Today's stock market
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Crude oil prices dropped again, setting a new 52-week low, and energy stocks led the market lower, with the Energy Select Sector SPDR ETF (NYSEMKT:XLE) down 1.3%. Biotech shares continued their run, and the iShares Nasdaq Biotechnology ETF (NASDAQ:IBB) rose 1.3%.
Chipotle falls on reaffirmed guidance
Chipotle Mexican Grill stock sank 7.3% today after the company submitted a filing to the SEC that disclosed forward-looking projections that disappointed some analysts. The filing was in connection with a meeting with investors today, and it was to "reaffirm and clarify its guidance for certain financial and operating results for the second quarter and full year of 2017 as announced in the company's quarterly earnings conference call on April 25, 2017," according to the document.
In the filing, the burrito specialist said that Q2 food costs are expected to be 34.2% of sales, and marketing and promotion costs are expected to be 3.6% to 3.7% of sales. For the full year, the company expects comparable-restaurant sales increases in the high single digits, 195 to 210 new restaurant openings, and an estimated effective tax rate of approximately 39%.
The striking thing about these numbers is that they are no revelation at all. They are exactly the same as guidance given in the company's first-quarter earnings release and conference call, which resulted in the stock jumping 2.4% the next day to close around $483, 13.5% higher than the close today.
The market's clearly jumpy about Chipotle, which is still recovering from food safety issues from late 2015 against a backdrop of present-day industry weakness. Chipotle bulls may see the cheaper price on no new information as a buying opportunity, though.
Lennar builds an excellent quarter
Shares of Lennar, one of the largest homebuilders in the country, rose 2.1% today on a second-quarter earnings report that strongly beat Wall Street expectations. Revenue was $3.3 billion, up 19% from 2016, and earnings per share were $0.91, compared with $0.95 last year. Analysts were expecting earnings of $0.78 on sales of $2.9 billion.
There was plenty of good news in the report. The company had its highest quarter for orders in 10 years, and backlog increased 20% to $4 billion. Sales, general, and administrative expenses, excluding costs related to an acquisition, were 9.3% of revenue, the second lowest in company history.
Lennar management gave an upbeat outlook for housing going forward. CEO Stuart Miller said in the press release, "These strong results were supported by an improved macroeconomic environment, renewed optimism, wage and job growth, and increased consumer confidence. We are now seeing, contrary to recent reports on housing starts and building permits, more of a reversion to normal in the housing market than the slow and steady recovery pace of the last several years."
The cheery news seemed to indicate that demand for housing is strong, despite a recent weak report on housing starts from the Commerce Department. Lennar's earnings results boosted shares of other housing-related stocks on Tuesday as well.