Wall Street's main indexes closed lower on Wednesday, with the Nasdaq leading declines, as technology stocks slumped on Thanksgiving eve on worries the Federal Reserve may be cautious about rate cuts after stubbornly strong U.S. inflation data.
Data showed consumer spending increased solidly in October, suggesting the U.S. economy maintained its strong pace of growth, but progress on lowering inflation appeared to have stalled.
Traders added to bets the Fed will lower borrowing costs by 25 basis points at its December meeting, according to CME's FedWatch. However, they anticipate the central bank leaving rates unchanged at its January and March meetings.
Market Snapshot
According to preliminary data, the S&P 500 lost 22.85 points, or 0.38%, to end at 5,998.78 points, while the Nasdaq Composite lost 113.80 points, or 0.59%, to 19,061.78. The Dow Jones Industrial Average fell 136.31 points, or 0.31%, to 44,723.23. MicroStrategy rose 10%, Nvidia fell 1.2%, Tesla fell 1.6%.
Market Movers
Fiscal third-quarter revenue at Dell Technologies Inc. rose 10% from a year earlier to $24.4 billion but missed analysts' expectations of $24.7 billion, and the company, a leading provider of computers and servers for artificial intelligence, issued a fourth-quarter revenue forecast that also missed estimates. The stock was down 12% after Dell said it expects revenue for the current quarter ending in January of $24 billion to $25 billion, below consensus estimates of $25.6 billion. The company said it was seeing some caution from customers for non-AI categories like its PC and storage businesses.
Third-quarter adjusted earnings of 93 cents a share at CrowdStrike Holdings, Inc. beat Wall Street estimates of 81 cents as revenue jumped 29% to $1.01 billion and beat forecasts. The cybersecurity company reported a bottom-line loss of 7 cents a share, a swing from year-earlier profit of 11 cents. "Our third-quarter results reflect our focused execution and financial discipline, which drove a strong finish and quarter-over-quarter increase in pipeline, despite expected headwinds from the July 19th incident," said Chief Financial Officer Burt Podbere, who was referring to an update to the company's software that triggered a global tech outage. The stock was down 4.6% after CrowdStrike said it expects fourth-quarter earnings of 84 cents to 86 cents per share compared with estimates of 86 cents.
Symbotic Inc. fell 36% after the robotics company lowered its outlook and reported it wouldn't meet the deadline to file its 10-K annual report for the fiscal year ended Sept. 28. Symbotic identified an error "related to system revenue recognition" and pledged to assess its financial impact. The company posted fiscal fourth-quarter revenue of $577 million, net income of $28 million, and adjusted earnings before interest, taxes, depreciation, and amortization of $55 million earlier this month, but the restatements, the company said, were expected to have a total impact of $30 million to $40 million.
SUPER MICRO COMPUTER INC rose 1.9%. The stock surged 16% on Monday and was the best performer in the S&P 500 during the session. However, it fell 10% on Tuesday and was the worst performer in the index. In a filing late Tuesday, the AI server maker said it prepaid and terminated loan agreements with Cathay Bank and Bank of America.
Workday, the provider of corporate human-resources and financial software, posted third-quarter earnings and revenue that beat analysts' estimates. Subscription revenue in the period rose to $1.96 billion from $1.69 billion a year earlier. The stock fell 6.2%, however, after Workday forecast fourth-quarter subscription revenue to rise 15% to $2.03 billion, below estimates of $2.2 billion.
Autodesk reported third-quarter adjusted earnings and revenue that beat analysts' estimates and the design-software company said total billings in the period jumped 28% from a year earlier to $1.54 billion. Autodesk bumped up the low end of its previous guidance for fiscal-year billings growth, saying it now expects growth of between 14% and 15%. For the fourth quarter, the company said it expected adjusted earnings of $2.10 to $2.16 a share while analysts were forecasting $2.12. The stock was down 8.6%.
HP Inc declined 11% after the maker of personal computers and printers reported fiscal fourth-quarter earnings that matched Wall Street estimates but revenue of $13.2 billion that fell 4% from a year earlier and missed expectations of $14 billion. The company said it expects first-quarter earnings of 73 cents a share, below consensus of 85 cents.
Nutanix Inc. fell 7.8% after rising in premarket trading. The cloud computing company's first-quarter adjusted earnings and revenue beat Wall Street forecasts, with Nutanix saying it expects revenue in the second quarter of $635 million to $645 million, higher than Wall Street estimates.
Urban Outfitters, the owner of upscale Free People and Anthropologie brands, rose 18% after third-quarter earnings beat estimates and sales rose 6.3% to a record $1.36 billion and beat forecasts of $1.34 billion. Chief Executive Richard Hayne said the company was optimistic about holiday demand.
Nordstrom's third-quarter earnings were better than Wall Street expectations and the retailer raised fiscal-year sales guidance. Nordstrom said it expects fiscal-year revenue growth ranging from flat to up 1% from a year earlier, in line with analysts' expectations for an increase of 0.7%. The company's previous outlook called for revenue to range from a 1% decline to a 1% increase from the same period in 2023. Shares fell 8.1% after CEO Erik Nordstrom said on the company's conference call Tuesday that "there was a noticeable decline in sales trends towards the end of October."
Market News
Microsoft Faces Broad Antitrust Investigation From US FTC
The US Federal Trade Commission has opened an antitrust investigation of Microsoft Corp., drilling into everything from the company’s cloud computing and software licensing businesses to cybersecurity offerings and artificial intelligence products.
After more than a year of conducting informal interviews with competitors and business partners, antitrust enforcers have crafted a detailed request to force Microsoft to turn over information, according to people familiar with the matter. The demand, which is hundreds of pages long, has been sent to the company after FTC Chair Lina Khan signed off, said one of the people.
Shares of Drone Maker Unusual Machines Soar After Donald Trump Jr. Joins Advisory Board
The share price of Unusual Machines Inc closed trading Wednesday nearly 85% higher after the small U.S. drone and drone component maker said that Donald Trump Jr. — the eldest son of President-elect Donald Trump — had joined its advisory board.
“Don Jr. joining our board of advisors provides us unique expertise we need as we bring drone component manufacturing back to America,” said Unusual Machines CEO Allan Evans in a statement.
Driverless Tech Firm Pony AI’s Shares Sink 7.7% After US IPO
Pony AI Inc’s American depositary shares erased an early pop to decline 7.7% in their trading debut after raising $413.4 million in an initial public offering and concurrent private placements, after delaying the pricing by a week.
The Chinese autonomous driving startup’s shares closed at $12 each on Wednesday in New York, below the IPO price. The company sold 20 million ADS in the offering for $13 per ADS, the top of the marketed range, to raise $260 million.
Separately, a group of investors agreed to buy $153.4 million worth of ordinary shares from the company in a private placement. One ADS is equivalent to one ordinary share. The pricing gives the Guangzhou-based firm a market value of $4.2 billion, based on the outstanding ADS.
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