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Wednesday, December 18

Some of the largest mega-cap moves in the market today: NVIDIA Corp (NVDA) +2.7%. UnitedHealth Group Inc (UNH) +1.4%.

The Federal Reserve is set to announce its interest rate decision later today, with widespread expectations for a 25 basis point cut. This meeting follows strong U.S. retail sales data that rose by 0.7% in November, raising concerns about the Fed potentially adopting a more cautious stance regarding future cuts due to persistent inflationary pressures and robust economic activity.

In recent economic releases from the UK, annual inflation increased slightly to 2.6%, marking an eight-month high as rising costs were noted across various sectors including recreation and housing utilities. Additionally, producer prices fell for three consecutive months while factory orders dropped significantly according to industry reports; these developments are contributing factors influencing market sentiment ahead of upcoming central bank meetings.

Meanwhile, Japan reported significant improvements in trade figures with exports up by 3.8% year-on-year while imports unexpectedly declined by nearly the same percentage—this led to a notable reduction in their trade deficit compared to previous years' levels and reflects shifting dynamics within global supply chains amidst ongoing geopolitical tensions affecting broader markets.

Health Care Select Sector SPDR Fund (XLV) [+0.8%]
The Health Care Select Sector SPDR Fund (XLV) has reported a price of 139.56, reflecting a modest increase during today's trading session. The fund has benefitted from broader market optimism, as the Federal Reserve is anticipated to announce a 25 basis point interest rate cut, which may lower borrowing costs and foster economic growth. Additionally, strong US retail sales data for November has bolstered expectations for ongoing consumer spending in the health sector. Notable contributors to XLV's performance include UnitedHealth Group, Merck, Thermo Fisher Scientific, Eli Lilly, and Cigna. Merck has entered a significant licensing agreement with Hansoh Pharma for a preclinical treatment, while Eli Lilly received approval in China for a drug aimed at Alzheimer's disease following promising clinical trial results. Meanwhile, the Dow Jones Index has also seen an upward movement, further reflecting positive market sentiment.

SPDR Dow Jones Industrial Average ETF Trust (DIA) [+0.6%]
The SPDR Dow Jones Industrial Average ETF Trust (DIA) has seen a price increase of 0.6% in pre-market trading on Wednesday. The Dow closed in the red for the ninth consecutive day, marking its longest losing streak since 1978. Over the past seven years, the S&P 500 has outperformed the DJIA significantly. Recent posts on social media indicated that DIA was experiencing a notable pullback, with indications that buyers were eager to exit. The top contributors to DIA's performance included UNH, CRM, GS, CAT, and HON, all showing positive returns. Concurrently, the Dow Jones Index increased by 0.4% during market hours, influenced by anticipated interest rate cuts by the Federal Reserve following strong economic data, including a rise in U.S. retail sales. Additionally, the Russell 2000 Index rose by nearly 1%, reflecting broader market sentiment that may also be affecting DIA's performance.

GIS | -4.6%| -1.6B
General Mills Inc | Packaged Foods & Meats
General Mills Inc has revised its fiscal year 2025 adjusted earnings per share (EPS) outlook to a decline of 1% to 3%, down from a previous range of flat to up 1%. The adjusted operating profit forecast has also been lowered to a decline of 2% to 4%, compared to flat to down 2%. Despite reporting second-quarter earnings of $1.40 per share, exceeding estimates of $1.22, and sales of $5.24 billion, which surpassed expectations, the company cited increased promotional investments and an uncertain macroeconomic environment as factors affecting its outlook. Following the announcement, General Mills' stock dropped significantly, moving -7.4% within an hour after the earnings report. Additionally, the EPS guidance for FY2025 was lowered to a range of $4.38-$4.48 from a prior $4.48-$4.57.

JBL | +9.4% | +1.7B
Jabil Inc | Electronic Manufacturing Services
Jabil Inc. reported strong first-quarter results, with adjusted earnings per share (EPS) of 2.00, surpassing the expected 1.88. Revenue reached 6.994 billion, exceeding the forecast of 6.608 billion. Following the earnings announcement at 7:45 AM NY, Jabil raised its EPS guidance for fiscal year 2025 to 8.75 from 8.65 and increased its revenue outlook to 27.3 billion from 27 billion. The company anticipates Q2 adjusted EPS between 1.60 and 2.00, with projected revenue ranging from 6.1 billion to 6.7 billion. The CEO attributed the robust performance to growth in the Cloud, Data Center Infrastructure, and Digital Commerce sectors. Following these announcements, Jabil's stock price increased significantly shortly after the earnings release.

HEI | -5.8% | -2.0B
HEICO Corp | Aerospace & Defense
HEICO Corp reported its fourth-quarter earnings, revealing a net income increase of 35% and a 15% rise in operating income. Despite this, net sales of $1.01 billion fell short of the $1.03 billion consensus estimate. The earnings per share (EPS) of $0.99 slightly surpassed expectations of $0.98, reflecting a year-over-year increase of nearly 34%. The company incurred acquisition costs of approximately $13.6 million related to the Wencor Group acquisition, negatively impacting net income by about $0.10 per diluted share. Following the earnings announcement, HEICO shares experienced a notable decline, trading down approximately 5.7%. Additionally, there was an unusual surge in call volume, reaching 4,100 contracts, which is significantly higher than the 30-day average of 42.1 contracts. Ten minutes post-earnings release, shares had already moved down by around 6.3%.

CRM | +1.4%| +4.8B
Salesforce Inc | Application Software
Salesforce Inc. has announced a significant hiring initiative, aiming to recruit 2,000 additional sales personnel focused on artificial intelligence, effectively doubling its previous target. This decision, articulated by CEO Marc Benioff at an event in San Francisco, responds to strong demand for the company's AI solutions, reflected in 9,000 referrals for the new positions. The initiative precedes the launch of Agentforce 2.0, scheduled for February 2025, which is designed to boost sales productivity and operational efficiency. Moreover, Salesforce has secured over 1,000 paid deals for its AI-powered platform, reinforcing its expanding presence in the enterprise AI market. Notably, social media discussions highlighted an unusually high call volume for Salesforce shares, reaching 82.4K, which is significantly above the average. The company also recently went ex-dividend at $0.4 per share.

MU | +1.7% | +2.1B
Micron Technology Inc | Semiconductors
Micron Technology Inc. has experienced a notable rise in its stock price, attributed to positive expectations surrounding its fiscal 2025 first-quarter earnings report. The pre-market increase was recorded at 1.06%. Analysts forecast earnings per share of $1.76, a significant improvement from the prior year's loss. Additionally, a substantial investment exceeding $6.1 billion from the White House for advanced memory chip facilities is expected to create at least 20,000 jobs. Despite Bernstein lowering its price target for Micron to $120 due to high valuation concerns, analysts from Wedbush highlighted the potential for a sharp upward move in shares if earnings meet expectations. Discussions on social media emphasize the significance of the upcoming earnings report, which is seen as pivotal for the semiconductor sector until TSM's December numbers are released on January 25th.

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