Passport to Wall Street

November Jobs Report Preview: Will It Seal The Deal For A Fed Interest Rate Cut?

Benzinga News — Thu, 05 Dec 2024 14:18:39 -0500

Traders are laser-focused on November's jobs data, slated for release this Friday, as one of the last pivotal data points - along with next week's inflation report - that could shape the Federal Reserve's decision on a potential rate cut at its Dec. 18 meeting.

With market odds sitting at about a 70% chance for a 25-basis-point reduction, the stakes are high.

Here's what the numbers need to show to lock in the move.

Nonfarm Payrolls Expected To Rebound Sharply From October Disruptions

After October's disappointing gain of just 12,000 jobs - a number heavily skewed by hurricanes and strikes - economists expect November will reflect stronger job growth as the effects of weather and strikes fade.

Consensus estimates peg November's nonfarm payroll growth at 200,000, according to TradingEconomics.

Earlier this week, Federal Reserve Governor Adriana Kugler indicated October's disruptions may have caused 100,000 to 120,000 jobs to go unaccounted for, which could now materialize in November.

Private payrolls data, however, painted a slightly murkier picture. The ADP National Employment Report for November - which uses private payrolls data from about 25 million employees - showed that U.S. businesses added 146,000 jobs, down from 184,000 in October and slightly below expectations of 150,000.

Economists expect the unemployment rate to tick up from 4.1% in October to 4.2% in November.

Average hourly earnings are projected to rise 0.3% month-over-month, down from 0.4% in October, and show a 3.9% annual increase, a slight cooling from 4.0% previously.

What It Means For Interest Rates

If November's report reveals softer-than-expected payroll growth, a slight rise in unemployment, and wage gains that align with or fall below forecasts, expectations for a December rate cut would likely firm up.

In this case, policymakers might view the cooling labor market and tempered wage growth as evidence that inflation pressures are easing, paving the way for monetary easing.

On the other hand, a sharp November payroll increase combined with stronger-than-expected wage growth could force traders to recalibrate their bets. A hot jobs report would suggest a resilient, tight labor market, potentially reducing the urgency for the Fed to cut rates and increasing the chances of a pause.

Analyst Projections

Comerica expects a robust 250,000 jobs to be added in November but anticipates the unemployment rate will edge higher to 4.2%.

This slight uptick, they said, could reflect previously sidelined workers - those affected by October's hurricanes and other one-off disruptions - returning to the labor market.

Analysts at JPMorgan are even more optimistic, forecasting a 275,000 job gain for November.

They indicate the recent slowdown was "almost entirely" due to temporary issues, including hurricanes and the high-profile Boeing Co. (BA ) strike, which suppressed October's growth by as much as 125,000 jobs. According to JPMorgan, "the underlying trend in job growth hasn't changed much from earlier months," signaling a labor market still firing on most cylinders.

Goldman Sachs is slightly more measured but still optimistic, projecting 235,000 jobs added in November.

The firm highlighted "big data" indicators suggesting a pick-up in hiring momentum and estimated the resolution of hurricane disruptions could contribute roughly 50,000 jobs to the total.

BNP Paribas is taking a more cautious tone, forecasting 225,000 jobs but warning that special factors - such as election-related hiring and the resolution of the Boeing strike - could obscure the true underlying strength of the labor market.

They described the likely outcome as "just ambiguous enough" to keep the December rate cut as their base case: strong enough to signal growth, but not so robust as to derail Fed easing expectations.

JPMorgan Bets On Natural Gas For 2025: Upgrades ConocoPhillips, Lowers 3 Energy Stocks

Benzinga News — Thu, 05 Dec 2024 13:54:11 -0500

While shale oil producers have enjoyed an advantage over gas producers over the past 15 years, the situation is likely to reverse in 2025, according to JPMorgan.

Analyst Arun Jayaram said in a note that natural gas producers are likely to benefit from three "powerful secular demand trends" in 2025:

The build-out of significant LNG export capacity
Rising power demand from electrification
The switch from coal to natural gas

Natural gas prices could remain above $3.50 per MMBtu (Metric Million British Thermal Unit) in the long term, as this price reset to a higher level will be needed to incentivize incremental supply growth from higher-cost gas basins, Jayaram stated.

The Rating Changes

ConocoPhillips (COP ) - upgraded from Neutral to Overweight.

While the stock has underperformed peers year-to-date, the company is likely to be "one of the few E&Ps in our coverage that raise cash return in 2025," including $6.0 billion in share buybacks, the analyst said.

Devon Energy Corp (DVN ) - downgraded from Overweight to Neutral.

