US stocks were mixed on Wednesday, with the Nasdaq looking to build on its latest record as Alphabet’s (GOOG, GOOGL) strong earnings boosted optimism for Big Tech results. Meanwhile, crucial GDP and labor market data continued to add data pieces to the Federal Reserve’s puzzle ahead of its next interest rate decision.
The Dow Jones Industrial Average (^DJI) rose about 0.3%, or more than 100 points, while the S&P 500 (^GSPC) popped nearly 0.2%. Meanwhile, the tech-heavy Nasdaq Composite (^IXIC) also added about 0.2%.
Fresh government data on Wednesday showed that US economic growth slowed slightly last quarter to a 2.8% annualized rate. That was slightly lower than economists had forecast. The data revealed, however, that consumers have kept spending at a robust pace as inflation continues to fall.
Also, data from ADP found US private payroll growth surged in October, adding a curveball to the mix ahead of the all-important monthly jobs report set for release on Friday.
At the same time, megacaps are in the spotlight after Alphabet’s quarterly results showed its high-spending push into artificial intelligence is starting to pay off. Shares of the Google parent jumped over 6%, alongside smaller gains for Amazon (AMZN), Meta (META), and Microsoft (MSFT).
The wait is on for after-hours earnings from Meta and Microsoft, next up in the five-strong parade of “Magnificent Seven” reports this week. For the stock rally, a lot is riding on how Big Tech earnings fare — which will be paramount even amid a packed two weeks of data and other market-moving news, according to analysts.
Despite AMD’s softer guidance, Wall Street analysts on Wednesday reiterated their belief that there’s no reason to fear an AI slowdown.
Wedbush analyst Matt Bryson pointed to AMD’s momentum in the GPU space. Graphics processing units are AI chips used in data centers to power generative artificial intelligence software. AMD raised its sales outlook for datacenter GPUs by $500 million to over $5 billion for the upcoming quarter. Nvidia holds a 75% to 90% share of the GPU market.
Bryson said in a note Wednesday: “With data center AI being by far the largest potential opportunity for AMD, we see the company’s continued strong performance on this front as the single most significant data point from last night’s call.”
Bryson added that, while he understands the rationale behind the stock’s drop, AMD’s results “only supported the longer-term bull thesis that AMD is well positioned to realize accelerated growth over a prolonged period as the most competitive alternative to NVDA for data center GPUs.”
25 mins ago
Social media stocks in focus: Reddit, Snap soar on earnings beats, Meta rises ahead of quarterly report
Today’s a good day to be a social media company.
Reddit (RDDT) soared more than 40% to a record high Wednesday morning, and fellow social media platform Snap (SNAP) surged 8% after the pair posted earnings beats the prior evening thanks to their growing advertising sales.
Reddit’s ad revenue grew 56% from last year, helping the company post its first-ever profit on a GAAP-adjusted basis. CEO Steve Huffman also said the company is “talking to folks” about future AI licensing deals (the company currently has partnerships with Alphabet (GOOGL, GOOG) and ChatGPT-maker OpenAI).
For its part, Snap CEO Evan Spiegel said in a call with investors Tuesday evening that direct advertisers on the platform more than doubled from last year in the third quarter.
JPMorgan analyst Doug Anmuth said in notes to investors Wednesday morning that Snap and Reddit’s results point to “mostly stable” macro trends in digital advertising.
Yahoo Finance’s Dan Howley has more on what’s expected from the Facebook and Instagram parent here.
Today at 2:17 PM UTC
Earnings roundup: Eli Lilly, Kraft Heinz, and Caterpillar disappoint
Another wave of companies reported earnings Wednesday morning, from pharmaceutical giants Eli Lilly (LLY) and AbbVie (ABBV), to UBS (UBS) and Kraft Heinz (KHC).
Here’s a snapshot of how companies performed relative to Wall Street’s expectations, using Bloomberg consensus estimates:
Eli Lilly: Adjusted diluted earnings per share of $1.18 vs. $1.51 expected, revenue of $11.4 billion vs. $12.2 billion expected.
AbbVie: Adjusted diluted earnings per share of $3.00 vs. $2.91 expected, revenue of $14.5 billion vs. $14.3 billion expected.
Caterpillar (CAT): Adjusted diluted earnings per share of $5.17 vs. $5.34 expected, revenue of $16.1 billion vs. $16.4 billion expected
UBS: Diluted earnings per share of $0.43 vs. $0.24 expected, revenue of $11.7 billion vs. $11.5 billion expected
Kraft Heinz: Adjusted diluted earnings per share of $0.75 vs. $0.74 expected, revenue of $6.38 billion vs. $6.42 billion expected
Hess (HES): Adjusted diluted earnings per share of $2.14 vs. $1.81 expected, revenue of $3.2 billion vs. $2.9 billion expected
Today at 2:00 PM UTC
Pending home sales jump in September to highest level since March
Homebuying demand bounced back in September amid lower mortgage rates during the month.
