- Wall Street erases early loses and gains slightly, 45 minutes after US session opening
- US inflation readings almost came in line with expectations
- Nasdaq 100 (US100) and S&P 500 rise around 0.2% and 0,05% respectively
- Disappointing results and a 10% drop in Oracle (ORCL.US) shares for the fiscal Q2 2024
- Shares of toy manufacturer Hasbro (HAS.US) near 10-year lows as layoffs policy accelerates over demand concerns
- Occidental Petroleum (OXY.US) loses 2% amid planned $12 billion USD acquisition of CrownRock
The second session of the week brings mixed sentiment at the market opening. U.S. index futures were unable to maintain their initial upward momentum, which was not even exceeded by a higher-than-forecast reading of monthly U.S. CPI inflation. Investors expect bond yields to fall further in the coming months, and while the m/m inflation reading brought minimal disappointment, the other readings came in line with expectations, reinforcing Wall Street's belief that inflation is already relatively subdued and falling (3.1% y/y in November vs. 3.2% previously). It seems that Jerome Powell will not find enough reasons to surprise the market tomorrow with any hawkish turn in communication (7:30 PM GMT). Investors are turning their attention to Oracle and Hasbro stocks today.
US inflation (November 2023)
- CPI inflation for November: 3.1% y/y (expected: 3.1% y/y; previous: 3.2% y/y)
- Monthly CPI inflation: 0.1% m/m (expected: 0.0% m/m; previous: 0.0% m/m)
- Core CPI inflation: 4.0% y/y (expected: 4.0% y/y; previous: 4.0% y/y)
- Monthly core inflation: 0.3% m/m (expected: 0.3% m/m; previous: 0.2% m/m)
The US100 remains close to this year's highs, but the dynamics of previous upward impulses suggest that a possible scenario is still a correction from current levels and a retest of 14,800 points where we see the 23.6 Fibonacci retracement of the upward wave from September, this year. Source: xStation 5
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Open account Try demo Download mobile app Download mobile appSignificant declines are seen today among oil and gas and new technology companies, where they are fueled by panic on Oracle shares. The chemical conglomerate Linde is up nearly 6%. Source: xStation5
Oracle leads among Wall Street 'losers' today
One of the largest US software companies, Oracle, reported results that fell short of Wall Street expectations. As a result, shares erased nearly $23 billion in market capitalization today and are trading 10% lower.
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Earnings per share: $1.34 per share, adjusted, vs. $1.32 per share, expected
- Revenue: $12.94 billion, vs. $13.05 billion expected (up 5% y/y)
- Cloud services revenue: $9.64 billion vs. $9.71 billion expectations (12% y-o-y growth).
- Cloud licensing revenue: $1.18 billion vs. $1.21 billion expectations (down 18% y/y)
- Services revenue: $1.37 billion vs. $1.4 billion expectations
- Net income up 44% at $2.5 billion vs. $1.74 billion a year ago
On the positive side, the company reported that revenue from cloud infrastructure reached $1.6 billion, up 52%. Customers included Elon Musk's artificial intelligence startup xAI, Samsung and Halliburton. Elon Musk wanted shipments of far more AI chips than Oracle could sell him, and the company is in the process of resolving production issues. It has not increased its capacity as much as it could have according to the company's CEO, Safra Catz.
However, the company is not laying down its arms and plans to expand heavily in the AI and cloud business. According to comments from founder Lary Ellison, it will handle, among other things, 20 data centers connected to Microsoft Azure in the next few months. Ellison expects the Oracle Cloud Infrastructure sector to grow at a rate of 50% year-on-year for 'several years.' The segment intends to take on rivals Azure and AWS. The acquisition of Next Technik, an Australian software company, took place this quarter on undisclosed terms, and the company did not address concerns in a commentary.
Oracle stock chart (ORCL.US, D1)![]()
Looking at the company's stock, we see that the sell-off has pushed it below the SMA200 and erased the rally of the past seven months. The declines stopped at the 38.2 Fibonacci retracement of the September 2022 upward wave, close to the psychological support level of $100 per share. Source: xStation5
Hasbro (HAS.US) has been forced to lay off 1,100 employees, due to the weakening demand for the toys the company produces, observed even during the holiday season.
Hasbro shares are extending the recent wave of sell-offs. Source: xStation5
Analyst recommendation changes:
- DNA sequencing company Illumina (ILMN.US) loses after Bank of America downgraded its recommendation, highlighting that the company is clearly finding it difficult to fight the lack of observed growth
- Analysts at Citi lowered their recommendation on Macy's (M.US) to 'sell' from 'neutral,' highlighting skepticism around the company's purchase by Arkhouse and Brigade Capital.
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