The company faces tougher comps in 2025, given its strong well productivity so far. "Another factor that supports our downgrade is the sizeable PE overhang post the Grayson Mill deal (~6% of shares outstanding)," Jayaram wrote.

SM Energy Co (SM ) - downgraded from Overweight to Neutral.

The downgrade reflects a "preference for natural gas exposure" and the company's near-term cash return lagging peers," he stated.

CNX Resources Corp (CNX ) - downgraded from Neutral to Underweight.

The stock has outperformed year-to-date and the company has "less near-term gas exposure compared to gassy peers given its robust hedge book," the analyst said.

Price Action

At the time of publication Thursday:

Shares of ConocoPhillips had risen by 0.58% to $104.10.
Devon Energy's stock had declined by 0.93% to $36.14.
SM Energy's stock had risen by 0.98% to $42.34.
Shares of CNX Resources were down 0.21% at $38.15.

Google's Genie 2 Creates 3D Game Worlds From A Single Image

Benzinga News — Thu, 05 Dec 2024 13:54:05 -0500

Alphabet Inc's (GOOG ) (GOOGL ) Google has introduced Genie 2, an advanced AI tool capable of generating fully interactive 3D game worlds from a single image prompt.

The technology, hailed as a "world model," has potential applications ranging from video game prototyping to broader AI research.

Genie 2 builds upon its predecessor, Genie 1, which was limited to creating 2D worlds. This new iteration allows users to generate 3D environments with dynamic perspectives, physics simulations, and interactions. Notably, it incorporates user actions like jumping or swimming.

How Genie 2 Works

The process begins with an image prompt, often created through Google's text-to-image AI tool Imagen 3, though real-world images are also supported.

Once the prompt is input, Genie 2 generates an interactive environment where users can move, explore, and interact.

Key features include:

Dynamic Physics: Realistic simulation of water, gravity, and other environmental elements.
Lighting and Reflections: Advanced rendering techniques to replicate realistic illumination.
NPC Interactions: Automatically generated non-playable characters with responsive behaviors.
Live Content Updates: Continuous world generation that adapts as users explore, maintaining immersion.

The generated worlds allow up to one minute of gameplay, during which the AI adapts to control inputs and camera movements, creating new plausible content on the fly.

A Tool For Rapid Prototyping

In a blog post, the company explained that the tool "enables artists and designers to prototype quickly, which can bootstrap the creative process for environment design, further accelerating research."

For game developers, this could mean reducing the time required to design and test virtual environments.

"Genie 2 shows the potential of foundational world models for creating diverse 3D environments and accelerating agent research... As with SIMA, our research is building towards more general AI systems and agents that can understand and safely carry out a wide range of tasks," the company said in a blog post.

The ethical implications of AI in creative industries remain a point of debate. AI tools like Genie 2 have sparked discussions about their role in gaming, particularly concerning potential impacts on jobs in scriptwriting, voice acting, and environment design.

Waymo Announces Expansion To Miami: How Soon Will Self-Driving Cars Hit The 'Magic City'?

Benzinga News — Thu, 05 Dec 2024 13:53:49 -0500

Alphabet Inc (GOOG ) (GOOGL ) subsidiary Waymo announced on Thursday its plans to introduce its autonomous vehicles to Miami, Florida. The valuation of the driving technology company has skyrocketed in recent years.

Waymo in Miami: The Mountain View, California-based company highlighted the city's growing reputation for innovation and technology in its announcement.

"While Miami is known for its sun and fun, the city is also an emerging hub for innovation," the statement read. "Waymo's autonomous driving technology offers an opportunity to provide safer, more accessible, all-electric mobility to Miami's residents and tourists."

Waymo will introduce its all-electric Jaguar I-PACEs "Magic City" in early 2025. Full capability for riders on the Waymo app will come in 2026.

Miami mayor Francis Suarez reacted to Waymo's expansion in the statement.

"Fully autonomous driving technology offers a safe and convenient option to the people of Miami. I'm so pleased to welcome Waymo to our city," Suarez said. "Waymo's commitment to sustainability with their all-electric fleet is the perfect mobility option to our city as we continue to prioritize low-cost, clean energy."

Other Cities: The company's vehicles operate in San Francisco, Phoenix, Los Angeles and Austin. The addition of Miami continues the subsidiary's expansion to the most populous warm-weather cities in the U.S.

Chewy Posts Q3 Sales Beat: Analysts Say Successful Cyber Week Could Lead To Higher Lifetime Value Customers

Benzinga News — Thu, 05 Dec 2024 13:53:40 -0500

Chewy Inc (CHWY ) shares were down Thursday after the company reported downbeat third-quarter sales.

