Markets Close at Session Highs; Oracle (ORCL) Posts Mixed Q1

We saw a promising beginning to the first day of trading for the week early this morning, when pre-market futures were riding in the green. However, most trading Monday fell back into the red. Heading into the close, we saw almost all major indexes finish in positive territory: the Dow +264 points or +0.76%, the S&P 500 +0.23%, and the small-cap Russell 2000 +0.59%. Only the Nasdaq, which almost fought back into the positive, was -0.07% on the day.

For the Dow and the S&P, they have each finally snapped a five-session losing streak. The Nasdaq currently has a four-day losing streak of its own. All major indexes raced toward session highs, which may be worth looking at come Tuesday morning — perhaps our near-term trough has been transcended, especially without economic catalysts weighing on results either way.

Energy was strong on the day, +2.8% on a big gain in Natural Gas, +5.3%. Partly, a note expecting airline travel to pickup in 2022 helped energy futures surge ahead today. Valero VLO and EOG Resources EOG were both +4.4% today. Financials also performed well, with American Express riding +1.7% higher. Movie theaters also had a strong trading day, with Cinemark CNK +8.6% on the day and AMC AMC +3.3%.

Supply chain issues continue to generate concern, especially in companies like Nike NKE, which dropped -2.5% today. Nike was one of the globally situated companies that moved manufacturing from China (during the trade war of the Trump administration) to Vietnam, which has endured an ugly Delta-variant Covid outbreak. Nike is still up nearly 14% year to date.

Oracle ORCL reported fiscal Q1 earnings after the closing bell today, beating on the bottom line (no surprise there; Oracle has not missed on earnings for exactly four years, with a trailing four-quarter average +9% beat): $1.03 per share versus 97 cents expected, +11% year over year. Cloud Services were basically in line with expectations, while licensing came in slightly short.  The stock, which had gained +36.8% year to date, initially fell around -3.5% before settling at -2%.

The reason for the sell-off may have to do with disappointing revenues in the quarter: $9.73 billion vs. $9.77 billion expected, and only slightly up year over year. By comparison, earnings in the quarter rose by 11% from the year-ago quarter. The company’s board also declared a 32-cent quarterly cash dividend for shareholders as of October 12th. The conference call is about to be underway.

Tomorrow we’ll get a look at the Consumer Price Index (CPI) for August, which is expected to tick down 10 basis points from the previous month’s +0.5%. The core read is expected to remain constant at +0.3%. But if last week’s Producer Price Index (PPI) is any gauge, we may see a surprise to the upside on this metric. It will be only the latest report documenting the pace of inflation hitting the U.S. economy at present.

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