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U.S. lawmakers are due to get back to work Tuesday on Capitol Hill, and there are growing expectations that one fruit of their labors will be a partial government shutdown.
“My guess is that we will have a lot of screaming and shouting, and we’ll end up shutting down the government, and a lot of people will be inconvenienced or hurt as a result of doing that, but we’ll do it,” said Republican Sen. Mitt Romney of Utah in an interview with a TV station in his home state.
“And by the way, we’ll shut down government, and then we’ll open it. It’s not like that means that we win. No, no. We just shut it down to show that we’re fighting and making noise.”
Investors should view the shutdown as largely noise, according to a number of analysts in Washington, D.C., who track lawmakers’ moves for Wall Street.
“The stakes here are significantly lower than they were back in June, when we were facing default,” said Ed Mills, Washington policy analyst for Raymond James, referring to lawmakers’ efforts to reach a deal on raising the U.S. debt ceiling in order to avoid a market-shaking default.
“For the most part, this is a 1 or 2 on a scale of 1 to 10 in terms of concern,” Mills told MarketWatch, adding that a U.S. default, on the other hand, would have registered as a 10 on that scale.
There have been six government shutdowns since 1978 that lasted five days or more, and the S&P 500 stock index SPX
gained in the four most recent shutdowns. Brian Gardner, chief Washington policy strategist at Stifel, emphasized that history in a note to clients.
“Headlines regarding a potential budget impasse will grow and there could be a whiff of panic in the air, but investors should take all of this in stride. Markets tend to ignore the impact of a government shutdown,” Gardner wrote, as he offered the chart shown below.
There have been six shutdowns since 1978 that lasted five days or more. Here’s how stocks handled them.
Stifel’s Gardner said that while past shutdowns suggest that investors should not panic, there still is some damage.
“There will be extensive media coverage of closed entrances at national parks and other government facilities. Government salaries will not be paid on time which is, certainly, a hardship for some families,” he wrote. At the same time, he emphasized that “much of the country will operate as usual,” including the military ITA
and air traffic controllers — and missed paychecks will come through once the shutdown ends.
“From a market perspective, the biggest concern relating to a government shutdown is that it could delay official government data reports at a pivotal time for the Federal Reserve,” said BTIG’s Issac Boltansky and Isabel Bandoroff in a note.
The BTIG analysts said they expect a shutdown will occur but it should be a “nonevent for markets” overall, because it “would have no impact on debt payments and any missed activity would be settled on the other side of reopening.”
There could be a greater-than-anticipated impact on stocks DJIA
COMP
if the shutdown lasts for a longer time than expected, and if the deal to end the shutdown features unexpectedly large cuts to spending along with significant repeals of Democrats’ Inflation Reduction Act, according to Mills, the Raymond James analyst.
“The most likely scenario is that it’s days, not weeks,” he said, regarding the length of any shutdown. He also noted it could hit consumer confidence and disrupt the initial-public-offering process for some companies.
What’s likely to happen on Capitol Hill
Only one chamber of Congress is returning to Washington on Tuesday, the day following Labor Day, after an August recess — the Senate. The House of Representatives is slated to resume its work on Capitol Hill a week later, on Sept. 12.
Ahead of their returns, the Biden White House’s budget office has pushed for passage of a short-term funding measure to avoid a partial federal government shutdown on Oct. 1, when the government’s 2024 fiscal year starts.
Such a measure is known as a continuing resolution, or CR, and they’re often used as the House and Senate work to agree on a dozen appropriations bills that would fund government operations for a full fiscal year.
The debt-ceiling deal negotiated between House Speaker Kevin McCarthy and President Joe Biden set spending levels over the next two years, keeping nonmilitary spending for 2024 the same as 2023 levels. But House Republicans have adopted spending targets for the coming fiscal year at levels below the McCarthy-Biden agreement.
“The thing that Kevin McCarthy is trying to tell his caucus is that we probably need to have a short-term CR, so that the House can finish its work on appropriations bills and establish the best negotiating position,” Mills said.
