Chips Rip and Transports Move North: Earnings This Week

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Chips Rip as Transports Move North: Earnings This Week

Earnings remained strong in the last week, led by economically sensitive industries like semiconductors, transports and financials.

Chip stock Xilinx (XLNX) is the S&P 500’s biggest gainer today and in the last week after beating estimates across the board. Some analysts say the company should trade at a premium to rivals because of its exposure to fast-growing areas like data centers and 5G networking.

XLNX seems less impacted by smart-phone weakness than others, but even those did better than feared. Lam Research (LRCX), a provider of semiconductor manufacturing gear, is the second-biggest gainer in the S&P after beating estimates and providing strong guidance. Texas Instruments (TXN) was a third winner in the in the chip space despite less stellar numbers.

All told, the news was positive enough to lift the industry-tracking Philadelphia Semiconductor Index ($SOX) decidedly above its 50-day moving average for the first time since September.

Philadelphia Semiconductor Index ($SOX), with 50-day moving average.

Transports also advanced. American Airlines (AAL) exceeded profit estimates but missed on revenue. Trucker JB Hunt (JBHT) had similarly mixed results last week, but that didn’t deter the bulls in either. Southwest Airlines (LUV) and railroad Union Pacific (UNP) scored cleaner top- and bottom-line beats. The main laggard in the group was CSX (CSX), hurt by weak guidance.

Other major companies rallied on their own good news at an individual level. International Business Machines (IBM) finally showed signs of a turnaround with growth in cloud-computing. Big Blue’s earnings, revenue and guidance all beat the Street, fueling its biggest one-day gain in over a year.

Fellow Dow Jones Industrial Average members Procter & Gamble (PG) and United Technologies (UTX) also beat on the top- and bottom lines. PG successfully raised prices on beauty products, while aerospace drove the upside at UTX.

A handful of smaller names deserve mention. Apparel firm VF (VFC) blew past consensus thanks to strong demand for its Vans shoes. Waters (WAT) had its biggest gain since at least 2000 after strong Chinese sales helped the scientific-equipment company crush estimates.

Then you have Synchrony Financial (SYF), once part of GE Capital. The credit-card issuer reported what appeared to be a transformative quarter that potentially removed several issues worrying investors. SunTrust Banks (STI), another financial, also rallied on strong numbers.

But not everyone was so lucky. American Express (AXP) and Capital One (COF) both dropped after missing profit and revenue estimates. Johnson & Johnson (JNJ) stumbled on weak guidance and fears about increased competition.

Other losers included copper miner Freeport McMoRan (FCX), spice company McCormick (MKC) and tool maker Stanley Black & Decker (SWK).

Netflix (NFLX) was perhaps the most prominent stock to report earnings in the last week. Ironically, it moved little after running in previous weeks.

Finally, Tesla (TSLA) deserves a mention after weak demand caused CEO Elon Musk to cut guidance and lay off workers. TSLA is down 17 percent in the last week, the biggest drop in the Nasdaq-100 index over that time.

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