Stock Market Update for Wednesday January 31st

Global Market Overview:

Asian Markets: Japan’s Nikkei: Recorded its best January in 26 years after overcoming early chip-led declines.

Chinese and Hong Kong Stocks: Extended losses, reflecting challenges in the Chinese economy.

European Stocks: Registered losses in the wake of broader market trends and uncertainties.

Canada’s Main Stock Index: Traded lower in anticipation of key domestic economic data and the Federal Reserve’s decision on interest rates in the United States.

US Stocks: Nasdaq: Experienced a decline of over 1% due to rising AI cost projections from tech giants Alphabet and Microsoft, leading to disappointment among investors and a subsequent slide in megacap and chip stocks.

Currency and Commodities:

  1. U.S. Dollar: Strengthened as traders awaited a U.S. rates decision to conclude January.
  2. Oil Prices: Fell due to lackluster economic activity in China, the world’s largest crude importer.
  3. Gold Prices: Edged higher amidst market uncertainties.

Federal Reserve and Global Economic Signals:

  1. Federal Reserve Decision: The Fed concluded a two-day policy meeting, assessing evidence of slowing inflation, strong labor market conditions, and a surge in consumer confidence to determine adjustments to its monetary policy stance.
  2. China’s Manufacturing Activity: Contracted for the fourth consecutive month, indicating challenges in both the manufacturing sector and the broader economy at the beginning of 2024.

Corporate Earnings and News:

  1. Elon Musk’s Tesla Pay Package: A Delaware judge voided Musk’s record-breaking $56 billion pay package, deeming it an “unfathomable sum” unfair to shareholders.
  2. Universal Music Group: Ceased licensing its content to TikTok and TikTok Music services, citing a non-renewal of the agreement with the social media platform.
  3. Vivendi: Announced plans to split into four entities to enhance growth and development.
  4. Pirelli, Continental, Michelin, Nokian Tyres: Raided by EU antitrust regulators as part of an investigation into a possible cartel, leading to declines in their shares.
  5. Microsoft: Beat market estimates for quarterly profit and revenue, driven by new AI features attracting customers to its Azure cloud service. However, rising AI development costs disappointed investors.
  6. Advanced Micro Devices (AMD): Boosted its 2024 forecast for AI processors by $1.5 billion, falling short of Wall Street’s expectations. Forecasted first-quarter revenue below estimates, contributing to a decline in semiconductor stocks.
  7. Alphabet Inc: Disappointed Wall Street with below-expectation holiday-season advertising sales and increased spending on AI-related infrastructure.
  8. Banco Santander SA: Reported record fourth-quarter net earnings, exceeding forecasts, with a focus on higher profitability for the upcoming year.
  9. Boston Properties Inc: Beat estimates for funds from operations (FFO) in the fourth quarter, benefiting from healthy demand for office spaces as more companies encouraged employees to return to workplaces.
  10. Boston Scientific Corp: Forecasted a full-year profit ahead of estimates, relying on resilient demand for its heart devices.
  11. Chubb Ltd: Reported a surge in fourth-quarter adjusted profit, driven by stronger underwriting and investment incomes.
  12. Electronic Arts Inc: Missed estimates for quarterly bookings, citing lower spending and stiff competition in the video game industry.
  13. Equity Residential: Forecasted full-year FFO below estimates, indicating potential pricing pressures in its West Coast market.
  14. GSK Plc: Beat market estimates for fourth-quarter results, with an upbeat forecast for 2024, highlighting the benefits of its consumer health unit spin-off.
  15. Juniper Networks Inc: Reported fourth-quarter revenue below market expectations, impacted by weak spending by cloud computing and enterprise clients.
  16. Match Group Inc: Forecasted first-quarter revenue below expectations as users cut back spending on dating apps amid economic uncertainty. Authorized a $1 billion share buyback plan.
  17. Mondelez International Inc: Posted a rise in fourth-quarter sales but experienced lower volumes due to price hikes affecting demand for its chocolates and salty crackers.
  18. Nasdaq Inc: Reported a 24.6% rise in fourth-quarter profit, driven by strong performance in its solutions business.
  19. Nomura Holdings Inc: Announced a share buyback of up to 4% of its own shares after reporting record net revenue from its investment banking division.
  20. Novartis AG: Reported a 6% gain in adjusted net income that fell short of market expectations, citing higher-than-expected corporate expenses.
  21. Novo Nordisk A/S: Novo Nordisk, the Danish pharmaceutical company, is optimistic about its future, forecasting double-digit sales and operating profit growth for the coming year. The positive outlook is attributed to the easing of restrictions on U.S. supplies of its popular weight-loss drug, Wegovy.
  22. Robert Half Inc: Robert Half, a California-based recruitment services firm, presented a cautious outlook due to sluggish hiring activity impacting its first-quarter revenue. Despite high job opening demand and tight candidate supply, hiring velocity has been affected, leading to an expected first-quarter revenue range of $1.44 billion to $1.54 billion,  below estimates. I
  23. Skyworks Solutions Inc: Skyworks Solutions, a key Apple supplier, exceeded market estimates for quarterly profit. The success is attributed to stabilizing end-markets and the increasing usage of 5G technology, driving demand for the company’s chip solutions.
  24. Starbucks Corp: Starbucks, the global coffee chain, revised its annual sales forecast lower, citing the impact of the Israel-Hamas war on its Middle East business. The company warned of softer demand in January and a slow recovery in China, affecting its second-quarter performance.
  25. Stryker Corp: Medical technology company Stryker Corp provided a positive outlook for 2024, forecasting profit above Wall Street estimates. Anticipating a post-pandemic increase in volume for certain surgical procedures, the company reported full-year 2023 sales of $20.5 billion,
  26. Thermo Fisher Scientific Inc: Thermo Fisher Scientific, a medical equipment maker, forecasted annual profit below Wall Street estimates, expecting a continued slump in demand for its services used in the production of therapeutics and vaccines in 2024.
  27. United Microelectronics Corp: Taiwanese chipmaker United Microelectronics Corp (UMC) expressed cautious optimism for 2024 amid macroeconomic uncertainty. UMC increased capital spending by 10%, expecting a mild increase in overall wafer demand in the first quarter.
  28. Cardinal Health Inc: Cardinal Health Inc announced a significant move, agreeing to acquire private tech company Specialty Networks for $1.2 billion in cash. This acquisition aims to expand Cardinal Health’s services in the specialty drug space.