The House Freedom Caucus, a hardline GOP group known for causing headaches for the chamber’s leaders, has voiced concerns. It said in an Aug. 21 statement that its members want to rein in outlays and will oppose any spending measure that doesn’t include a House-passed bill focused on security at the U.S. southern border. In addition, the group said any spending measure must address the “unprecedented weaponization” of the Justice Department and the FBI, as well as end “woke policies in the Pentagon.”
The most likely path forward is the GOP-run House passes a short-term funding measure that incorporates House Freedom Caucus goals, and then there’s a showdown with the Democratic-controlled Senate over those policy riders, with a short-lived shutdown potentially taking place, Mills said.
The Raymond James analyst said the most likely deal is a budget that’s in line with what was negotiated as part of the debt-limit deal. He also expects supplemental measures that provide relief for areas hit by Hurricane Idalia and the Maui wildfires, as well as some funding for Ukraine as it continues its fight against Russia’s invasion.
“For investors, they have seen McCarthy go up to the brink, go through a tough situation and be able to pull a rabbit out of it,” Mills said, referring to his January battle to become House speaker and the spring’s debt-limit talks. And they’ve “gone through government shutdowns in the past, mostly with very minimal market reaction,” he added.
Arm Holdings Ltd.’s initial public offering could give the company a valuation between $50 billion and $55 billion in what may be the biggest offering of the year.
The British chip designer, whose circuit designs lie inside billions of electronic devices, intends to start meeting as early as Tuesday with prospective investors ahead of its stock-market debut on the Nasdaq exchange the following week, according to a Wall Street Journal report, which cited multiple unnamed sources.
Shares of investment giant Blackstone Inc. and vacation-home rental platform Airbnb Inc. rallied after hours on Friday after both won the nod to join the S&P 500 index SPX
later this month.
The announcement, from S&P Dow Jones Indices, said that the change would take hold before the start of trading on Monday, Sept. 18. The move, among others announced Friday, will “ensure each index is more representative of its market-capitalization range,” according to a release.
Airbnb ABNB, +0.87%
currently has a market value of $83.98 billion, and its shares are up 64.7% so far this year. Blackstone BX, -1.77%,
currently worth $129.29 billion, has seen its stock rise 43.6% year-to-date.
Shares of Airbnb and Blackstone were up 5.7% and 4.8%, respectively, after hours on Friday.
Blackstone and Airbnb will replace Lincoln National Corp. LNC, +2.14%
and Newell Brands Inc. NWL, +1.23%
in the index, S&P Dow Jones Indices said on Friday. In the process, Lincoln and Newell will join the S&P SmallCap 600.
“We’ve established an unparalleled global platform of leading business lines, offering over 70 distinct investment strategies,” Chief Executive Stephen Schwarzman told analysts. “We believe our clients view us as the gold standard in alternative asset management.”
Meanwhile, Airbnb last month said that travelers were seeking longer stays and bigger properties in pricier areas, as the rebound in travel endures despite a tidal wave of inflation last year. The company’s second-quarter results and third-quarter sales forecast topped Wall Street’s estimates.
Meanwhile, S&P 500 member Deere & Co. DE, +1.94%
will replace Walgreens Boots Alliance Inc. WBA, -7.43%
in the S&P 100, S&P Dow Jones Indices said on Friday. That change also takes hold on Sept. 18. S&P Dow Jones Indices said Walgreens “is no longer representative of the megacap market space” but will stay in the S&P 500.
Shares of Deere fell 0.2% after hours. Walgreens stock was up 0.4%.
More than a year ago, the Federal Trade Commission sued Intuit Inc., the maker of TurboTax, for allegedly tricking people into thinking they could file their income taxes for free with the tax-preparation giant.
Now, an administrative judge inside the agency has ruled against Intuit — and the company said in a Friday afternoon SEC filing that it’s going to keep fighting the case, even if that means incurring “significant costs.”
“We expect to appeal this decision to the FTC Commissioners and, if necessary, then to a federal court of appeals. We intend to continue to defend our position on the merits of this case,” the company said in its 10-K filing.
