Markets News, Nov. 16, 2023: Walmart, Cisco Weigh on Dow; S&P 500, Nasdaq Eke Out Gains as Treasury Yields Fall

S&P 500 Gains and Losses Today

Here are the stocks in the S&P 500 that gained and lost the most today, and the stories behind the day's market movers.

Dow Breaks Four-Session Streak on Tepid Earnings Outlooks

Weighed down by lackluster earnings guidance from two of its components, the Dow Jones Industrial Average fell 45 points, or about 0.1%, breaking its four-day winning streak. 

Intel (INTC) shares jumped 6.7% to its highest since June 2022 after Mizuho Securities upgraded the stock to buy from neutral and raised its target price to $50 from $37. Analysts argue the chipmaker is primed for gains in 2024 on new product launches and new foundry customers.

McDonald's (MCD) shares moved higher by 2.1%, bucking the trend among consumer discretionary stocks, which cumulatively declined 0.9%.

Microsoft (MSFT) shares gained 1.8% to close at a new all-time high a day after the company introduced its own artificial intelligence (AI) chip in a bid to lower costs and compete for AI investment. Wedbush analysts raised their price target on the stock by $25 to $425. 

Other tech components moved higher, including 0.9% gains for both Salesforce (CRM) and Apple (AAPL).

Cisco Systems (CSCO) shares plunged 9.8% after it reported a slowdown in new product orders and offered a quarterly earnings and revenue outlook short of analyst projections.

Walmart (WMT) shares dropped 8.1% on its earnings report, which showed the retail giant grew revenue by 5% on a 15% jump in global e-commerce sales, but its full-year revenue and earnings guidance were lower than analysts were expecting. 

Chevron (CVX) shares declined 1.6% as the energy sector tumbled more than 2% on slumping oil prices.

Palo Alto Networks Billings Miss Forecasts as Customers Change Plans, and Shares Fall

Palo Alto Networks (PANW) shares dropped over 5% in intraday trading Thursday after the cybersecurity firm’s billings and current quarter guidance missed estimates as customers changed their IT spending.

The company reported first-quarter fiscal 2024 billings increased 16% from a year ago to $2.025 billion, $45 million below expectations. It anticipates second-quarter bookings to be $2.34 billion to $2.39 billion, while analysts had been looking for $2.43 billion. First quarter earnings per share (EPS) were $1.38, with revenue rising 20% to $1.9 billion. Both were higher than forecasts.

Even with Thursday’s losses, shares of Palo Alto Networks have added about three-quarters of their value this year.

-Bill McColl

Walmart Shares Tumble Despite Earnings Beat

Walmart (WMT) shares sank 8% despite its third-quarter earnings topping analyst estimates.

Walmart posted net income of $453 million, representing 17 cents per share. Revenue surged by 5.2% to $160.80 billion as the company expanded its revenue streams into sales of data and ads.

E-commerce bolstered much of the company's earnings, as it grew 15% globally, led by a 24% jump in the U.S. alone that was buoyed by pickup and delivery services. But weak consumer spending has weighed on the big-box retailers at the end of the quarter and Walmart is no exception.

Walmart was cautious in its guidance amid these headwinds, raising its net sales guidance for the fiscal year to 5.0% to 5.5%. It also pushed its adjusted EPS outlook to a range of $6.40 to $6.48, lower than analysts expected.

-Nathan Reiff

Midday Movers

Sonos Inc. (SONO): Shares of the wireless speaker maker rose 17% after it said it would launch a new product line—widely believed to be headphones—in the second half of its next fiscal year.

Intel Corp. (INTC): Shares of the chipmaker rose more than 5% after analysts at Mizuho Securities upgraded the stock to buy from neutral, citing server product launches and new foundry business on the horizon. 

Williams-Sonoma Inc. (WSM): Shares rose about 5% after the furniture retailer’s quarterly earnings topped Wall Street estimates despite lower-than-expected revenue. 

CarMax Inc. (KMX): Shares of the used-car retailer fell more than 7% after Wedbush lowered its price target and warned rising auto loan delinquencies could lead to bigger loan losses in the future.

Palo Alto Networks Inc. (PANW): Shares of the cybersecurity firm fell more than 6% after its current-quarter and full-year booking guidance came up short of Wall Street estimates. Peer Cisco Systems (CSCO) also offered disappointing guidance, reviving concerns about corporate IT spending. Cisco shares fell more than 11%.

Alibaba ADRs Plunge After It Calls Off Cloud Spinoff Amid US Chip Restrictions

American depositary receipts (ADRs) of Alibaba Group Holdings (BABA) tumbled over 9% Thursday as the Chinese e-commerce giant said that it was canceling its plan to spin off its cloud computing unit, and earnings came in lower than expected.

