Fed’s Rate Cut Outlook U.S. stock futures are on the rise, setting the stage for a robust weekly finish. This comes after the Federal Reserve maintained its stance on implementing three rate cuts within the year, despite an optimistic economic forecast. The announcement has propelled main indices to new record highs, marking the fourth consecutive session of gains, with expectations set for a weekly increase of over 2%.
Corporate Sector in Focus As the week wraps up with little economic data to shift market sentiments, attention pivots towards the corporate world. FedEx, Nike, and Apple are particularly under the spotlight. However, Lululemon experienced a premarket downturn after issuing a subdued growth forecast for North America, indicating slowing momentum.
Justice Department Takes On Apple In a significant move, the U.S. Department of Justice has filed an antitrust lawsuit against Apple, accusing it of monopolistic practices by restricting software and hardware on its devices to hinder competition. This landmark case highlights the government’s scrutiny over Big Tech’s power, posing a potential threat to Apple’s business framework. Despite the legal challenges, some see this as an investment opportunity, anticipating a rebound in Apple’s stock value.
FedEx Exceeds Expectations FedEx shares witnessed a premarket surge following the announcement of its third-quarter earnings surpassing expectations, despite economic uncertainties. The company reported an adjusted profit of $966 million and plans to initiate a $5 billion share repurchase program. However, FedEx also expressed caution regarding future revenue projections, citing unpredictable macroeconomic conditions.
Nike Faces Revenue Challenges Nike shares experienced a premarket dip amid warnings of an upcoming revenue decline in the first half of fiscal 2025, attributed to a strategic pullback from franchises to cut costs. Despite this setback, Nike’s recent performance exceeded expectations due to holiday discounts and new product launches, allowing it to maintain its fiscal 2024 revenue growth forecast.
Oil Prices and Geopolitical Tensions Oil prices saw a retreat amid reports of a potential Gaza ceasefire, which could alleviate geopolitical tensions in the Middle East. This development follows the U.S.’s proposal for a UN draft resolution aiming for an immediate ceasefire, possibly influencing oil supply disruptions and market volatility.
As the week concludes, the stock market’s resilience in the face of legal battles, corporate forecasts, and international conflicts underscores the intricate dynamics influencing investor sentiment and economic outlooks.
$TSLA- Shares of Tesla are down 4% or $6.82 at $166 following a Bloomberg report that the company that the company has reduced electric car production at its plant in China amid sluggish sales growth and intense competition.$NKE- Evercore ISI lowered the firm’s price target on Nike to $117 from $127 and keeps an Outperform rating on the shares. While the magnitude of the forward outlook was “worse than we expected,” the firm thinks some of the qualitative commentary “suggest that Nike is heading in the right direction,” the analyst tells investors. With the stock likely to be pressured in the near-term, the debate will quickly focus on whether or not guidance for revenue declines in the first half of FY25 is the “true de-risking moment for Nike,” the analyst added.
$FDX- Morgan Stanley raised the firm’s price target on FedEx to $210 from $195 and keeps an Equal Weight rating on the shares. With a Q3 beat following a Q2 miss, the FedEx “earnings rollercoaster continues,” as will the debate on the stock, the analyst tells investors. Bulls will like that Express was better than feared and the $5B buyback, while bears will point to the continued revenue miss and potential earnings quality issues, says the analyst, who adds that this quarter reminds the firm of the Q1 FY24 result, when a 20% beat was muddled by “mixed messages” and an unraised fiscal year outlook. While the stock was up 6.5% in the days following that report, it dropped 15% in the following month, the firm reminds investors.
Cowen raised the firm’s price target on FedEx to $320 from $293 and keeps an Outperform rating on the shares. The firm noted they beat Cowen’s earnings estimates due to strong cost control as revenue was below forecast. Management continues to focus on their DRIVE cost-cutting program as they restructure operations to improve margins and profitability and also announced a new $5B share buyback program.
$NVS- Novartis announced that the Committee for Medicinal Products for Human Use, or CHMP, of the European Medicines Agency has adopted a positive opinion and recommended granting a marketing authorization for Fabhalta for the treatment of adults with paroxysmal nocturnal hemoglobinuria, or PNH, who have hemolytic anemia. Following the CHMP’s recommendation to approve Fabhalta in adult patients with PNH who have hemolytic anemia, the European Commission will take a final decision within approximately two months, the company noted. “If approved by the European Commission, Fabhalta would be the first oral monotherapy available to PNH patients in Europe. With current standard of care, PNH symptoms are often uncontrolled, while patients endure regular and time-consuming infusions. This oral therapy could provide a much-needed alternative to support many people living with PNH who often have to structure their lives around managing their condition,” said Patrick Horber M.D., President, International, Novartis, Basel.
$PANW- Argus raised the firm’s price target on Palo Alto Networks to $336 from $290 and keeps a Buy rating on the shares. The stock fell after the company lowered its FY24 revenue and billings guidance as it adopts a new go-to-market strategy, but the firm sees Palo Alto as a strong competitor in the highly fragmented but rapidly growing enterprise cybersecurity space, the analyst tells investors in a research note. The cybersecurity environment is getting more toxic as generative AI may be used for both good and ill, and Palo Alto continues to stand out from its sector peers with not just best-in-class technology integrated into a comprehensive cybersecurity platform, but also its rapid product innovation cycle, the firm added.
$AAPL- JPMorgan analyst Samik Chatterjee says the Department of Justice lawsuit alleging monopoly practices by Apple is unlikely to be a complete surprise for investors. While most investors will treat the possibility of a material change to Apple’s financial outlook as modest, the suit will be a distraction and an overhang on the shares before the process concludes, the analyst tells investors in a research note. JPMorgan says the surprise for it and investors is more in relation to the approach taken by the Justice Department to “target the plethora of Apple’s business practices across the board.” This “could end up being a challenge in relation to opening up scrutiny on multiple fronts, but at the same time benefitting from the lack of focus,” contends the firm. It keeps an Overweight rating on Apple shares.
analyst Atif Malik keeps a Buy rating on Apple with a $220 price target after the Department of Justice and 16 state and district attorneys general announced an antitrust lawsuit against the company for illegally monopolizing the smartphone market. The complaint points out a list of actions that Apple takes across many technologies, products and services to disrupt competition, such as super apps, cloud streaming apps, text messaging, smartwatches, and digital wallets, the analyst tells investors in a research note. Apple said it will defend against the case, but its list of ongoing litigations will likely remain a near-term headwind for the shares, says Citi.
$NVDA- UBS raised the firm’s price target on Nvidia to $1,000 from $800 and keeps a Buy rating on the shares. Following the Blackwell launch, UBS believes Nvidia sits on the cusp of a new wave of demand from global enterprises and sovereigns, with each sovereign potentially as big as a large U.S. cloud customer, the analyst tells investors in a research note. The firm sees another solid year of growth in calendar 2025, with revenue approaching $150B, and would view any near-term weakness as an attractive buying opportunity.
$BABA- Alibaba (BABA) has raised $357.8 million by selling securities in Chinese streaming platform Bilibili (BILI), Bloomberg’s Amy Or and Henry Ren report, citing people familiar with the matter. Alibaba priced the sale of 30.85 million American depositary receipts at $11.60 each, the people said. Time to start getting into a long position again.
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