Moving Markets Today: Japanese Equities Dip; Tesla Plummets 12%, Intel Drops 10.90%; Eyes on US PCE Data Today, ‘FAAMG’ Earnings Next Week
The S&P 500 continued its record-breaking streak for a fifth consecutive day, driven by strong U.S. economic growth data. However, Tesla’s stock tumbled 12% due to disappointing sales forecasts, while Asian markets saw a decline after six days of gains. Intel’s quarterly revenue forecast fell below expectations, causing its stock to drop by 10.90%, and Visa shares also fell by 3%. Investors are eagerly awaiting the release of the U.S. Core Personal Consumption Expenditures Price Index (Core PCE) for insights into inflation trends later today. Additionally, FAAMG earnings will be in focus next week. Here are five key takeaways for your day.
Intel’s Below-Estimate Revenue Forecast Sparks 10.90% Stock Plunge; Visa Shares Slide 3%
Intel predicts first-quarter revenue may miss market expectations by over $2 billion due to uncertain chip demand in traditional server and PC markets. Shares fell over 10% in after-hours trading, potentially leading to a $20 billion market value drop if losses continue into Friday. Despite Intel’s stock rising 66% in the past year, exceeding the 53% increase in the PHLX Semiconductor Index, the announcement sparked investor concern.
Visa saw revenue growth slow last quarter, ending a 10-quarter streak of double-digit expansion. Revenue reached $8.6 billion, surpassing estimates, but marking only a 9% increase from the previous year. This is the first time since Q2 2021 that Visa’s growth fell below 10%. Visa shares dropped 3% in extended trading.
BOJ Minutes: December Debate Signals Future Rate Hike Discussion
During the December meeting, Bank of Japan policymakers engaged in lively discussions regarding the criteria for gradually winding down stimulus measures. They also reached consensus to explore in more detail the appropriate timing and pace for future interest rate increases, signaling a potential shift away from negative interest rates in the near future.
Recent data unveiled a slowdown in core inflation within Japan’s capital, dipping below the central bank’s 2% target to its lowest level in almost two years. Government figures revealed that the core consumer price index (CPI) in Tokyo increased by 1.6% in January compared to the previous year, falling short of the market’s anticipated 1.9% rise. This underscores policymakers’ beliefs that pressure on costs is likely to continue easing in the months ahead.
Lower Inflation Boosts UK Consumer Sentiment to 2-Year High: GfK
British consumers are feeling their most confident since January 2022, buoyed by lower inflation rates, according to a recent Reuters report. The GfK consumer confidence index rose to -19 in January from -22 in December, surpassing economists’ expectations of -21. This uptick in confidence is welcomed news for Prime Minister Rishi Sunak ahead of the anticipated national election later this year.
Tech Titans Brace for Earnings Week: FAAMG Stocks Under the Microscope
In the wider market landscape, investors are eagerly awaiting the release of the personal consumption expenditures (PCE) price index, especially the core PCE price index, which serves as the Federal Reserve’s favoured measure of inflation. There’s an anticipation for a 3% annual uptick in this index.
Looking ahead to the upcoming week, all eyes are on the quarterly earnings reports from tech giants like Apple, Microsoft, Amazon, Alphabet, and Meta Platforms. These reports will offer valuable insights into whether the impressive surges in their stock prices since 2022’s low point on Wall Street are justified by their performance and financial health.
Asian Stocks Mixed; Tesla Hits May 2023 Low
The S&P 500, Nasdaq, and Dow Jones Industrial Average all climbed during the session, with gains of 0.53%, 0.18%, and 0.64% respectively. However, Tesla faced a significant setback, dropping 12% following CEO Elon Musk’s warning about slower sales growth despite price cuts, leading to its lowest point since May 2023. IBM surged by 9.5% after forecasting full-year revenue growth surpassing estimates, while Comcast increased by 3.4% after surpassing quarterly revenue expectations. American Airlines saw a notable rise of 10.3% after forecasting optimistic annual profits. Conversely, Boeing fell by 5.7% due to regulatory restrictions on expanding production of its 737 MAX narrowbody planes by the U.S. Federal Aviation Administration.
In Asian markets, shares were poised to end a three-week losing streak, with South Korea’s Kospi rising by 0.8%. However, Hong Kong’s Hang Seng index decreased by 0.2%, and China’s CSI 300 lost 0.4% in early trading. Japan’s Nikkei 225 slid by 1.2%, stepping back from a 34-year high set earlier in the week. U.S. Treasury yields declined as inflation pressures eased, with the benchmark 10-year yield settling at 4.1126%. In currency markets, the U.S. dollar gained support from robust GDP data, resulting in a 0.07% drop in sterling to $1.2702. Oil prices eased slightly after a 3% increase in the previous session, with Brent futures dropping by 0.4% to $82.11 a barrel, and U.S. crude decreasing by 0.57% to $76.92 per barrel. Gold was last priced at $2,021.50 an ounce.