U.S. stocks soared on Monday, with investors breathing a collective sigh of relief as Hurricane Irma began to weaken. All told, both the Dow Jones Industrial Average (DJINDICES:^DJI) and S&P 500 (SNPINDEX:^GSPC) climbed more than 1%.
Today's stock market
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Financials stocks extended Friday's gains thanks to a continued rebound from insurers, and the Financial Select Sector SPDR Fund (NYSEMKT:XLF) jumped 1.7%. Tech stocks weren't far behind, with the Technology Select Sector SPDR Fund (NYSEMKT:XLK) up 1.4%, partly buoyed in anticipation of Apple's big product launch event slated for tomorrow.
As for individual stocks, GoPro (NASDAQ:GPRO) extended Friday's gains amid optimism for the action camera and drone specialist's ongoing turnaround, while shares of Universal Insurance Holdings (NYSE:UVE) rallied on news of the waning storm in Florida.
GoPro's turnaround is taking shape
Shares of GoPro climbed 6.4% today, extending last week's 14% rise amid continued investor optimism following the company's encouraging preliminary quarterly results.
Early last Thursday, GoPro announced that revenue in its third quarter will arrive at the high end of its guidance, which called for a range of between $290 million and $310 million. Gross margin should also be near the top of GoPro's previously expected 36% to 38% range, which will mean the company will return to adjusted (non-GAAP) profitability during the quarter.
"Consumer demand for GoPro products is strong," added GoPro Chief Operating Officer CJ Prober. "Channel inventories have been reduced and we're incredibly excited about the upcoming launch of two great new products, HERO6 and our 5.2K spherical camera, Fusion."
This progress is nothing new; GoPro management promised last quarter that the company would return to adjusted profitability by the end of 2017, while at the same time suggesting that their next-gen cameras would launch in time for this year's holiday season.
But considering production issues with last year's Hero 5 launch and a subsequent recall of its Karma drone absolutely crushed the stock and effectively prefaced its current need for a turnaround, it's good for investors to hear that everything is going as planned right now. Coupled with the broader rise of tech stocks today, it's hard to blame GoPro bulls for bidding up shares again.
Universal Insurance rides the tide higher
Universal Insurance Holdings stock spiked 12.3% as investors in the Florida-based insurer ruled out a worst-case scenario for damage caused by Irma, which was downgraded from a hurricane to a tropical storm this morning. For perspective, policies in Florida comprised 88.3% of Universal Insurance Holdings' direct written premiums and 76.3% of its total insured value in its most recent quarter.
But we should also be careful not to minimize Irma's negative impact. Earlier today, catastrophe modeling firm AIR Worldwide estimated Irma's insured damage would cost the industry $20 billion to $40 billion. But that range was narrowed from AIR Worldwide's more ominous estimate on Friday for potential damages of $15 billion to $50 billion.
If there's one thing the market hates, it's uncertainty. Investors are rightly encouraged that the high end of those damage predictions shouldn't come to fruition. With Universal Insurance Holdings stock still down nearly 30% so far in 2017, it's no surprise to see shares staging a modest rebound today.
Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends AAPL and GoPro. The Motley Fool has the following options: short January 2019 $12 calls on GoPro and long January 2019 $12 puts on GoPro. The Motley Fool has a disclosure policy.