Market / Macro Economic Summary Markets saw a strong rebound on Friday as we saw all indexes jump 1.65%-2.65% 0n the day alone, but the weekly performance was nonetheless weak enough that it overshadowed one day’s performance. There is a lot of chatter about the possibility that we’re at or near the bottom as the S&P officially marked correction (10% decline) territory. While the markets are still on rocky ground due to the constant back and forth of tariffs, political uncertainty, and economic data, I still believe the underlying strength of the US economy will prove more powerful in the long run. I’d like to remind my investors that as markets decline a bit and fear is in the air, it provides us a chance to be opportunistic. I believe I relay this message each year, but on average the market sees a 5%-10% correction at least one or two times. Most people won’t remember because in 2023 and 2024 the S&P 500 finished up over 20% each year, but we saw our share of volatility in each of those years. As you can see in the chart below, in both of the last two years we saw declines of more than 5%. Investors just needed to remain patient and invested to ensure to partake in those 20% returns by year end. I believe by the year’s end most of us will look back and see what a good buying opportunity these times brought for long term oriented investors. Micro Economic Summary Oracle (ORCL) Shares dropped 4% as the technology firm delivered a disappointing quarter. Earnings per share of $1.47 were two cents short of the analyst estimates of $1.49. Revenues of $14.13 billion were also short of the expectations of $14.39 billion. The company’s cloud infrastructure segment, which helps businesses move workloads out of their own data centers, has been booming due to demand for computing power that can support artificial intelligence projects. Oracle said revenue in its cloud infrastructure unit increased 49% from a year earlier to $2.7 billion. Management also said it has more than $130 billion in remaining performance obligations after signing $48 billion in contracts during the period. That excludes contracts related to Stargate, Oracle CEO Safra Catz said on the call with analysts. Adobe (ADBE) Shares fell 12% despite the company reporting a top and bottom line beat as AI growth concerns remain in the market. Earning per share came in at $5.08 per share and revenues were at $5.71 billion. That surpassed analysts’ estimates of $4.97 in earnings per share and $5.66 billion in revenue. CEO Shantanu Narayen said that, “Not only are we infusing AI in our existing products and delivering value, but it’s clear that the innovation that we’ve delivered is creating new revenue streams.” However, some market participants have mounting worries that the company is falling behind some competitors and losing its advantage in generative AI. The company’s annualized recurring revenue from AI contributed $125 million during the quarter and Adobe expects that to double by the end of the fiscal year. Ulta Beauty (ULTA) Shares rose 12% as the beauty retailer delivered a top and bottom-line beat. Revenue of $3.49 billion beat the expectations of $3.47 billion. Earnings per share of $8.46 were also well ahead of the $7.14 analyst estimates. CEO Kecia Steelman highlighted the team’s efforts during a busy holiday season that also gave her confidence to guide above expectations for the upcoming year. Rubrik (RBRK) Shares of the cyber security company shot up 24% as the firm reported a strong quarter. Earnings per share came in at a loss of $0.18 cents but were much better than the Wall Street estimates of a loss of $0.40 cents. Revenue of $258 million were also ahead of the expectations of $237 million. CEO Binpul Sinha highlighted the company’s 39% year over year Annual Recurring Revenue(ARR) growth and the first time the company made $75 million in free cash flow. Its always good to remember that its an inflection point in a company’s history to finally begin to see quarter over quarter free cash flow. Parting Thoughts We welcome an opportunity to discuss the above detail and wish you much success in the rest of your week! Regards, Erick J. Palacios, MBA Wealth/Fiduciary Advisor
