2024 Mar 12, US Market
The latest reading of U.S. inflation was hotter than economists expected but cooler than many investors feared. That lifted stocks Tuesday.
Companies from chip makers and software providers to big-box retailers and pharmaceutical giants helped pull all three major indexes higher.
The gains came despite a Labor Department report showing consumer prices rose 3.2% in February from a year earlier, another installment in a string of recent data suggesting inflation remains stubbornly high. Even so, many investors continue to believe the Federal Reserve remains on track to cut interest rates later this year, reducing borrowing costs for businesses and, potentially, boosting stocks.
Traders are now assigning a roughly 60% chance that the central bank begins cutting rates in June, according to futures markets.
Later this week, Dollar Tree and Dollar General will report earnings that could provide snapshots of how low-income Americans have weathered price pressures in recent months. The Labor Department on Thursday will publish February’s producer-price index, an inflation gauge for companies that manufacture goods.
Investors in recent weeks have grown more confident that the U.S. economy can avoid a recession as Washington completes its inflation fight. The optimism is fueling a 2024 rally that has expanded beyond the massive tech firms that propelled the stock market higher last year.
Oracle (ORCL) reported better-than-expected Q3 results, with Cloud revenue rising 25% year-over-year
Southwest (LUV) lowered its Q1 RASM guidance, adding that Boeing (BA) has advised the company to expect a reduction in 737-8 aircraft deliveries in 2024
American Airlines (AAL) said it expects its Q1 adjusted earnings per share to come in at the low end of its guidance
Archer Daniels (ADM) reported downbeat Q4 earnings and revenue, provided FY24 earnings guidance, and announced an additional $2B share repurchase program
William Blair upgraded Oracle (ORCL) to Outperform from Market Perform without a price target. Oracle reported a solid Q4 with management confidently reiterating its fiscal 2026 guidance for $65B in revenue and 45%-plus non-GAAP operating margins and indicating potential for upside to these targets, the firm notes.
JPMorgan upgraded Dollar General (DG) to Neutral from Underweight with a price target of $158, up from $120, ahead of the Q4 report. The firm sees sequential sales improvement in fiscal 2024 for the company, supported by management's initiatives around in-stocks, store standards, improving customer service, and signage highlighting value to customers.
Argus upgraded Southwest (LUV) to Buy from Hold with a $40 price target. The company's outlook has improved over the past several months as Southwest and other airlines have opted to limit capacity growth following a post-pandemic spike, the firm tells investors in a research note.
Jefferies upgraded Carvana (CVNA) to Hold from Underperform with a price target of $85, up from $30. The firm says recent expansion in retail gross profit per unit suggests Carvana's operational adjustments may have driven sustainable improvements to unit economics.
Raymond James upgraded Coinbase (COIN) to Market Perform from Underperform without a price target. The firm says that while its long-term bias on Coinbase remains negative, it no longer believes an Underperform is the appropriate near-term investment rating.
Bernstein initiated coverage of Regeneron (REGN) with an Outperform rating and $1,125 price target. Despite a "cautious stance on Eylea," the firm argues that Dupixent and oncology growth justify upside in the stock.
RBC Capital initiated coverage of DexCom (DXCM) with an Outperform rating and $165 price target. The firm sees "substantial opportunity" for continuous glucose monitor total addressable market expansion aided by innovation, indication and geographic expansion, and measurements beyond glucose.
US Politics: Primary contests happening today could solidify nominations for Biden and Trump in the upcoming presidential election [AP News].
Ukraine: Ukraine is pushing back against comments from Pope Francis suggesting they consider peace talks with Russia [NBC News, AP News].
Gaza Strip: Humanitarian efforts are underway to deliver aid to the Gaza Strip as civilians face hardship amidst the ongoing conflict [Al Jazeera, NBC News].
International Aid: The U.S. House of Representatives is considering a significant aid package for Ukraine, Israel, and Taiwan [AP News].
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