The stock market rally continued to drift lower, moving on stimulus-deal headlines, but the Dow Jones and other major averages were finding support at key levels. Many, but not all, growth names took heavier losses. Tesla (TSLA) reported strong earnings and stuck to its 2020 delivery forecast, but hinted that the Cybertruck may not come out in 2021. General Motors (GM) surged as it unveiled the GM Hummer EV, a high-end pickup that will go on sale in 2021. Snap (SNAP) skyrocketed on strong earnings and user growth. Intel plunged on data-center sales. PayPal (PYPL) spiked as it moved into cryptocurrency, but then pulled back.

Stock Market Rally Retreats

The Dow Jones, S&P 500 index and Nasdaq composite extended their recent pullbacks, awaiting a stimulus deal, though they all found support at their 21-day moving averages. Many growth stocks struggled, though some recent IPOs soared. Tesla (TSLA) earnings were strong, while GM stock surged on the GM Hummer EV. Snap (SNAP) and Align Technology (ALGN) were huge earnings winners, while Intel (INTC) was a big loser.

Snap Skyrockets On Blowout Results

Revenue jumped 52% to $678 million, vs. estimates of $550.5 million. Snap (SNAP) showed a 1-cent profit, vs. expectations of a 6-cent loss. Daily active users of its Snapchat platform climbed 18% to 249 million, above views. Shares soared 28% Wednesday.

PayPal Enters Cryptocurrency

PayPal (PYPL) launched a cryptocurrency service, joining digital payments rival Square (SQ) in allowing customers to buy, sell and hold Bitcoin. The digital payments leader will also be able to use cryptocurrencies to shop at the 26 million merchants on its network. The service will be expanded to PayPal’s Venmo and international markets in 2021. In 2018, Square enabled Cash App users to buy and sell Bitcoins. In the June quarter, Bitcoin sales of $875 million generated $17 million in profit for Square.

Shares broke out on the news, but reversed lower.

Homebuilders Report Strong Earnings

PulteGroup (PHM) earnings rose 33%, with revenue up 9% to $2.95 billion, both beating. Orders jumped 36% to 8,202 homes. Meritage Homes (MTH) earnings jumped 59%, comfortably above consensus. Revenue rose 21% to $1.14 billion as orders surged 71% to 3,851 homes. But homebuilder stocks extended heavy losses, as Treasury yields trend higher, albeit from historic lows.

Netflix Misses Q3 Targets

Internet television streamer Netflix (NFLX) added 2.2 million subscribers worldwide, missing its own target and Wall Street’s. Netflix, which ended the third quarter with 195.15 million subscribers, expects to add 6 million in Q4. In Q3, Netflix earnings rose 18% to $1.74 a share, far below views for $2.13. Revenue grew 23% to $6.44 billion, slightly beating. Netflix stock tumbled after the earnings report.

Intel Dives On Data Center Woes

Intel (INTC) earnings fell 22%, either meeting or just beating views. Sales dipped 4% to $18.33 billion, topping forecasts But data center sales of $5.9 billion missed the consensus for $6.22 billion. Intel stock fell hard on the news. Meanwhile, chipmakers Texas Instruments (TXN) and Xilinx (XLNX) delivered beat-and-raise Q3 reports while STMicroelectronics (STM) missed on earnings but topped on sales.

Among semiconductor equipment stocks, Entegris (ENTG), Lam Research (LRCX) and Teradyne (TER) beat their Q3 targets and guided higher for Q4.

Intel agreed to sell its Nand memory-chip unit to South Korea’s SK Hynix for $9 billion. The divestiture will allow Intel to focus on its core business of processors for PCs and servers.

Coronavirus Update

HHS Secretary Alex Azar and CDC head Robert Redfield said they are “optimistic” that one or two Covid-19 vaccines will get emergency approval, and millions of doses will be distributed, in 2020. Pfizer (PFE) and partner BioNTech (BNTX) and Moderna (MRNA) are the two vaccine developers furthest along. Meanwhile, Moderna announced its reached its full 30,000-participant enrollment in its final-phase testing. Moderna and Pfizer have said they expect to release Phase 3 data in November and will seek Emergency Use Authorization shortly thereafter. Phase 3 clinical trials for the vaccine candidates from AstraZeneca (AZN) and J&J (JNJ) remain on hold in the U.S. following a serious illness by one participant in each of their clinical trials.

The FDA approved Gilead Sciences (GILD) antiviral remdesivir for emergency use for treating coronavirus patients.

Covid-19 Testers Pass Earnings Test

Covid-19 test providers Thermo Fisher Scientific (TMO), Abbott Laboratories (ABT), Danaher (DHR) and Quest Diagnostics (DGX) all posted Q3 adjusted EPS and sales that beat analyst forecasts. So, too, did the guidance given by Abbott and Quest. Shares of TMO and DHR hit new highs after their earnings reports. Thermo Fisher posted its biggest quarterly percentage bottom- and top-line gains ever. Danaher in 2020 is on pace for its biggest percentage sales and EPS gains since 2011. Quest stock rose near its all-time, which it touched in late July following the company’s Q2 earnings report. Abbott stock, though, reversed lower the day it reported. The maker of a $5, 15-minute Covid-19 test is on track for its lowest sales and EPS gains since 2016, hurt by the business slowdown caused by the pandemic.