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

RBC Capital Markets On Chewy

Analyst Steven Shemesh maintained an Outperform rating while raising the price target from $39 to $42.

Chewy's active customer count grew sequentially for the second consecutive quarter, with net adds of around 160,000, Shemesh said in a note. Autoship rose to a new record, reaching 80% of net sales in the quarter, he added.

The company's fourth-quarter guidance implies slightly softer-than-expected margins, but this is mainly due to management's decision to "opportunistically step-up ad spend to grow active customers," the analyst stated. "We walk away from the quarter with higher conviction in a top-line recovery and the margin outlook largely unchanged," he further wrote.

JPMorgan On Chewy

Analyst Doug Anmuth reiterated an Overweight rating while lifting the price target from $37 to $38.

Chewy delivered better active customer growth and achieved a "meaningful profitability ramp" in the third quarter, Anmuth said. This was driven by the company's product enhancements and solid execution, as well as "improving industry trends," he added.

"Given strong momentum, favorable recent returns and a rational competitive environment, CHWY expects to lean into marketing to drive 4Q Active Customer growth," the analyst wrote. He projected active customer net adds of over 200,000 in the fourth quarter, which could take the full year to 277,000 while projecting the figure to accelerate to 650,000 in 2025.

Needham On Chewy

Analyst Bernie McTernan maintained a Hold rating on the stock.

Chewy's overall results were "solid, with encouraging topline trends including a supportive macro environment/competitive intensity," McTernan wrote in a note. These trends appear to have continued into the fourth quarter, with the company witnessing "successful Cyber Week sales," he added.

The Cyber Week sales included "greater penetration of consumables and pushing customers to order within the app, both of which should lead to a higher LTV (lifetime value) customer," the analyst wrote. The company is likely to make top-of-the-funnel investments, which could drive "modest revenue growth acceleration throughout '25E," he further wrote.

CHWY Price Action: Shares of Chewy had declined by 5.44% to $31.65 at the time of publication on Thursday.

American Airlines Partners With Citi, Issues Strong Profit Outlook

Benzinga News — Thu, 05 Dec 2024 13:53:34 -0500

American Airlines Group, Inc. (AAL ) shares are trading higher on Thursday after reporting the fourth quarter and full-year outlook.

In an exchange filing, American Airlines said it expects fourth-quarter TRASM to be flat to up 1%, better than the previous forecast of a 1% to 3% decline.

CASM-Ex is projected to rise 5% to 6%, slightly higher than the prior guidance of 4% to 6%, due in part to a higher accrual for profit sharing driven by higher anticipated earnings in the quarter.

American Airlines expects fourth-quarter adjusted EPS of $0.55 to $0.75, much better than the analyst estimate of $0.39 (prior outlook: $0.25 to $0.50).

Also, American Airlines and Citigroup, Inc. (C ) announced a new agreement for America's co-branded credit card program, set to begin in January 2026.

Under this partnership, Citi will become the exclusive issuer of American Airlines' AAdvantage credit card portfolio in the U.S.

American Airlines projects that this new agreement will drive a 10% annual growth in cash remuneration from its co-branded credit card and other partners, including customer acquisition and program growth.

For the twelve months ending September 30, American Airlines received about $5.6 billion in cash remuneration from these partnerships, the filing read.

As this figure approaches $10 billion annually, the airline expects its pre-tax income to rise by approximately $1.5 billion compared to 2024.

While American Airlines will not provide regular updates on the performance of these programs, it will continue to factor this growth into future revenue and guidance, impacting its overall financial outlook, the company said.

Price Action: AAL shares are trading higher by 14.08% to $17.08 at the last check on Thursday.

Bullets Used To Kill UnitedHealthcare CEO Contained Eerie Message: Here's What They Could Mean

Benzinga News — Thu, 05 Dec 2024 13:53:20 -0500

Bullets and shell casings from the Wednesday shooting of UnitedHealthcare CEO Brian Thompson contain the words "deny," "depose" and "defend."

What Happened: According to the New York Post, citing police records, new clues connected to the bullets from the incident could point to a motive for the gunman who is still at large.

Two of the words on the bullets and casings could be directly linked to a 2010 exposé on the insurance business. The 2010 book "Delay, Deny, Defend: Why Insurance Companies Don't Pay Claims And What You Can Do About It," authored by Jay Feinman, contains a title eerily similar to the words left on the bullets.

New York police recovered three casings and three live rounds at the crime scene.

Surveillance footage showed the shooter firing at Thompson at close range. He quickly fixed a malfunction with the weapon prior to firing. This prompted police officials to believe the shooter was experienced.

The gun also appeared to have a silencer, which can cause weapons to malfunction or jam, CNN reports citing experts.

