Futures for the S&P 500 and Nasdaq 100 were little changed early Thursday morning after the Nasdaq composite slumped Wednesday on Apple (AAPL) and weakness in chips fueled by Texas Instruments (TXN).
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Late Wednesday, chip-equipment giant Lam Research (LRCX) and chipmaker Xilinx (XLNX) reported blowout earnings and bullish guidance, sending the stocks near or into buy zones overnight. But chip-gear maker Teradyne (TER) tumbled on guidance that fell short of estimates.
S&P 500 index futures were essentially flat vs. fair value. Nasdaq 100 futures rose a fraction. Dow futures were up 0.1%.
Apple
Apple shares fell 1.6% to 174.22 in Wednesday’s stock market trading, dropping back below a 175.34 flat-base buy point. The stock did find support at its 50-day moving average, as it has since the last days of 2017. But volume was the highest since Nov. 3 and was the heaviest trade in a down session since September.
Meanwhile, the relative strength line, which tracks a stock’s performance vs. the S&P 500 index, fell yet again. (The RS line is the blue line in the charts below.) Already at consolidation lows, Apple’s RS line is now approaching longer-term levels. Apple’s stock hasn’t made much headway vs. the S&P 500 for several months.
A growing number of Apple analysts are warning of weak iPhone demand. Perhaps the bad news is being priced, or overpriced, into the stock ahead of earnings next week.
Lam Research
Lam Research earned $4.34 a share in its fiscal second quarter excluding various items including a tax-related charge, up 94% vs. a year earlier and well above views for $3.69 according to Zacks Investment Research. Revenue rose 37% to $2.58 billion, just above analyst forecasts for $2.57 billion.
For fiscal Q3 ending in April, Lam Research expects EPS of $4.20-$4.50 and revenue of $2.73 billion to $2.98 billion. Wall Street was looking for EPS of $3.81 and revenue of $2.66 billion.
Lam Research shares rose 3.7% to 217.50 in late trading after closing down 2.5% to 209.73. The stock had rallied in the prior six sessions.
Lam’s after-hours action suggests the stock could test its 219.80 cup-base buy point. Lam’s RS line remains off its highs near the left side of the consolidation. But the RS line has made some progress, clearing some short-term highs.
Lam’s results follow strong earnings and a bullish outlook from ASML Holding (ASML) last week, as well as strong preliminary revenue figures and sales guidance from Ichor Holdings (ICHR) and Electro Scientific (ESIO).
KLA-Tencor (KLAC), which is at the edge of a buy zone, reports earnings Thursday.
Xilinx
Xilinx earned 76 cents a share excluding various items and a tax-related charge, up 46% vs. a year earlier. That was the best gain in four years and easily beat fiscal third-quarter views for 63 cents. Revenue rose 8% to $631.2 million vs. views for $630 million. That’s just OK, but is the best top-line growth in five quarters.
For the current quarter, Xilinx sees revenue of $635 million to $665 million. That $650 million midpoint is above Wall Street forecasts and would be a 6.7% yearly gain.
Xilinx rose 5.2% to 77.30 in late trade, suggesting a move back above a 75.24 buy point. Xilinx fell out of buy range during the regular session, losing 2.7% to 73.48.
The RS line is definitely a concern. It’s well below the consolidation’s high and hasn’t made headway for the past year. A powerful price move Thursday could push the RS line over short-term levels.
Teradyne
Teradyne earned 46 cents a share in its fourth quarter on sales of $479 million vs. views for 34 cents and $438 million, respectively. The chip-equipment maker also hiked its quarterly dividend by 29% to 9 cents a share.
But Teradyne gave EPS and revenue guidance that, at the midpoint, is below the consensus.
Teradyne shares fell 5.7% to 44.99 in late trading. The stock had closed down 3.4% to 46.79, moving back into buy range from a 44.72 entry. Extended trading doesn’t always carry over to the next regular session, but Teradyne looks set to test its buy point.