The stock market rally had a solid week on the major indexes, following two big weekly gains, with the Dow Jones and S&P 500 hitting record highs. Micron Technology beat views and guided higher, lifting a number of chip and other tech plays as well, after Nvidia and Taiwan Semiconductor made bullish moves. Chinese stocks surged, including Alibaba and Nio, as the central bank pledged and enacted various measures to spur lending. KB Home and Costco Wholesale fell after earnings.
S&P 500 Hits Record Highs
After two big weekly gains, the major indexes had a solid week, with the S&P 500 and Dow Jones setting all-time highs. The Nasdaq composite moved above the 18,000 level, moving toward all-time levels. Micron Technology, Nvidia and other AI chip plays were big winners, while Chinese stocks and related names soared on China stimulus efforts. Copper prices also jumped on the stimulus news, but crude oil tumbled. Treasury yields rose.
Economy Resilient, Inflation Ebbs
The latest batch of data showed that inflation continues to ebb, even as the economy shows signs of resilience. Both the headline and core PCE price index rose 0.1% in August. That lowered headline inflation to just 2.2% and some economists see it falling to 2% in September. The Fed's primary inflation gauge showed core inflation ticking up to 2.7% from 2.6%, but the six-month annualized rate eased to 2.4% from 2.6%. The 3-month rate is just 2.1%. After the inflation data, odds of a 50-basis-point rate cut on Nov. 7 edged above 50%. Still, other data seemed to back those questioning whether big rate cuts are needed. The Commerce Department revised up income gains through July. Previously, it looked like households were relying on borrowing to keep consumption afloat. But revised July data showed savings at 4.9% of disposable income vs. an initial report of 2.9%. Further, new weekly claims for jobless benefits fell to 218,000, the lowest since May. New-home sales slipped 5% from July's upwardly revised 716,000 annual rate, but were still 10% above year-earlier levels.
Micron Stock Jumps On Q4 Beat
Micron Technology reported stronger-than-expected fiscal Q4 earnings, while revenue jumped 93% to $7.75 billion. The memory-chip giant also guided well above views for the current quarter. Robust AI data center demand fueled its Q4 results and Q1 outlook. Micron CEO Sanjay Mehrotra predicted "a substantial revenue record with significantly improved profitability in fiscal 2025." Micron stock surged on the news, lifting a variety of related techs.
China Stocks Soar On Monetary Easing
On Tuesday, China's central bank's chief signaled it would cut a key loan rate and a 7-day reverse repo rate, along with a 50-basis-point cut in banks' reserve requirement. Those pledges — carried out later in the week — sent Chinese stocks and related names skyrocketing Tuesday. On Thursday, China-tied stocks jumped again on a report that Beijing was mulling a big capital injection into banks. Tencent, Bilibili and Tesla rival BYD all broke out, while Alibaba, JD.com, Nio and many others surged. Southern Copper, Alcoa and many other China-reliant companies bounced as well.
ServiceNow, SAP Skid On Probe Reports
The Justice Department is investigating whether an information technology solutions provider, Carahsoft Technology, and software companies collaborated to overcharge government agencies, according to reports. Germany's SAP and ServiceNow traded down on the news. At Piper Sandler, analyst Rob Owens said in a report: "Given Carahsoft is one of the largest IT solution providers to the U.S. government and the timing of the raid is very close to the end of the federal fiscal year, we believe this has the potential to disrupt deals in the pipeline."
KB Home Skids On Earnings, Orders
KB Home earnings rose 13% per share, but slightly misses. Revenue rose 10% to $1.75 billion, above forecasts. CEO Jeffrey Mezger noted that net orders were flat year over year, though they began to pick up in August and are trending positively in fiscal Q4. KB Home guided 2024 housing revenues slightly higher to $6.85 billion-$6.95 billion. KBH stock fell from near a buy point but later bounced off key support.
DOJ Says Visa Monopolizes Debit Cards
The Justice Department sued Visa on Tuesday, alleging that the Dow Jones payments giant monopolizes the U.S. debit card market. The antitrust suit claims that Visa illegally hindered rivals with incentive payments to keep them out of the market, punished merchants with higher fees for routing transactions to other card networks, and harmed customers as fees were passed on as higher prices for goods and services. Visa holds about a 60% share of the debit payments market and earnings about $7 billion annually in debit swipe fees, according to the DOJ. Visa's general counsel called the lawsuit "meritless" and said the company is ready to "defend ourselves vigorously." Visa stock fell solidly from near a buy point.
Meta Touts AI Chatbot, VR Headset
Facebook parent Meta Platforms unveiled a lower-cost virtual reality headset and showcased a prototype of high-tech augmented reality smart glasses at its annual Connect developer conference. During his keynote speech, CEO Mark Zuckerberg said the Meta AI chatbot has surpassed 500 million monthly active users. While the Orion augmented reality smart glasses are still just a prototype, Zuckerberg's demonstration caught the attention of analysts. Meta edged higher for the week, near the top of a 5% buy zone.
Accenture Rises On Earnings, Bookings, Buyback
Accenture said adjusted EPS rose 3% in fiscal Q4. Revenue also climbed 3%, to $16.4 billion, including acquisitions, both slightly beating. Bookings rose 21% to $20.1 billion, including $1 billion in artificial intelligence-related bookings. For fiscal 2025, the global technology services firm sees revenue up 3%-6%, in line with views, while EPS guidance was fractionally lower than consensus at the midpoint. Accenture also hiked its dividend by 15% and announced a $4 billion buyback. Shares rose.
In Brief
Super Micro Computer crashed Thursday on a report that the Justice Department is investigating the server maker for alleged accounting irregularities. That follows an August short-seller report claiming accounting manipulation.
Regeneron Pharmaceuticals tumbled Monday after a West Virginia judge unexpectedly rejected a preliminary injunction that would have prevented Amgen from launching a biosimilar copycat of eye drug Eylea, one of Regeneron's biggest products.
Amgen fell Tuesday on the results for its drug, Uplizna, in patients with generalized myasthenia gravis. The drug's results lagged that of already-approved treatment called Vyvgart, make by Argenx. ARGX popped on the news but was little changed for the week.
Blackstone and Vista Equity Partners announced the acquisition of software maker Smartsheet for $8.4 billion, or $56.50 a share. Initial reports of a private equity buyout surfaced in mid-July. Smartsheet competes in the work management market vs. Monday.com, Asana and others. Also, Vista earlier acquired software makers Avalara, KnowBe4, Duck Creek Technologies, EngageSmart and Model N.
Costco Wholesale earnings topped fiscal Q4 views while sales rose 1%, below views. Shares fell, but found support near key levels.