“There is no monetary penalty, and Intuit expects no significant impact to its business,” Intuit spokesman Rick Heineman said in a statement. The company will appeal “this groundless and seemingly predetermined decision by the FTC to rule in its own favor,” he said.
Intuit already reached a $141 million settlement with state attorneys general about the allegations of deceptive advertising. The company says it has been clear and upfront with customers about costs. It did not admit liability in the settlement.
The FTC could not be immediately reached for comment Friday afternoon.
In March 2022, the regulator sued Intuit in federal court to immediately stop commercials that repeated “free” over and over. Intuit pulled some of the advertising and after filing season ended, a San Francisco federal judge said the FTC bid for emergency halts didn’t need to happen under the circumstances.
FTC lawyers also lodged an internal administrative complaint. “Intuit widely disseminated ads on television, on the radio, and online that gave consumers the impression that they could use TurboTax for free, even though two-thirds of taxpayers don’t qualify for Intuit’s free TurboTax offerings,” they wrote in administrative complaint proceedings.
The ongoing legal fight is happening while the broader fight over of free tax preparation is heating up. The Internal Revenue Service is planning to test its own pilot program in the upcoming filing season where taxpayers can file their taxes directly with the IRS instead of through tax preparation companies or individual preparers.
TurboTax and the tax software industry oppose the proposed IRS direct file system. So do Congressional Republicans.
One sticking point in the looming government shutdown is how much money the IRS should be getting in its budget. The House appropriations bill would forbid the IRS from using any money to build the direct file system.
Intuit Inc. INTU, +1.44%
shares closed 1.4% higher Friday, at $549.60, and the disclosure didn’t seem to be having much effect on the shares in after-hours trading. Shares are up 41% year to date, while the Dow Jones Industrial Average DJIA
is up 5% and the S&P 500 SPX
is up 17.6%.
U.S. exchange-traded funds that invest in Chinese stocks notched their best day in a month after China ramped up its efforts to support the country’s flagging currency as investors’ concerns over the economic weakness persist.
The Invesco Golden Dragon China ETF PGJ,
which tracks the American depositary shares of companies based in China, rose 3% on Friday, while the KraneShares CSI China Internet ETF KWEB,
which offers exposure to Chinese software and information technology stocks, gained 3.5%. The iShares MSCI China ETF MCHI
advanced nearly 2.2% and the SPDR S&P China ETF GXC
surged 2%, according to FactSet data.
The iShares MSCI China ETF and the KraneShares CSI China Internet ETF booked their biggest daily percentage advance since August 3, according to FactSet data.
Based on about $822 billion foreign-exchange deposits in July, the 200-basis-point cut in the reserve requirement ratio could release about $16 billion, which will improve the supply of the U.S. dollar onshore, and could move spot USDCNY lower, said strategists at Citigroup led by Johanna Chua, chief Asia economist.
“In a broader picture, this can be also seen as part the current round of accelerated policy rollout which works more directly on asset markets. If the accelerated pace [of policy rollout] continues, it may help stabilize sentiment to some extent and prevent outsized bearish moves on China risk assets including the RMB FX,” they wrote in a Friday note.
The onshore yuan USDCNY,
weakened around 1.7% against the dollar in August, extending its losses for the year to nearly 5%, according to FactSet data. The offshore yuan USDCNH, -0.03%
was trading at 7.27 per dollar Friday afternoon.
Friday’s change to reserve requirement ratio came a day after Chinese authorities announced that homebuyers’ minimum down payment will be reduced to 20% for first-time home purchases, and 30% for second-home purchases nationwide, according to a joint statement from the People’s Bank of China and National Administration of Financial Regulation late Thursday.
Currently, homebuyers in largest cities such as Beijing and Shanghai have a 30% down payment ratio for first homes, and 40% or more for second homes.
