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Wall Street’s major averages climbed higher on Friday, with the S&P 500 notching fresh all-time trading highs, as investors reacted to a slightly hotter-than-expected May core PCE report and welcomed news of a newly inked U.S.-China trade agreement.
Deutsche Bank’s Jim Reid noted that the continued positive momentum in equities was impressive. “We seem to be in a sweet spot, post-Middle Eastern calm and pre-July 9th reciprocal tariff extension deadline” Reid added.
The US and China have finalized a trade truce reached last month, with Beijing agreeing to supply rare earths in exchange for the lifting of US countermeasures. The White House also has imminent plans to reach agreements with 10 major trading partners.
Investors grew optimistic with a new calm reached in the Middle East conflict, a newly inked trade deal between the US and China, and a hotter-than-expected May core PCE report. To add to the optimism, companies had a good run this week on the earnings front as well, with eight out of nine companies reporting EPS wins.
Earnings Roundup:
Out of the nine S&P 500 companies that reported earnings this week, eight of them beat EPS estimates, while seven of them surpassed revenue expectations.
Let’s take a look at the quarterly performance of some of the companies that reported earnings this week.
Carnival Corporation (NYSE:CCL) reported strong fiscal second quarter results, fueled by record high bookings despite historically high prices,
The impressive results led the company to hike its full-year guidance once again. Net income is expected to increase by 40% versus earlier guidance for a 30% gain, and adjusted EBITDA of $6.9B versus March’s guidance of $6.6B to $6.7B.
FedEx Corporation (NYSE:FDX) released a mixed FQ4 earnings report and set revenue guidance slightly below expectations. The Memphis-based shipping giant reported revenue rose 0.5% year-over-year to $22.2 billion in FQ4. EPS came in at $6.07 vs. $5.85 consensus and $5.41 a year ago.
Micron Technology (NASDAQ:MU) reported third-quarter results and guidance that topped expectations by a wide margin, aided by artificial intelligence spending.
For the period ending May 29, Micron said it earned an adjusted $1.91 per share as revenue surged 36.6% year-over-year to come in at $9.3B. A consensus of analysts expected the company to earn $1.61 per share on $8.85B in revenue.
Nike’s (NYSE:NKE) fiscal fourth quarter results were better than Wall Street feared and in-line with the company’s own modest expectations thanks to promotional pricing on its popular sneakers, but still “not where we want them to be.”
Nike said it would cut its reliance on production in China to mitigate the impact of US tariffs on imports, and warned that Trump’s sweeping levies on key trading partners could add around $1 billion to the company’s costs.
However, Wall Street saw early strides in the company’s turnaround — from trimming bloated inventory and tightening supply chain gaps. Investors are betting that Nike has – in the words of CEO Elliott Hill — a “clear path to recovery.”
Earnings next week:
Earnings-wise, the holiday shortened week will be light, with only one S&P500 company scheduled to report earnings- Constellation Brands (NYSE:STZ). As the company continues to face growth stagnation and tariff headwinds, analysts expect the future outlook to be weak. With the wine and spirits segment struggling with double-digit revenue declines, analysts see little evidence of a turnaround.