Markets Lose Steam; AMAT, WSM Fall Post-Earnings

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Market indexes couldn’t keep up the positive energy throughout the trading day today, with a pronounced temporary sell-off mid-morning today across the board. The S&P 500 and Nasdaq managed to close the day higher — +0.34% and +0.45%, respectively — to fresh all-time closing highs. The Dow failed to make it into the green, -0.17%, and the Russell 2000 fell -0.56% in the Thursday regular session.

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After the close, earnings reports from Applied Materials AMAT and Williams-Sonoma WSM are sending those stocks lower in late trading.
While we’ve seen the profit-taking pullback in the Dow over recent sessions, the S&P and Nasdaq — up +4.6% and +5.7%, respectively, in the past month alone — continue to let it roll. Here in the late stages of earnings season, however, we often see investors display a measure of buying exhaustion and take a break. The good news is that late Q4 is usually a very robust time for market bulls. And if we follow the lead of analysts casting an eye back toward cyclicals, then we may expect the Dow to pick up the pace going forward, as well.
In the very near-term, we’ll be going through a lull in economic data reports for the next few sessions. That is, until Wednesday morning next week rolls around and brings us half a dozen econ metrics — including a Q3 GDP revision, Durable Goods and Weekly Jobless Claims — ahead of the long Thanksgiving Weekend. In the meantime, we’ll continue on with significant reports here at the back end of earnings season.
Applied Materials met earnings estimates on its fiscal Q4 report after Thursday’s close at $1.94 per share, +55% above the year-ago quarter. Yet shares fell -8.5% almost immediately upon release, as the semiconductor giant’s top-line missed estimates: $6.12 billion versus $6.33 billion in the Zacks consensus. Further, guidance was reduced to below consensus for both top and bottom lines in AMAT’s fiscal Q1.
Ongoing supply chain issues has apparently hit Applied Materials, like so many other goods-reliant companies this quarter. Semiconductor Systems brought in $4.31 billion for the quarter and Applied Global was $1.4 billion. Shares of AMAT have moderated somewhat since the initial sell-off in the late session, now down -5%. Applied Materials had been up +82.7% year to date.
Meanwhile, WilliamsSonoma managed to beat expectations on both top and bottom lines after the close Thursday, earnings of $3.32 per share on $2.05 billion in sales outpaced the estimates of $3.11 per share and $1.99 billion, respectively. Comps at both West Elm and Pottery Barn were up for the quarter, and the company looks well-set for holiday shopping season. Yet shares dropped -6.2% in late trading on the earnings release.
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