What’s happening: The S&P 500 index closed higher on Tuesday, extending its rally for three consecutive sessions.
What happened: US stocks surged yesterday on upbeat economic reports, including retail sales and industrial production. These reports boosted investor sentiment, which was already positive after the Federal Reserve’s announcement of buying corporate bonds.
The S&P 500 and other major indices finished the trading session on a high note yesterday, after Fed Chairman Jerome Powell suggested additional fiscal stimulus underway for the US economy to make a recovery from the impact of the pandemic.
Putting a dampening to market sentiment one of S&P 500’s major components, Oracle Corp, reported disappointing quarterly results after the closing bell. Oracle’s revenues came in below Wall Street expectations as the coronavirus-led crisis forced clients to postpone purchases. Shares of the software company moved lower in extended trading, following the release of its quarterly results.
Why it matters: US stocks closed higher after retail sales grew 17.7% in May, exceeding expectations for an 8.5% rise and industrial production increased 1.4% for the month. A report of progress on a therapeutic drug for covid-19 also lifted investor sentiment yesterday.
After adding 0.8% on Monday, the S&P 500 index gained 1.8% to close at 3,124.74 on Tuesday. The Dow Jones index and the Nasdaq 100 surged 2% and 1.8%, respectively.
Hit hard by the covid-19 pandemic, businesses are being forced to tighten spending to maintain their liquidity. Against this backdrop, Oracle’s customers started pushing back orders, leading to a decline in revenues. The company’s rival SAP SE also indicated that its customers had postponed orders.
“As the quarter progressed, we saw a drop-off in deals, especially in the industries most affected by the pandemic,” Oracle’s CEO Safra Catz said in a statement.
Total revenue slipped around 6% to $10.44 billion in the fourth quarter, falling short of the consensus views of $10.63 billion. Adjusted earnings rose to $1.20 per share, from $1.16 a share in the same quarter last year, exceeding expectations of $1.15 per share.
Oracle has recently been foraying into the cloud computing business. The software company’s unit that includes Oracle Cloud posted revenues of $6.85 billion, below the expectation of $6.98 billion.
Management’s guidance for the current quarter projected sales in a range of 1% growth and 1% decline, and adjusted earnings of between 84 cents per share and 88 cents per share. Although the company said it expects to generate revenue growth this year, it did not issue any outlook for the same.
After adding 2.5% during the regular stock trading session on Tuesday, Oracle’s shares fell 3.3% in after-hours trading to settle at $52.80. The stock has gained around 28% over the past three months.
What to watch: With Oracle reporting mixed quarterly results and shares declining in after-hours trading, investors are keen to see the impact of this on indices trading today, especially on the S&P 500. US stock index futures were trading mostly flat in the European session today.
Investors await US reports on housing starts and building permits. Housing starts, which declined 30.2% to an annualised rate of 0.891 million in April, are likely to increase to 1.095 million. Building permits are expected to rise to an annual rate of 1.228 million.