Palacios’ Perspectives Week ending December 6th, 2024
From Wall Street to Main Street Highlights from the past week
Market / Macro Economic Summary Markets ended mixed on the week as the Nasdaq and S&P 500 ended higher (3.34% and 0.96% respectively) but the Dow Jones Industrial Average ended lower by 0.6%. We remain with markets near record highs and bond markets offering decent yields. Certainly of central importance for me in 2025 is that the underpinning theme for our economic growth remains strong and recession signs are also very low. In the past week, we saw ISM manufacturing data point to economic growth. U.S. Labor markets added 227,000 jobs, which exceeded the estimates of 220,000 and the unemployment rate remains at 4.2% which is well below the long-term average of 5.7%. One final component that I would like to point to is the VIX….which, I will remind you, is the main way investors gauge volatility (or risk) in the market. We now sit at a VIX of 12.76, the lowest level since July. A VIX reading of over 20 denotes very risky or fearful markets, so for us to be at lows around 12 means the markets are relatively devoid of fear of a decline. Company Specific / Micro Economic Summary Salesforce (CRM) Shares were up 8.6% on the heels of a strong quarterly report. Revenues of $9.44 billion came in above the expectations of $9.35 billion. Earnings per share of $2.41 were a slight miss as compared to estimates of $2.45. CEO Marc Benioff highlighted Agentforce which is their version of the complete AI system for enterprise software systems. He said, “the rise of autonomous AI agents is revolutionizing global labor, reshaping how industries operate and scale. With Agentforce, we’re not just witnessing the future-we’re leading it, unleashing a new era of digital labor for every business and every industry.” Okta (OKTA) Shares rose 5.19% as the cyber-security software provider reported a top and bottom-line beat. Earnings per share of $0.67 came in nine cents better than the $0.58 cents. Revenue of $665 million was also ahead of the calls for $650 million. CEO Todd McKinnon said, “The focused investments we’ve made in our partner ecosystem, the public sector vertical, and large customers are materializing in our business with each of these areas contributing meaningfully to top-line growth. Okta’s commitment to innovation and elevating identity security is resonating with customers of all sizes as they look to Okta to modernize their identity infrastructure.” Marvell Technologies (MRVL) Shares of the chip maker rocketed 24% on a superb quarter. Revenue of $1.52 billion beat the calls for $1.46 billion. Earnings per share of $0.43 beat the Wall Street estimates of $0.41. Of course, strong AI demand keeps helping results and allowed management to guide 19% sequential growth quarter over quarter while year over year growth is now expected to accelerate to 26% growth. Ulta Beauty (ULTA) Shares jumped 10.34% as the quarter came in stronger than expected. Revenues of $2.53 billion came in better than the $2.50 billion analysts were looking for. Earnings per share of $5.14 also came in much better than the $4.53 expectations. Dave Kimbell, CEO, said he was proud of the team and how they controlled expenses while making progress towards improving market position.
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
