The broader market slipped from earlier highs on Thursday after tech giants Microsoft
The S&P 500 Index
In the spotlight, Microsoft and Meta rose higher on Thursday after both posting better-than-expected earnings reports after market on Wednesday.
Microsoft's Intelligent Cloud unit, which includes its Azure cloud, saw revenue jump 26% to $29.88 billion in its fiscal fourth-quarter. The company also said its Azure annual revenue exceeded $75 billion in its first time disclosure. The strong report helped push Microsoft's market capitalization over $4 trillion, making its the second company to do so after Nvidia
Meta's second-quarter advertising revenue, a key metric for the social media giant, came in ahead of estimates at $46.56 billion, with CEO Mark Zuckerberg telling analysts during the company's earnings call on Wednesday that Meta's artificial intelligence technology produced "greater efficiency and gains across our ad system." Meta said it expects third-quarter sales to range between $47.5 billion and $50.5 billion -- ahead of Wall Street expectations.
HSBC analyst Nicolas Cote-Collison upgraded Meta's stock to Buy on Thursday and raised the firm's price target by $290 to $900, implying a nearly 30% upside from Wednesday's close. The analyst said artificial intelligence is creating opportunities for the tech giant that can support double-digit revenue growth by facilitating more search-related traffic, ad dollars and tools for advertisers.
"We see Meta in a strong position to outpace digital ad market growth," Cote-Collison wrote in a note to clients. "Meta already captures 31.6% of the global digital ad market in 25e and can get more incremental revenue than its fair share, we think. AI capabilities improve targeting and quality of content. Time spent on the different platforms keep increasing. In addition, user count is still expanding, reinforcing the network effect (where revenue increases faster than users)."
Other Magnificent 7 members Apple
On the economic front, U.S. inflation rose in June as tariffs increased prices for a slew of imported goods, the Commerce Department reported Thursday, signaling that the Federal Reserve may need to hold interest rates at their current range of 4.25% to 4.50% for longer.
The month's personal consumption expenditures (PCE) price index rose 0.3% after May's upwardly revised 0.2% gain, coming in-line with estimates. So-called core PCE, which excludes food and energy costs and is closely watched by policymakers, also rose 0.3% in June after rising 0.2% in May. On an annual basis, core prices rose above expectations at 2.8% in June.
"Tariffs are beginning to make their mark on the inflation data," wrote Michael Pearce, deputy chief U.S. economist at Oxford Economics, in a note to clients on Thursday. "While services inflation remains subdued, helped by slowing housing inflation, core goods prices are up sharply in recent months. As Federal Reserve Chair Jerome Powell argued on Wednesday, the Fed will not cut rates until it is confident that a temporary rise in goods prices isn't bleeding through into broader inflation and inflation expectations.
Regarding tariffs, Trump announced Thursday he would not raise tariffs on Mexican imports beyond their current level of 25% for 90 days as the two nations continue their trade deal negotiations. The president had previously threatened to raise Mexico's blanket tariff to 30%, and the nation is already subject to a 25% duty on auto imports and 50% tariff on metal commodities.
"The complexities of a Deal with Mexico are somewhat different than other Nations because of both the problems, and assets, of the Border," Trump wrote in a Truth Social post on Thursday.
In the news, Moderna
"Every effort was made to avoid affecting jobs," CEO Stephane Bancel said in a memo discussing the layoffs. "But today, reshaping our operating structure and aligning our cost structure to the realities of our business are essential to remain focused and financially disciplined, while continuing to invest in our science on the path to 2027."
Looking ahead, all eyes will be on Apple and Amazon's earnings reports on Friday, alongside the Labor Department's "official" jobs report for July.
- In the news
- Moderna said Thursday is plans to cut about 10% of its global workforce by the end of 2025
- amid slowing sales for COVID-19 shots and broader uncertainty in the vaccine market.
- "Every effort was made to avoid affecting jobs
- " CEO Stephane Bancel said in a memo discussing the layoffs. "But today
- reshaping our operating structure and aligning our cost structure to the realities of our business are essential to remain focused and finacially disciplined
- while continuing to invest in our science on the path to 2027."