Why It's Important: Thompson joined UnitedHealth Group Inc (UNH ) in 2004. He had been CEO of the insurance division, UnitedHealthcare, since April 2021.

The former executive was one of several under investigation by the Department of Justice for insider trading, the New York Post reported.

Without locating the killer, a motive has not been officially determined. Early evidence could point to Thompson being targeted for his company rejecting insurance claims. Health insurance companies often have to decide which claims to accept and how much coverage to provide to customers.

While the investigation is early, without locating the shooter, the big question remaining is if the shooter had a connection to Thompson or if he was a hired gunman.

Thompson's wife, Paulette, told NBC News her husband had received several threats before the shooting.

"There had been some threats," she told NBC News. "Basically, I don't know, a lack of coverage? I don't know details. I just know that he said there were some people that had been threatening him."

Price Action: UnitedHealth Group stock is down 3% to $592.79 Thursday versus a 52-week trading range of $436.38 to $630.73. The stock closed at $610.79 Wednesday, up from Tuesday's closing price of $605.23.

Robinhood CEO Vlad Tenev Says Sports Betting Comments Taken 'A Little Bit Out Of Context,' But He Also 'Wouldn't Rule It Out'

Benzinga News — Thu, 05 Dec 2024 12:21:38 -0500

Robinhood Markets Inc (HOOD ) saw early success with the launch of event contracts ahead of the 2024 presidential election. Now the company appears to be eyeing the sports betting space.

What Happened: Robinhood held its first Investor Day in New York on Wednesday. CEO Vlad Tenev made headlines when he suggested that an expansion into sports betting was on the table.

When Tenev was asked about the potential for Robinhood to venture into sports betting, he said the company is "keenly looking into that space," per CNBC.

"Nothing to announce just yet, but it's so important to our customers and in culture that we're excited about it," Tenev said at the investor day event.

The sports betting talk comes after Robinhood's launch of event contracts ahead of the 2024 presidential election, which saw strong traction. Robinhood said more than 400 million contracts were traded by over 500,000 Robinhood users.

Prediction markets, which let participants buy and sell contracts to each other, are different than sportsbooks that offer betting odds against the house. Robinhood would need to get approval from the Commodity Futures Trading Commission (CFTC) before it would be allowed to offer traditional sportsbook betting odds.

In a CNBC interview on "Squawk Box" Thursday morning, Tenev clarified his comments on sports betting. The Robinhood CEO explained that he believes his comments were "taken a little bit out of context," although he didn't rule out a swift move into the space.

"I wouldn't expect us to launch sports betting soon. But I also wouldn't rule it out," Tenev said.

Shares of DraftKings Inc (DKNG ), Flutter Entertainment (FLUT ) and PENN Entertainment, Inc (PENN ) traded slightly lower on Tenev's comments before bouncing back Thursday morning. At last check, DraftKings was up 0.74% at $45.10, Flutter was up 0.76% at $280.14 and Penn Entertainment was down 0.37% at $21.83, according to Benzinga Pro.

Robinhood shares have more than tripled since the start of the year. The rally accelerated at the beginning of November as the company's event contract offering soared in popularity.

November was an overall strong month for Robinhood with the company adding more than 400,000 users. Net deposits totaled $5 billion during the month and assets under custody grew to more than $190 billion.

Equity trading volumes were up more than 15% from October and up over 170% year-over-year. Crypto volumes jumped over 400% from October to November and rose over 600% year-over-year.

Robinhood said it will release its full November operating data next week.

HOOD Price Action: Robinhood shares were down 0.85% at $39.66 at the time of publication Thursday, according to Benzinga Pro.

Netflix Stock Reaches New All-Time High This Week: What's Driving The Surge?

Benzinga News — Thu, 05 Dec 2024 12:21:30 -0500

As 2024 winds down, Netflix Inc (NFLX ) is in the spotlight thanks to its strong historical performance in December and January. The streaming giant is known for delivering robust returns during this period and the stock has hit a new all-time high of $915.97 this week.

What To Know: The stock has recently gained amid market strength following Donald Trump's re-election, as investors expect his pro-business, tax-cutting agenda to boost consumer spending, potentially in discretionary sectors like streaming.

The company also achieved a milestone with its ad-supported tier reaching 70 million monthly users-just two years after launch.

Netflix also surpassed 10 million subscribers in Japan in early 2024, driven by the popularity of Japanese-language content like Tokyo Swindlers and anime, which is now its third-most-viewed non-English category globally.

Seasonal Trends: Per data from Seasonax, Netflix has historically posted an average two-month gain of 14.1%, with a median return of 11%. It has closed this stretch positively 80% of the time over two decades.

