Main Wall Street Indexes Take a Hit: On Thursday, the financial markets were marked by significant losses across all major indices, fueled by escalating geopolitical tensions between Israel and Iran, coupled with hawkish remarks from Federal Reserve officials. This downturn sets the stage for a potentially losing week for the markets, with the Dow Jones Industrial Average on track for its worst performance since March 2023.
Nonfarm Payrolls Awaited for Rate Clues: Investors are now keenly waiting for the release of the nonfarm payrolls data for March, expected on Friday. This data is anticipated to provide further insights into the state of the labor market, which, along with inflation, serves as a critical guide for the Federal Reserve’s interest rate decisions. Recent months have seen the payrolls figure consistently outperform expectations, hinting at a robust U.S. labor market.
Fed Officials Express Concerns Over Inflation: Throughout the week, several Federal Reserve officials have voiced concerns over persistent inflation potentially delaying the central bank’s plans to reduce interest rates. Notably, Minneapolis Fed President Neel Kashkari suggested that inflation’s stickiness could prevent any rate cuts in 2024. These comments, especially those made late on Thursday, contributed to the sharp pullback observed on Wall Street.
Oil Prices Surge Amid Middle East Tensions: The oil market has seen a notable increase, with prices reaching a five-month high due to the worsening geopolitical situation in the Middle East. The conflict between Israel and Iran, in particular, has sparked fears of supply disruptions, further exacerbated by OPEC’s production cuts and attacks on Russian refineries. Despite high U.S. production levels, a significant draw in U.S. gasoline inventories indicates rising demand, adding to the upward pressure on prices.
Market Movers and Shakers: In stock-specific news, Uber Technologies received a bullish outlook from Jefferies, citing an expanded mobility product suite driving growth. Snowflake was upgraded to Buy at Rosenblatt following positive customer feedback. Meanwhile, Tesla is reportedly increasing compensation for its AI team to counter aggressive recruiting by OpenAI. Roku faces challenges from slowing advertising growth, according to Morgan Stanley. Netflix enjoys a higher price target from Pivotal Research, buoyed by strong subscriber and revenue growth. Lastly, Disney is set to tackle password sharing on its streaming platforms, indicating a stricter enforcement approach starting June.
$UBER- Jefferies raised the firm’s price target on Uber Technologies to $100 from $95 and keeps a Buy rating on the shares. Uber is increasingly leveraging an expanded mobility product suite to address more use cases, which is driving increased user adoption and multi-product attachment, the analyst tells investors in a research note. The firm’s analysis shows these new products will increase the company’s annual growth of mobility bookings and EBITDA by 4% and 6% through 2026, respectively, supporting faster growth and upside to Street estimates. Jefferies says Uber has gone from just two mobility products in 2011 – UberX and Black – to about 20 at the present.
Rosenblatt upgraded Snowflake to Buy from Neutral with an $185 price target. The analyst came away from a customer event in Toronto encouraged that broad-based customer interest in the Snowflake platform and the expanding ecosystem around the company “remain very healthy.” The firm cites the post-Q4 results weakness in the stock and 22% implied return to the price target for the upgrade.
$TSLA-Â Tesla is increasing compensation for its AI engineering team because OpenAI has been “aggressively recruiting Tesla engineers” with “massive” offers, Bloomberg’s Nick Turner and Craig Trudell report. Tesla CEO Elon Musk wrote on X in response to a report by The Information on how his startup xAI has poached four engineers from Tesla, the CEO blamed “the craziest talent war I’ve ever seen!” After The Information reported on Wednesday that Ethan Knight, a member of Tesla’s team working on computer vision for advanced driving systems, left last month to join xAI, Musk said that OpenAI had tried to hire him.
$ROKU-Â Morgan Stanley lowered the firm’s price target on Roku (ROKU) to $60 from $65 and keeps an Underweight rating on the shares. The analyst reduced estimates for Roku, saying lower advertising growth expectations more than offset higher streaming services distribution revenues. The firms says that while Walmart’s (WMT) Vizio (VZIO) acquisition will increase competition in connected TV, the risk to Roku’s Active Account and revenue growth is likely muted in the near-term. Morgan Stanley sees limited valuation support for Roku shares in an increasingly competitive connected TV advertising market and sees risk to medium-term Platform segment gross profit expectations.
$NFLX- Pivotal Research raised the firm’s price target on Netflix to $765 from $700 and keeps a Buy rating on the shares. The analyst says the target is a high on the Street and reflects higher 2024 and beyond subscriber and average revenue per user forecasts. The higher forecasts are a result of continued solid momentum in the core business and the attractive absolute and relative value that the Netflix service is offering to consumers, the analyst tells investors in a research note.
$DIS- Disney intends to crack down on password sharing for its streaming platforms, beginning with a few countries in June before implementing a broader rollout in September, the Wall Street Journal’s Alyssa Lukpat reports. In a CNBC interview, CEO Bob Iger revealed the time frame, though declined to mention which countries would be first, Lukpat notes
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