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Market Swing Takes Hold; Q3 Results for ULTA, DOCU, MRVL

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That market swing-back into the green happened today, after Wednesday’s false-start and deeper gauge into Omicron variant/inflation fears. As scientists sift through data on the new variant, discovered in the U.S. yesterday for the first time, the buzz is these fears may be overblown. The Dow has thus enjoyed its best trading day since June, +619 points or +1.82%; the S&P 500 was +1.42% and the Nasdaq was +0.83%. The long-struggling Russell 2000 broke through +2.54% on the day.

After the close, we also received new Q3 earnings results from Ulta Beauty ULTA, DocuSign DOCU and Marvell Technologies MRVL, two out of three Zacks Rank #3 (Hold) which outperformed expectations.

We are far from data-secure on Omicron at this stage, but current discussions are whether it is more or less contagious and/or deadly than the Delta variant, and whether current vaccines and treatments can at least keep contractors of the coronavirus from getting sick enough to seek a hospital bed. That we are not seeing immediate emphatic evidence of Omicron being worse is, in itself, a good enough reason for market participants to go near-term bargain hunting.

As far as the increased rate of the Fed’s tapering program, which startled markets Tuesday and shook them out somewhat yesterday, it would appear cooler heads have prevailed, near term. Ramping up asset purchases to higher than $15 billion per month — from the $120 billion that has kept the economy awash in cheap cash since the earliest days of Covid on our shores — is not the same as seeing interest rates tightening. That is saved for sometime in Q1 or Q2 of next year, and will be dependent on a continually strengthening economy, which would discount the overall effects of Omicron.

Ulta Beauty posted a record quarter on very strong Q3 numbers after the closing bell today, with earnings of $3.93 per share rocketing past the $2.51 in the Zacks consensus or $2.00 billion in revenues, outpacing the $1.90 billion analysts were looking for. Full-year revenue guidance has also been raised to $8.6 billion from the previous consensus $8.3 billion. Shares bought up +6.5% immediately upon the news, but have moderated to +4.5% at this hour.

DocuSign has had a rougher time of it after also reporting quarterly numbers after the closing bell. While the digital document services firm did beat on both top and bottom lines — 58 cents per share on $545 million in sales versus 46 dents expected on $529 million — revenue guidance for Q4 has been ratcheted notably lower: to a range of $557-563 from the Zacks consensus $573 million. This caused late-traders to dump shares over -20% on the news, giving up the company’s gains year to date.

Marvell Technologies also put up record revenue numbers for its Q3 report released this afternoon, with 43 cents per share outperforming the 38 cents expected and 25 cents in the year-ago quarter, on record-high sales of $1.21 billion, which topped the $1.15 billion our analysts had projected. The company also upped guidance on both top and bottom lines for next quarter, calling its Data Center business “promising,” and now consisting of 40% of total company revenues.

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