STOCK MARKET NEWS: Peloton plunges, Tesla stock split and GDP revision signals recession

Dell Technologies Inc posted its slowest revenue growth in six quarters on Thursday as a surge in the dollar and COVID-19 flare-ups in major market China offset a jump in its enterprise-focused business.

Shares of the company fell more than 7% in extended trading.

The greenback surge has this year eaten into the earnings of technology firms from Microsoft Inc to Apple Inc, compounding pressure from a drop in consumer spending on electronics such as personal computers and smartphones.

Dell's revenue rose 9% to $26.43 billion in the quarter to July 29 and was roughly in line with market expectations, according to Refinitiv data.

Consumer revenue fell 9%, echoing weakness seen at Intel Corp and Lenovo Group as demand weakened after a pandemic-fueled boom and decades-high inflation prompted consumers to prioritize essentials.

But orders from businesses gearing up for the hybrid-work era pushed Dell's commercial revenue up by 15% to $12.1 billion. The storage and servers-focused unit also posted strong growth.

Excluding items, Dell earned $1.68 per share.

Workday is higher in after-hours trading. The enterprise cloud applications for finance and human resources beat Wall Street revenue and profit estimates.

Fiscal second quarter revenue rose 21.9% to $1.54 billion. The estimate was $1.52 billion. Subscription revenue increased 22.8%.The net loss was $64.2 million for the three months ended July 31 compared to net profit of $105.7 in the year ago quarter. Diluted net income per share of 83 cents versus the estimate of 80 cents.

“We are maintaining our guidance for fiscal 2023 subscription revenue to be in the range of $5.537 billion to $5.557 billion, representing 22% year-over-year growth. We expect third quarter subscription revenue of $1.418 billion to $1.420 billion, growth of 21%,” the company said.

Micro Focus is surging in after-hours trading. The British multinational software and information technology business agreed to be acquired by OpenText in an all-cash offer worth $6 billion.

Micro Focus will pay 532p per share ($6.30).

The acquisition will be funded by $4.6 billion in new debt, $1.3 billion in cash, and a $600 million draw on Micro Focus’ existing revolving credit facility.

The deal is expected to close in the first quarter of 2023.

OpenText is a Canadian developer and seller of enterprise information management software. 

Bed Bath & Beyond will hold a conference call to provide a business and strategic update on Aug. 31 at 8:15am EDT.

Sue Gove, Director and Interim Chief Executive Officer, commented: “We recognize the strong interest in our company and our plans to better serve customers, recapture market share, drive growth and profitability, ensure our vendors are supported, and strengthen our balance sheet. We look forward to providing an update on our business next week, including a preview of strategies and changes being implemented across the enterprise to deliver results for all stakeholders.”

Gap Inc on Thursday withdrew its annual forecasts as the apparel chain struggles to sell its outdated Old Navy items, while inventory builds up as red-hot inflation forces people to cut discretionary spending.

"Our elevated inventory and pressured margins are current realities against unsettled market conditions," Gap interim chief executive officer Bob Martin said.

Gap, which beat quarterly revenue estimates, said sales trends improved in July and August, coinciding with a drop in gas prices.

While higher prices of essentials have hit apparel demand, people have particularly been shunning activewear, fleece and other casual clothing as they increasingly venture out for social events, offices and travel.

The change in consumer choices led to a 13% decline in second-quarter sales at Gap's Old Navy brand.

The company's net loss stood at $49 million, or 13 cents per share, compared with a net profit of $258 million, or 67 cents per share, a year earlier.

Gap, which recorded an inventory impairment charge of $58 million, said stocks at the end of the second quarter were 37% higher from a year earlier.

Overall revenue of $3.86 billion topped estimates of $3.82 billion, according to IBES data from Refinitiv, buoyed by a 9% jump in sales at the Banana Republic division which sells suits, dresses and skirts.

Gap in May had forecast fiscal 2022 adjusted earnings per share between 30 cents and 60 cents and revenue to decline in low- to mid-single digit percentage.

Economic experts Ann Berry and Michael Lee provide insight on the market's response to the Federal Reserve and Chinese tech stocks on 'Making Money.'

Burlington Stores lowered its full year outlook. Shares fell more than 12% in intraday trading.

The off-price retailer expects comparable store sales to decrease in the range of 15% to 13% for fiscal 2022. The previous forecast was for a 9% to 6% decline.

“We believe that the external factors – economic pressure on lower-to-moderate income shoppers, and very high levels of promotional activity – will continue well into the second half of the year. Accordingly, we are taking down our full year sales and earnings outlook,” said CEO Michael O’Sullivan.

Burlington Stores also missed Wall Street revenue estimates but beat on profit.

Second quarter total sales decreased 10% to $1.98 billion. Analysts expected $2.023 billion. Comp store sales dropped 17% as lower-to-moderate income shoppers continued to face tremendous economic pressure driven by the higher cost of living, and a massive overhang of inventory across the retail industry drove a huge surge in promotional activity at other retailers.

Net income for the three months ended July 30 was $12 million compared to $102.6 million in the year ago period.

Adjusted earnings per share was 35 cents, above the forecast of 23 cents.

Snowflake surged more than 20% in intraday trading Thursday. The cloud computing–based data cloud company beat Wall Street revenue estimates but missed on profit.

Fiscal second quarter revenue rose 83% to $497.2 million from a year ago; analysts expected $467.3 million.

