AVGO
TSLA
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Wholesale prices fell in May, signaling a retreat in inflation. Markets reacted positively to the Fed's announcements, with the S&P 500 and Nasdaq reaching new highs.
Premarket Movers:
| Company | Stock Symbol | Stock Movement | Reason |
|---|---|---|---|
| Broadcom | NASDAQ:AVGO | +14% | Upgraded its annual revenue guidance for AI-optimized chips |
| Tesla | NASDAQ:TSLA | +6.8% | CEO Elon Musk announced shareholder backing of $56 billion pay package and reincorporation in Texas |
| Dave & Buster’s Entertainment | NASDAQ:PLAY | -10% | Reported another quarter of lagging sales |
| Virgin Galactic | NYSE:SPCE | -8% | 1-for-20 reverse stock split going into effect |
| MicroStrategy | NASDAQ:MSTR | -1.5% | Plans to offer $500 million in convertible debt |
| 3M | NYSE:MMM | +0.5% | Transfer of $2.5 billion of U.S. pension payment obligations to Metropolitan Tower Life Insurance |
Producer Price Index Falls
In May, wholesale prices dropped unexpectedly, signaling a retreat in inflation. The producer price index (PPI), which tracks prices producers receive for goods and services, fell by 0.2%, reversing April's 0.5% increase. Analysts had forecasted a 0.1% rise, making this decline notable. When excluding food, energy, and trade services, the PPI remained unchanged, contrary to the anticipated 0.3% increase.
Market Reaction and Fed's Position
Investors reacted positively to the Federal Reserve's announcement of "modest further progress" toward its 2% inflation target. Despite no changes in interest rates, the S&P 500 rose 0.85%, closing above 5,400 for the first time. The Nasdaq Composite gained 1.53%, also hitting a record high. However, the Dow Jones Industrial Average saw a slight decline, slipping 0.09%.
The Federal Reserve indicated that it expects just one rate cut by year-end, down from the three cuts projected in March. It maintained the key interest rate within a 5.25% to 5.5% range.
The consumer price index (CPI) for May showed no monthly increase but was up 3.3% year-over-year. Federal Reserve Chair Jerome Powell acknowledged the progress but stated it wasn't enough to start loosening policy.
Broadcom's Strong Performance
Broadcom (NASDAQ: AVGO) exceeded earnings expectations for Q2 and raised its annual sales forecast.
The chipmaker, boosted by the artificial intelligence surge, reported $3.1 billion in AI product revenue for the quarter. Following the announcement of a 10-for-1 stock split set for July 15, Broadcom shares soared 13% in premarket trading.
Crude Oil Prices Decline
Crude oil prices fell on Thursday due to an unexpected increase in U.S. crude inventories and a reduced oil demand growth forecast for 2024 by the International Energy Agency (IEA).
U.S. crude futures (WTI) dropped 0.3% to $78.23 per barrel, while Brent crude fell 0.4% to $82.31 per barrel. U.S. oil inventories rose by 3.7 million barrels in early June, against an expected draw of 1.2 million barrels.
Additionally, distillates and gasoline stockpiles increased, raising concerns about weaker-than-expected summer fuel demand. The IEA cut its 2024 demand growth forecast by 100,000 barrels per day to 960,000 bpd.