During its best December-January performance (2012-2013), shares soared 117.42%. Even in unpredictable election years, Netflix averaged a 34.33% gain.

Holiday binge-watching boosts subscriber engagement and investor optimism for Netflix's earnings as the new year begins.

How To Buy NFLX Stock

By now you're likely curious about how to participate in the market for Netflix - be it to purchase shares, or even attempt to bet against the company.

Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy 'fractional shares,' which allows you to own portions of stock without buying an entire share. For example, some stock, like Berkshire Hathaway (BRK.A ), can cost thousands of dollars to own just one share. However, if you only want to invest a fraction of that, brokerages will allow you to do so.

In the the case of Netflix, which is trading at $911.06 as of publishing time, $100 would buy you 0.11 shares of stock.

If you're looking to bet against a company, the process is more complex. You'll need access to an options trading platform, or a broker who will allow you to 'go short' a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource. Otherwise, if your broker allows you to trade options, you can either buy a put option, or sell a call option at a strike price above where shares are currently trading - either way it allows you to profit off of the share price decline.

Tesla's Path To $400: Bank Of America Highlights EV, AI Growth

Benzinga News — Thu, 05 Dec 2024 12:21:24 -0500

Bank of America significantly raised Tesla Inc's (TSLA ) 12-month price target from $350 to $400, maintaining a Buy rating as the investment bank bets on the company's ability to balance strong near-term growth in electric vehicles with bold long-term plays in autonomous driving and robotics.

In a note to clients Thursday, analyst John Murphy highlighted his optimism following a recent visit to Tesla's Gigafactory in Austin, Texas.

"The trip gave us increased confidence that Tesla is well-positioned to grow in 2025+," Murphy said, citing discussions with investor relations, a factory tour, and test drives that showcased Tesla's technological advancements.

FSD Advances Bolster Robotaxi Prospects

Tesla's Full Self-Driving (FSD) technology stood out during the test drive at Gigafactory Austin, with vehicles demonstrating significant improvements.

Murphy highlighted how Tesla's Cybertruck and Model Y seamlessly navigated construction zones and managed a challenging left turn against traffic.

"Tesla noted that soon its FSD will require an intervention only once every 10,000 miles," Murphy said, emphasizing that the company's autonomous technology is nearing the safety level required to launch a monitored robotaxi service.

For comparison, Alphabet Inc.'s (GOOGL ) (GOOG ) Waymo initiated its robotaxi operations after achieving one intervention every 17,000 miles, "a milestone TSLA believes it could achieve shortly with its growing AI compute."

Murphy highlighted Tesla's growing AI infrastructure, which includes 50,000 active Nvidia Corp. (NVDA ) H100 chips as of October. This positions the company to potentially launch its robotaxi service by 2025.

Optimus: Tesla's Robot Revolution

Tesla's humanoid robot, Optimus, is already making strides in automation.

Though Optimus currently accounts for just a single-digit percentage of Tesla's AI compute power, Murphy expects this to increase as the robotaxi program stabilizes, accelerating Optimus' development.

"With more robots in use, training will accelerate," he said, adding that mass production in 2026 and beyond could drive down costs and open new growth avenues for Tesla.

Murphy also indicated Tesla may consider raising capital to support its investments in Optimus, robotaxis, and artificial intelligence.

"At its current valuation, Tesla could raise $50 billion+ through an equity raise at a relatively modest 4-5% dilution to shareholders," Murphy stated.

"TSLA has historically been able to raise capital at an extremely low cost compared to its peers," he added.

Lower-Cost EV And Expanding TAM

Tesla plans to launch a lower-cost EV in the first half of 2025, targeting a price point below $30,000, which includes the $7,500 federal EV tax credit.

Murphy said this vehicle could expand Tesla's total addressable market (TAM), with cost savings achieved through "a number of areas such as de-contenting, making the motor more efficient and thereby enabling a smaller battery, and changing the interior."

Market Reactions

Shares of Tesla rose by 3.8% to $371.52 on Thursday, reaching levels last seen in early April 2022, pushing year-to-date gains to 50%.

The all-time highs of $414 reached in November 2021 are now approximately 10% above current prices.

Intel Interim Co-Chief Expects CEO To Have Foundry Background, Stands By Forecast

Benzinga News — Thu, 05 Dec 2024 12:07:47 -0500

Intel Corp (INTC ) interim co-CEO David Zinsner said he expects the next chief to have manufacturing and product expertise Reuters cites from the UBS technology conference on Wednesday.

Zinsner's comments came after CEO Pat Gelsinger quit on Monday, failing to impress the board with his turnaround efforts.

