The Dow Jones Industrial Average added 264 points today, despite a very tough day for retail stocks, thanks to solid gains from tech giants Salesforce(NYSE: CRM) and Apple(NASDAQ: AAPL).
Target, which is not part of the Dow, told investors today that near-term profitability could be in trouble due to extra inventory that the company has struggled to get off the shelves. The big-box retailer trimmed its guidance for profit margins for the fiscal second quarter of the year. Other big-box retailers in the Dow struggled as a result including Walmart, Walgreens, and Home Depot, which were among just five of the Dow's 30 stocks that finished lower.
On the inflation front, investors dealt with more conflicting data today. Signs that inflation might be easing came from the semiconductor industry, where the cost of chips may finally be peaking. In addition, shipping container prices are also down significantly from their highs last September and the price of fertilizer has come down as well.
But in a surprise move, the Reserve Bank of Australia raised its benchmark interest rate by a half-point. That caught investors off guard and suggests that the central bank sees inflationary pressure in the region as being worse than expected.
Salesforce once again carries the day
Since reporting its most recent earnings results at the very end of May, Salesforce has been red hot and continues to find itself at the top of the Dow. The company rose more than 2.3% today and is up close to 17% since reporting earnings.
Salesforce surprised investors when it reported adjusted earnings of $0.98 per share on total revenue of $7.41 billion for the first quarter of fiscal 2023, both numbers that beat analyst estimates. Additionally, the cloud giant upped its guidance, telling investors it now expects to produce adjusted earnings of roughly $4.75 per share on total revenue of at least $31.7 billion for the full 2023 fiscal year.
I definitely feel much better about Salesforce after the company made it very clear that its business is proving resilient in what has been very difficult conditions. "We see strong demand across our clouds, our industries and our regions despite the unprecedented foreign exchange headwinds, and our results really demonstrate the power of our strategy," Salesforce's Co-CEO Bret Taylor said on the company's recent earnings call.
Additionally, when asked by an analyst about the potential for share repurchases, management did not rule them out. The company has not done repurchases in the past, so it would be huge if they eventually launched one in the near future.
Apple unveils buy now pay later
In a big move from Apple, the consumer tech giant announced new features on its iPhone that will make the company look more like a fintech than ever before. Using Apple Pay, consumers will be able to purchase items through installment payments with no money down upfront in a format known as buy now pay later. Shares of Apple rose close to 1.8% today.
Apple is also rolling out a new payments platform that will let consumers pay one another simply by tapping their iPhones together. Both offerings present new competition in the fintech space to other companies doing buy now pay later such as Affirm and for Block, which offers a tap payment solution.
The new offerings are another reason for consumers to spend more time on their Apple devices, which isn't good for Apple's competition due to the intense loyalty consumers already have for the Apple brand.
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Affirm Holdings, Inc., Apple, Block, Inc., Home Depot, Salesforce, Inc., and Target. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.