Meta CEO Mark Zuckerberg offloaded $88 million worth of Meta stock in two recent transactions, despite the company’s stellar performance and record-high valuations. This move comes amidst a broader tech surge, with the ‘Magnificent Seven’ reaching new milestones. Analysts, however, maintain a positive outlook on Meta’s future.
Alphabet Inc. (GOOGL, GOOG), the parent company of Google, reported record-breaking third-quarter earnings, surpassing Wall Street expectations and propelling the combined market capitalization of the ‘Magnificent Seven’ tech giants to an unprecedented $16.8 trillion. This surge was driven by Alphabet’s robust advertising revenue and strong performance across its various divisions.
The Dow hits a new all-time high, driven by Nvidia’s strong Q2 revenue despite production hiccups. This signals the AI revolution is in full swing, but cracks are appearing in other ‘Magnificent Seven’ companies, with Tesla and Alphabet missing earnings expectations. Benzinga Research Analyst Gianni Di Poce sheds light on the market’s direction in the face of potential interest rate cuts.
Asian markets exhibited a mixed performance on Thursday, with some key indices experiencing declines ahead of the release of a deluge of global earnings reports, including updates from prominent U.S. tech companies known as the ‘Magnificent Seven’. Japan’s benchmark Nikkei 225 suffered a 2.1% drop to 37,670.50, while South Korea’s Kospi lost 1.4% to 2,637.18. Hong Kong’s Hang Seng index managed a modest gain of nearly 0.1% to 17,215.51, but Shanghai’s Composite remained largely unchanged at 3,044.41. Meanwhile, markets in Australia and New Zealand were shuttered due to Anzac Day.
Attention is also directed towards the Bank of Japan, which commenced its two-day monetary policy meeting on Thursday. Market analysts have noted the remarkable weakness of the Japanese yen as a concern for the BOJ. The U.S. dollar strengthened against the yen, rising to 155.67 yen from 155.31 yen. The euro also gained ground, increasing to $1.0715 from $1.0697. The yen has been trading at 155 yen-levels recently, its lowest point in 34 years. This situation benefits Japanese exporters but simultaneously drives up the cost of imports, leading to speculation that Japan may intervene to bolster the yen.
In the United States, the S&P 500 index remained essentially flat, edging up by less than 0.1% to 5,071.63. The Dow Jones Industrial Average slipped marginally by 0.1% to 38,460.92, while the Nasdaq composite gained 0.1% to reach 15,712.75. Tesla’s stock surged by 12.1% after the company announced plans to accelerate production of more affordable vehicles, a move that investors hope will reignite growth. This announcement helped mitigate concerns over Tesla’s reported 55% decline in profit. Tesla is the first of the ‘Magnificent Seven’ group to release its financial results for the start of 2024.
The focus on this small group of stocks stems from their significant contribution to the U.S.’s market gains in the previous year. Their continued strong performance is crucial to justifying their high valuations. Meta Platforms also disclosed its latest results following the close of trading on Wednesday, with Alphabet and Microsoft scheduled to follow suit a day later. Market expectations are that profit growth will extend beyond the ‘Magnificent Seven’ to a wider range of companies, largely driven by the resilience of the U.S. economy. However, to drive stock prices higher, these companies will likely need to deliver even more robust profit growth, as interest rates are unlikely to provide significant support.
Despite posting results that exceeded analysts’ expectations, Boeing’s stock price declined by 2.9%. The company, which has faced criticism regarding the safety of its aircraft, stated it is implementing measures to enhance manufacturing quality, albeit this has slowed down production. On the other hand, Hasbro’s stock soared by 11.9% after the toy and game company surpassed analysts’ expectations for profit and revenue in the latest quarter. Texas Instruments and Boston Scientific also contributed to the positive sentiment in the S&P 500 index, rising by 5.6% and 5.7%, respectively, after exceeding forecasts for profit and revenue.
US stock futures rose on Monday, pointing to a potential market recovery after a recent selloff. Investors anticipate a series of earnings reports from tech giants, including members of the “Magnificent Seven” (Apple, Amazon, Tesla, Nvidia, Microsoft, Alphabet, and Meta). Tesla’s earnings will be closely watched after a challenging start to the year, while Google’s parent company, Alphabet, has outperformed due to its strong advertising business and artificial intelligence focus. Amazon, Microsoft, and Meta are also reporting earnings this week, with Apple and Nvidia expected to follow in May. Economic data releases include new-homes sales and weekly jobless claims.