Intel stock is down over 54% year-to-date as it failed to tap technological shifts, including a shift to mobile devices and AI-centric computing akin to Taiwan Semiconductor Manufacturing Co (TSM ) and Nvidia Corp (NVDA ).

Zinsner said Intel's "core strategy" and outlook regarding the future of its PC and server business remain intact. The company continues to expect fourth-quarter revenue of $13.30 billion-$14.30 billion versus guidance of $13.81 billion.

The chipmaker had named CFO David Zinsner and general manager of Intel's Client Computing Group Michelle Johnston Holthaus as interim co-CEOs while the board hunted for a new CEO.

The company's list of potential candidates includes former director Lip-Bu Tan who reportedly left the company after differences with Gelsinger.

Intel's head of foundry manufacturing and supply chain, Naga Chandrasekaran, emphasized the need for cultural change to become a successful foundry and semiconductor player. He expects Intel to offer samples of chips made with the new node in the first half of 2025.

Zinsner expects Intel's foundry business to note better margins by 2025, mainly due to its Lunar Lake processors.

Truist Securities analyst William Stein and Benchmark analyst Cody Acree do not expect a management change to move the needle for Intel, which lagged behind Taiwan Semiconductor in manufacturing capacity and needed to include the AI accelerator opportunity. However, the potential breakup of Intel's products and foundry business would deprive shareholders, and the separation of the foundry business could imply Intel parting with the $7.8 billion of CHIPS Act funding, as per the analysts.

Investors can gain exposure to Intel through First Trust Nasdaq Semiconductor ETF (FTXL ) and REX FANG & Innovation Equity Premium Income ETF (FEPI ).

Price Action: INTC stock closed lower by 3.79% at $21.13 at the last check on Wednesday.

Meta Readies $10 Billion AI Data Center in Louisiana, Its Largest Facility Globally

Benzinga News — Thu, 05 Dec 2024 12:07:39 -0500

On Wednesday, Meta Platforms, Inc. (META ) and Louisiana Economic Development (LED) disclosed plans for a $10 billion AI data center in northeast Louisiana, marking a major investment in the state's innovation ecosystem.

Set to be Meta's largest global facility at 4 million square feet, the data center in Richland Parish is slated to begin site work in December and expects construction to extend through 2030.

The Richland Parish Data Center will be Meta's largest facility globally, designed to handle vast data processing needs for AI workloads.

As part of its advanced infrastructure, it will support Meta's platforms, including Facebook, Instagram, WhatsApp, Messenger, and Threads.

The AI data center in Richland Parish is expected to create over 500 direct jobs, with LED projecting an additional 1,000 indirect roles, totaling more than 1,500 new jobs in the region. At the construction peak, the 2,250-acre site will employ approximately 5,000 workers, the LED said in the press release.

Meta plans to benefit from Louisiana's new incentive program under Act 730, which provides a sales and use tax rebate on data center equipment purchases or leases for qualifying projects.

The company has also pledged over $200 million for local infrastructure upgrades, including roads and water systems.

Meta will work with Entergy to add 1,500 MW of renewable energy to the grid, matching the data center's energy use with 100% clean power.

Kevin Janda, Meta's Director of Data Center Strategy, stated, "Richland Parish in Louisiana is an outstanding location for Meta to call home for a number of reasons. It provides great access to infrastructure, a reliable grid, a business-friendly climate, and wonderful community partners that have helped us move this project forward."

Governor Jeff Landry said, "Meta's investment establishes the region as an anchor in Louisiana's rapidly expanding tech sector, revitalizes one of our state's beautiful rural areas, and creates opportunities for Louisiana workers to fill high-paying jobs of the future."

Investors can gain exposure to Meta through iShares Global Comm Services ETF (IXP ) and Vanguard Communication Services ETF (VOX ).

Price Action: META shares are up 0.22% at $615.14 premarket at the last check on Thursday.

Southwest Airlines Lifts Q4 Guidance, Launches $750 Million Stock Buyback

Benzinga News — Thu, 05 Dec 2024 12:07:32 -0500

On Thursday, Southwest Airlines Company (LUV ) shares traded higher after the company announced it will launch a $750 million stock buyback program in the first quarter of 2025. The move follows the $250 million accelerated share repurchase launched in October 2024.

After this, $1.5 billion will remain under its $2.5 billion repurchase program, authorized in September 2024.

Outlook: The company revised its fourth-quarter guidance, now expecting RASM to increase by 5.5% to 7.0% (vs. 3.5%- 5.5% prior) and economic fuel costs per gallon to be $2.35 to $2.45 (vs. $2.25 to $2.35 earlier).

