Major US indices notched-up further all-time highs this week on dovish comments from Fed chair Jay Powell in the press conference following the central bank’s decision to leave interest rates unchanged.
The Fed’s summary of economic projections sees stronger economic growth and stickier inflation, but it still anticipates a couple of rate cuts later in the year.
The small-cap, economically sensitive Russell 2000 index which has lagged the S&P 500 and Nasdaq Composite indices was the biggest gainer, up over 3%, but remains around 13% shy of its all-time high achieved in November 2021.
Reflecting the prevailing euphoric mood social media site Reddit (RDDT:NYSE) surged 48% in New York to top $50 on its market debut.
This follows the Nasdaq listing of artificial intelligence infrastructure group Astera Labs (ALAB:NASDAQ) which jumped 72% on its IPO (initial public offering).
It wasn’t such a good week for Apple (APPL:NASDAQ) whose shares fell 4% on 21 March after the US Justice Department sued the technology giant over its alleged iPhone monopoly.
MICRON
Shares in Micron (MU:NASDAQ), the largest US maker of memory chips, jumped the most in over a decade after the firm gave a surprisingly positive outlook based on increasing demand for chips for AI (artificial intelligence) applications.
For the three months to the end of February, the company posted sales of $5.82 billion against $4.73 billion the previous quarter and $3.69 billion a year earlier.
‘We delivered revenue, gross margin and EPS well above the high-end of our guidance range — a testament to our team’s excellent execution on pricing, products and operations,’ said president and chief executive Sanjay Mehrotra.
‘Our preeminent product portfolio positions us well to deliver a strong fiscal second half of 2024. We believe Micron is one of the biggest beneficiaries in the semiconductor industry of the multi-year opportunity enabled by AI,’ added Mehrotra.
Micron shares climbed more than 16% to an all-time high of $112, adding more than $16 billion to the firm’s market value and sparking a broad rally across the semiconductor sector.
NIKE / LULULEMON
Wall Street’s athleisure kings Nike (NKE:NYSE) and Lululemon (LULU:NASDAQ) lost ground despite skipping in with better-than-expected quarterly results (21 March), as outlook disappointment dragged their shares lower.
Nike initially rallied on a better-than-feared third quarter print before plunging 7% to $94 as investors digested its soggy outlook reflecting unfavourable currency moves and changes in the amount of product being bought directly from Nike, not to mention broader pressures on discretionary spend and market share losses to newer running shoe brands.
The sneakers-to-soccer ball behemoth’s third quarter growth in North America topped estimates, but growth in China continued to slow. Planning to cut $2 billion of costs over the next three years, Nike delivered a slight uptick in sales to $12.4 billion for Q3, ahead of the $12.28 billion Wall Street was expecting, while earnings of $0.77 proved better than the $0.74 called for by analysts as lower shipping costs supported gross margins.
Meanwhile, yoga pants-to-belt bags purveyor Lululemon soured 13% to $479 despite forecast-beating fourth quarter earnings, as the company’s first quarter outlook disappointed amid a slowdown in North America.
FEDEX
Often seen as a good indicator of the health of the wider economy thanks to the breadth of its exposure across areas like transportation, logistics and e-commerce, FedEx (FDX:NYSE) was up sharply in after hours trading as quarterly results on 21 March impressed the market.
The company posted revenue for the three-month period of $21.7 billion, down from $22.2 billion last year, and now expects fiscal 2024 earnings in the range of $17.25 to $18.25 per share, compared with its previous guidance of $17 to $18.50 per share.
The reaction to these numbers told you less about broader economic conditions and more about the progress the company has made in its turnaround efforts. CEO Raj Subramaniam has been under pressure to improve profitability at its Express air freight arm and evidence of progress here was received warmly by the market.
It was supported by measures including parking aircraft on the ground, reducing the number of flight hours and other efforts aimed at putting a lower number of fuller planes in the air.
FedEx also said it plans to buy back $500 million worth of its shares in the current quarter, with the board approving a new $5 billion buyback programme to boot.
