Stocks began Wednesday sharply lower on trade war concerns, but bounced back, rising steadily through the session. The Dow Jones Industrial Average (^DJI -0.12%) opened down over 500 points and recovered, while the S&P 500 (^GSPC -0.58%) 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 -0.44%) rising 2.8% and the iShares US Home Construction ETF (ITB -0.63%) soaring 4.7%.

As for individual stocks, Lennar Corporation (LEN -0.46%) 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.