Stocks rose Wednesday on optimism that interest rate increases will slow. The Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) ended the session up modestly.
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The price of crude oil surged over 5%, lifting energy shares; the SPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT: XOP) jumped 2.2%. Homebuilding stocks had a good day, with the iShares US Home Construction ETF (NYSEMKT: ITB) rising 3.3%.
As for individual stocks, Skyworks Solutions (NASDAQ: SWKS) lowered guidance and Lennar (NYSE: LEN) exceeded profit expectations.
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Skyworks Solutions reduces its expectations
Chipmaker Skyworks Solutions lowered its guidance for sales and profit in the quarter that ended last month, but Wall Street was relieved that the damage from a slowing smartphone market wasn't even worse, and shares rose 3.8%. The company said to expect a 7.8% drop in revenue to $970 million, compared with earlier guidance of $1.0 billion to $1.02 billion. Non-GAAP earnings per share will be in the range of $1.81-$1.84, compared with earlier guidance of $1.91 at the midpoint.
Skyworks, which makes wireless communication chips, depended on Apple for 47% of its sales in its last fiscal year, so when the tech giant reported a slump in iPhone sales last week, Skyworks' stock tumbled 11%. CEO Liam Griffin said today that the guidance revision was due to lower shipments to Apple, but that the rest of the company's business was in line with its prior outlook.
Skyworks' shares have been selling off over the past year, but with the stock valued at only 9.2 times estimates for this year's earnings and a boost to the company's non-smartphone sales coming from the rollout of 5G infrastructure, investors may have concluded that the stock is near a bottom.
Lennar beats on the bottom line
Homebuilding stocks mostly slumped in 2018 as the housing market slowed, but the sector got a lift today when Lennar reported profit that beat estimates and expressed optimism about the spring selling season, sending shares up 7.9%. Revenue in Lennar's fiscal fourth quarter was up 70.6% to $6.46 billion, thanks largely to its acquisition of CalAtlantic last year, and adjusted earnings per share came in at $1.96. Analysts were expecting Lennar to earn $1.93 per share on revenue of $6.55 billion.
Lennar confirmed the general view of the housing market, saying that it is experiencing slower sales due to higher home prices and rising mortgage rates. But Executive Chairman Stuart Miller thinks that underlying demand for new homes is strong, stating, "We continue to believe that the housing market is adjusting to a temporary disconnect between sales prices and buyer expectations and that the basic underlying fundamentals of low unemployment, higher wages and low inventory levels remain favorable."
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Jim Crumly owns shares of AAPL and Skyworks Solutions. The Motley Fool owns shares of and recommends AAPL and Skyworks Solutions. The Motley Fool has the following options: long January 2020 $150 calls on AAPL and short January 2020 $155 calls on AAPL. The Motley Fool has a disclosure policy.