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Waller Optimistic on 2024 Rate Cuts, Cautions Data Dependency

Federal Reserve Governor Christopher Waller expressed optimism on Tuesday, stating that the Fed could potentially lower interest rates later this year, provided that inflation doesn’t rebound or remain elevated.

However, Waller emphasized that the timing and magnitude of rate cuts would hinge on upcoming data. His perspective aligns with the median projection of all Fed officials, anticipating three rate cuts in 2024. This outlook is more conservative than investors’ expectations, as they anticipate six cuts starting in March.

The Fed’s last rate increase occurred in July, reaching a 22-year high as part of an assertive effort to curb inflation. Waller’s comments echo recent efforts by several Fed officials to temper expectations of swift cuts in 2024.

Market Movers

Spirit Airlines (NYSE:SAVE) shares saw a 1% decline following a significant 47% drop in the regular session. The downturn occurred after a federal judge blocked JetBlue

Airways’ (NASDAQ:JBLU) acquisition of its low-cost rival. Both airlines express disagreement with the court’s decision and are currently assessing their options.

Interactive Brokers (NASDAQ:IBKR) experienced a 2.25% decline as it reported fourth-quarter earnings per share (EPS) of $1.52, slightly below the analyst estimate of $1.54. The electronic broker’s revenue reached $1.14 billion, exceeding the consensus estimate of $1.13 billion.

Rocket Lab USA (RKLB) witnessed a 3% gain after KeyBanc initiated coverage with an ‘overweight’ rating and set a price target of $8.

Big 5 Sporting Goods (Nasdaq: BGFV) faced a 5% decline following the release of sales results for the fiscal 2023 fourth quarter. Net sales amounted to $196.3 million, down from $238.3 million in the fourth quarter of fiscal 2022, with same-store sales decreasing by 17.7% year-over-year.

Calavo Growers (Nasdaq: CVGW) saw a 7% decline as it announced a delay in the release of fourth-quarter and full-year results. The company anticipates reporting a net sales decrease of approximately 18% to $972 million for the year ended October 31, 2023, falling below the consensus of $987 million.

Impinj, Inc. (PI) experienced an 11% gain after announcing expectations of fourth-quarter 2023 revenue exceeding $70 million, surpassing its prior guidance of $65.5 to $68.5 million. Additionally, adjusted EBITDA is projected to exceed $2.5 million, above the previous guidance of ($0.9) to $0.7 million.

Progress Software Corporation (NASDAQ:PRGS) witnessed a 4% climb as it reported fourth-quarter EPS of $1.02, surpassing the analyst estimate of $0.91. Quarterly revenue reached $176.97 million, exceeding the consensus estimate of $174.12 million. The company forecasts FY2024 EPS of $4.58-$4.68 on revenue of $722-732 million.

Digital World Acquisition (DWAC) faced a 5% decline, retracing gains after surging 29% in the regular session. The blank-check firm, known for its agreement to take President Donald Trump’s social media platform public, experienced this volatility following Trump’s victory in the Republican contest in Iowa.

Surge in Nvidia and AMD Stocks Fueled by Optimism Over Rising Demand for AI Chips; Price Targets Raised by Analysts

Investor optimism regarding increased demand for artificial intelligence (AI)-powered chips has driven shares of Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) higher. Nvidia maintains a dominant position in advanced AI chips, while AMD is expected to make gains this year, particularly in deliveries to enterprise customers, according to Barclays analysts led by Tom O’Malley.

Nvidia’s stock saw a 3% increase, reaching $563.65 and hitting a new record high. Meanwhile, AMD experienced a surge of 7.5%, reaching $157.57, marking its highest level in over two years. Nvidia’s shares more than tripled last year, securing its position as the world’s most valuable chipmaker, while AMD’s shares more than doubled.

Barclays raised the price target for AMD shares to $200 from $120, and KeyBanc analysts increased theirs to $195 from $170. KeyBanc also raised Nvidia’s price target to $740 from $650. Both Nvidia and AMD are among the top gainers in the industry-wide PHLX semiconductor index, which rose by 1.15% during the session.

Currently, the median price target for Nvidia, as indicated by the 53 analysts covering its stock, is $625, slightly down from $627.50 a month ago. The collective recommendation remains “buy.” For AMD, the 47 analysts covering its shares have a median price target of $145, up from $130 a month ago, with a collective recommendation to buy the stock, according to LSEG Data.

Nvidia’s plans to initiate mass production later this year for an AI chip designed for Chinese customers to comply with tightened U.S. export rules were reported by Reuters earlier this month. In December, AMD announced two new AI data center chips as part of its strategy to challenge Nvidia’s flagship microprocessors.

Investing is a financial tango where your money learns the cha-cha of compound interest, and the more it dances, the more friends it invites to the party. So, grab your financial dance shoes, keep a sharp eye on market rhythms, and remember, in the grand ballroom of investments, patience is not just a virtue; it’s the secret sauce for a waltz with wealth. After all, money talks, but investing lets it sing a melodious symphony of financial freedom.