The company expects unit revenues to rise 5.5%-7.0% YoY, with capacity down ~4%. This improvement is driven by robust travel demand and benefits from tactical initiatives, including network optimization, capacity adjustments, enhanced marketing, and advanced revenue management.

Strong holiday bookings and improved revenue trends bolster confidence in its "Southwest. Even Better." plan, set to extend momentum into 2025.

Meanwhile, it still projects ASMs down ~4% and CASM-X up 11% to 13% in the quarter.

The company is also advancing its fleet strategy, targeting an initial transaction by early 2025, including aircraft sales and sale-leasebacks, to optimize fleet value.

Southwest continues to plan for approximately 20 Boeing (BA ) 737-8 aircraft deliveries and now expects 40 aircraft retirements in 2024, comprised of 36 Boeing 737-700s and four Boeing 737-800s.

In October, the company reported a third-quarter 2024 operating revenue increase of 5.3% year-over-year to $6.870 billion, beating the consensus of $6.735 billion. Adjusted EPS was $0.11, down from $0.31 last year, beating the consensus $0.00.

Investors can gain exposure to the stock via U.S. Global Jets ETF (JETS ) and Themes Airlines ETF (AIRL ).

Price Action: LUV shares are up 2.90% at $35.14 at the last check Thursday.

Misinformation Expert Admits Using ChatGPT To File Affidavit On Misinformation, Says OpenAI's Chatbot Added The Fake Details

Benzinga News — Thu, 05 Dec 2024 12:07:25 -0500

Misinformation expert Jeff Hancock confessed to utilizing OpenAI's ChatGPT for organizing citations in a legal document, with hallucinations calling into question the integrity of the filing itself.

What Happened: Hancock, who founded the Stanford Social Media Lab, admitted that while ChatGPT assisted in drafting his affidavit, it introduced errors. These inaccuracies do not, however, affect the core arguments of his document, according to the expert.

"I wrote and reviewed the substance of the declaration, and I stand firmly behind each of the claims made in it, all of which are supported by the most recent scholarly research in the field and reflect my opinion as an expert regarding the impact of AI technology on misinformation and its societal effects," Hancock wrote in a subsequent filing.

Hancock's affidavit supports Minnesota's "Use of Deep Fake Technology to Influence an Election" law, which is currently challenged in federal court by Christopher Khols, known as Mr. Reagan on YouTube, and state Rep. Mary Franson.

Their attorneys labeled the document "unreliable" due to non-existent citations and sought its removal.

Hancock clarified that while he used ChatGPT for drafting, he did not rely on it for writing. He emphasized his commitment to the affidavit's claims, supported by scholarly research. He used Google Scholar and GPT-4o to find relevant articles, inadvertently causing citation errors, known as "hallucinations."

"I did not intend to mislead the Court or counsel," said Hancock.

Why It Matters: The incident underscores ongoing concerns about AI's reliability in legal contexts.

In May 2023, a lawyer faced similar issues when ChatGPT fabricated non-existent cases in a brief, leading to legal chaos.

This highlights the challenges of AI "hallucinations," a term gaining traction since Google (GOOG ) (GOOGL ) CEO Sundar Pichai acknowledged AI's struggle with this issue.

The rapid evolution of AI technology, as seen with the launch of ChatGPT's successor GPT-4, has prompted tech leaders like Elon Musk and OpenAI CEO Sam Altman to caution against potential risks.

OPEC+ Extends Oil Output Cuts To Late 2026: What It Means For Markets

Benzinga News — Thu, 05 Dec 2024 12:07:11 -0500

The OPEC+ group decided on Thursday to extend its collective oil production cuts of 3.65 million barrels per day (bpd) through the end of 2026, solidifying the cartel's cautious stance amid global demand concerns and rising output from non-OPEC+ producers.

During its December meeting, the group also announced a gradual unwinding of cuts starting in April 2025, a move designed to prevent oversupply risks, CNBC reports.

Here are the major takeaways from OPEC+'s latest meeting and how oil markets reacted to the news.

OPEC+ Key Announcements: Long-Term Cuts, Gradual Increases

Extension of Output Cuts -- OPEC+ confirmed the continuation of its collective cuts of 3.65 million bpd until the end of 2026. This includes both baseline adjustments and voluntary reductions.
Voluntary Cuts Extended Through March 2025 -- Member countries implementing additional voluntary cuts of 2.2 million bpd, first announced in November 2023, will extend these reductions until the end of March 2025.
Gradual Unwinding Over 18 Months -- Starting in April 2025, OPEC+ plans to begin a phased increase in production. Instead of the originally anticipated 12-month timeline, the unwinding process will stretch over 18 months, concluding in September 2026. This slower pace reduces monthly additions to the market, helping avoid potential oversupply.
Baseline Boost for UAE -- The UAE will receive a 300,000 bpd increase to its production baseline starting in April 2025, phased in gradually over the same 18-month period.
Extended Compensation Period -- Member states that overproduced in the past will now have until June 2026 to compensate for excess output.
Capacity Assessments Extended -- The group extended its capacity assessment period to November 2026. This is a sensitive issue that often requires delicate negotiations among members, and it helps preserve unity within the group.

