Lower than expected inflation for October helped supercharge US stocks. The 7.7% year-on-year CPI reading compared with the 7.9% which had been forecast and investors took this as a signal the Federal Reserve might finally be prepared to pivot on rate hikes.
There were eye-catching intra-day gains on the day the data was released, particularly from the tech-heavy Nasdaq index which is highly sensitive to interest rate moves.
Facebook owner Meta Platforms (META:NASDAQ) made particularly strong progress as it announced plans for 11,000 job cuts in response to a big drop in advertising revenue. Investors reacted positively to signs the business was taking seriously the need to cut its cloth to fit its more straitened circumstances.
Strong demand for solar energy helped SolarEdge Technologies (SEDGE:NASDAQ) to a record quarter and helped power up its share price. The company enjoyed particularly strong demand from Europe, despite the strong dollar. Sales from the region were up 90% year-on-year as the continent looks to find alternatives to Russian gas.
TESLA
Shares in Elon Musk-steered Tesla (TSLA:NASDAQ) reversed sharply over the past week, leaving them down more than 50% year-to-date.
This followed the revelation Musk had sold another 19.5 million shares in the electric vehicle-to-renewable energy company worth almost $4 billion.
The latest Tesla stock sale comes hot on the heels of his completion of the $44 billion takeover of social networking platform Twitter, where he has moved quickly slashed 50% of the workforce. Tesla shares are down heavily year-to-date on concerns the mercurial billionaire will be distracted by Twitter and with the car maker's debt issues also a concern for investors.
Sentiment towards Tesla, which is recalling just over 40,000 of vehicles in the US because of a potential power-steering problem, has also soured following analyst downgrades, a third quarter revenue miss and price cuts in China amid rising competition.
WALT DISNEY
Shares in Walt Disney (DIS:NYSE) sank to a two-month low after the company missed quarterly estimates for revenues and earnings per share.
While the company attracted a better than anticipated164.2 million new subscribers to its Disney+ streaming service, the direct-to-consumer business unit clocked up $1.5 billion of losses, around $800 million up on the prior year.
Adding to the disappointment the company guided for 2023 growth in earnings to be in the high single-digits, materially lower than analysts' forecasts.
Nevertheless, CEO Bob Chapek said that streaming losses were at an inflection point and insisted the business would turn a profit in 2024.
The company is pinning its hopes on a plan to reach profitability by increasing prices, launching an advertising tier realigning costs and marketing spending.
Disney said it had secured more than 100 advertisers for the US launch of the ad-supported tier on 8 December supported by strong base pricing.
ROBLOX AND TAKE-TWO
It might be the pre-teen gaming platform of choice, yet investors certainly showed no pleasure at Roblox's (RBLX:NYSE) latest update. The shares slumped 21% after it reported a much bigger third quarter loss than expected at 50c per share versus the 35c consensus forecast. Currency headwinds and higher staff costs were to blame.
The company generates revenue from selling a virtual currency to users so they can pay for games or related accessories in its gaming universe. About a third of these sales come from outside of the US so Roblox has lost out when translating foreign earnings back into the dollar, due to the strength of its home currency.
Fellow gaming company Take-Two Interactive Software (TTWO:NASDAQ) also disappointed the market after cutting its bookings outlook for the year. Weaker mobile and in-game sales caused the shares to fall 15% on 8 November, putting them back to levels not seen since 2019.