Separately, big banks, such as Industrial & Commercial Bank of China 601398, -1.08%
and Bank of China 601988, -1.07%,
have said they would cut their one-year yuan deposit rate by 10 basis points to 1.55% and their two-year yuan deposit rate by 20 basis points to 1.85%. The banks also plan to cut mortgage rates to boost consumption and aid the troubled property sector.
The broader U.S. stock market finished mostly higher on Friday as traders weighed the latest jobs report to conclude the final trading day before the Labor Day holiday weekend. The S&P 500 SPX
was up 0.2%, while the Dow Jones Industrial Average DJIA
advanced 0.3% but the Nasdaq Composite COMP
ended nearly flat.
A consortium of groups representing the private funds industry filed a lawsuit against the Securities and Exchange Commission Friday in an attempt to block new rules that would require private equity and hedge funds to disclose quarterly performance, fees and expenses.
The rules, adopted last week, would also ban so-called side letters, or agreements between a fund and specific investors that give them preferential treatment, unless those arrangements are made available to all investors.
“The Private Fund Adviser rule will harm investors, fund managers, and markets by increasing costs, undermining competition, and reducing investment opportunities for pensions, foundations, and endowments,” he added.
The MFA was joined by several other industry groups in filing the lawsuit, including the National Association of Private Fund Managers, National Venture Capital Association, American Investment Council, Alternative Investment Management Association and the Loan Syndications & Trading Association.
An SEC spokesperson told MarketWatch that “the Commission undertakes rulemaking consistent with its authorities and laws governing the administrative process, and we will vigorously defend the challenged rule in court.”
SEC Chair Gary Gensler argued in recent speeches and statements that the new rules are necessary to protect investors, including the pension funds and endowments that have increasingly turned to alternative investments in recent years to boost returns.
He said in a May speech that private funds are of growing importance to the U.S. economy, noting that advisers report that they now manage $25 trillion in assets — up from $1 trillion in 1998 — surpassing the size of the U.S. banking sector.
“The private fund industry plays an important role in each sector of the capital markets,” he said.
“It also plays an important role for investors, such as retirement funds and endowments,” he added. “Standing behind those entities are a diverse array of teachers, firefighters, municipal workers, students, and professors.”
The Federal Reserve can probably end its inflation fight now that the U.S. labor market is cooling after generating a historic 26 million jobs in roughly the past three years, according to BlackRock’s Rick Rieder.
“In fact, 26 million jobs is like adding an economy the size of Australia or Taiwan (including every man, woman, and child),” said Rieder, BlackRock’s chief investment officer in global fixed income, in emailed commentary following Friday’s monthly jobs report for August.
The August nonfarm-payrolls report showed the U.S. adding 187,000 jobs, slightly more than had been forecast, but also pointing to an uptick in the unemployment rate to 3.8% from 3.5%.
“Remarkably, 22 million people were hired between May 2020 and April 2022, and 11 million were added to the workforce from June 2021 to May 2023, as the economy has opened up massive amounts of roles for fulfillment,” said Rieder.
He expects wage pressures to ease, he said, and thinks the “economy may now have fulfilled many of its needs,” which should make the Fed feel more confident in “the permanence of lower levels of inflation,” so that it can slow or stop its interest-rate rises by year-end.
Hiring in the U.S. has slowed, except in education and in healthcare services, when looking at private payrolls based on a three-month moving average.
Payrolls are slowing in many sectors, expect education and healthcare
Rieder of BlackRock, one of the world’s largest asset managers with $2.7 trillion in assets under management, said he thinks a Fed pause or outright end to rate hikes could calm markets, even if the Fed, as BlackRock expects, keeps rates high for a time.
U.S. closed mostly higher Friday ahead of the Labor Day holiday weekend, with the Dow Jones Industrial Average DJIA
up 0.3%, the S&P 500 index SPX
up 0.2% and the Nasdaq Composite Index COMP
0.02% lower, according to FactSet.
The 10-year Treasury yield BX:TMUBMUSD10Y
was at 4.173%, after hitting its highest level since 2007 in late August, adding to volatility that has wiped out earlier yearly gains in the roughly $25 trillion Treasury market.
