A day after stocks plunged on no real news, the market rebounded. The Dow Jones Industrial Average (^DJI -1.36%) and the S&P 500 (^GSPC -1.60%) fluctuated during the session before taking off in the afternoon.

Today's stock market

Index Percentage Change Point Change
Dow 2.33% 567.02
S&P 500 1.74% 46.20

Data source: Yahoo! Finance.

Materials and technology were the market's strongest sectors. The Materials Select Sector SPDR ETF (XLB -1.96%) rose 3.2% and the iShares PHLX Semiconductor ETF (SOXX -3.16%) jumped 3.6%.

Two semiconductor stocks made big moves on news of higher profits. Micron Technology (MU -3.89%) revised upward its guidance for this quarter, and Skyworks Solutions (SWKS -2.42%) beat expectations for earnings.

Bull and bear superimposed on stock graphs.

Image source: Getty Images.

Micron upgrades outlook for quarter

Shares of Micron Technology soared 11.4% after the company boosted guidance for sales and profits in its fiscal second quarter, which ends March 1. Revenue is now forecast to come in between $7.20 billion to $7.35 billion, about 4% above the guidance given in December of $6.80 billion to $7.20 billion. Earnings guidance was raised over 5% to $2.70-$2.75, compared with the prior range of $2.51-$2.65. Micron also announced a transition to a new CFO, David Zinsner. 

The uplift in the outlook for Micron's business prompted a series of upgrades from Wall Street analysts. Needham upgraded the stock from buy to strong buy with a price target of $76, KeyBank Capital Markets upgraded it from sector weight to overweight, and Stifel reiterated its buy rating while raising its price target from $75 to $85.

The improvement in guidance for the current quarter comes after the company reported first-quarter results that blew away analyst estimates, the latest in a string of positive earnings surprises. Computer memory is a cyclical business, a fact that holds the valuation down and makes Micron bears wary. The analyst consensus is still for Micron's fiscal 2019 revenue to decline from 2018, but today's news has some of them thinking that this cycle could have much longer to run.

Skyworks beats on profit

Skyworks Solutions, maker of wireless connectivity chips, reported fiscal Q1 profit that beat Wall Street expectations, sending the shares skyward by 10.3%. Revenue increased 15% to $1.05 billion, about what analysts were expecting, and non-GAAP EPS jumped 24% to $2.00 compared with expectations of $1.92. Including a one-time charge due to the new tax law, GAAP earnings were $0.38.

Skyworks gave guidance for Q2 that fell short of what analysts were expecting. Revenue is expected to be $910 million with EPS of $1.60, while analysts were expecting earnings of $1.63 on sales of $933 million. The company did deliver some good news about capital returns to shareholders, though. The board approved a new $1 billion stock buyback program, and CFO Kris Sennesael said in the press release, "Our plans for sustained above market growth and strong cash generation, coupled with the benefits from the recently passed U.S. tax reform act, are enabling us to increase our targeted cash return rate to shareholders from the prior 40-50 percent range to 60-75 percent of free cash flow going forward."

The weak guidance for next quarter normally might have been a drag on the stock, but company officials gave an upbeat outlook for the second half of the year in the conference call. Based on some new design wins, Skyworks sees accelerating revenue and improving margins for the rest of the year.

Skyworks stock has underperformed its semiconductor peers since mid-September, and one nagging concern for investors has been its reliance on a single customer: Apple. Discussion of new design wins that should diversify the company's customer base had investors thinking that the best news yet may lie a little further ahead.