“During Q2, product revenue grew 83% year-over-year to $466 million dollars. Our non-GAAP product gross margin exceeded 75%, and we continue to generate non-GAAP operating income and free cash flow,” said Frank Slootman, Chairman and CEO, Snowflake.

The net loss for the three months ended July 31 widened to $222.8 million from $189.7 million a year ago.

The adjusted net loss was 8 cents. Wall Street expected a loss of 1 cent.

Shoe Carnival jumped almost 20% in intraday trading Thursday. The family footwear retailer topped Wall Street profit estimates but fell short on revenue.

Second quarter net sales grew 16.4% to $312.3 million, driven by contribution from Shoe Station stores and new customer acquisitions at Shoe Carnival stores. Wall Street expected $353.4 million.

Net income for the three months ended July 30 was $28.9 million, down from $44.2 million. Diluted earnings per share was $1.04, beating Wall Street’s expectations of $1.02.

The company said August included the highest three-day sales achieved during any three days in the company’s history.

“August-to-date merchandise sales have increased in the mid-teens compared to 2019 and have decreased mid-single digits compared to 2021. Gross profit margin for August is expected to increase over 650 basis points compared to 2019. The August back-to-school shopping period drives over half of the Company’s third quarter profitability,” Shoe Carnival said.

Coty rose more than 10% in Thursday trading. The beauty products maker beat Wall Street revenue estates and matched on profit.

Fiscal fourth quarter revenue rose 10% to $1.17 billion, topping the estimate of $1.14 billion.  Like-for-like sales grew 16%.The net loss widened to $284.8 million from $210.2 million for the three months ended June 30. The diluted earnings per share loss was 1 cent, matching the analyst estimate.

The owner of brands including COVERGIRL, Max Factor and Sally Hansen estimates 6% to 8% like-for-like growth for fiscal 2023.“Entering the first fiscal quarter of 2023, Coty continues to see prestige fragrance market momentum globally, coupled with strong demand growth particularly in Europe, global Travel Retail, Middle East & Africa, and Brazil,” the company said.

U.S. equity futures were trading higher ahead of key economic reports. The major futures indexes suggest a gain of 0.5% when the opening bell rings on Wall Street.

Oil prices were trimming gains on Thursday.

West Texas Intermediate crude traded around $94.00 a barrel. Brent crude was around $101.00 a barrel.

The Commerce Department will release its second estimate of 2Q GDP. The Refinitiv forecast is for a seasonally adjusted annual decline of 0.8%.

The Labor Department will release its tally of new claims for unemployment benefits for last week, indicating a tight jobs market that continues to cool. Expectations are for 253,000, up slightly from the previous week.

The Federal Reserve’s  annual economic symposium gets under way Thursday at a lodge in Grand Teton National Park. Fed Chair Jerome Powell will deliver a speech on Friday.

Salesforce shares are off 5% in premarket trading after the company cut its full-year revenue forecast to below market estimates 

Snowflake shares are jumping 17% in premarket trading after the data-software company easily topped revenue expectations for its latest quarter.

In Asia, Japan's benchmark Nikkei 225 edged up 0.6%, Hong Kong's Hang Seng surged 3.6%, after trading was delayed earlier because of a storm. China's Shanghai Composite rose 0.9%.

On Wall Street, the S&P 500 edged up 12.04 points, or 0.3%, to 4,140.77. The Dow Jones Industrial Average added 59.64, or 0.2%, to 32,969.23, and the Nasdaq composite rose 50.23, or 0.4%, to 12,431.53.

The U.S. economy may or may not be in a recession, but economists broadly agree that a downturn is looming due to high inflation and higher interest rates.

The Commerce Department will release revised figures for second-quarter GDP Thursday morning, which are expected to show that the economy remained in a hole last quarter.

Among the things you should do to prepare for a recession:

1. Reassess your budget monthly

Experts advise that Americans should take a close look at where they spend their money each month and take stock of where they can cut back. To be well-prepared for a recession or other financial hurdle, individuals should have an emergency fund that covers at least three to six months of living expenses and, ideally, a nest egg for retirement, according to Equifax. 

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Shares of Tesla will begin trading under its 3-for-1 stock split.

Each stockholder of record as of Aug. 17 will receive a dividend of two additional shares of common stock for each held share.

The shares were to be distributed after the close of trading on Wednesday Aug. 24.

Oil prices rose on Thursday due to several concerns affecting supply. They include disruptions to Russian exports, the potential for major producers to cut output, and the partial shutdown of a U.S. refinery.

West Texas Intermediate crude traded around $96.00 a barrel. Brent crude was around $101.00 a barrel.

Both crude oil benchmark contracts touched three-week highs on Wednesday. 

BP reported shutting some units its Whiting, Indiana, refinery after an electrical fire on Wednesday.

The average price of a gallon of gasoline slipped on Thursday to $3.878, according to AAA.

Wednesday's price was $3.883. The price dropped below $4 for the first time since March more than a week ago, when the price fell to $3.99.

Gas has been on the decline since hitting a high of $5.016 on June 14.

Diesel has gained for a second straight day at $4.989 per gallon.

Bitcoin was trading around $21,000, after rising in three of the last four days.

For the week, Bitcoin was trading lower by more than 8%. For the month, the cryptocurrency is down more than 8%.

Year-to-date, bitcoin is down more than 53%. Ethereum was trading around $1,700.

In the past week, Ethereum was trading down more than 9%. Dogecoin was trading at 6 cents, off 15% in the past week.