Stock Market Rally Extends Gains; Tesla, Nvidia, Adobe, KB Home In Focus: Weekly Review

The stock market rally made further progress, with the Nasdaq composite leading and the S&P 500 regaining its 200-day moving average. Treasury yields continued to rise as Fed chief Jerome Powell hinted at faster rate hikes. Crude oil prices rose. Nvidia (NVDA) surged amid new products, headlining big moves in chip stocks. Adobe (ADBE) plunged on weak guidance. KB Home (KBH) led a big sell-off in housing stocks. Nike (NKE) topped views. Tesla (TSLA) began Model Y deliveries from its Berlin-area factory.

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Market Rally Extends Gains

The Nasdaq continued to lead the market rally, with Apple and chipmakers such as Nvidia in the vanguard. The S&P 500 index reclaimed its 200-day line. The Dow Jones fell slightly, though it also held its 50-day line. Energy and commodity stocks continue to do well, while housing-related stocks plunged amid weak new-home sales and KB Home (KBH) earnings, along with soaring interest rates. The 10-year Treasury yield rose to a 34-month high as Fed chief Jerome Powell signaled bigger Fed rate hikes could loom. Crude oil prices rose solidly.

Adobe Outlook Disappoints

Digital media and marketing software firm Adobe (ADBE) topped Wall Street’s targets for its fiscal first quarter ended March 4. But its guidance for the current quarter came up short after Adobe halted sales in Russia and Belarus in response to Russia’s invasion of Ukraine. Adobe also attributed sales weakness in Europe to the war. Analysts highlighted Adobe sales decelerated for a fourth straight quarter to just 9% in Q1, its slowest pace in years. But Adobe announced price hikes for its Creative Cloud products, which will boost revenue in the second half of the year.

Nvidia Touts New AI Chips

At its GTC conference, Nvidia (NVDA) announced its next-generation graphics processors for artificial intelligence and accelerated computing. It debuted its H100 graphics processing unit, which has 80 billion transistors. Nvidia also showed off its Grace CPU Superchip, a central processing unit for data centers designed for high-performance computing. Plus, Nvidia revealed advances to its Omniverse platform for online collaboration and simulation. They included Omniverse Cloud, a suite of cloud-computing services. Nvidia surged for the week.

Tesla Opens Berlin Plant

The EV giant officially opened its new factory near Berlin on Tuesday, with CEO Elon Musk was on hand to deliver the first 30 Model Ys to customers. The opening of Giga Berlin should improve production bottlenecks in China for deliveries throughout Europe. The Berlin factory has the potential to expand production to about 500,000 vehicles annually. The plant is reportedly ready to make around 500 cars a week, likely ramping up to 1,000 a week by the end of April. Tesla (TSLA) rose sharply.

Uncertainty Whipsaws China Stocks

Concerns about regulations, fears of delisting and other uncertainties continued to rock Alibaba (BABA), Tencent (TCEHY), JD.com (JD), Baidu (BIDU) and other China stocks. Market speculation that the Public Company Accounting Oversight Board, which oversees the audits of public companies, had reached a final agreement on accounting regulation with Chinese authorities is premature, reports said. Previous reports had hinted at positive developments. Also taking a toll on China stocks has been a resurgence in Covid infections and the Ukraine war. Tencent’s stock suffered a sharp drop after the messaging and gaming reported its slowest-ever revenue growth due to China’s ongoing tech crackdown.

Nike Tries To Tame Supply Chain

Nike (NKE) reported a 3% EPS decline and a 5% sales gain but still beat fiscal Q3 views. Direct-to-shopper sales jumped 15% to $4.6 billion. Higher freight and logistics costs still pressured profit. But inventories rose, and production of clothing and shoes in Vietnam — a big Nike production hub that temporarily closed factories last year due to the pandemic ­— were at pre-shutdown levels. Nike said it expected improvement in China for the current Q4, but said it would “closely monitor the operational impact related to recent COVID lockdowns.”

KB Home Results Miss

KB Home (KBH) reported a 44% EPS jump and 23% revenue rise that missed Q1 views. The homebuilder said constraints in available construction workers and the supply chain delayed completions. Management stuck with its full fiscal-year housing-sales outlook, but said it expected average selling prices to tick higher. KB Home shares tumbled. Along with declining new-home sales and fast-rising mortgage rates, that sent housing-related stocks sharply lower.

Cintas (CTAS) posted a 14% EPS increase on a 10% sales gain to $1.961 billion for the uniform supply firm.

A Boeing 737-800 jet operated by China Eastern Airlines crashed, killing all 132 people on board. China halted 737-800 flights temporarily. That comes as Beijing was close to recertifying 737 Max flights. Boeing (BA) stock sold off.

Nio (NIO) slightly widened its loss in Q4, missing estimates. Revenue jumped 51% to $1.55 billion, edging past views. Nio’s Q1 delivery target was below some estimates. On Monday, Nio will begin deliveries of its luxury ET7 sedan. Nio stock sold off Friday, partly due to broader China delisting concerns.

General Mills (GIS) reported better-than-expected fiscal Q3 earnings and raised its full-year outlook as it sees recent food-price hikes helping offset rising costs and continued strong demand. It earned adjusted EPS of 84 cents, beating by 6 cents, on sales of $4.5 billion, in line with views. GIS stock rose more than 7% for the week.

Anaplan (PLAN) accepted a $10.7 billion, $66 a share, buyout from private-equity firm Thoma Bravo.

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