Landon Capital

U.S. Stocks Edge Up Amid Fed Signals, Holiday Optimism, and Mixed Market Moves

On Tuesday, the U.S. stock market saw modest gains amid mixed signals from Federal Reserve officials, ultimately closing the session positively. Despite a loss of momentum as the day progressed, all major indexes ended in positive territory after a range-bound session.

Investors closely analyzed statements from Fed officials preceding the Federal Open Market Committee’s upcoming meeting. Fed Governor Christopher Waller expressed growing confidence in the current policy rate’s restrictiveness, hinting at potential rate cuts if inflation continues to align with the Fed’s 2% target. Conversely, Chicago Fed President Austan Goolsbee highlighted progress in curbing inflation, comparing it to rates not seen since the 1950s. However, Fed Governor Michelle Bowman hinted at the necessity of another rate hike to control inflation promptly.

Market expectations heavily lean towards a status quo at the FOMC meeting, with a nearly certain 98.9% probability that the Fed will maintain the current Fed funds target rate between 5.25% and 5.50%.

The holiday shopping season is underway, with National Retail Federation data suggesting a projected 5% increase in consumer spending. This aligns with positive consumer confidence data from the Conference Board, attributed to improved short-term expectations.

Upcoming releases from the Commerce Department include the second estimate for third-quarter Gross Domestic Product and the comprehensive Personal Consumption Expenditures report, encompassing income, spending, and crucially, inflation.

In market movements, the Dow Jones Industrial Average rose by 83.51 points (0.24%), the S&P 500 gained 4.46 points (0.10%), and the Nasdaq Composite added 40.73 points (0.29%). Among S&P 500 sectors, eight closed positively, with consumer discretionary shares leading the gains while healthcare stocks faced the most significant losses.

Specific stock movements included Boeing’s 1.4% rise after an upgrade by RBC Capital Markets, Chinese e-commerce firm PDD Holdings’ 18.1% surge on surpassing revenue estimates, Affirm Holdings’ 11.5% jump following a Cyber Monday boost, and Micron Technology’s 1.8% decline post-revision of first-quarter operating expense expectations.

Market activity showed a slightly higher number of advancing issues versus decliners on both the NYSE and Nasdaq, with varying figures for new highs and lows on the S&P 500 and Nasdaq Composite.

Trading volume on U.S. exchanges reached 10.03 billion shares, slightly lower than the 20-day average of 10.41 billion shares for a full session.

UnitedHealth Group Sees 2024 Profit in Line with Street Expectations, Health Costs Maintain High Spirits

In a twist of fortune, UnitedHealth Group foresees its 2024 profits aligning closely with Wall Street’s predictions. This forecast signals that the health insurance giant expects the ongoing surge in medical costs to keep its momentum.

The healthcare sector has undergone a revival this year, especially witnessing a resurgence among older patients who are flocking back to doctors’ offices and hospitals for procedures they’d deferred during the COVID-19 pandemic.

Analysts anticipate the company to shed light on its expectations regarding medical expenses during its investor day.

All eyes are on the potential influence of biosimilars and the latest GLP-1 drugs like Novo Nordisk’s Ozempic and Wegovy, as well as Eli Lilly’s Mounjaro and Zepbound, noted J.P. Morgan analyst Lisa Gill in a recent note.

UnitedHealth (NYSE:UNH) and other insurers have grappled with rising costs in 2023 due to this demand resurgence. However, October brought a whisper of stability, with the insurer stating that elective surgeries in the third quarter were showing a more “stable” trend compared to the second quarter’s fluctuations.

NetApp (NASDAQ: NTAP) Pulls a Surprise: Soars 11% on Q2 Earnings Beat Despite Revenue Dips

NetApp (NASDAQ: NTAP) shares took flight by over 11% in after-hours trading post their Q2 results. The EPS of $1.58 sprinted past the expected $1.39, sparking this impressive leap.

While the revenue took a slight dip by 6% year-over-year (8% in constant currency) to $1.56 billion, it managed to outshine the consensus estimate of $1.53 billion. Yet, the billings stumbled, taking a 9% year-over-year tumble to $1.45 billion.

CEO George Kurian seemed quite pleased, commenting, “We delivered another strong quarter, hitting revenue above our guidance midpoint and reaching all-time highs for gross margins, operating margins, and EPS.”

Peeking into Q3/24, the company seems bullish, projecting an EPS between $1.64 to $1.74, towering over the consensus estimate of $1.53. Revenue expectations for this period hover between $1.51 billion and $1.67 billion, slightly askew from the anticipated $1.555 billion.

For the grand finale of the year, NetApp’s revised outlook paints a rosy picture, foreseeing an EPS range of $6.05 to $6.25, surprising the consensus estimate of $5.73. However, there’s a predicted 2% year-over-year revenue decline, adding a touch of bittersweetness to the narrative.

Ah, midweek investing—a bit like a midweek espresso. The market’s energy might not be as intense as Monday’s double-shot, but it’s definitely not the decaf lull of a Friday afternoon. It’s that sweet spot where you’re sipping on possibilities, checking the pulse of your investments, and maybe even discovering a few surprises nestled in the week’s trends. It’s like a Wednesday dance-off: neither the opening act nor the grand finale, but boy, does it have its own rhythm and moves.