The big increase in the jobless rate — from 3.5% in July — stemmed almost entirely from more people in the labor force.
People generally look for a job when they think it’s easy to find one and the pay is good. That’s a sign of a robust labor market, not a weakening one.
An estimated 736,000 people entered the labor force last month, but only about one-third found a job.
The other half million didn’t find a job right away, so they would be considered unemployed. The government includes anyone without a job who is actively searching for work in the unemployment rate.
Ergo, that’s why the jobless rate jumped three-tenths to 3.8%.
Digging a little deeper, the summer-jobs market for young people may have played an outsized role.
About 45% of the people who reportedly entered the labor force in August were between the ages of between 16 and 24 years old, noted Omair Sharif, president of Inflation Insights.
As it turns out, a similar 724,000 spike in the size of the labor force took place in August 2022. And once again it was driven by an increase in young jobseekers.
What’s going on? Young people working summer jobs may have simply stayed on a bit longer than the government’s employment survey could account for.
“This looks like an anomaly associated with the summer jobs market,” said chief economist Stephen Stanley of Santander Capital Markets.
What happened after August 2022? The size of the labor force fell or moved sideways for the next three months. The unemployment rate also declined.
If the same scenario plays out again this fall and the labor force shrinks, the unemployment rate could drop back down again in the next few months.
There also could be another, less positive, explanation for the large increase in the number of people seeking work in August. Maybe they need the spending money to keep their current standard of living in light of high inflation and the depletion of their Covid-era savings.
“This could also be a possible sign of stress, with households having to come back to the labor market to pay bills and maintain current spending habits,” said senior economist Sam Bullard of Wells Fargo.
The new iPhone 15 is coming in September. History says the month is a wash.
LCG Auctions
Not even
Apple was invincible to this tough August. And if investors are pinning their hopes on the iPhone 15 launch in just a couple of weeks, they could very we…
Roche said Friday that its Alecensa drug demonstrated the ability to reduce recurrence of lung cancer for patients in the early stage of the disease.
The Swiss pharmaceutical company said the results, from a Phase 3 study of 257 people which compared the treatment with platinum-based chemotherapy, met its primary goal of disease-free survival in people with early-stage non-small cell lung cancer. About half of people with this type of lung cancer experience a recurrence of the disease after surgery, Roche said.
Roche said that it found no unexpected safety issues and will submit the data to global health authorities.
The U.S. Labor Day holiday will mark another milestone in the marathon to bring workers back to the office, but it won’t be a quick fix for landlords, according to Thomas LaSalvia, head of commercial real estate economics at Moody’s Analytics.
“A lot of companies are saying that after Labor Day, ‘We expect more out of you,” LaSalvia said, referring to days in the office. Still, office attendance, he argues, likely only stages a fuller comeback if a job or promotion is on the line.
That could prove difficult, with Friday’s U.S. jobs report for August expected to show U.S. unemployment at a scant 3.5%, near the lowest levels since the late 1960s, even if hiring has been slowing. The labor market, so far, appears unfazed by the Federal Reserve’s benchmark rate reaching a 22-year high.
It has been a different story for landlords facing a roughly 19% vacancy rate nationally and piles of debt coming due, especially for owners of older Class B and C office buildings with a bleak outlook or properties in cities with wobbling business centers.
As with shopping malls, LaSalvia said it’s largely a problem of oversupply, with many office properties at risk of becoming obsolete as tenants flock to better buildings and locations staging a rebirth. The trend can be traced in leasing data since 2021, with Class A properties in central business districts (blue line) showing a big advantage over less desirable buildings in the heart of cities (orange line).
Return to office isn’t going to save the entire office property market
Moody’s Analytics
“Little by little, we are finding the office isn’t dead,” LaSalvia said, but he also sees more promise in neighborhoods with a new purpose, those catering to hybrid work and communities that bring people together.