Alibaba indicated that it ended the move to make its Cloud Intelligence Group a separate company because of recent restrictions imposed by the Biden administration on U.S. exports of advanced computer chips and equipment to China.

The company also released its September quarterly results, and earnings per share (EPS) of 1.95 Chinese yuan ($0.27) missed estimates. Revenue rose 9% from a year ago to 224.79 million yuan ($30.81 million), exceeding forecasts.

With Thursday's losses, ADRs of Alibaba were down more than 13% year-to-date.

-Bill McColl

Oil Sinks to a 4-Month Low on Inventory Build-Up, Economic Concerns

Oil futures continued to fall on yesterday’s U.S. inventory report, which showed crude stocks rising nearly 1% in a week, and concerns about global demand.?

West Texas Intermediate futures contracts tumbled nearly 5% Thursday to about $73 a barrel, its lowest since July. Brent crude fell more than 4% to less than $78 a barrel.

Lower oil prices should continue to take pressure off consumer and producer prices. A retreat in gas prices was a major contributor to two promising inflation prints earlier this week.

Oil also took a hit from unemployment claims, which rose earlier this month to their highest level in nearly two years, according to data released Thursday, signaling a slowing U.S. economy and weaker oil demand ahead.?

U.S. Continuing Unemployment Claims Climb to Almost 2-Year High

The number of people collecting unemployment benefits in the U.S. rose to its highest level in nearly 2 years earlier this month, adding to evidence the Federal Reserve’s string of interest rate hikes are still reverberating throughout the economy.?

Continuing unemployment claims increased 32,000 in the week ending Nov. 4 to 1,865,000, the most since November 2021 when claims totaled 1,964,000.

Initial claims also increased by 13,000 to 231,000. That brought the 4-week moving average to 220,250, an increase of nearly 8,000.

The Fed has been looking for unemployment to rise slightly as it seeks to bring inflation down to its 2% target.

Cisco Shares Tumble on Order Slowdown

Shares of Cisco Systems (CSCO) fell more than 11% Thursday morning after the networking hardware and services company said new product orders had slowed in the most recent quarter and forecast one or two more quarters of underwhelming sales. 

Cisco earnings by the numbers

• Net income: $3.6 billion vs. $3.5 billion expected according to analyst estimates compiled by Visible Alpha
• Adjusted earnings per share: $1.11 vs. $1.03 expected
• Revenue: $14.7 billion vs. $14.6 billion expected

Cisco reported better-than-expected sales and earnings for its fiscal 2024 first quarter, with both coming in at the high end or above the company’s guidance range.?

But the company forecast second-quarter revenue of between $12.6 billion and $12.8 billion and adjusted earnings of between 82 cents and 84 cents a share—both as much as 7% lower than the same quarter a year ago.?

“Cisco saw a slowdown of new product orders,” in the first quarter, which the company attributed to customers installing products “following exceptionally strong product delivery over the past three quarters.” The company forecasts one or two more quarters of lower orders.

Stocks Making the Biggest Moves Premarket

Gains:

• NICE Ltd. (NICE): Shares of the Israeli software company rose more than 6% after it reported record quarterly revenue and better-than-expected earnings thanks to growth in its cloud business.
• Novo Nordisk A/S (NVO): Shares of the Danish drug maker rose 2% after reports it was organizing a clinical trial to test its weight-loss combination therapy CagriSema against Eli Lilly’s recently approved Zepbound. 
• Catalent Inc. (CTLT): Shares of the syringe maker built on yesterday’s 11% gain after management indicated revenue from weight-loss drugs like Wegovy could quintuple from the $100 million they’re expecting in 2024.
  

Losses:

• Cisco Systems (CSCO): Shares of the networking hardware provider fell more than 9% after it offered lower-than-expected current quarter guidance, citing a slowdown in orders. 
• Alibaba Group Holding Ltd. (BABA): Shares of the Chinese e-commerce company lost more than 8% after it said it would not go forward with its planned spin-off of its cloud computing unit due to uncertainty caused by U.S. semiconductor restrictions.
• Walmart Inc. (WMT): Shares of the retail giant fell more than 5% after management offered current-quarter guidance slightly below Wall Street’s estimates and highlighted concerns about the health of U.S. consumer finances. 

Stock Futures Slip After Walmart, Cisco Earnings

Futures contracts connected to the Dow Jones Industrial Average were 0.2% lower in premarket trading Thursday as Walmart earnings weighed on the index.

S&P 500 futures also fell 0.2%.

Nasdaq 100 futures sank nearly 0.3% a little over an hour before the open.