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Markets closed another session higher today, ahead of where the economic grist really hits the mill. This begins tomorrow with the May Consumer Price Index (CPI) report. Also, should trade talks between the U.S. and China — now going into Day 3 — bring about continued hope that we may see an upward catalyst for market participation.
Eventually, these days will start to feel the altitude of current valuations. The S&P 500 is now at its highest level since February 20th — when the index was moving rapidly in the opposite direction. But indexes shot up near session highs at the closing bell today. The Dow gathered +105 points, +0.25%, the S&P 500 +32 points, +0.55%, the Nasdaq — led by +8% gains in IntelINTC today and +10% for TeslaTSLA over the past two days — closed +123 points, +0.63%, and the Russell 2000 +11 points, +0.56%.
These indexes are now up +10-15% from April lows, and closing in on all-time highs set in late 2024. This is all well and good — as long as you’re not expecting the Fed to cut interest rates anytime soon — but at some point we’ll need more than just some encouraging words about pending trade deals. So far, that’s pretty much all there is.
Q1 Earnings Season Continues to Wrap Up: GME
Former celebrated “meme stock” GameStopGME posted mixed results after the closing bell today, beating on its bottom line by a penny to +$0.09 per share from the Zacks consensus, but coming up well short of expectations on the top line to $732.4 million and -17% year over year. Operations for the quarter in the U.S. were positive, but negative in Canada, Australia and Europe. Shares are down -5% in late trading on the news.
That’s still better than PetMed ExpressPETS, which announced it would delay fiscal Q4 earnings this afternoon. Expectations are for a slimmer loss per share from the year-ago quarter, but for quarterly revenues to tumble -27.5% from fiscal Q4 of last year. The report, and following conference call, are now scheduled for Monday. Shares are down -8% on this development.
What to Expect from the Stock Market Wednesday
Monthly CPI numbers, including a new Inflation Rate, are due out before tomorrow’s opening bell. These numbers are expected to bump up 10 basis points (bps) to +2.4% for May — still around 4-year lows. Back in June 2022 we had escalated to a +9.1% Inflation Rate, the highest in 40 years. Now we’re back to early-2021 levels.
The overall U.S. economy has demonstrated resilience many experts did not think it had. Analysts do not expect things to have fallen apart last month. That said, it’s hard to imaging much of a surprise in either direction on the Inflation Rate tomorrow. We’ll keep an eye on core CPI year over year, which reached +2.9% a month ago, still nearly a full point higher than optimum inflation levels according to the Fed.
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Strong focus in R&D is a key positive for DENTSPLY. This apart, DENTSPLY’s CAD/CAM dental imaging platform is fortifying its foothold in the global dental markets.
KLA is a major player in each of its served markets. The company offers complete yield management solutions, including hardware, software and services that reduce production cost.
Affiliated Managers is well-placed for growth, driven by successful partnerships, global distribution capability, focus on alternative strategies, and strong balance sheet and liquidity position.
Align Technology’s robust product line, balanced growth across all channels and consistent focus on international markets to drive growth bolster our confidence in the stock.
Solid advisory revenue growth and a strong balance sheet will likely drive Evercore’s top-line expansion. Robust capital returns and return on equity enhance its shareholder value proposition.
Cullen/Frost’s branch expansion efforts in the Texas region will drive deposit and loan growth. NII growth will aid the company’s top line. Also, its capital distributions seem sustainable.
Snap-on has been grappling with macroeconomic headwinds including inflation, which are likely to act as deterrents. Also, higher operating costs remain concerns.
U.S-China trade tension, oversupply of solar products and tariff imposition by U.S. government on imports pose risks to the stock. It also has a weak solvency position
Softness across industrial and consumer electronics end markets, rising costs, intensifying competition and leveraged balance sheets are key headwinds.
Amazon is benefiting from its Prime program, delivery and logistic system in the e-commerce space. Further, its dominant position in cloud market is a positive.
Innovative Medicine unit is showing a growth trend, driven by existing products like Darzalex, Tremfya and Erleada and continued uptake of new launches, including Spravato, Carvykti and Tecvayli.
Netflix’s growing subscriber base, driven by content strength, focus on originals across various genres and languages, rapid international expansion and partnerships with telcos are key drivers.
Broadcom is a leading player in the semiconductor market based on its expanding product portfolio, multiple target markets, accretive acquisitions and strong cash flow.
Strength in the Energy Generation/Storage business, balance sheet strength, and focus on autonomous driving and artificial intelligence are set to drive Tesla.
Align Technology’s robust product line, balanced growth across all channels and consistent focus on international markets to drive growth bolster our confidence in the stock.