Another way to look at the trend is through rents. Manhattan’s Penn Station submarket, with its estimated $13 billion overhaul and neighboring Hudson Yards development, has seen asking rents jump 32% to $74.87 a square foot in the second quarter since the fourth quarter of 2019, according to Moody’s Analytics. That compares with a 2% bump in asking rents in downtown New York City to $61.39 a square foot for the same period.
The push for a return to the office also doesn’t mean a repeat of prepandemic ways. Goldman Sachs analysts estimate that part-time remote work in the U.S. has stabilized around 20%-25%, in a late August report, but that’s still up from 2.6% before the 2020 lockdowns.
Furthermore, the persistence of remote work will likely add another 171 million square feet of vacant U.S. office space through 2029, a period that also will see tenants’ long-term leases expire and many companies opting for less space. The additional vacancies would roughly translate to 57% of Los Angeles roughly 300 million square feet of office space sitting empty.
“The fundamental reason why we had offices in the first place have not completely disintegrated,” LaSalvia said. “But for some of those Class B and C offices, the writing was on the wall before the pandemic.”
U.S. stocks were mixed Thursday, but headed for losses in a tough August for stocks, with the S&P 500 index SPX
off about 1.5% for the month, the Dow Jones Industrial Average DJIA
2.1% lower and the Nasdaq Composite COMP
down 2% in August, according to FactSet.
Broadcom Inc. shares slipped 4.5% in the extended session Thursday after the chip and software company delivered a revenue forecast for the current quarter that failed to offer upside versus the consensus view.
The company reported fiscal third-quarter net income of $3.30 billion, or $7.74 a share, compared with $3.07 billion, or $7.15 a share, in the year-ago period.
After adjustments, Broadcom AVGO, +3.43%
earned $10.54 a share, compared with $9.73 a share in the year-ago quarter. Analysts tracked by FactSet were expecting $10.43 a share.
Revenue increased to $8.88 billion from $8.46 billion in the year-ago quarter, while analysts were modeling $8.85 billion.
Chip sales rose 5% to $6.94 billion from the year-ago period, and infrastructure software sales also were up by 5%, to $1.94 billion. The FactSet consensus was for $6.97 billion in chip sales and $1.89 billion in software sales.
The latest results “were driven by demand for next-generation networking technologies as hyperscale customers scale out and network their AI clusters within data centers,” Chief Executive Hock Tan said in a statement.
Broadcom generated $4.6 billion in free cash flow during its third quarter.
The company forecast fiscal fourth-quarter revenue of about $9.27 billion, in line with the FactSet consensus.
Year to date, Broadcom is up 65% and the PHLX Semiconductor Index SOX, +0.74%
is up 45%, while the S&P 500 index SPX
is up 18% and the tech-heavy Nasdaq Composite COMP
is up 35%.
Pernod Ricard plans to buy back up to EUR800 million ($874 million) in shares in fiscal 2024 after the company reported an increase in sales and profit for fiscal 2023.
The French drinks group said Thursday that organic sales for the year ended June 30 grew 13% on a reported basis to EUR12.14 billion, while net profit for the year rose to EUR2.28 billion from EUR2.03 billion in fiscal 2022.
Analysts had expected sales of EUR12.16 billion and net profit of EUR2.4 billion, according to a FactSet-compiled poll.
For the fourth quarter, sales rose to EUR2.63 billion from EUR2.30 billion a year earlier.
The company said sales in all regions increased thanks to pricing, with all spirits categories delivering strong growth.
Looking ahead, the company backed its fiscal 2023-25 medium-term financial target, including reaching the upper end of between 4% and 7% of net sales growth and a 50 to 60-basis-point increase in operating margin.
It proposed a dividend of EUR4.70, an increase of 14% compared with fiscal year 2022.
Salesforce Inc. shares rallied in the extended session Wednesday after the customer-relations management software giant’s earnings outlook topped Wall Street expectations two weeks ahead of its annual confab.
Salesforce CRM shares rallied more than 6% after hours, and held steadily in that range during the conference call with analysts, following a 1.5% rise to close the regular session at $215.04.
on Wednesday issued new financial guidance after spinning out the consumer-health company
Kenvue
While its earnings and sales projections were lowered on an absolute basis, the company is maintaining its dividend and expects to increase its revenue at a faster pace.
