It’s been a bumpy week for US markets and investors have pulled out as caution creeps in. What could make markets cautious? Well, Donald Trump 2.0 incoming for one, a man who has no problem making up policy on-the-hoof which means we really are entering unknown territory as far as a whole host of issues goes.
More tangibly, stronger-than-expected producer price index inflation data sparked increased uncertainty over the long-term outlook for rates, and investors also locked in recent profits, pulling Wall Street indexes off record highs before a Fed meeting next week.
The Fed will meet next week in what will be the last key policy event of 2024 for global markets. Barclays economists expect the US central bank to deliver another 25 basis point cut, but are less certain about the rate path next year, given sticky inflation and the potential impact of ‘Trumponomics’.
The profit taking was especially apparent in technology shares, which saw a strong run-up in recent weeks. Conversely, both Tesla (TSLA:NASDAQ) and Alphabet (GOOG:NASDAQ) had pretty gung-ho weeks, and both sit firmly among the S&P 500’s best five day performers. There’s also been a fair bit of M&A speculation doing the rounds.
BROADCOM
US chip firm Broadcom (AVGO:NASDAQ) basically carry the internet on its back which makes the $844 billion company crucial to everything from online shopping to Bitcoin to AI.
So, it was with no little relief to see latest quarterlies report upbeat revenue guidance for the current quarter amid surging AI revenue, though the chipmaker reported mixed Q4 results as revenue fell just short of estimates.
Semiconductor solutions, its core business, jumped 12% to $8.23 billion, while infrastructure software rose 196% to $5.82 billion.
For 2024, semiconductor revenue was a ‘record $30.1 billion driven by AI revenue of $12.2 billion’, the company said. That AI revenue grew 220% year-on-year, a fact no missed by investors, who chased the stock aggressively in the after-market, putting up a 14% jump, which will catapult the stock beyond the $200 mark for the first time ever.
UBER TECHNOLOGIES
Carmaker General Motors (GM:NYSE) quitting the race to build so-called ‘robotaxis’ due to the huge amount of investment needed to bring its Cruise operation to scale sent shivers down the spines of Uber Technologies’ (UBER:NYSE) many investors.
Uber had bet big on Cruise in the hope of cutting its reliance on its vast army of human drivers to boost profit margins in its ride-hailing and food deliveries operations, so the news came as a blow.
It prompted a quick response from Uber chief financial officer Prashanth Mahendra-Rajah, who spoke at an investors conference hosted by Barclays, which appeared to settle some jitters.
Even so, this was the second time in the past seven days that Uber stock sold off in response to robotaxi news, sliding previously after Alphabet-owned Waymo revealed launch plans in Miami for 2026 but failed to even mention Uber in the presentations.
Waymo has partnered with Uber to offer rides through the Uber app in Phoenix and for its upcoming expansions in Austin and Atlanta, so being left on the hard shoulder seemed like it had been cold shouldered in Miami.
WALGREENS BOOTS ALLIANCE
Having shed over 80% of their value in five years, shares in Walgreens Boots Alliance (WBA:NASDAQ) bounced 12% to $9.65 this week on reports the embattled retail pharmacy is in talks to sell itself to Sycamore Partners in a rumoured $10 billion-plus transaction.
Known for acquiring troubled retailers like stationery chain Staples and department store Belk, private equity firm Sycamore is thought to be exploring a deal that could involve a break-up of Boots-owner Walgreens; if the buyout succeeds, Sycamore is expected to seek separate ownership for the UK chemist.
Struggling to deliver a turnaround under CEO Tim Wentworth, Walgreens Boots Alliance has planned, then pulled, at least two possible sale processes for Boots in recent years, with the board deciding offers received undervalued the 175-year old business.
