Stocks soared on Thursday as investors bet the Federal Reserve is close to wrapping up its rate-hiking campaign and assessed a fresh stream of corporate results.
The tech-heavy Nasdaq (^IXIC) and the S&P 500 (^GSPC) closed about 1.8% and 1.9% higher, respectively, while the Dow Jones Industrial Average (^DJI) gained roughly 1.7%, or more than 500 points.
All three major gauges ended Wednesday with strong gains after the Fed held interest rates steady at their highest range in 22 years. The market's overall takeaway from Chair Jerome Powell's comments on the decision is that the US central bank will stick with keeping rates unchanged in December.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
Traders are now pricing in an 85% chance there will be no more Fed hikes this year, compared with a 59% probability the day before its policymakers' meeting, according to the CME FedWatch Tool.
Attention is now turning to earnings season, with Apple's (AAPL) quarterly report due after hours as the highlight in a packed Thursday. Top of mind will be what its results show about the iPhone situation in China and global consumer spending, after a mixed bag of reports from US tech giants so far.
Meanwhile, Starbucks stock (SBUX) popped nearly 10% after the coffee chain beat estimates for revenue and earnings. Shopify (SHOP) said it returned to a profit in the third quarter as it adopted AI, and its shares jumped more than 20%.
Stocks soared on Thursday investors have increased their bets that the Federal Reserve won’t increase interest rates again in 2023.
The tech-heavy Nasdaq (^IXIC) popped 1.8% while the S&P 500 (^GSPC) rose about 1.9%. The Dow Jones Industrial Average (^DJI) gained roughly 1.7%, or more than 550 points.
Meanwhile the 10-year Treasury yield (^TNX) fell below 4.7% for the first time since Oct. 13.
Tech giant Apple will highlight another busy day of earning after the closing.
Yahoo Finance’s Hamza Shaban has the numbers to know:
Further detail on the company’s iPhone competition in China and a glimpse into global consumer spending will be top of mind for investors during the company’s earnings call, in addition to insight around Apple’s transformation into a services business.
Here’s what Wall Street is expecting for some of Apple’s (AAPL) most significant metrics in the company’s fiscal fourth quarter:
Revenue: $89.34 billion expected ($90.15 billion in Q4 2022)
Adj. EPS: $1.39 expected ($1.29 in Q4 2022)
iPhone revenue: $43.73 billion expected ($42.63 billion in Q4 2022)
Services revenue: $21.36 billion expected ($19.19 billion in Q4 2022)
Mac revenue: $8.76 billion expected ($11.51 billion in Q4 2022)
iPad revenue: $6.33 billion expected ($7.22 billion in Q4 2022)
Wearables revenue: $9.41 billion expected ($9.65 billion in Q4 2022)
Prescription weight-loss drugs have been the talk of other companies’ earnings calls this quarter as investors attempt to price in how the drugs could impact food and beverage companies. On Thursday, the companies’ behind the drugs showed the hype about demand is real.
Yahoo Finance’s Anjalee Khemlani reports:
Novo Nordisk (NVO) and Eli Lilly (LLY) stocks were both boosted by sales of their Type 2 diabetes and weight loss drugs in the third quarter, despite shortages of supply of the three popular products — Novo’s Type 2 diabetes drug Ozempic, its weight loss drug Wegovy, and Lilly’s Type 2 drug Mounjaro — the companies announced Thursday.
The three drugs have seen a spike in popularity this year due to the unprecedented total body weight loss they provide compared to older GLP-1s — drugs that mimic a hormone in the body that slows digestion and promotes insulin production.
Wegovy sales hit $1.37 billion in the third quarter, marking a 200% increase, along with an older drug, Saxenda, for obesity sales year-over-year for Novo.
The company saw a 60% growth in the GLP-1 portfolio alone for the first nine months of 2023. Wegovy sales grew 467% in the first nine months, according to North America executive vice president Doug Langa.
High demand continues to outstrip supply for Wegovy and Ozempic — which together brought in $4.8 billion in sales in the quarter — forcing Novo to continue to control output of the drugs in higher doses and focus on existing patients. This has limited how many new prescriptions the company will see until it can boost production.
Eli Lilly, meanwhile, saw $1.41 billion from Mounjaro, which is still only approved for diabetes but is awaiting FDA approval as a standalone weight-loss drug by end of year. The company is ramping up production as a result of anticipation that demand will outstrip supply.
Two of the stock market’s worst performing sectors in October are leading the charge during Thursday’s market rally.