Top Analyst Ratings

Advanced Micro Devices Inc (AMD): Bernstein has raised the target price for AMD to $140 from $120, citing expectations for growth in the company’s data center and clients throughout the year.

Alphabet Inc: Roth MKM has reduced the target price for Alphabet to $164 from $166, attributing this adjustment to the company’s mixed fourth-quarter results.

General Motors Co: Wells Fargo has increased the target price for General Motors to $28 from $27. This change is based on the company’s better-than-expected guidance for the fiscal year 2024.

Microsoft Corp: RBC has raised the target price for Microsoft to $450 from $415, following the company’s strong second-quarter results.

United Parcel Service Inc (UPS): JPMorgan has lowered the target price for UPS to $154 from $156. This adjustment is driven by concerns that margins could contract if the company is unable to generate sufficient productivity gains to offset contractual wage increases.

Canadian Pacific Kansas City Ltd: JPMorgan has raised the target price for Canadian Pacific Kansas City to C$121 from C$116. This change is based on the company’s operating profit, providing momentum as it enters fiscal year 2024.

Manulife Financial Corp: CIBC has increased the target price for Manulife Financial to C$30 from C$28. The rationale behind this adjustment is the belief that the company’s earnings estimates should rise, considering current equity market levels.

Metro Inc: RBC has reduced the target price for Metro Inc to C$82 from C$83. This adjustment follows a slowdown in the company’s margin and progress on key distribution network projects.

Sun Life Financial Inc: CIBC has raised the target price for Sun Life Financial to C$75 from C$73. This change is attributed to the company’s strong sales and earnings growth, particularly in the Asian region.

 

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