ADBE
NFLX
GME
WFC
ZS
Inflation Signals Cooling
On Thursday, the S&P 500 and Nasdaq Composite hit record highs for the fourth consecutive day. The S&P rose by 0.23%, while the Nasdaq added 0.34%. In contrast, the Dow Jones Industrial Average slipped by 65.11 points, or 0.17%. The mixed performance among major indices highlights the varying investor responses to recent economic data.
The primary driver for this market rally was the latest data showing signs of cooling inflation. May’s producer price index (PPI), which measures wholesale inflation, unexpectedly fell by 0.2% from the prior month. This decline follows a 0.5% increase in April and counters economists' expectations of a 0.1% uptick.
Premarket Movers:
| Company | Stock Change | Reason |
|---|---|---|
| Adobe (NASDAQ:ADBE) | +14% | Raised revenue forecast for fiscal 2024, expecting more demand for its AI-powered software |
| Tesla (NASDAQ:TSLA) | +1.1% | Shareholders voted in favor of a $56 billion pay package for CEO Elon Musk, and the company’s reincorporation in Texas |
| Sirius XM (NASDAQ:SIRI) | -2.4% | Removed from the Nasdaq 100 index, replaced with Arm Holdings (NASDAQ:ARM) |
| GameStop (NYSE:GME) | -1.2% | Postponed its virtual annual shareholders' meeting due to technical difficulties |
| RH (NYSE:RH) | -12% | Reported a bigger-than-expected first-quarter loss and forecast second-quarter sales below expectations |
| Wells Fargo (NYSE:WFC) | -0.7% | Fired more than a dozen workers for alleged “simulation of keyboard activity” |
| Hasbro (NASDAQ:HAS) | +1.2% | Bank of America upgraded its investment stance on the toymaker to ‘buy’ from ‘neutral’ |
| Zscaler (NASDAQ:ZS) | +1.7% | JPMorgan upgraded the cloud security company to ‘overweight’ from ‘neutral’ |
Adobe's Impressive Performance
Adobe's (NASDAQ: ADBE) shares soared nearly 15% in premarket trading, driven by strong second-quarter earnings that exceeded analysts' expectations. The company's revenue grew by 10% compared to the same period last year. David Wadhwani, President of Adobe's Digital Media business, highlighted the company's excitement about innovation in cloud technology and artificial intelligence functionality.
Treasury Yields and Economic Indicators
U.S. Treasury yields fell again on Friday, with the 10-year Treasury yield trading around 4.215%, down nearly 3 basis points, and the 2-year Treasury note yield slipping 1 basis point to 4.677%. This decline in yields follows the release of data indicating easing inflation and increased jobless claims.
Despite the stock market's gains, the dollar experienced minor losses. However, it remains on course for small weekly gains following the Federal Reserve's decision to leave the funds rate unchanged at 5.25%-5.5%. The Fed also reduced the number of projected rate cuts for the year from three to one.
Weak U.S. consumer and producer prices, combined with an increase in new unemployment claims to a 10-month high, suggest easing inflationary pressures. These factors have led some analysts, like those at Goldman Sachs, to anticipate a rate cut in September and another in December. They believe the Federal Reserve might push through with rate cuts if inflation continues to moderate.
Netflix's Venture into Live Sports
Netflix is exploring partnerships to broadcast NFL games on Christmas Day, marking its first significant foray into live sports.
The streaming giant is in talks with major broadcasters like ESPN, NBCUniversal, and CBS Sports. However, Netflix might face challenges, as some broadcasters view it as a competitor and may be hesitant to collaborate.
