Market Sees a Tumultuous Week Post-Fed Decision
In the shadow of the Federal Reserve’s decision to maintain steady interest rates, the Dow Jones Industrial Average is poised to record its most robust weekly surge of 2024. With a focus on buoyant job growth and persistently low unemployment levels, the Fed holds firm at a key federal funds interest rate of 5.5% this March.
Established since July of the previous year, the current federal funds interest rate has spurred a recent uptick in borrowing costs. This move aligns with the Federal Reserve’s aim – making borrowing money pricier in a bid to deflate inflation to a comfortable 2% level. By curbing spending, individuals and businesses are expected to bring down inflation. However, the committee’s plan to slash rates thrice in 2024 hinges on stronger conviction that the current inflation rate, sitting at 3.2%, is steadily veering toward the elusive 2% target.
Market Response to Recent Events
Over the past two trading days, investor sentiment has largely favored the Fed’s stance. The Dow Jones Industrial Average wrapped up, shedding 305.47 points (0.77%) to conclude at 39,475.90. A downtrend in Nike (NKE) by 8% on disappointing guidance and slowing China sales weighed on the blue-chip index, offsetting the jubilation stemming from FedEx’s (FDX) 8% stock surge after exceeding analysts’ earnings projections. On the other hand, the S&P 500 Index saw a decline of 7.35 points (0.14%), closing at 5,234.18.
On the tech front, the Nasdaq Composite managed to eke out gains, rising by 26.98 points (0.16%) to wrap up the session at 16,428.82. This upward trajectory was fueled by surges in Apple (AAPL) and Google’s parent company, Alphabet (GOOG, GOOGL), climbing by 2.15% on Friday. Investment firm Wedbush’s inclusion of the search giant in its ‘Best Ideas List’ bolstered confidence in Google’s AI capabilities, as analyst Scott Devitt expressed in a note.
Devitt, endorsing an Outperform rating on GOOG stock, hiked the price target by $15 to $175, citing the company’s unparalleled data expanse to foster and refine AI models along with AI-centered compute infrastructure and a proven track record of effective monetization. With Google shares already up by 8% year-to-date, there’s potential for a further 20% rise. In a broader market context, the Dow missed a 2% gain slot by a whisker on a weekly basis, while the S&P 500 and Nasdaq surged by 2.9% and 2.4%, respectively.
Expert Opinion and Projections
“The Fed’s reaffirmation of monetary easing intentions against a backdrop of an anticipated macro upswing predictably ushered in another wave of ‘risk-on’ trading,” remarked Wells Fargo analyst Christopher Harvey in a Friday note. Harvey predicted that this bullish momentum in equity prices would likely persist in the short term. Worth noting, after the conclusion of the Fed’s meeting on Thursday, all three primary indices clinched record closures and set all-time intraday peaks. Despite Friday’s slightly muted activity, the prevailing market trend remains sanguine, notably post the breakthrough to fresh all-time highs.
The stage is thus set for the upcoming earnings releases under the spotlight.
GameStop Set to Make a Stock Market Splash
GameStop (GME) – Financial Report Due Post Market Closure on Tuesday, Mar. 26
Wall Street anticipates GameStop to yield 29 cents per share in earnings on a revenue totaling $2.05 billion. Comparatively, this forecast is against the year-ago period, where their earnings charted at 16 cents per share with revenue figures standing at $2.23 billion.
The chatter around GameStop, popularly hailed as the meme stock muse, continues to dominate market discussions. The video game retailer, however, hasn’t met investors’ expectations this year. Currently, trading at roughly $13 per share, the stock trails 46% behind its 52-week peak, circa $27. Year-to-date, the equity has dipped by 22%, including a 20% slip over the prior six months, falling short of the S&P 500 index’s 10% surge in the same timeframe. In the trailing twelve months, GME shares plummeted by 23%, while the S&P 500 index soared by 31%.
Despite substantial improvements noting on its balance sheet and a notable slowdown in the cash burn rate due to rigorous cost-containment measures, GameStop’s road to recovery appears bumpy. While these enhancements hint at a potential shift towards more efficient business models, the company faces an uphill battle in revamping its core outlook, hindering any substantial upward trajectory in long-term profitability.
BlackBerry: An Earnings Tale Unfolds
BlackBerry (BB) – Earnings Release
For the earnings report of BlackBerry, stay tuned as the company gears up to unveil its financial performance.