Pending home sales rose 7.4% in September from the month prior, according to the National Association of Realtors, hitting the highest level since March. Economists polled by Bloomberg had expected a 1.9% monthly increase in the data, a forward-looking indicator of home sales based on contract signings,
High mortgage rates this year have prompted potential sellers and buyers to stay on the sidelines. In September, the rates started to drop after the Federal Reserve cut the federal funds rate at its meeting that month.
“Contract signings rose across all regions of the country as buyers took advantage of the combination of lower mortgage rates in late summer and more inventory choices,” NAR chief economist Lawrence Yun said in a press statement. “Further gains are expected if the economy continues to add jobs, inventory levels grow, and mortgage rates hold steady.”
However, the cost of mortgages has risen again this month. And many first-time homebuyers remain on the fence due to high borrowing costs, record home prices, and a lack of supply.
Today at 1:32 PM UTC
Stocks open mixed
US stocks traded mixed on Wednesday, with the Nasdaq looking to build on its latest record as Alphabet’s (GOOG, GOOGL) strong earnings boosted optimism for Big Tech results.
Meanwhile, crucial GDP and labor market data continued to add data pieces to the Federal Reserve’s puzzle ahead of its next interest rate decision.
The Dow Jones Industrial Average (^DJI) fell more than 60 points, or more than 0.1%, while the S&P 500 (^GSPC) also slid about 0.1%. The tech-heavy Nasdaq Composite (^IXIC) rose just above the flat line as a fresh batch of earnings rolled in.
Today at 1:16 PM UTC
Super Micro Computer stock tanks after accounting firm resigns
Shares of Super Micro Computer (SMCI) cratered in premarket trading, falling over 30% after a filing revealed accounting firm Ernst & Young (EY) has resigned from its accounting duties with the tech company.
In a resignation letter, EY said, in part: “We are resigning due to information that has recently come to our attention which has led us to no longer be able to rely on management’s and the Audit Committee’s representations and to be unwilling to be associated with the financial statements prepared by management, and after concluding we can no longer provide the Audit Services in accordance with applicable law or professional obligations.”
EY quit while conducting the audit for Super Micro’s fiscal year that ended on June 30, 2024. The resignation comes two months after a short seller report from Hindenburg Research alleged, among other things, “accounting manipulation” at the AI highflier.
Today at 12:40 PM UTC
GDP: US economy grows at slower-than-expected pace in third quarter as inflation falls
The US economy grew at a slightly less rapid pace in the last quarter than expected.
Meanwhile, the “core” Personal Consumption Expenditures index — a measure of price pressures that excludes the volatile food and energy categories — grew by 2.2% in the second quarter. That topped estimates of 2.1% but was significantly lower than the 2.8% gain in the prior quarter.
Google parent’s stock surges on strong earnings fueled by AI
Shares of Google parent Alphabet (GOOG, GOOGL) jumped 7% premarket Wednesday after the company reported earnings that beat Wall Street’s expectations.
Here’s a look at how its performance compared to forecasts, according to Bloomberg consensus estimates:
Google’s better-than-expected growth was all thanks to artificial intelligence. Quarterly sales within the company’s robust Cloud unit, for example, grew 35% to $11.4 billion, Yahoo Finance’s Hamza Shaban reports.
“This business has real momentum, and the overall opportunity is increasing as customers embrace gen. AI,” Google CEO Sundar Pichai said in a call with investors Tuesday evening.
Jefferies analyst Brent Thill wrote on Wednesday: “AI feels increasingly like a well-managed tailwind, improving effectiveness of ads, drawing in Cloud customers, and driving internal efficiencies.”
In notes to investors, with titles like “Gem of a Quarter,” “Ice in its veins,” and “Come At The Search King,” Wall Street analysts raised their price targets and earnings outlooks for Google, with bullish Thill seeing shares rise as high as $235. On average, analysts forecast shares rising to about $209 over the next 12 months, according to Bloomberg consensus estimates.
Today at 12:19 PM UTC
Private payroll additions surprise Wall Street
The latest data from ADP out Wednesday showed the private sector added 233,000 jobs in October, above economists’ estimates for 111,000 and significantly higher than the 159,000 jobs added in September.
September’s number of job additions was revised up from a prior reading of 143,000.
“Even amid hurricane recovery, job growth was strong in October,” ADP chief economist Nela Richardson said in a release. “As we round out the year, hiring in the US is proving to be robust and broadly resilient.”