Tesla Earnings Beat, Stock Falls

Tesla (TSLA) earnings rose 105% to 76 cents a share vs. estimates for 55 cents. Revenue also beat, climbing 39% to $8.77 billion. Much-higher-than-expected regulatory credits revenue fueled much of the upside. Tesla stuck to its forecast of 500,000 deliveries for the year, which will require a big jump from Q3’s record 139,300. Tesla is starting to shift the lower-cost, made-in-China Model 3 cars to several European markets in Q4. That should boost margins but may create spare Model 3 capacity at the Fremont, Calif. plant. Tesla also stuck to 2021 completion goals for its Berlin and Austin plant. But Musk once again hinted that the Cybertruck may not launch until 2022, noting manufacturing challenges and the lack of a final design. Tesla also began pushing its “Full Self-Driving” update to select customers — still a Level 2 system — with the FSD cost rising to $10,000 on Monday.

Tesla stock rose slightly on earnings, but fell below its 50-day line Friday as China ordered a recall of Model S and Model X cars due to a suspension problem well known in the U.S.

GM Unveils Hummer EV

General Motors (GM) revealed its all-electric Hummer “supertruck,” as the automaker pumps billions into its risky pivot to an emissionless future. The big, bold, brawny Hummer EV can hit 60 miles per hour in three seconds, while delivering 350 miles of driving range on a full charge, GM said. It also has all-wheel steering, allowing it to move diagonally in a mode called Crabwalk in difficult terrain. The first Hummer EVs will cost $112,595, with cheaper models to follow in come years. The Hummer EV, launching in late 2021 will follow an electric pickup from Amazon-backed Rivian and likely ahead of the Tesla Cybertruck, with Ford (F) and several others likely to enter this market soon. By 2023, GM plans to introduce 20 new electric vehicles globally. GM shares soared.

Delivery Hits Chipotle Margins

Fast-casual Mexican chain Chipotle Mexican Grill (CMG) reported third-quarter earnings that beat expectations. But higher delivery and food costs sliced into margins. And as investors focus on restaurants’ month-to-month rebound from the coronavirus pandemic, the company noted that August’s same-store sales marked the “high point” during the quarter. September’s same-store sales, meanwhile, ran up against the popularity of last year’s nationwide carne asada rollout. Shares fell, after coming close to their record high.

Shale Consolidation Continues

ConocoPhillips (COP) announced Monday that it will buy shale company Concho Resources (CXO) in a $10 billion deal, creating the largest independent producer. Consolidation in the prolific Permian Basin continued Tuesday as Pioneer Natural Resources (PXD) reached a deal to buy Parsley Energy (PE) in a $4.5 billion all-stock deal. Shale M&A could continue as demand for oil has weakened during the coronavirus pandemic and shale companies are finding ways to survive the downturn.

Telecom Earnings

AT&T (T) said Q3 earnings fell 19% in line with estimates as revenue slid 5% to $42.3 billion, topping estimates modestly. The telecom and media conglomerate said it expects to generate $26 billion in free cash flow in 2020. Verizon Communications (VZ) reported flat EPS while revenue fell 4% to $31.59 billion, slightly below views. It forecast wireless service revenue growth of at least 2% in the December quarter.

News In Brief

Disneyland will remain closed for at least several more weeks after California health officials issued new guidelines for reopening. Disney (DIS) can reopen the Anaheim, Calif.-based theme park at 25% capacity after Orange County reaches the minimal level of Covid-19 cases. The county is currently at the second-highest level.

Logitech (LOGI), a maker of peripherals for PCs and other devices, surprised Wall Street with much better-than-expected September-quarter results as it continues to benefit from the work-from-home trend. Earnings skyrocketed 274% to with sales up 75% to $1.26 billion.

Home-cleaning robot maker iRobot (IRBT) reported earnings up 72% to $2.58 a share with sales up 43% to $413 million. Analysts had expected EPS of 97 cents for the Roomba maker on sales of $312 million.

Crispr Therapeutics (CSPR) plunged after the gene-editing specialist reported the death of a participant in its Phase 1 CAR-T cell therapy targeting B-cell malignancies in lymphoma.

West Pharmaceutical Services (WST) reported better-than-expected Q3 earnings and sales. The laboratory services provider, whose customers include many Covid-19 vaccine and treatment makers, also hiked its guidance.

Edwards Lifesciences (EW) fell sharply after the heart valve maker just edged Q3 sales views and said heart valve procedures wouldn’t resume normal double-digit growth until next year.

AutoNation AN posted EPS of $2.38, crushing views for $1.63 and almost double vs. a year ago. Revenue fell 1% to $5.4 billion, but also beat. The nation’s largest auto dealer chain said pandemic-weary car buyers returned to showrooms lured by low financing rates. Lean inventories coupled with higher demand helped boost pricing and margins.

Align Technology (ALGN) reported EPS jumped 52% with sales up 21% to $734.1 million, obliterating views. Shares of the teeth-straightening products maker skyrocketed.

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