Meta’s Revenue Forecast Sends Tech Stocks Tumbling
In a tumultuous turn of events, Meta Platforms, formerly Facebook, saw its shares plummet by 15% in aftermarket trading, hitting a near three-month low. The steep decline came on the heels of Meta’s announcement of weaker-than-expected revenue projections for the second quarter, attributed to increased spending on artificial intelligence initiatives.
Despite Meta’s stronger-than-anticipated first-quarter earnings, the gloomy revenue forecast cast a shadow over the broader technology sector. Investors braced themselves for the upcoming earnings reports from major tech giants Microsoft and Alphabet, scheduled for release after the bell on Thursday.
Wall Street Rebound Stalled by Interest Rate Jitters
Wednesday saw a mixed session on Wall Street, with indexes attempting to rebound from near three-month lows but ultimately faltering due to persistent concerns about rising interest rates. The start of the second quarter has been marked by negative sentiment, exacerbated by signs of escalating inflation and hawkish commentary from the Federal Reserve, eroding expectations for a June interest rate cut.
Investor attention remains focused on key economic indicators, including gross domestic product data released later in the session, and Friday’s Personal Consumption Expenditures (PCE) price index data, which are anticipated to influence the trajectory of U.S. interest rates. The anticipation of these readings contributed to a rise in Treasury yields, exerting pressure on stock markets.
Social Media Stocks Feel the Heat
Following Meta’s downward spiral, social media stocks Snap and Pinterest experienced sharp losses in premarket trading. IBM also faced a setback, sliding 9% due to disappointing first-quarter earnings, although the company announced a $6.4 billion acquisition deal for Hashicorp.
However, there were some bright spots amidst the gloom. Ford surged 2.3% on the back of robust first-quarter earnings and optimistic guidance, while Chipotle Mexican Grill saw a 3% increase after exceeding expectations with its first-quarter earnings.
Crude Prices Rebound Despite Mixed Inventory Data
Oil prices bounced back on Thursday after a previous session’s dip, with traders digesting the latest U.S. inventories data. Despite a less-than-expected decline in gasoline stockpiles and a surprising increase in distillate stockpiles, crude inventories recorded a significant drop of over six million barrels, contrary to expectations of a build.
In response, U.S. crude futures edged 0.1% higher to $82.83 a barrel, while the Brent contract climbed to $88.04 a barrel. Meanwhile, gold futures experienced a modest increase of 0.1%, reaching $2,337.60 per ounce.
Market Update: Stocks are trading mixed ahead of U.S. data.. Tech stocks were under pressure overnight,x and a -0.9% correction in the NASDAQ is leading the slide in U.S. futures. Meta Platform Inc.’s disappointing outlook halted the rally in tech stocks. In Asia, China bourses managed modest gains, while the Nikkei dropped more than -2% and USD-JPY lifted to 155.51 as the BoJ meeting gets underway. In Europe, the FTSE 100 outperformed and is up 0.6%, despite a broad move higher in Sterling. The DAX is down -0.7%. Long EGBs meanwhile found buyers and yields corrected. The 10-year Bund yield is down -0.8 bp on the day at 2.58%, the 10-year Gilt yield has dropped -1.3 bp. Treasuries underperformed, and the U.S. 10-year rate is up 0.4 bp. That didn’t help the dollar, which apart from the yen corrected against its peers, leaving the DXY at currently 105.592. The front end WTI contract is trading around the USD 83 per barrel mark. Bullion hit a session low of USD 2305.20 per ounce before stabilizing and inching up to USD 2327.92.
$META-Â Oppenheimer lowered the firm’s price target on Meta Platforms to $500 from $585 and keeps an Outperform rating on the shares following quarterly results. CEO Zuckerberg now believes Meta can become “the leading AI company in the world,” underpinning higher opex/capex guidance. The firm says ad outlook seems healthy, and expects engagement and ads performance to keep improving, as conversions growing above impressions.
$CMG-Â Wedbush analyst Nick Setyan raised the firm’s price target on Chipotle to $3,200 from $2,850 and keeps a Neutral rating on the shares. The firm cites Q1 EPS above expectations on better-than-expected same-store sales growth and UL margin upside, and 2024 same-store sales growth guidance raised as benefits of throughput initiatives take hold. Wedbush continues to believe Chipotle is poised to sustain accelerated market share gains in a post-COVID environment, resulting in sustained growth above pre-COVID levels. However, it also believe its current valuation may not allow a potentially slower transaction growth trend-line beyond the second half of 2024.
$REGN- Regeneron Pharmaceuticals and Mammoth Biosciences announced a collaboration to research, develop and commercialize in vivo CRISPR-based gene editing therapies for multiple tissues and cell types. Regeneron is developing adeno-associated viral vectors using antibody-based targeting to enhance delivery of genetic medicine payloads to specific tissues and cell types. Mammoth is developing novel ultracompact nucleases and associated gene editing systems, with a variety of editing functionalities at a significantly smaller size than other CRISPR-based systems, including first generation Cas9 nucleases. By leveraging Regeneron’s expertise in AAV and antibody engineering and Mammoth’s expertise in ultracompact gene editing systems, the teams will endeavor to create disease-modifying medicines that can be delivered to tissues beyond the liver, to which most gene editing treatments are currently limited.
$BA- Citi lowered the firm’s price target on Boeing to $224 from $252 and keeps a Buy rating on the shares. The company’s Q1 results were better than expected, but “it’s clear there is much left to do,” the analyst tells investors in a research note. The firm believes Boeing “will come through this healthier than before.” This should position it well to take advantage of its duopoly position in commercial aerospace at a time when backlogs stretch out for roughly a decade and customers are clamoring for new aircraft, contends Citi.
Samsung (SSNLF) has started mass production of its 9th-generation 286-layer 3D NAND memory chips, which increases data I/O speeds by 33% compared to 8th-gen 236-layer chips, Nikkei Asia’s Nami Matsuura reports. The ninth-generation 3D NAND memory will be used in artificial intelligence data centers, as well as in smartphones, with Google (GOOGL) and Apple (AAPL) believed to be the main clients, according to the report.
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