For a change the main talking point in markets this week wasn’t tariffs, trade wars or Donald Trump, but the Federal Reserve, which met on Wednesday to decide whether or not to cut interest rates.
The outcome was a formality with the Fed holding its policy rate in the range of 4.25% to 4.5%, which was no surprise to anybody, but the main message from Jerome Powell’s press conference was uncertainty had increased leading the central bank to lower its growth expectations and raise its inflation expectations.
The labour market may seem solid for now, and hard data on the economy – like last month’s housing starts – appears fairly supportive, but investors decided the future looked less rosy than it did and dialed down their risk.
Tech stocks went lower again, with even Meta Platforms (META:NASDAQ) – the last Mag-Seven holdout – dropping into negative territory for the year.
Overall, the indices made small gains, with utilities such as GE Vernova (GEV:NYSE) and Vistra Energy (VST:NYSE) and oil stocks such as Chevron (CVX:NYSE) and Exxon Mobil (XOM:NYSE) posting healthy returns, alongside investor favourite Berkshire Hathaway (BRK.B:NYSE), often seen as a ‘safe haven’ in uncertain times.
ACCENTURE
Shares in management consultancy and outsourcing group Accenture (ACN:NYSE) fell to a six-month low on Thursday after the firm warned US government budget cuts were harming its business.
The $200 billion business services behemoth raised the lower end of its full-year revenue forecast on strong demand from clients to help integrate AI (artificial intelligence) tools like cloud services and data security into their operations.
However, on a call with analysts, chief executive Julie Sweet warned that as DOGE (the Elon Musk-run Department of Government Efficiency) looks for ways to cut government spending, ‘many new procurement actions have slowed, which is negatively impacting our sales and revenue’.
The company didn’t cut its earnings forecasts but admitted the new trend in government contracts was ‘very recent’, which suggests guidance could be altered in the coming quarter.
According to the Financial Times, Accenture is one of 10 consulting firms targeted by DOGE in its crackdown on spending.
BOEING
It was a good week for aerospace company Boeing (BA:NYSE), with the shares gaining 7% on Thursday thanks to an upbeat outlook from finance chief Brian West.
West shrugged off any immediate concerns about Trump’s tariffs, although he admitted parts availability could be a concern in the future, and said the company’s ‘cash burn’ was easing.
The company expects to take a one-off $150 million hit to first-quarter profit from cost overruns on fixed-price contracts, however cash flow could improve by ‘hundreds of millions of dollars,’ said West.
The company has been battling production delays and regulatory hurdles, but it had a ‘good start’ to the year and hopes to deliver more planes in 2025.
Bank of America analysts expect 737 deliveries to pick up this month, exceeding February’s numbers and matching January’s total of 40 aircraft.
The company said publicly it aims to reach a monthly output of 38 737 Max aircraft and seven 787 Dreamliners.
NVIDIA
Shares in everyone's favourite chip stock Nvidia (NVDA:NASDAQ) were flat on the week, although that masks a disappointing reaction to the firm's GPU Technology Conference in San Jose, California.
Participants were treated to the usual two-hour keynote speech from Jensen Huang, who talked up the future of robotaxis - the company has agreed a joint venture with GM (GM:NYSE) to develop AI-driven vehicles - and the firm's line-up of new products, but the general impression was the chief executive seemed to have lost his touch.
Inveterate Nvidia promoter Dan Ives at US broker Wedbush had expected the event to be ‘a wake-up moment for tech bulls’, but in the event the shares dropped 3% on the day as the magic appeared to fade.
Spending on AI by so-called hyperscalers such as Alphabet (GOOG:NASDAQ), Amazon (AMZN:NASDAQ) and Meta Platforms is expected to top $370 billion this year and reach $500 billion annually by the end of the decade, so there is no doubt there is more to come from Nvidia, but with the shares having gained over 2,000% in the last five years a period of reflection would seem be in order.
