Wall Street Today | Arm Hands AI Win to Investors, S&P Winks Over 5k
RECAP
The $S&P 500 Index (.SPX.US)$ passed the 5,000-point mark briefly Thursday. The leading index hit a symbolic all-time high during a multi-month bull run for AI, proven by Arm earnings -- which sent the stock rocketing more than 60% intraday.
The S&P 500 rose to 5,000.4 shortly before the market's close, then pulled back to end the session 2.9 points higher at 4,997.91 -- still good enough for a new record finish. Meanwhile, the $Dow Jones Industrial Average (.DJI.US)$ inched up 49 points, or 0.13%, to notch its own record finish of 38,726.33. Separately, the $Nasdaq Composite Index (.IXIC.US)$ rose 37.07 points (0.24%) to end the session at 15,793.72.
The S&P 500 has continued to climb in 2024 after a banner 2023 that saw the index rising about 25%.
The index briefly pushed above 5,000 Thursday due to optimism over corporate earnings - particularly from big technology companies - alongside a solid U.S. economic backdrop and investors' acceptance that interest rates won't fall until later this year.
Well-received results from $Disney (DIS.US)$, released after Wednesday's closing bell, helped support sentiment on Wall Street, although that positivity was somewhat counteracted by a disappointing earnings update from $PayPal (PYPL.US)$.
But perhaps more important for the S&P 500, and indeed the tech-rich Nasdaq Composite, was the 47% pop in shares of $Arm Holdings (ARM.US)$ after the chip designer delivered upbeat guidance and said it saw "increasing demand for new technology driven by all things AI."
ARM soared as much as 64.4% during Thursday's session to hit a $126.58 intraday high.
MACRO
Richmond Federal Reserve Bank President Tom Barkin Says 'Smart' for FOMC to Take Time on Rate Cuts
More evidence needs to be seen that the recent inflation slowdown is legitimate before rate cuts should be considered. Still, the Federal Open Market Committee has time, Richmond Federal Reserve President Tom Barkin said Thursday at the Economic Club of New York.
"Looking forward, I am hopeful but still looking for more conviction that the slowing of inflation is broadening and sustainable," Barkin said. "Much of the inflation drop thus far has come from the partial reversal of pandemic-era goods price increases. Shelter and other services inflation remain higher than historical levels."
Treasury Yields Remain Higher After Solid $25 Billion 30-year Auction
Treasury yields remained higher Thursday afternoon as traders assessed the results of another strong government auction this week.
A $25 billion auction of 30-year bonds went "very well" and was met with "really good demand" from indirect bidders, according to Tom di Galoma, co-head of global rates trading for BTIG in New York. "Real money, as represented by indirect bidders, took a higher percentage than usual," at 70.7% versus an average of 65%, he said, while direct bidders took a below-average 14.5% and dealers got 14.8%.
The $U.S. 2-Year Treasury Notes Yield (US2Y.BD)$ rose 2.6 basis points to 4.446% from 4.420% on Wednesday. The $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$advanced 3.4 basis points to 4.142% from 4.108% on Wednesday. The $U.S. 30-Year Treasury Bonds Yield (US30Y.BD)$ climbed 4.2 basis points to 4.351% from 4.309% on Wednesday.
SECTORS
WTI Crude Oil Rises for a Fourth Day on Higher US Refined Product Demand and Mideast Tension
West Texas Intermediate) crude oil rose for a fourth-straight session on Thursday on signs of higher demand after the Energy Information Administration said inventories of refined products fell despite a rise in crude oil stocks. At the same time, Mideast tensions continue to run hot.
West Texas Intermediate crude oil for March delivery closed up US$2.36 to settle at US$76.22 per barrel, while April Brent crude, the global benchmark, was last seen up US$2.39 to US$81.60.
The rise comes after the EIA on Wednesday offered traders some good news on demand, with gasoline stocks dropping 3.1 million barrels last week and distillate inventories down 3.2 million barrels, even as crude inventories rose a more than expected 5.5 million barrels and production returned to a record 13.3-million barrels per day.
"While the crude oil market remains rangebound, the fuel product market is showing some emerging strength with refinery margins on the rise, not least diesel prices which are being supported by global stock levels falling below their seasonal averages," Ole Hansen, head of commodity strategy at Saxo Bank, noted.
COMPANIES
Arm Holdings Soars 60%+ Intraday on Well-Received Q3 Results and Forward Guidance
$Arm Holdings (ARM.US)$ soared more than 60% in early Thursday trading after the tech darling reported fiscal Q3 non-GAAP earnings late Wednesday of $0.29 per diluted share, up from $0.22 a year earlier.
Affirm -7%, Holdings Q2 Loss Wasn't as bad as Expected
$Affirm Holdings (AFRM.US)$ reported quarterly losses of $(0.54) per share which beat the analyst consensus estimate of $(0.72) by 25 percent. This is a 50.91 percent increase over losses of $(1.10) per share from last year. The company reported quarterly sales of $591.10 million which beat the analyst consensus estimate of $520.62 million by 13.54 percent. This is a 47.94 percent increase over sales of $399.56 million the same period last year.
Pinterest Reports Sales Below Expectations and Negative Outlook
$Pinterest (PINS.US)$ reported quarterly earnings of $0.53 per share which beat the analyst consensus estimate of $0.51 by 3.92 percent. The company reported quarterly sales of $981.00 million, which missed the analyst consensus estimate of $989.53 million by 0.86 percent.
Disney Shares Climb 9% After Earnings Beat, Plans $1.5B Stake in Epic Games
$Disney (DIS.US)$ shares soared 9.5% Thursday after the company delivered a better-than-expected quarterly earnings, painted a rosy outlook, boosted dividend and announced a plan to buy a $1.5 billion equity stake in Epic Games, the company behind the popular game Fortnite.
PayPal Sinks After Earnings
$PayPal (PYPL.US)$ fell some 10% in early trading Thursday on the heels of the company's fourth-quarter results.
Maersk Sinks Nearly 20% After Shipping Giant Suspends Share Buyback Amid Red Sea Crisis
$A.P. Moller - Maersk A/S Unsponsored ADR (AMKBY.US)$ sank nearly 20% intraday Thursday after the shipping giant suspended its share-buyback program to preserve cash amid uncertainty surrounding disruption in the Red Sea and industry overcapacity that continues to drag on freight rates.
Ralph Lauren Exits 20 Department Stores in North America Amid Continuing Wholesale Hit
$Ralph Lauren (RL.US)$'s international sales offset another weak performance in North America, which has driven the exit of 20 department stores in the region during the fiscal year. The luxury apparel and accessories company suffered a 15% hit to wholesale revenue in the latest quarter, in line with expectations as it strengthened its direct-to-consumer business.
Source: Bloomberg, Dow Jones, CNBC, Reuters
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