All three major U.S. stock indexes scored record closing highs on Wednesday as technology shares rallied after upbeat results from Salesforce and as comments by Federal Reserve Chair Jerome Powell gave a late boost to the market.
Market Snapshot
The Dow Jones Industrial Average rose 308.91 points, or 0.69%, to 45,014.44, the S&P 500 gained 36.59 points, or 0.60%, to 6,086.47 and the Nasdaq Composite gained 254.21 points, or 1.30%, to 19,735.12.
Market Movers
Salesforce - Salesforce rose 11% after reporting third-quarter earnings that missed analysts’ estimates but revenue that topped forecasts and lifting its fiscal-year revenue guidance. The enterprise software company said it expects fiscal-year revenue of $37.8 billion to $38 billion, raising the low-end of previous guidance. Salesforce CEO Marc Benioff said Agentforce, which enables Salesforce customers to use so-called artificial-intelligence agents to handle tasks in areas such as sales, marketing, and commerce, was “at the heart of a groundbreaking transformation.”
Marvell Technology - Marvell Technology reported third-quarter adjusted earnings of 43 cents a share that beat Wall Street forecasts and better-than-expected revenue of $1.52 billion, up 7% from a year earlier. Revenue rose 19% on a sequential basis, which the company said was “well above the midpoint” of its guidance, adding the growth was “driven by strong demand from AI.” For the fourth quarter, Marvell said it expects “another 19% sequential revenue growth at the midpoint of guidance, while year over year, we expect revenue growth to accelerate significantly to 26%, marking the beginning of a new era of growth for Marvell,” said CEO said Matt Murphy. Marvell shares jumped 23.2%.
Eli Lilly, Novo Nordisk - Eli Lilly rose 2% after the company said its Zepbound weight-loss drug showed an average weight loss of 20.2% of body weight compared with 13.7% for Wegovy, which is made by Novo Nordisk. U.S.-listed shares of Novo Nordisk, the Danish company, were down 0.2%.
Pure Storage - Pure Storage, a provider of systems based on flash memory technology to enterprise customers, soared 22.1% after raising its fiscal-year revenue outlook following third-quarter adjusted earnings and revenue that beat Wall Street expectations. Pure Storage said it expects fiscal-year revenue of $3.15 billion for the year, up from its previous estimate of $3.1 billion.
Roku - Roku rose 9.6% to $82.94 after analysts at Needham said they see the maker of streaming devices and software as anacquisition opportunity. Netflix and Trade Desk were mentioned as possible acquirers. Needham rates Roku stock at Buy with a price target of PINEBRIDGE US LARGE CAP RESEARCH ENHANCED "A5H" (SGDHDG) ACC
JetBlue - JetBlue Airways rose 8.3% after the low-cost carrierincreased its fourth-quarter and fiscal-year revenue guidance.
Okta - Security software company Okta posted third-quarter adjusted earnings of 67 cents a share, beating Wall Street estimates of 58 cents, as revenue rose 14% to a better-than-expected $665 million. Okta raised its fiscal-year guidance for both adjusted earnings and revenue. The stock was up 5.4%.
Foot Locker - Foot Locker dropped 8.9% after the shoe retailer postedweaker-than-expected fiscal third-quarter earningsand slashed fiscal-year guidance.
Box - Third-quarter adjusted earnings and revenue at Box topped analysts’ expectations but the cloud-storage company reduced its fiscal-year per-share outlook, saying it expects profit of 30 cents a share, down from previous guidance of 31 cents to 33 cents. The stock declined 7.7%.
Couchbase - Couchbase, the cloud database platform, reported a narrower-than-expected third-quarter adjusted loss and revenue of $51.6 million that beat estimates of $50.8 million. Subscription revenue in the period rose 12% to $49.3 million. But the stock fell 21.9% after Couchbase said it anticipatesfourth-quarter total revenueof between $52.7 million and $53.5 million versus analysts’ expectations of $54 million.
Campbell Soup - First-quarter net profit at Campbell’s, the company formerly known as Campbell Soup, declined from a year earlier as it navigated a “dynamic consumer environment and uneven pace of category recovery.” Adjusted earnings of 89 cents a share beat estimates of 87 cents while sales rose 10% to $2.77 billion but missed estimates of $2.8 billion. The company alsonamed Mick Beekhuizen as its new CEO. Beekhuizen is currently the president of Campbell’s meals and beverages segment. He will take over from Mark Clouse, who is joining the NFL’s Washington Commanders as president. Shares declined 6.2%.
Texas Pacific Land - Texas Pacific Land was down 11.6% and was the worst stock Wednesday in the S&P 500. Shares were on pace for their largest daily percentage decrease since March 23, 2020, when the stock fell 12.6%, according to Dow Jones Market Data. The company, which owns significant acreage in the energy-rich Permian Basin, joined the S&P 500 last week.
Market News
Powell Says Fed Can Afford to Be a Little More Cautious
U.S. Federal Reserve Chair Jerome Powell on Wednesday said the economy is stronger now than the central bank had expected in September when it began reducing interest rates, and appeared to signal his support for a slower pace of interest-rate cuts ahead.
“The U.S. economy is in very good shape and there’s no reason for that not to continue ...the downside risks appear to be less in the labor market, growth is definitely stronger than we thought, and inflation has come in a little higher," Powell said at a New York Times event. "So the good news is that we can afford to be a little more cautious as we try to find neutral.”
His remarks during a wide-ranging half-hour interview that touched only lightly on monetary policy and the economy are likely his last before the Dec. 17-18 policy meeting, as the quiet period when Fed officials refrain from speaking about monetary policy ahead of a meeting starts on Saturday.
As economists at BMO summed it up, "Powell said little to alter the market's view that the Fed will likely trim rates."
US Services Sector Comes off the Boil in November, Prices Stay High
U.S. services sector activity slowed in November after posting big gains in recent months, but remained above levels consistent with solid economic growth in the fourth quarter.
The Institute for Supply Management survey on Wednesday also showed businesses are worried about potential tariffs on imports from President-elect Donald Trump's incoming administration, warning of higher prices. Economists have echoed similar sentiments. Trump has said he would impose a 25% tariff on all products from Mexico and Canada and an additional 10% tariff on goods from China on his first day in office.
Nonetheless, the economy's outlook remains favorable. The Federal Reserve's Beige Book report on Wednesday showed that while economic activity increased slightly in most U.S. central bank districts in November, businesses were optimistic that demand would rise in the months ahead.
Fed Chair Jerome Powell was also upbeat on the economy, saying at a New York Times event that "it's in remarkably good shape."