From Wall Street to Main Street Highlights from the past week
Market / Macro Economic Summary Markets took a break from the post-election rally this past week. Friday was particularly brutal as concerns over further interest hikes haunted stocks. The driving factor was the Consumer Price Index (CPI) for October which came in where expected but still showed signs that certain areas being measured are stubbornly steady at slightly high levels. Areas like shelter, rent, and even motor vehicle insurance have not moderated as much or as quickly as expected. Nonetheless, I continue to see potential for inflation to gradually reach the Fed's 2.0% target in the months ahead and perhaps settle in the 2.0% - 3.0% range longer-term. Also, October retail sales came in at 0.4% higher than the expectations of 0.3% and showed the consumer remains strong. As my readers should be reminded, my outlook and sentiments on the markets are based on earnings reports and data….all of which remain optimistic on equity returns. Lastly, we have a huge week ahead as crowd-favorite Nvidia will report earnings on Wednesday after the market close. Company Specific / Micro Economic Summary Cisco Systems (CSCO) Shares fell 2.5% as the IT software company reported a top and bottom-line beat. Earnings per share of 91 cents beat the estimates of 87 cents. Revenue did decline 6% but came in at $13.84 billion and ahead of the Wall Street estimate of $13.77 billion. CEO Chuck Rob said “Our customers are investing in critical infrastructure to prepare for AI, and with the breadth of our portfolio, we are uniquely positioned to capitalize on this opportunity. Revenue, gross margin and EPS in Q1 were at the high end or above our guidance range.” Walt Disney Co (DIS) Shares leaped nearly 6% as the company reported a strong quarter that beat expectations. Earnings per share of $1.14 beat expectations by three cents. Revenue of $22.6 billion also came in stronger than the calls for $22.5 billion. Interim CEO Bob Iger said, “This was a pivotal and successful year for The Walt Disney Company, and thanks to the significant progress we’ve made, we have emerged from a period of considerable challenges and disruption well positioned for growth and optimistic about our future. Applied Materials (AMAT) Share slid 7% as shares delivered a top and bottom-line beat. Earnings per share of $2.32 beat the estimates of $2.19. Revenues of $7.04 billion also came in stronger than the $6.97 billion of estimates. Gary Dickerson, President and CEO said, “Our portfolio of products and services uniquely positions us to enable our customers in their pursuit of AI and energy-efficient computing. As these key drivers of semiconductor innovation continue to grow in importance, the industry’s roadmap is becoming increasingly dependent on materials engineering, where Applied is the clear leader.”
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
