The US market lost its recent momentum in a big way this past week as shares collapsed on the 18 December with the S&P 500 enduring its worst day since 2001.
The trigger for the sell-off was a hawkish tone from the US Federal Reserve even as it announced its latest interest rate cut.
With officials signaling growing concern over the threat posed by inflation, the market moved quickly to reset bets on rate cuts in 2025 and an upward revision to US third-quarter GDP only added to the sense rates will stay higher for longer.
Bucking the negative trend was Boeing (BA:NYSE), which secured a major new deal from Turkish low-cost airline Pegasus for 100 Boeing 737 Max 10 jets.
Multi-brand restaurant operator Darden Restaurants (DRI:NYSE), owner of chains such as Olive Garden and LongHorn Steakhouse, was also in demand as it reported a dining boom for the holiday season and upgraded its annual sales forecast.
MICRON TECHNOLOGY
Missing forecasts seldom goes down well with investors and soggy guidance is usually equally unsavoury, so it was little surprise Micron Technology’s (MU:NASDAQ) soft outlook sparked a hefty stock reaction.
Shares in the memory chipmaker plunged 15% after it steered second-quarter 2025 earnings and revenue guidance way below existing estimates - the company forecast adjusted earnings of $1.33 to $1.53 per share compared to the consensus of $1.97, a 22% to 32% miss.
Sales guidance was little better, with second-quarter revenue expected to be $7.9 billion, give or take $200 million, significantly short of the $8.97 billion estimated by analysts.
Micron, a big Nvidia (NVDA:NASDAQ) supplier, has problems with weaker demand in mature markets for home PCs, laptops and smartphones, which peaked a few years ago.
‘While consumer-oriented markets are weaker in the near term, we anticipate a return to growth in the second half of our fiscal year,’ said Micro chief executive Sanjay Mehrotra.
Crucially, Micron’s emerging AI angle, it’s HBM or high bandwidth memory chips, ‘remains intact,’ said analysts at Piper Sandler.
NIKE
Following an initial bounce on better-than-feared second-quarter results (19 December), Nike’s (NKE:NYSE) shares finished the week flashing red on the realisation the sportswear titan’s turnaround will take longer than expected.
There was also disappointment as Nike forecast a low double-digit revenue fall in the third quarter including Christmas.
New chief executive Elliott Hill outlined his strategy to return the sneakers-to-soccer ball behemoth to growth, with Nike now focused on returning sport to the centre of everything it does, though he warned the Oregon-based company’s bid to regain lost market share will entail some short-term pain.
Sales of $12.35 billion and earnings of 78 cents for the quarter to 30 November topped the $12.13 billion and 63 cents anticipated by analysts respectively, but heavy discounting and Nike’s lack of product newness drove sales and profit declines, with revenue down in North America and China.
‘In a moment where our team, brand and business are being challenged,’ said Hill on a call with analysts, ‘my singular focus is to help get us back on track, to get back to winning.’
PFIZER
Pharmaceutical giant Pfizer (PFE:NYSE) gave its weary shareholders an early Christmas present on Thursday (18 Dec) after reaffirming 2024 guidance and forecasting 2025 financials in line with analysts’ expectations.
The news sent the shares up over 5%, highlighting just how poor sentiment towards the stock has become in recent years, reflected in a 55% fall in value since late 2021.
The company’s struggles have attracted the attention of activist investor Starboard, which has amassed a $1 billion stake according to Bloomberg.
Pfizer said it expected 2025 revenue growth in the range of flat to 5% and a meaningful 10% to 18% growth in adjusted, diluted EPS (earnings per share) to between $2.80 and $3.00, which was a tad ahead of the current consensus of $2.88.
This anticipated growth reflects higher revenue and an increase in operating margin as the business benefits from a $4 billion ‘cost realignment’ programme with a further $500 million of savings announced.
The shares are down 13% year to date compared with a 24% advance in the S&P 500 index.
