In a week foreshortened by the Thanksgiving holiday, US markets, for the most part, consolidated their recent gains.
Investors on Wall Street seem increasingly hopeful rates have peaked and this has set the scene for a possible Santa Rally through the remainder of the year.
The test will be if the Federal Reserve tries to pour cold water on this idea – perhaps when it next meets in mid-December.
Entertainment company Paramount Global (PARA:NASDAQ) was higher as the market responded to M&A speculation – with a stock market filing revealed current CEO Bob Bakish, chief financial officer Naveen Chopra and other senior executives would be offered severance if they are terminated within two years ‘following the consummation of a change in control’.
Faring less well was computer-aided design software firm Autodesk (ADSK:NASDAQ) which, despite announcing robust quarterly earnings, disappointed on the outlook and posted weak cash flow figures.
NVIDIA
Shooting forecasts’ lights out is what investors demand of Nvidia (NVDA:NASDAQ) these days if they are to reconcile its soaring $1.2 trillion valuation.
The AI chips company did exactly that, tonking third quarter estimates by clocking adjusted earnings per share of $4.02 on revenue of $18.12, a sharp beat versus consensus of $3.36 earnings per share and $16.18 billion revenue. But a 16% share price rally into the results coupled with the risk that future revenue growth from China may be hurt by Washington’s advanced tech exports impasse with Beijing kept a new wave of excitement in check, the stock drifting off record $499.44 levels.
The political battle of wills between the West and China needs watching, and why there’s not much Nvidia can do to influence that, the company remains optimistic that it does have offset options.
The scale of the AI opportunity is becoming increasingly forceful and accepted by market participants, and assuming they are right, the key for Nvidia is innovation, making sure its designs stay at the bleeding edge of AI development. Plenty think is can, and will, which is why the most bullish analysts think the stock could blast past $1,000 in time.
DEERE & CO
Farming equipment maker Deere & Co (DE:NYSE) revealed stronger than expected quarterly results on 22 November but the shares dropped after the company gave a disappointing outlook.
Sales for the three months to the end of October fell 1% compared with the prior year to $15.4 billion but they topped consensus analysts’ estimates of $13.6 billion.Fiscal fourth quarter EPS (earnings per share) increased 11% year on year to $8.26 comfortably beating Street forecasts of $7.47 per share.
Looking out into 2024 the company estimates it will deliver net income between $7.75 billion and $8.25 billion which is well shy of Street estimates which are looking for $9.33 billion according to LSEG data.
Deere’s softer outlook mirrors comments from construction and mining equipment maker Caterpillar (CAT:NYSE) which noted (1 November) continued weakness in China and Europe. Deere shares are down 13% year to date compared with a 19% gain for the S&P 500 index.
AGILENT TECHNOLOGIES
Selling software, instruments and consumables to the life sciences and diagnostics industries is a resilient business line to be in, but even laboratories’ spend isn’t entirely insulated from tougher economic conditions judging by a 17.5% year-to-date fall in Agilent Technologies’ (A:NYSE) shares.
But this was a positive week for the provider of laboratory instruments and consumables, which has been impacted by disappointing sales in China, whose stock rallied 9% to $124 on the back of forecast-beating fourth figures (20 November).
Though sales and earnings per share declined by 8.7% and 10% year-on-year, to $1.69 billion and $1.38 on a per share respectively, both metrics were ahead of Wall Street estimates and investors’ spirits were buoyed by some confident outlook comments from CEO Mike McMullen.
‘The Agilent team continued its strong execution in Q4 and delivered leveraged earnings in 2023 during a challenging year for the industry,’ explained McMullen. ‘As we look ahead to 2024, we anticipate a slow but steady recovery’, insisted McMullen, whose charge is ‘well-positioned for long-term growth’ .
