Please ensure Javascript is enabled for purposes of website accessibility

What Happened in the Stock Market Today

By Jim Crumly – Apr 4, 2018 at 4:06PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Stocks opened down but rebounded strongly. Lennar reported strong home sales and Cloudera tumbled on a weak outlook for sales growth.

Stocks began Wednesday sharply lower on trade war concerns, but bounced back, rising steadily through the session. The Dow Jones Industrial Average (^DJI -1.54%) opened down over 500 points and recovered, while the S&P 500 (^GSPC -2.11%) gained over a percentage point.

Today's stock market

Index Percentage Change Point Change
Dow 0.96% 230.94
S&P 500 1.16% 30.24

Data source: Yahoo! Finance.

Consumer stocks led the market, with the SPDR S&P Retail ETF (XRT -4.63%) rising 2.8% and the iShares US Home Construction ETF (ITB -2.96%) soaring 4.7%.

As for individual stocks, Lennar Corporation (LEN -3.24%) provided a boost to the housing sector with a strong report and outlook, while Cloudera (CLDR) predicted that its growth rate will be cut in half this year.

Abstract design of rising stock graphs.

Image source: Getty Images.

Lennar home sales are booming

Homebuilder Lennar reported first-quarter results that crushed estimates and sent the stock up 10%. Revenue increased 28% to $2.98 billion, compared with the consensus analyst estimate of $2.65 billion. GAAP earnings per share came in at $0.53, up from $0.16 in the period last year. Adding back one-time charges for the CalAtlantic acquisition and a writedown of tax assets, adjusted EPS was $1.11 when Wall Street was expecting $0.77.

Deliveries were up strongly, growing 24% to 6,765 homes, but orders were even better, increasing 30% to 8,456 homes, or 38% when including orders of 1,069 homes that came along with the CalAtlantic purchase. The end result is that the backlog soared 95% to 17,566 homes worth $7.7 billion. The average sales price of homes delivered grew 7.7% to $393,000 and adjusted gross margin increased from 21.1% to 21.6%.

Company officials sounded a positive note for the housing industry going forward. "We continue to remain positive on the outlook of the housing industry in general," said CEO Stuart Miller in the press release. "Although interest rates have ticked up, unemployment remains low, the labor participation rate has been increasing, and wages have been moving modestly higher, though we think, even higher than the data the government captures. Feedback from our new home consultants indicates that our customer base feels confident in both job security and compensation levels in spite of the political noise that abounds."

Cloudera rains on investor expectations for growth

Shares of Cloudera, maker of cloud-based data analytics and machine-learning software, plummeted 40.2% the day after the company announced fourth-quarter results that beat expectations, but delivered a disappointing outlook. Total Q4 revenue grew 42% to $103.5 million and subscription revenue was up 50% from a year ago. Non-GAAP loss per share narrowed to $0.10, compared with a $0.30-per-share loss in the period a year earlier. Analysts were expecting a non-GAAP loss of $0.23 on sales of $98.7 million. 

What troubled investors was Cloudera's guidance for 2018. For Q1, the company expects total revenue growth to slow to 28% and subscription revenue growth to fall to 32%. For the full year, growth rates look even worse, with revenue growth of 20% and subscription revenue growth of 24%. Analysts had been expecting full-year revenue to increase 25.5%.

Analysts on the conference call tried to understand why the growth rate of subscription revenue would be cut in half from the previous year. CEO Tom Reilly explained that the company is reorganizing its sales organization to increase the focus on the target market of large enterprise customers. Cloudera has a model of growing primarily by expanding sales to existing customers, but admitted that lately, it has been expending too much effort selling to smaller customers that have less potential for sales expansion.

The sales organization realignment will cost Cloudera in the short term in hopes of longer-term gains, but investors today seemed skeptical that slowing growth, less than a year after the company's IPO, was only a temporary phenomenon.

Jim Crumly has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Lennar Corporation Stock Quote
Lennar Corporation
$74.97 (-3.24%) $-2.51
Cloudera Stock Quote
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$29,225.61 (-1.54%) $-458.13
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$3,640.47 (-2.11%) $-78.57
SPDR Series Trust - SPDR S&P Retail ETF Stock Quote
SPDR Series Trust - SPDR S&P Retail ETF
$57.32 (-4.63%) $-2.78
iShares Trust - iShares U.S. Home Construction ETF Stock Quote
iShares Trust - iShares U.S. Home Construction ETF
$52.40 (-2.96%) $-1.60

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.