The stock market rally saw mixed action, with the Nasdaq hitting a record high while the S&P 500, Dow Jones and Russell 2000 all lost ground. Google-parent Alphabet took a quantum leap past a buy point on news while Broadcom gapped up on earnings while Tesla ran to a record high. Some superhot names such as Palantir Technologies and AppLovin retreated. Adobe and Oracle tumbled on results. Treasury yields rebounded amid sticky-to-hot inflation readings.
Nasdaq Holds, Other Indexes Fall
The Nasdaq hit fresh all-time highs in the past week, trading little changed by Friday afternoon, fueled by Alphabet and Tesla. The S&P 500 fell modestly, still near record levels, while the Dow Jones and Russell 2000 fell below their 21-day lines. Treasury yields rose significantly.
Fed Rate Cut Is A Lock
Two big inflation reports sealed the deal for a Fed rate cut next week, even as some other reports pointed to a stronger growth backdrop. The headline numbers for both the consumer price index and producer price index suggested were nothing to write home about. Core consumer prices rose 0.3%, as expected. The PPI rose 0.4%, doubling forecasts, while the core PPI was in line at +0.2%. Yet the details will be quite soothing to the Fed. The combined reports point to just a 0.1% rise in the Fed's key inflation rate for November. Plus, the strength came in core goods prices, not services prices, which would have been a concern. New and used autos got what will likely be a temporary bump in prices, probably due to extra demand after some especially destructive hurricanes. Yet S&P Global expects Q3 GDP to be revised up to 3.2% after a strong Quarterly Services Survey. Plus, the NFIB small business confidence survey soared well past expectations postelection.
Google Surges On Quantum, AI News
Google-parent Alphabet unveiled a breakthrough quantum computing chip, Willow, and then its latest AI tool, Gemini 2.0. That comes amid optimism about the self-driving Waymo ride-hailing business as well as YouTube advertising. Google stock first broke out and then surged to a record high.
Tesla Blasts To Record Highs
Tesla continued its huge run postelection, clearing the prior record high of 414.50 set in November 2021. stock rallied to 424.88, a record high for the stock, before closing at 424.77 on Wednesday. The company's previous all-time high was 414.50 which it hit on Nov. 4, 2021. Prior to this week, the stock last touched 400 in January 2022. Investors are upbeat that this time Tesla is on the verge of achieving self-driving as well as other moonshots.
Broadcom Up On AI Chip Sales
Broadcom delivered roughly in-line results for its fiscal fourth quarter, helped by strong sales of AI processors and networking chips. Its outlook also matched analyst estimates. Earnings rose 28% while acquisition-boosted revenue leaped 51% to $14.05 billion. an adjusted $1.42 a share, up 28% year over year, on sales of $14.05 billion, up 51%, in the quarter ended Nov. 3. For the current quarter, the chipmaker and infrastructure software provider predicted sales of $14.6 billion, up 22%. Shares gapped out of a base to a record high.
Nvidia fell after China's market regulator launched an investigation into the AI chipmaker over suspected violations of the country's antimonopoly law. The probe is related to Nvidia's 2020 acquisition of Mellanox Technologies. It also comes as the U.S. expands chip curbs on Beijing.
Taiwan Semiconductor Manufacturing said its November sales rose 34% vs. a year earlier last year as demand remains strong for chips for artificial intelligence applications. Analysts say the company is set to meet or beat Q4 expectations.
Adobe Guidance Disappoints
Software firm Adobe handily beat fiscal Q4 views, with EPS up 13% and revenue 11%. But its 2025 sales and earnings guidance was below views as Adobe is taking longer than expected to monetize its AI tools for content creation and digital marketing. CFO Dan Durn told IBD that Adobe is focused on expanding usage of its generative AI technology before monetizing it. Adobe stock tumbled.
Oracle Earnings Fall Short
The database software giant reported a 10% EPS gain with sales up 9% to $14.06 billion, both just shy of fiscal Q2 views. Analysts were positive on the cloud infrastructure business, which accelerated to 52% growth from 45% in Q1. Chairman Larry Ellison said Meta Platforms is using Oracle's cloud to train some of its AI models. But the results missed high expectations. Oracle reversed from a record highs in a big, outside, negative week.
Costco Rises, Ollie's Jumps
Costco earnings rose 10%, comfortably beating, while revenue climbed 8% to $62.15 billion, either just missing or just beat various views. COST stock edged higher, right at record highs, Ollie's Bargain Outlet delivered a 14% EPS jump, edging past estimates. Sales rose 7.8% but fell short of views. Same-store sales slipped 0.5% vs. the prior year's increase of 7.0%. Gross margins expanded. The discount retailer affirmed its full-year EPS outlook but slightly pared sales guidance. Analysts called the mixed results impressive given retail headwinds. Ollie's stock blasted past a 102.83 buy point.
News In Brief
General Motors ditched Cruise robotaxi development after sinking $10 billion into the effort. The auto giant basically cedes the autonomous ride-hailing race to Waymo, owned by Google parent Alphabet as well as possible Tesla and Zoox, owned by Amazon.com. The news slammed Uber, coming less than four months after a Cruise-Uber ride-sharing alliance.
C3.ai reported a smaller-than-expected fiscal Q2 loss while revenue growth accelerated again, to 29%. The AI software play guided up on Q3 and full-year revenue but sees operating losses that are wider than consensus. Shares briefly hit a 52-week high but ultimately fell in a whipsaw week.
Palantir Technologies announced an expanded contract with the U.S. Special Operations Command, with a new one-year pact worth $36.8 million. PLTR initially hit record highs, fell back as many extended stocks retreated, before paring losses.
Casey's General Stores solidly beat fiscal Q2 EPS views with a 14% gain, but a 3% revenue drop to $3.95 billion slightly missed. Inside same-store sales did rise 4%.
Rev Group blasted past multiple buy points Wednesday after mixed results for the maker of RVs, fire engines, ambulances and buses. Rev also hiked its cash dividend by 20%.
Ciena earnings fell 28% vs. a year earlier, well below fiscal Q4 views. Revenue fell less than 1% to $11.24 billion, just beating. The fiber-optic components maker gave a strong outlook, due to cloud and AI demand.
MongoDB easily beat views with a 21% adjusted EPS rise with a 22% sales gain to $529.4 million. But the database software company plunged, amid high expectations and the news that its CFO was leaving.
United Natural Foods reported a surprise fiscal Q1 profit. Revenue rose 4% to $7.87 billion. The natural and organic foods distributor sharply raised fiscal 2025 EPS guidance.
