The stock market rally was a bit bumpy, but it was a solid week, with the Nasdaq and S&P 500 hitting new highs. Semiconductor stocks have mostly recovered since Monday, but Micron Technology (MU) fell despite earnings in line with expectations, but software and large caps fared well and small caps rebounded, helped by muted inflation data. carnival (CCL) and FedEx (FDX) wins with profits, Nike (NKE) fell. Rivian (RIVN) soared following VW’s big investment in Rivian.
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What stock market investors need to know about the PCE report
Mega-cap, small-cap, and software are strong
The stock market posted modest to solid gains last week. Software stocks accelerated their recovery while a rotation into industrials and financials stalled. Several large-cap stocks surged. The Dow Jones Industrial Average rose modestly, while the S&P 500 and Nasdaq hit new all-time highs. The small-cap Russell 2000 index rose above its 50-day line. Micron Technology (MU) and Nike (NKE) fell after the earnings announcement, carnival (CCL) and FedEx (FDX) surged. Crude oil continued to rebound. Treasury yields rose.
Economic data bolsters hopes of rate cut
The core PCE price index, the Fed’s preferred inflation measure, rose just 0.1% month-on-month in May. Core PCE inflation was 2.6% year-on-year, the lowest since March 2021. The report strengthened expectations for a Fed rate cut in September and two quarter-point cuts in 2024. The inflation data is part of the Income and Expenditures report, which showed consumer spending weakening below expectations, while basic durable goods data unexpectedly weakened in May. Jobless claims fell in the latest week, but the four-week average continued to rise.
Micron’s in-line guidance disappoints
Micron Technology Micron (MU) posted third-quarter adjusted earnings per share of 62 cents, its second consecutive quarterly profit after consecutive losses. Revenue rose 82% to $6.81 billion, accelerating growth again. Micron highlighted strong sales of high-bandwidth memory for AI applications and solid-state drives for data centers. The memory chip giant’s fourth-quarter EPS guidance beat consensus at the midpoint, while revenue targets remained within consensus. Micron plans to increase capital spending, which is good news for chip equipment makers. Micron shares fell sharply.
Carnival soars with unexpected profit
The cruise giant expects adjusted earnings per share of 11 cents, compared with a loss of 31 cents and a loss of 1 cent in the same period last year.Revenue rose 18% to $5.78 billion, slightly beating expectations, as growth continues to slow. carnival (CCL) continues to see strong booking momentum, with record bookings for voyages in 2025. The stock has surged, surging off the bottom.
Nike plummets amid weak sales and outlook
Nike Nike (NKE) profits rose 50% in the fourth quarter, well above expectations. But sales fell 2% to $12.6 billion, below expectations, due to a slowdown in North America. The Dow Jones athletic footwear and apparel giant now sees a high single-digit decline in sales in the first half of fiscal 2025, compared with its previous target of a low single-digit sales decline. UBS said in a Friday note that the fourth-quarter report showed Nike’s fundamental trends were “much worse than expected” and that the key takeaway was “there will be no rapid recovery in profits.”
Rivian’s growth surges thanks to VW deal
Late Tuesday, Rivian (RIVN) Volkswagen (VWAGY) plans to invest $5 billion in the startup over the next two years to ease financing concerns. This includes $3 billion for Rivian shares and $2 billion for a joint venture focused on designing and developing software and electrical architecture. Meanwhile, Rivian said Thursday it expects to produce 57,000 vehicles this year. It will deliver 13,000 to 13,300 vehicles in the second quarter, beating analysts’ expectations of 12,000. Official second-quarter delivery numbers will be released on July 2. Rivian also confirmed its goal of achieving a positive gross profit per vehicle by the fourth quarter. In the first quarter, Rivian lost $38,784 per vehicle delivered. Rivian shares surged on Wednesday.
FedEx profits soar, UPS sells Coyote
FedEx (FDX) reported that fourth-quarter earnings rose 9.5% and revenue rose 1% to $22.1 billion, both of which beat expectations. The shipping and delivery giant offered solid guidance and said it was evaluating options for its FedEx Freight unit, which loses its postal service contract in September. UPS UPS acquires Coyote Logistics’ freight brokerage business RXO The company said it would acquire FDX for just over $1 billion and “focus on its core business.” FDX shares soared to a 52-week high on the stock market. UPS was little changed in its long-term downward trend.
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Novo Nordisk Novo Nordisk has received marketing approval in China for its weight-loss drug Wegovy. Novo’s diabetes drug Ozempic, which contains the same active ingredient, has been available in China since 2021. Novo Nordisk also announced plans to invest $4.1 billion to build a second fill-finish manufacturing facility in Clayton, North Carolina, to keep up with demand.
AeroVironment Shares in drone and missile maker AVAV fell Wednesday after the company reported a 57% drop in fourth-quarter adjusted profit and slowed sales growth to 6%, though earnings beat expectations while fiscal 2025 guidance was in line with expectations.
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