Markets Flattish Ahead of CPI Data Tuesday
Markets were generally flat today, not counting the strong showing from the small-cap Russell 2000, which was the benefactor of investors skimming the froth of recent big winners and rotating them into oversold areas like regional banks. The blue-chip Dow was up +125 points, +0.33% on the day, while the S&P 500 was barely under water at -0.095%. The Nasdaq was only off -30 points, -0.48%, while the Russell, which cranked higher all morning and then kept its trading margin over the field, was +1.75% for the session.
One of the biggest stories out this morning was the latest in M&A investment in the valuable Permian basin of oil and gas production. Diamondback Energy FANG announced it has agreed to purchase privately owned Endeavor Energy Partners for $26 billion in an all-stock transaction. This follows last fall’s merger of ExxonMobil XOM and Pioneer Natural Resources PXD, as oil drillers firm up ownership in the west Texas/southeastern New Mexico drilling region. Diamondback closed off its session highs, but closed +9.38% on the day.
This afternoon, a new U.S. Federal Budget for January came in at -$22 billion, slightly worse than the -$21 billion expected but much better than the -$39 billion we saw here in December. The main factor here is the absence of a big one-time expense that we saw in January of last year, which involved a bailout of a Teamsters union pension fund for a whopping $36 billion. Elsewhere, costs rose this year, whether in Medicare payouts, military programs and Social Security.
After-market earnings reports are typically heavy for this time of year, with marginal misses — or even beats with less-than-exceptional guidance — are sending some stocks much lower on their Q4 news. Cadence Design Systems CDNS are down -6% at this hour on a one-penny earnings beat to $1.35 per share and an in-line $1.07 billion in quarterly revenues. Lattice Semiconductor LSCC met its expected 45 cents per share while sales of $171 million came in below the $176 million anticipated; combined with lower guidance, we’re seeing shares -7% in late trading today.
Arista Networks ANET actually beat estimates on both top and bottom lines — earnings of $2.08 per share outpaced the $1.71 expected (and the $1.41 per share reported a year ago) while revenues came in at $1.54 billion, slightly above the $1.53 billion expected. Revenue guidance even extended its top-end to $1.56 billion, although with the stock already up +20% year to date, these figures may not have been stellar enough to keep shares from shedding -8% in the after-market.
Some of this late trading activity may be attempts to realign holdings ahead of tomorrow morning’s Consumer Price Index (CPI) report coming out prior to Tuesday’s opening bell. Analysts are looking for a big drop in the Inflation Rate (headline CPI year over year) to sub-3% for the first time since inflation began spinning out of control; if this number remains stubbornly closer to the previous month’s +3.4%, that would be consistent with other better-than-expected economic prints of late, but may trigger something of a puncture in the ongoing bullish trading environment.
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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
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