Energy (XLE) and Consumer Discretionary (XLY) are both up about 2%.The interest rate sensitive real estate sector (XLRE) is leading the way up more than 3% as investors price in an increased confidence the Federal Reserve’s interest hiking may be over.
Here’s a look all 11 sectors as of about 12:30 p.m. ET courtesy of the YFinteractive.
Roku (ROKU) shares soared more than 25% in midday trading on Thursday after the company reported strong fourth quarter guidance and pointed to further signs of recovery in its ad revenue.
Roku guided to adjusted EBITDA of $10 million in the fourth quarter, compared to an expected loss of $57.6 million, according to consensus estimates compiled by Bloomberg. It also expects fourth quarter revenue of roughly $955 million, above Wall Street estimates, while total gross profit is expected to total about $405 million.
The company, which has enacted a slew of cost-cutting measures including layoffs in an effort to bring down operating expenses, said it remains committed to positive adjusted EBITDA for full-year 2024, “with continued improvements after that.”
Roku reported third quarter net revenue of $912 million, up 20% year over year, on a net loss of $330.1 million, or $2.33 a share. That net loss was wider than the prior-year period’s $122.2 million loss.
Platform revenue, which includes ad sales, revenue from distribution deals, and the over-the-top streaming service The Roku Channel, came in at $744 million — up 18% on the year after declining 1.5% in the first quarter and growing 11% in Q2.
The boom was driven by strength in both content distribution and a solid rebound in video advertising.
“In Q3, the year-over-year growth of video advertising on the Roku platform outperformed both the overall ad market and the linear TV ad market in the US,” Roku said, adding the the company “saw continued signs of a rebound” despite the weak macro environment.
Roku said overall US ad spend on traditional linear TV was down 12% year over year, while traditional TV ad scatter, or the ad inventory not purchased at the Upfronts, sank 27% compared to 2022, citing data from the Standard Media Index (SMI).
Read more here.
Third quarter results season carried on Thursday, with some companies’ reports driving massive stock moves.
Palantir (PLTR) soared after the company reported a record quarterly profit and attributed the success to artificial intelligence. Shares were up nearly 20%.
Shopify (SHOP) skyrocketed more than 20% on a positive AI story. The company said it’s launching new AI-powered tools for merchants. Notably, Shopify also announced operating expenses were $779 million in the most recent quarter, down 23% from the same period last year.
Starbucks (SBUX) shares rose more than 10% as the company beat Wall Street’s estimates for both revenue and earnings per share.
Meanwhile, Moderna (MRNA) shares slumped 18% at the open, the stock’s largest decline since November 2021. Shares regained some momentum during morning trade as investors digested a weaker-than-expected sales guidance driven by soft demand for the COVID-19 vaccine.
Federal Reserve Chair Jerome Powell was careful not to tip the central bank’s hand when discussing the path forward for interest rates.
“Slowing down is giving us, I think, a better sense of how much more we need to do, if we need to do more,” Powell said in a press conference on Wednesday after the Fed decided to hold rates steady for the second consecutive meeting.
Markets haven’t been so wishy-washy. Treasury yields, which often peak around when the fed funds rate peaks, hit their lowest levels in two weeks on Thursday. The tech-heavy Nasdaq Composite, which often lags when fears of further tightening persist, is up more than 1% for the second straight day.
And direct bets on the Fed’s path are increasingly leaning toward no more hikes too. The CME FedWatch Tool now projects an 80% chance the Federal Reserve doesn’t raise rates again this year, up from a 54% chance a month ago.
“Certainly it’s a scenario that we could get more rate hikes but I think the most likely scenario is that we are done,” Moody’s Analytics chief economist Mark Zandi told Yahoo Finance Live on Wednesday after Powell’s presser sent socks rallying into the market close. “And I think today’s market action would suggest that now is the consensus view.”
Investors piled into risk-on trades on Thursday as fears of another Federal Reserve rate hike have been pushed to the back burner.
The tech-heavy Nasdaq, which has lagged in the past when investors feared a rate hike spike, soared more than 1.2%. The S&P 500 (^GSPC) was up nearly 1% while the Dow Jones Industrial Average (^DJI) gained almost 0.7%.
Meanwhile, the 10-year Treasury yield fell to 4.62%, its lowest level in more than two weeks.
The major US stock indexes were poised Thursday to extend the previous day’s gains as investors assessed Federal Reserve Chair Jerome Powell’s comments after the central bank’s decision to hold interest rates steady.
Futures on the Dow Jones Industrial Average (^DJI) were up 0.50%, or 168 points, while S&P 500 (^GSPC) futures put on 0.71%. Contracts on the tech-heavy Nasdaq 100 (^NDX) were 1.09% higher.
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