Weekly Market Mornings (September 15) Nasdaq Gained (6%) in A Week Ahead of FOMC

Last Week’s Reports

Economic Reports

The annual inflation rate in the US slowed for a fifth consecutive month to 2.5% in August, (the lowest since February 2021 below forecasts of 2.6%). Compared to the previous month, the CPI rose 0.2%, the same as in July and matching expectations. The index for shelter rose 0.5% and was the main factor in the monthly increase. Meanwhile, core inflation steadied at 3.2% but the monthly core inflation rate edged up to 0.3% from 0.2%.

Producer Price Index in the United States increased 1.7% year-on-year in August below market expectations of 1.8%. 

The ECB cut the deposit facility rate by 25 bps to 3.5% to ease monetary policy restrictions, reflecting an updated inflation outlook and better transmission of policy. The ECB remains committed to bringing inflation back to its 2% target, adjusting rates based on data and economic conditions without committing to a specific rate path. Inflation projections remain in line with previous forecasts: 2.5% in 2024, 2.2% in 2025, and 1.9% in 2026.

US consumer sentiment increased to its highest level since May, while year-ahead inflation expectations dropped to the lowest reading since December 2020.

This increased for a second consecutive month to 69 in September, the highest since May, compared to 67.9 in August.

Earning Reports

Oracle

Oracle (ORCL) Shares surged about 14% in the previous week.

The company on Monday posted fiscal first-quarter net income of $1.03 a share, compared with 86 cents a share, in the year-earlier period. 

Revenue rose to $13.31 billion from $12.45 billion, above estimates.

Oracle generated $10.52 billion in revenue from cloud services and license support, up 7% from a year before.

Oracle CEO Safra Catz emphasized that the company’s operating income and earnings per share growth have accelerated, with Cloud Services now being Oracle’s largest business segment. Catz also announced a MultiCloud agreement with Amazon’s AWS, enabling AWS customers to easily access the Oracle database starting in December.

Additionally, Oracle and Google’s Google Cloud have launched Oracle Database on Google Cloud, now available in four regions across the U.S. and Europe, with further expansion planned in the coming months.

Kroger

Kroger (KR) reported second-quarter adjusted earnings per share of 93 cents, beating the estimate of 91 cents.

Quarterly sales of $33.912 billion (nearly flat year over year). Excluding fuel, sales increased 1.3% compared to the same period last year.

Kroger reported a 1.2% increase in identical sales excluding fuel, with an operating profit of $815 million. 

CEO Rodney McMullen highlighted growth in households and customer visits, driven by affordable prices and personalized promotions. Digital sales grew by 11%, and there was an increase in total households, customer visits, and loyal households.

For fiscal year 2024, Kroger affirmed its adjusted EPS outlook of $4.30 to $4.50 and raised its full-year identical sales without fuel guidance to 0.75% to 1.75%.

Adobe

Adobe (ADBE) recently reported its fiscal Q3 results, surpassing expectations on both revenue and earnings per share (EPS).

Adobe’s shares dropped over 9% due to a disappointing Q4 outlook, with projected revenue between $5.5 billion and $5.55 billion, below analyst expectations. Adjusted per-share earnings are also expected to fall short. This lowered guidance caused an 8% drop in Adobe’s stock to $538.80 in premarket trading.

Despite this, Adobe expects to exceed its annual net new recurring revenue, indicating healthy subscription sign-ups. The lighter-than-expected guidance may be due to new competition and the impact of AI on Adobe’s creative business. 

Adobe’s Digital Media segment, its largest revenue generator, brought in nearly $4 billion this quarter, but growth has slowed.

Management cited foreign exchange translation as a primary reason for the weak forecast. Adobe also announced the upcoming beta release of its AI-powered video tool, Adobe Firefly Video Model, but does not expect it to significantly impact revenue.

Indices

Indices’ Weekly Performance:

Last week US benchmark equity indices closed higher. As markets awaited the Federal Reserve’s latest monetary policy decision due next week’s FOMC meeting.

For the week, the Nasdaq jumped nearly 6%, while the Dow increased 2.6%.

The S&P 500 index rose 4% last week amid increasing optimism that the Federal Reserve’s policy-setting committee will slash interest rates while the technology sector also rallied on upbeat long-term guidance from Oracle.

S&P 500 has reached a 2-month resistance zone, for further increase in price, the index should break this resistance in the first place. If not, dropping in price anticipated.

Moreover, investors are looking ahead to next week’s Federal Open Market Committee (FOMC) meeting with bullish expectations. Bets are increasing that the Fed’s policy-setting committee may not only cut rates but may curb them by as much as a quarter-point.

Stocks

Stock Market Sector’s Weekly Performance:

Source: Finviz

It’s been a strong week on Wall Street for the two biggest chip companies: Nvidia (NVDA) shares are up 16%, while Broadcom (AVGO) shares are up 22%.

