Investor focus was back on trade on Friday, as positive signs for a deal with China lifted the market. Trade-sensitive industrial stocks helped the Dow Jones Industrial Average (^DJI -1.63%) gain over 400 points, and the broader-based S&P 500 (^GSPC -1.54%) closed up as well.
Today's stock market
| Index | Percentage Change | Point Change |
|---|---|---|
| Dow | 1.74% | 443.86 |
| S&P 500 | 1.09% | 29.87 |
Data source: Yahoo! Finance.
Bank stocks participated in the rally today, and a rise in crude oil lifted the energy sector. The SPDR S&P Bank ETF (KBE -3.01%) climbed 2.3% and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP 1.19%) jumped 2.7%.
As for individual stocks, investors liked PepsiCo's (PEP -2.66%) outlook, and NVIDIA (NVDA -3.00%) met lowered expectations and offered an optimistic view of the upcoming year.
Image source: Getty Images.
Investors like Pepsi's future
A major soft drink company reported fourth-quarter results that met expectations but gave guidance for 2019 that was below what analysts were expecting. That was the headline yesterday that sent Coca-Cola shares down 8%, but the same story for PepsiCo today propelled its stock up 3%.
PepsiCo's revenue was flat at $19.5 billion and core earnings per share came in at $1.49, up 17% excluding currency effects and right on target with expectations. Organic revenue, excluding currency and one-time events, grew 4.6% in the quarter and 3.7% for the year.
Coke and Pepsi both forecast 4% organic revenue growth in 2019, but for Pepsi, that's an improvement of 30 basis points, while it is a decline of 100 basis points for Coke. Investors seem to buy into plans that incoming Pepsi CEO Ramon Laguarta has for stimulating growth and making technology investments to generate $1 billion in annual savings through 2023.
A few days of share-price movements never tell the full story, and despite their different performances this week, Coca-Cola still sells for a slightly higher valuation relative to 2019 earnings guidance than Pepsi does.
NVIDIA foresees a big turnaround after next quarter
Revenue and profit at NVIDIA plunged in the fourth quarter, but cheery guidance for a big sales rebound later this year lifted shares 1.8%. Revenue fell 24% to $2.21 billion and earnings per share dropped 48% to $0.92. NVIDIA had updated its guidance last month, so the results were not much of a surprise.
Sales in NVIDIA's gaming segment continue to suffer from the collapse of cryptocurrency mining, which resulted in a huge amount of unsold inventory. The company also blamed "recent deteriorating end-market conditions," particularly in China, for low end-user demand.
Looking forward, NVIDIA guided to Q1 sales of $2.2 billion, well below the $2.4 billion analysts have been expecting, but full-year revenue of "flat to slightly down" from last year's $11.7 billion implied guidance above the $11.4 billion analyst consensus.
That turnaround suggests a huge second half for the chipmaker, which had the bulls and bears locked in debate about the likelihood of that today.
