Market News
Stock indexes declined on Thursday afternoon after losing the momentum gained in the morning due to the Federal Reserve’s economic outlook and a strong retail sales report.
Dow Jones Today: Nasdaq Retraces as Fed’s Gain Loses Momentum; Treasury Yields and Dollar Decline
The Dow Jones Industrial Average rose 0.2% Thursday afternoon after reaching an all-time high yesterday. The S&P 500 increased by 0.1%, while the Nasdaq dropped by 0.2%.
U.S. retail sales rose 0.3% in November, indicating a strong start to the holiday shopping season. Economists had expected a 0.1% decline in October sales.
Treasury yields continued to fall after yesterday’s drop following the Federal Reserve’s decision. Yields on benchmark ten-year bonds decreased from over 4.2% early yesterday to below 4% on Thursday morning as investors positioned themselves for a low-inflation future with lower interest rates. The dollar weakened along with Treasury yields.
European Stocks Get a Boost from Bank of England and ECB
European stocks received a boost from the Bank of England and the European Central Bank, as both kept interest rates steady at their policy meetings on Thursday.
Adobe Shares Drop After Q4 Results Beat Expectations
Adobe shares fell over 6% on Thursday after the company reported fourth-quarter results that exceeded expectations, but the company’s guidance failed to meet analysts’ forecasts, and it warned of potential fines from regulators in the U.S.
Adobe, the developer of software like Photoshop and Illustrator, stated it expects earnings for 2024 to be in the range of $17.60 to $18 per share. Analysts had expected $18 per share. The company also anticipates revenue to be between $23.5 billion and $25.5 billion, while forecasts indicated $27.5 billion.
In the fourth quarter, Adobe reported earnings per share of $4.27, with revenue increasing by 12% from the previous year to a record $5.05 billion. Both exceeded expectations.
Despite the drop in Adobe’s shares on Thursday, they have risen by nearly three-quarters of their value this year.
Rivian Shares Rise After Signing Deal with AT&T for Electric Fleet Pilot Program
Rivian shares jumped 9% on Thursday after they signed an agreement with AT&T to supply electric vehicles to the telecommunications giant, marking Rivian’s first new contract in four years.
AT&T will add an unspecified number of electric R1 vehicles and commercial trucks to its fleet starting in early 2024. As part of the deal, Rivian will make AT&T its exclusive communications provider, using AT&T’s network to issue over-the-air software updates.
AT&T is Rivian’s first commercial customer since signing an exclusive deal in 2019 to supply Amazon with 100,000 delivery vans. Rivian and Amazon ended the exclusivity of that deal in November this year, opening the door for Rivian to sell the trucks developed in partnership with Amazon to other companies.
Rivian’s shares rose to their highest level in over a month, while AT&T’s shares increased by 1.6%.
Intel Shares Rise Thanks to New AI Chips
Intel shares rose after the company unveiled a series of artificial intelligence chips designed to run AI software as it seeks to keep pace with the market frenzy throughout the year.
Intel launched Core Ultra, an AI chip for the personal computer market. The company expects AI-powered personal computers, which it described as “the biggest shift in personal computing experience in 20 years,” to make up 80% of the personal computer market by 2028.
Intel launched
The company also offers Xeon processors that include AI accelerators to enhance the efficiency of data centers and cloud networks operating AI applications. CEO Pat Gelsinger previewed Gaudi3, the optimized AI accelerator that the company expects to launch next year.
According to the company, key customers are already using its AI chips including International Business Machines (IBM) and Alphabet (GOOGL).
Intel’s shares surged to trade up as much as 5.5% on Thursday morning before losing some gains.
Solar Stocks Rise on Rate Cut Forecasts
Solar stocks were among the best performers in the S&P 500 early Thursday as markets prepared for the Federal Reserve to begin cutting interest rates next year.
Federal Reserve officials expect to cut interest rates three times next year, according to the summary of economic projections from the Federal Open Market Committee. This will reduce rates by 75 basis points from their highest levels in 22 years.
Solar companies and other renewable energy firms are sensitive to interest rates due to the large debt loads they carry. Infrastructure projects that rely on financing become more expensive due to rising borrowing costs.
At the same time, higher interest rates increase yields on low-risk investments such as bonds and cash equivalents, making them more attractive compared to high-risk stocks.
Shares of Enphase Energy, which has seen a 55% decline so far this year, jumped 10% Thursday morning. Shares of SolarEdge, down 69% since the start of the year, rose 9%. Shares of First Solar, which avoided the clean energy downturn this year and is up 4% for the year, increased by 7%.
Stocks That Moved the Most Before Opening
Gains: Shares of Moderna Inc. surged more than 10% after it said a vaccine developed in collaboration with Merck significantly reduces the likelihood of melanoma recurrence in patients. UBS Group AG’s shares rose by about 3% after reports it is trying to recover hundreds of millions of dollars in bonuses paid by Credit Suisse to bankers in 2022 and 2023 to retain employees amid its increasing troubles. Occidental Petroleum’s shares increased by more than 2% after billionaire Warren Buffett’s Berkshire Hathaway raised its stake in the oil company following a $12 billion acquisition proposal for CrownRock.
Losses: Shares of Adobe Inc. fell 4% after the company forecasted its 2024 earnings outlook below analysts’ expectations. Nucor Corp.’s shares dropped by about 1% after its current quarter guidance also came in below Wall Street expectations.
Stock Futures Rise on Federal Reserve Support in Second Session
Futures linked to the Dow Jones Industrial Average rose by 0.2% in pre-market trading.
S&P 500 futures climbed by about 0.2%.
Nasdaq 100 futures increased by 0.3%.
Source: https://www.investopedia.com/dow-jones-today-12142023-8415888
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