The technology sector led the weekly climb, jumping 7.1%, as Oracle raised its revenue outlook for fiscal 2026. Oracle’s shares rose 14%.

The consumer cyclical sector was also strong, rising 5.27%, followed by a 4.57% gain in communication services. Industrials, materials, utilities and real estate also rose by more than 3.5% each.

Just one sector bucked the weekly climb as energy dropped 0.07%.

Stock Market Weekly Performance:

Source: Finviz

Nvidia (NVDA) received the US government’s nod earlier this year to sell advanced chips to United Arab Emirates-based artificial intelligence firm G42, Semafor reported Friday. However, the approval has not been previously reported.

Also, the U.S. government is considering allowing Nvidia to export advanced chips to Saudi Arabia, which would help the country train and run the most powerful AI models, Semafor reported on Wednesday, citing people familiar with the matter.

Technically, Nvidia has been stock in a ranging trend. Also, there is a strong resistance area in $131. So, for starting a new up-trend leg, NVDA needs to break this zone with a strong momentum.

Apple Event 2024

The latest Apple event, dubbed “Glowtime,” took place on September 9. Here are some of the highlights:

• iPhone 16 and iPhone 16 Plus: These models feature a water- and dust-resistant design, new colors like ultramarine, teal, and pink, and a customizable Action button. They also come with a 48-megapixel main camera, a 12MP telephoto lens, and a new ultrawide camera with autofocus.
• iPhone 16 Pro and Pro Max: These models include a new Camera Control button, longer battery life, and advanced AI features.
• Apple Watch Series 10: The new series includes design updates and enhanced health features.
• AirPods 4: These come with improved audio quality and new features.

Effect of Event on Apple Stocks

The iPhone 16 event had a mixed impact on Apple (AAPL) share. Initially, there was a slight dip in Apple’s share price on the day of the event, which is a common occurrence known as a “sell-the-news” reaction. However, investors are optimistic about the long-term effects. The introduction of AI features in the iPhone 16 is expected to drive better performance in the coming months.

Overall, while there was a short-term decline, the new features and advancements are likely to boost Apple’s stock in the longer term. 

Effect of Event on ARM Stocks

The iPhone 16 event had a positive impact on Arm (ARM) share. Following the announcement that the iPhone 16 will feature a chip based on Arm’s v9 CPU architecture, Arm’s shares rose by about 5%. This increase was driven by the anticipation of enhanced generative AI capabilities in the new iPhone, which rely on Arm’s technology.

Commodity

Weekly Performance of Gold, Silver, WTI and Brent Oil:

Source: Finviz

Gold prices surged to record levels last week, driven by optimism that the U.S. Federal Reserve is close to cutting interest rates, fund inflows, and a weaker dollar. Spot gold rose 3.68% to $2,585 per ounce, while Silver increased by 10% to $30,70.

Traders are eyeing a potential milestone of $3,000 per ounce, fueled by monetary easing from major central banks and a tight U.S. presidential election race. The European Central Bank lowered its main interest rate, and the Fed is expected to follow suit next week, with markets pricing in a significant rate cut.

Oil prices rose for 0.77% last week, with supply tight as Hurricane Francine shut in 42% of the U.S. Gulf of Mexico production.

Also, prices have continued to rebound from three-year lows touched Tuesday on weak demand from China.

Forex

Weekly Performance of Major Foreign Exchange Pairs:

Crypto

Crypto Market Weekly Performance:
Source: quantifycrypto

Bitcoin, the most popular cryptocurrency, was on track to log a weekly gain of 12%.

Last week was positive for BTC, during which its price increased by more than 10%.

The BTC is ranging in a sideways trend. If the price could break up-wardly the channel, then there is a high possibility of rising further.

Ethereum, the second-largest digital asset, set for a weekly rise of about 4%.

BNB, the third-largest digital asset by market value excluding stablecoins, gained 10%, while Solana, the fourth largest, added about 4%.

The altcoin market also remained quite flat throughout Saturday, with most of the coins charting small differences.

Next Week’s Outlook

Economic Events 

Next week, all eyes will be on the two-day FOMC meeting that concludes on Wednesday. Most traders see a 25-bps reduction as the most likely outcome.

The central bank will also provide updated economic projections, with traders expecting a full percentage point of easing this year. 

Other economic highlights will include the release of August retail sales on Tuesday, August housing starts and building permits on Wednesday.

Other important releases include the NY Empire State Manufacturing Index, the Philadelphia Fed Manufacturing Index.

Earning Events 

Earnings reports coming this week include Q1 reports of General Mills (GIS), Q1 reports of FedEx (FDX) and Q2 reports of Lennar (LEN).