As Mike Tyson famously said, everyone has a plan until they are punched in the face, and much of the optimism surrounding the start of 2025 seems to have gone out of the window as investors have been left reeling from a one-two combination of economic data with better-than expected employment data contrasting with stubbornly high inflation.
That means the dream of lower interest rates is fading, and even Fed board members are reported to be less convinced of the need for cuts than they were a few months ago when they voted for an emergency 0.5% cut even though there was no emergency.
In a week of curtailed trading due to the state funeral of former president Jimmy Carter, many of the stock market gainers look suspiciously similar to last year’s big winners – tech hardware and software, electric utilities and fossil fuel companies – with the exception of AI (artificial intelligence) darling Nvidia (NVDA:NASDAQ).
Investors were unimpressed at chief executive Jensen Huang’s failure to provide forecasts for revenues and profits at CES and his suggestion quantum computing – a big potential market for his company’s AI chips – was probably two decades away from providing anything ‘useful’.
EBAY
Shares in Ebay (EBAY:NASDAQ) soared 9% in after-hours trading on 8 January after US tech giant Meta Platforms (META:NASDAQ) gave the green light to allow users to browse Ebay listings on Facebook marketplace.
Meta said it would test the placement of eBay listings on Facebook Marketplace in the US, France and Germany and allow users to complete the transactions on eBay.
The agreement was described by analysts at Morgan Stanley as a ‘win-win partnership', giving Ebay increased distribution across Facebook’s audience while allowing Meta to better monetise its Marketplace feature.
Over the past year Ebay shares have put in a stellar performance gaining 64%. Adjusted earnings for the $20 billion retail platform are expected to have risen 14% last year compared to just 2% growth in 2023.
Analysts have also reacted positively to Ebay’s use and progress with generative AI to create product listings.
MODERNA
Shares in Moderna (MRNA:NASDAQ) jumped 12% on Tuesday (7 Jan) after the CDC (Centre for Disease Control and Prevention) reported the first human death from bird flu or H5N1 in Louisiana.
Investors bid up the stock in the hope the embattled vaccine maker could see a sales boost in the event of a bigger outbreak - in July 2024 Moderna was awarded $176 million by the government to advance the development of its mRNA bird flu vaccine.
Although the investigation is ongoing, the CDC believes the source of the infection in Louisiana is due to exposure to bird flocks rather than a human-to-human transmission and its overall assessment is that risk to the public from bird flu remains low.
Moderna’s shares subsequently fell back by around 9% but remain up 4% over the week. The vaccine maker is pinning its hopes on gaining up to 10 product vaccine approvals over the next three years across cancer, rare diseases, and respiratory diseases.
ULTA BEAUTY
Cosmetics retailer Ulta Beauty (ULTA:NASDAQ) initially caught a bid on a bullish fourth quarter trading update (6 Jan), although the bounce faded to leave the shares 4.4% lower at $415.1 over the week.
America’s biggest specialist beauty retailer said it now expects comparable sales to increase ‘modestly’ in Q4 following a stronger-than-expected performance over the holiday season, and its operating margin will be above the high end of its previously expected 11.6% to 12.4% range.
This encouraging Christmas performance suggests the firm could continue to deliver positive comparable sales in the new year as it laps soft comparatives, though the cosmetics and skin care market remains competitive with rivals such as Sephora on a store opening spree.
A seller of mass and prestige cosmetics, as well as fragrances, skin care and hair care products, Ulta Beauty also sprang a surprise by announcing that long-serving chief executive Dave Kimbell is retiring and naming chief operating officer Kecia Steelman as his successor.