Eramet shares fell Wednesday after the French miner said it was ceasing operations in Gabon, where the military has reportedly seized control of the government in a coup.
At 0811 GMT, shares in Eramet slumped 19% to EUR61.65.
The company said all operations have stopped and rail traffic has been suspended in the West African country, and that it has begun procedures to ensure the safety of staff and facilities of its two subsidiaries there, Comilog and Setrag.
The former operates the Moanda manganese mine–the world’s largest–and Setrag is a rail transport company.
“The group continues to monitor developments in real time,” Eramet said.
Write to David Sachs at david.sachs@wsj.com and to Joshua Kirby at joshua.kirby@wsj.com
HP Inc.’s stock initially skidded more than 6% in extended trading Tuesday after the computing giant reported mixed results and offered a cautious outlook.
“While we expect another quarter of sequential growth in [the fourth quarter], the external environment has not improved as quickly as anticipated and we are moderating our expectations as a result,” HP Chief Executive Enrique Lores said in an interview.
For the fourth quarter, HP is guiding for adjusted earnings of 85 cents to 97 cents a share, while analysts polled by FactSet are forecasting 95 cents a share. Lores warned that PC pricing has not “recovered as quickly” as expected in what he called a challenging economy, but he said that the availability of AI products in late 2024 should “refresh” consumer and business sales.
HP HPQ, +0.13%
reported fiscal third-quarter net earnings of $766 million, or 76 cents a share, compared with net earnings of $1.12 billion, or $1.08 a share, in the year-ago quarter. Adjusted earnings were 86 cents a share.
Revenue declined 10% to $13.2 billion, compared with $14.65 billion a year ago. It was the third straight quarter HP missed analysts’ revenue estimates.
Analysts surveyed by FactSet had expected on average net earnings of 86 cents a share on revenue of $13.4 billion.
Shares of HP have gone up 17% this year, while the S&P 500 index SPX
has gained 17%.
“HP results provided a look into the bifurcation between AI and everything else in tech,” analyst Daniel Newman, CEO of the Futurum Group, said in an email. “While the company made solid sequential gains, it is still dealing with a macro softness that is likely to persist as tech investment runs to AI and on device AI monetization is showing a longer path to clarity.”
Nvidia Corp. shares are back on track to try to turn in their best year ever after closing at a record high Tuesday, as the company reached a $1.2 trillion market capitalization for the first time.
After an initial show of strength, Nvidia walked back gains following its blowout earnings report last week, when the graphics-processing-units maker topped Wall Street’s data-center sales estimates by more than $2 billion for the quarter, and forecast revenue for the current quarter of more than $3 billion above expectations.
Nvidia also closed above a $1.2 trillion market cap for the first time Tuesday, according to Dow Jones Market data.
In a little more than a year, Nvidia’s market capitalization had increased by close to $1 trillion, adding $925 billion in market cap since 2022’s stock price low, hit on Oct. 14, when shares closed below $113 for the first time since August 2020, according to Dow Jones data.
Last fall, Nvidia’s stock was melting down because it had to replace some $400 million in expected data-center sales to China with equipment that would clear a U.S. ban on AI tech as well as deal with inventory write-downs.
Nvidia shares are up 234% year to date, compared with a 17% gain by the S&P 500, and already ahead of their strong 2016 gain of 224%, and back in the running to overcome their best one-year gain of 308% set back in 2001, according to FactSet data.
Nvidia shares were also the second-most active on the S&P 500 on Tuesday, with more than 69 million shares exchanged, second only to Tesla Inc.’s TSLA, +7.69%
more than 132 million shares exchanged by the close.
For their part, Tesla shares posted a 7.8% gain Tuesday, their biggest one-day jump in five months, following a report that Tesla was launching a $300 million AI computing cluster using thousands of Nvidia GPUs.
Also on Tuesday, Nvidia and Alphabet Inc. GOOG, +2.81%
