On Thursday, stocks shot higher as investors evaluated a fresh batch of company reports and wagered that the Federal Reserve was almost done with its rate-hiking campaign.
The tech-heavy Nasdaq (^IXIC) and the S&P 500 (^GSPC) ended the day 1.8% and 1.9% higher, respectively, with a gain of almost 500 points, or nearly 1.7%, on the Dow Jones Industrial Average (^DJI).
Following the Fed’s decision to maintain interest rates at their highest level in 22 years, all three major indexes finished Wednesday strongly higher. Overall, the market concluded from Chair Jerome Powell’s remarks on the choice that the US central bank will continue to maintain unchanged interest rates in December.
According to the CME FedWatch Tool, traders are pricing in an 85% possibility that there won’t be any more rate rises this year, up from a 59% probability the day before the policymakers’ meeting.
Now that earnings season has begun, the focus is on Apple’s (AAPL) quarterly report, which is expected after hours on Thursday. Following a mixed bag of reports thus far from US tech companies, the main focus will be on what its findings reveal on the iPhone situation in China and worldwide consumer spending.
Starbucks’ stock (SBUX) surged about 10% in the meanwhile as the coffee company exceeded earnings and revenue projections. Shopify’s (SHOP) stock increased by more than 20% after the company said that it earned a profit in the third quarter by implementing AI.
Investors’ bets that the Federal Reserve won’t raise interest rates again in 2023 rose as stocks shot up on Thursday.
While the S&P 500 (^GSPC) gained almost 1.9%, the tech-heavy Nasdaq (^IXIC) surged 1.8%. Roughly 1.7%, or more than 550 points, were gained by the Dow Jones Industrial Average (^DJI).
Meanwhile, for the first time since October 13, the yield on the 10-year Treasury note (<TNX) dropped below 4.7%.
Due to their exceptional ability to reduce body weight in comparison to previous GLP-1s (medications that imitate a hormone in the body that slows digestion and increases insulin production), the three medications have become extremely popular this year.
Together with Saxenda, an older medication, Wegovy sales reached $1.37 billion in the third quarter, a 200% rise year over year for Novo’s obesity business.
For the first nine months of 2023, the company’s GLP-1 portfolio alone witnessed a 60% rise. Doug Langa, executive vice president of North America, reports that Wegovy sales increased by 467 percent in the first nine months.
For Wegovy and Ozempic, which combined generated $4.8 billion in sales in the quarter, strong demand continues to exceed supply, requiring Novo to maintain production control of the medications at greater dosages and concentrate on current patients. The company’s ability to get new prescriptions has been restricted until it can increase output.
While Mounjaro is still only licenced for diabetes, Eli Lilly received $1.41 billion from the medicine and is expected to receive FDA clearance by the end of the year to be used as a stand-alone weight-loss medication. The corporation is expecting demand to exceed supply, therefore it is increasing output.
In lunchtime trading on Thursday, Roku (ROKU) shares surged more than 25% as the company revealed robust fourth quarter expectations and indicated more indications of recovery in its ad income.
Based on consensus expectations provided by Bloomberg, Roku guided to adjusted EBITDA of $10 million in the fourth quarter, as opposed to an estimated loss of $57.6 million. In addition, it anticipates sales for the fourth quarter of around $955 million, which is higher than Wall Street projections, and a total gross profit of approximately $405 million.
In an attempt to reduce operational expenditures, the firm has implemented a number of cost-cutting initiatives, including layoffs. It stated that it is still dedicated to achieving positive adjusted EBITDA for the entire year 2024, “with continued improvements after that.”
With a net loss of $330.1 million, or $2.33 per share, Roku reported third-quarter net sales of $912 million, up 20% from the previous year. Compared to the $122.2 million loss in the same time last year, that net loss was larger.
After falling 1.5% in the first quarter and increasing 11% in the second, platform revenue, which comprises ad revenues, income from distribution agreements, and the over-the-top streaming service The Roku Channel, totaled $744 million, up 18% year over year.
Strong content distribution combined with a strong comeback in video advertising drove the boom.
The third quarter results season began on Thursday, and the reports from a few businesses caused significant market movements.
Palantir (PLTR) surged on the company’s announcement of a record quarterly profit, which it credited to artificial intelligence. The stock was up about 20%.
Shopify (SHOP) surged over 20% due to a favourable AI narrative. The business announced the release of new AI-powered products for retailers. Notably, Shopify also revealed that, compared to the same period last year, operational expenditures decreased by 23% to $779 million in the most recent quarter.
Starbucks’ (SBUX) stock increased by more than 10% as the company’s revenue and profits per share above Wall Street forecasts.
When addressing the future direction of interest rates, Federal Reserve Chair Jerome Powell took cautious to avoid giving away any information about the central bank.
Following the Fed’s decision to keep interest rates unchanged for a second straight meeting, Powell stated at a press conference on Wednesday that “slowing down is giving us, I think, a better sense of how much more we need to do, if we need to do more.”
The markets haven’t been that ambiguous. On Thursday, Treasury yields—which typically peak at the same time as the fed funds rate—reached their lowest points in the previous two weeks. For the second day in a row, the tech-heavy Nasdaq Composite has increased by more than 1%. Normally, this index lags while concerns about more tightening endure.
Furthermore, direct wagers on the Fed’s course are gradually moving away from additional raises. A month ago, the CME FedWatch Tool predicted a 54% likelihood that the Federal Reserve wouldn’t hike rates again this year. Today, it predicts an 80% chance.
Following Powell’s press conference, which propelled socks higher into the market close, Moody’s Analytics chief economist Mark Zandi said on Yahoo Finance Live on Wednesday, “Certainly it’s a scenario that we could get more rate hikes but I think the most likely scenario is that we are done.” “And I think today’s market action would suggest that now is the consensus view.”
Fears of yet another rate rise by the Federal Reserve have subsided, and investors flocked into risk-on trades on Thursday.
The tech-heavy Nasdaq surged more than 1.2%, reversing its previous lag when investors predicted a rise in rate hikes. The Dow Jones Industrial Average (^DJI) rose about 0.7%, while the S&P 500 (\GSPC) increased by over 1%.
In the meantime, the yield on the 10-year Treasury dropped to 4.62%, the lowest point in almost two weeks.
The main US market indexes were ready to build on their gains from the previous day on Thursday as investors evaluated remarks made by Federal Reserve Chair Jerome Powell following the central bank’s decision to maintain interest rate stability.
S&P 500 (\GSPC) futures gained 0.71%, while Dow Jones Industrial Average (\DJI) futures increased by 0.50%, or 168 points. The tech-heavy Nasdaq 100 (^NDX) had a 1.09% increase in contracts.