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Markets Swing to Positive for the Week; AVGO, LULU Beat

Market indices were up across the board this Thursday, keeping their overall bifurcation over the past week or so of trading: the Nasdaq is up over that time, the S&P 500 is flat, and the Dow and small-cap Russell 2000 remain lower. For today’s session, the Dow gained +128 points, +0.39%, the S&P closed +0.92%, the Nasdaq blossomed another +159 points, +1.23%, and the Russell +1.00%.

Earlier today, we saw Manufacturing PMI from both the S&P and ISM surveys for the month of May; both came in a smidge under expectations: S&P Manufacturing reached 48.4, below the expected 48.5 (and 48.5 reported for April) and beneath the pivotal 50-measure that signifies growth. ISM numbers came in at 46.9%, a tad beneath the 47.0% expected and 47.1% the previous month.

We also saw Construction Spending for April surge well past expectations this morning: +1.2% versus +0.1% expected and +0.3% for the previous month. This aligns with this morning’s private-sector payroll numbers, which showed Construction jobs gaining more than any industry outside Leisure & Hospitality, at +64K. Of course, this spending print is from a week in arrears, but clearly we’re seeing a rebound in Construction this late spring.

Broadcom AVGO is the latest semiconductor stock reporting earnings during a stock market boon for all things A.I.: earnings of $10.32 per share outpaced the $10.13 Zacks consensus, on $8.73 billion in quarterly sales which narrowly surpassed the $8.71 billion expected. However, even though revenue guidance for the current quarter was hiked slightly as the company anticipates a rapid upscale in A.I., shares are selling off -3% in late trading. The stock had been up over +40% year to date.

lululemon LULU also posted beats on both top and bottom lines in its Q1 report this afternoon: earnings of $2.28 per share on $2.00 billion in quarterly revenues easily outbid the $1.97 per share and $1.92 billion in the Zacks consensus. Net revenues gained +24% in the quarter, with same-store sales above projections even as digital sales were slightly underwhelming. Shares are bouncing back nicely after taking a large hit over the past two weeks, +12% in late trading.

Tomorrow morning’s Employment Situation brings us the biggest economic report of the week, and arguably of the month — at least until the next Fed meeting in a couple weeks. Nonfarm payrolls are expected to come down from 253K previously reported to 190K or so for May. The Unemployment Rate is anticipated to tick up to +3.5% — still in-line with an historically robust labor market. It will be hard to root for another 200K+ jobs to have been created over the last month; the Fed doesn’t need more reasons to decide it needs to carry on raising interest rates.

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