallen more than 35% month to date, thanks to ugly Q2 earnings reportincluding the news that the company has suspended its dividend due to cost reasons.
“We believe Intel has a long road to recovery,” wrote the Argus Research analyst Jim Kelleher (Hold) in a post-earnings statement. “As Intel seeks to maintain its aggressive node and product roadmap for customers and data centers, the company likely faces an extended period of low or no profit quarters, even with the planned reduced cost base.”
As for the main indices, S&P500 closed on Friday with a plus of 0.5% at 5,344, Nasdaq-Composite was 0.5% higher at 16,745, and the Dow Jones Industrial Average rose 0.1% to 39,497. All three indices ended the week with slight losses.
Inflation data and blue chip profits in sight
Next week could be another volatile week for equity markets. The much-anticipated Consumer Price Index (CPI) for July is due to be released on Wednesday morning, and Wall Street will be watching to see if the recent downward trend in inflation continues.
“The July CPI report will likely reinforce the notion that inflation is calming, even if it has not quite returned to the Fed’s target,” says Sarah House, senior economist at Wells Fargo. “We expect headline CPI to have risen 0.2% in July, which would keep the annual rate steady at a three-year low of 3.0%.” She expects core CPI to have also risen 0.2% month-on-month, “due to a rebound in some of the more volatile ‘super-core’ components.”
In the meantime, several blue chips on the Results calendarincluding Cisco systems (CSCO, -0.8%). The network equipment maker made news today amid rumors that it plans another round of layoffsAs for fourth-quarter results, Wall Street expects further weakness in sales and earnings.
“The network market remains weak as the aftermath of the boom and bust in the supply chain is still being felt in the second quarter of the calendar year, the winter in the telecommunications industry is still lingering and the economy is now showing signs of slowing due to the Fed’s restrictive policy,” says Needham analyst Alex Henderson (Hold).
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