Rally Broadens As Leaders Rest

One of the critical data points investors are watching into next year is consumer spending. So, what better place to check in on that than Costco? Let’s dive into their first-quarter results. 👇

The membership-based warehouse club operator reported adjusted earnings per share of $3.58 on $57.80 billion in revenues. Earnings topped expectations by $0.17, while revenues aligned with estimates. Higher gross margins helped drive the beat, rising 43 bps YoY to 11.04%. 📊

Here’s how its 3.8% comparable sales, which matched estimates, broke down:

• U.S. +2.0%
• Canada +6.40%
• Other international +11.2%
• E-Commerce +6.3%

Membership revenue was up 8% YoY as more consumers flocked to its private-label brand Kirkland Signature and shopped for consumables and necessities in its stores. Like other retailers, its discretionary categories remain under pressure, but the retailer remains an attractive place to shop as consumers search for bargains. 🛒

Executives remain optimistic heading into 2024, saying the store’s value proposition will continue to attract and retain customers. The company is also rewarding its shareholder base by announcing a special cash dividend of $15 per common share, even as shares sit near all-time highs. 🤑

$COST shares are up marginally after the bell as investors digest the news. 🔺

The tech sector continues to lead the market higher, with those that can deliver strong results being rewarded handily by investors. 💸

Electronic supplier and manufacturer Jabil is the latest to beat first-quarter earnings and revenue expectations. Its adjusted earnings per share of $2.60 on $8.39 billion in revenues narrowly beat forecasts of $2.58 and $8.35 billion. 🔺

Executives saw a broad-based softening in demand during the last few weeks of the quarter, but the company was able to drive core margin growth through cost management. The weak demand environment has been telegraphed, so the market was happy to see its revenues fall about the same amount it expected.

Looking ahead, management remains cautious on demand but optimistic on earnings. Their fiscal second-quarter adjusted earnings guidance of $1.73 to $2.13 per share should easily top analysts’ $1.85 consensus view. 🔮

$JBL shares were up over 13% on the day as investors assessed the report. 

One of the key themes we’ve discussed since early November is money looking for a new home in beaten-down areas of the market. That theme continued today with the Federal Reserve confirming the market’s rate cut bets with a dovish statement and projections. 💸

We saw significant rallies in stocks like Carvana, Upstart, SoFi Technologies, Lucid Group, Rocket Companies, and many more highly-shorted names. But it’s not just happening in the stock market. Assets across the board rallied, including one of this year’s worst performers, palladium.

Below is a chart of palladium futures, which jumped 12% today. That type of move would typically be more than enough to grab people’s attention, but where it’s taking place amplified the importance among traders. 🧭

Palladium’s been in a clear downtrend for the last eighteen months, with a clear downtrend line, keeping a lid on prices. However, prices are now testing that downtrend line again. And they’re doing so while also breaking above its previous price low, something they’ve been unable to do all year. 🤔

Technical analysts say a decisive breakout above this level would confirm that its trend has shifted from down to sideways or up, depending on who you ask. With animal spirits taking hold of the market this week, bulls say this is when palladium and other laggards have their best chance to meaningfully change their trends.

We’ll have to wait and see who is right. But palladium bulls are coming out of the woodwork for the first time in years, and that’s notable to us. 👀