Stocks were mixed at the start of the final trading session in August, as global markets sold down following a raft of trade war news, and earnings and acquisitions set the tone in U.S. premarket trade.
IBD 50 names Lululemon Athletica (LULU) and Integrated Device Technology (IDTI), along with firearms maker American Brands (AOBC), led Friday’s early gains, all scoring double-digit advances. Ulta Beauty (ULTA) surged on earnings news to lead the Nasdaq 100 and S&P 500 indexes. Activision Blizzard (ATVI) fell hardest among Nasdaq 100 stocks.
The Dow Jones industrial average fell 0.2% at the starting bell. The S&P 500 slipped 0.1%. The Nasadq Composite muscled up to a 0.2% gain, as Apple (AAPL), Netflix (NFLX) and Ulta Beauty all pulled higher. (For updates on this story and other market coverage, visit the Stock Market Today.)
Trade war concerns continued to occupy center stage for global markets. A U.S.-imposed Friday deadline loomed as trade negotiators hustled to include Canada in a trade deal crafted between the U.S. and Mexico. News reports said the Trump administration was set to add $200 billion in trade war tariffs against China as early as next week. Comments from the president about auto tariffs on European auto imports, as well as the potential for a U.S. exit from the World Trade Organization, sent global markets lower on Friday.
The Nasdaq has so far clocked a clear lead for the week, rising 1.8% to Thursday’s close. The Dow has so far advanced 0.8% for the week. The S&P 500 shows a 0.9% gain.
For the month, the Nasdaq has powered up 5.4% in August — its fifth straight monthly advance and its strongest performance since January. The S&P 500 has a 3% gain. The Dow is up 2.3%.
Integrated Device, Lululemon Spike; Apple Aims For 78-Month Best
Apple climbed 1% to lead the Dow. Nomura maintained its neutral rating on the stock, but raised its price target to 210, from 190. Apple shares closed at 225.03 on Thursday. Apple shares ended Thursday’s session up 18.2% so far in August, tracking toward the stock’s strongest month since February 2012.
Coca-Cola (KO) slipped 0.3% after the company said it would pay $5.1 billion to acquire the U.K.’s largest coffee shop chain, Costa Coffee. The 4,000-shop chain, spread across 32 countries, is owned by hotel and coffee shop giant Whitbread. The deal is expected to close in the first half of 2019. Coke shares have formed a seven-month, cup-with-handle base, showing a 46.97 buy point.
Integrated Device Technology shot 10% higher, after news reports said Japan-based chipmaker Renesas Electronics was in late-stage negotiations for a takeover deal. The deal, which the Wall Street Journal said was valued near $6 billion, would jump-start Renesas’ entry to autonomous driving markets. Integrated Device Technology shares were taking out new highs following a series of failed breakout attempts.
Athletic wear maker Lululemon nailed a 12% gain. Earnings growth of 82%, a 25% rise in revenue and a 20% surge in comparable store sales easily topped analyst targets. The IBD Leaderboard stock is extended following a rebound from its 10-week moving average.
Ambarella (AMBA) crumbled 12% at the open. The Santa Clara, Calif.-based chipmaker reported late Thursday its second-quarter sales and earnings topped expectations, but third-quarter revenue guidance was well below consensus forecasts.
Firearms maker American Outdoor Brands jetted 28% higher, after reporting its first combined sales and earnings advance in six quarters. Fiscal first-quarter earnings vaulted 950%, while revenue rose 8%. Management adjusted second-quarter earnings and revenue guidance to well above analyst targets. Friday’s move put the stock back above 10, and moved it well up the right side of a two-month consolidation.
Ulta Beauty jumped 6%. UBS and Stifel Nicolaus both trimmed the stock’s price target following the salon chain’s second-quarter results late Thursday. Q2 earnings and revenue topped estimates, but same-store sales growth and Q3 profit guidance fell short of views. Ulta shares are extended and at new highs after a five-week advance, and a rebound from support at its 10-week moving average.