Analyst Insights

Amena Bakr, senior research analyst at Energy Intelligence, highlighted the significance of the extended timeline for unwinding production cuts: "By pushing voluntary cuts back three months and extending unwinding over 18 months, OPEC+ reduces monthly increments and creates a bigger cushion for compensation cuts. This demonstrates the group's commitment to managing markets cautiously."

Prior to the OPEC+ meeting, Goldman Sachs analysts, including Daan Struyven, stated: "The rise in compliance and the likely extension of cuts support our view of modest near-term upside to oil prices. We maintain our $76/bbl average 2025 Brent price forecast."

Last week, Bank of America warned that uncertainties surrounding key producers like Saudi Arabia, OPEC, and Iran could still disrupt market dynamics.

"The fortunes of commodity exporters will depend on the interplay between negative tariff and interest rate shocks and the positive effects of fiscal easing in China," the bank said in its 2025 economic outlook.

Market Reactions

The oil market's immediate reaction to the OPEC+ announcements was negative, with prices dipping by about $1 per barrel after early reports of the deal.

Yet, oil futures managed to trim losses as much of the news aligned with expectations.

Front-month West Texas Intermediate futures - broadly tracked by the United States Oil Fund (USO ) - traded at $68.54 a barrel by 8:35 a.m. in New York, flat for the day.

Broader concerns about slowing global demand and rising non-OPEC+ production continue to weigh on market sentiment.

The muted oil market reaction extended to U.S.energy equities.

The Energy Select Sector SPDR Fund (XLE ) edged up by 0.1% in premarket trading. Major oil players Exxon Mobil Corp. (XOM ) and Chevron Corp. (CVX ) also traded flat.

Warren Buffett's Portfolio Stock Kroger Pauses Buybacks For Albertsons Merger, Narrows FY24 Outlook

Benzinga News — Thu, 05 Dec 2024 12:06:53 -0500

Kroger Company (KR ) shares are trading lower in the premarket session on Thursday. The company reported third-quarter adjusted earnings per share of 98 cents, in-line with the street view.

Quarterly sales of $33.634 billion (down 0.9% year-on-year) missed the analyst consensus estimate of $34.204 billion. Identical Sales ex-fuel increased by 2.3%.

The LIFO charge for the quarter was $4 million, compared to $29 million for the same period last year. The decreased charge was due to lower expected year-over-year inflation.

"While we expect the macroeconomic environment to remain uncertain near-term, the strength of our model gives us confidence in our ability to deliver value for customers and invest in our associates," said Chairman and CEO Rodney McMullen.

The gross margin for the third quarter was 22.9% of sales. Excluding fuel, the FIFO gross margin increased by 51 basis points from last year, showing Kroger's ability to improve margins while keeping prices competitive to help customers manage their budgets, the company said.

Kroger closed the sale of its specialty pharmacy business on October 4 for $464 million, reducing total company sales in the third quarter by approximately $340 million.

"We are committed to closing this merger because bringing Kroger and Albertsons together will provide meaningful and measurable benefits - lower prices, secure jobs and expanded access to fresh, affordable food - for customers, associates, and communities across the country," McMullen adds.

Going forward, the company expects to continue paying its quarterly dividend, which will increase over time, subject to board approval.

Kroger has paused its share repurchase program to prioritize de-leveraging following the proposed merger with Albertsons.

Berkshire Hathaway's (BRK.A ) latest 13F showed that Warren Buffett's company had increased their stake in Kroger by 155 to 50 million shares.

Outlook: Kroger has narrowed its FY2024 adjusted EPS guidance from $4.30-$4.50 to $4.35-$4.45, compared to the $4.44 estimate.

The company also expects identical sales growth, excluding fuel, to be between 1.20% and 1.50%.

Kroger's net total debt to adjusted EBITDA ratio is 1.21 compared to 1.40 a year ago. The company's net total debt to adjusted EBITDA ratio target range is 2.30 to 2.50.

Kroger stock was down as much as 3.50% in the premarket session but has recovered most of its losses.

Price Action: KR shares are trading lower by 0.35% to $59.70 premarket at last check Thursday.

Elon Musk's SpaceX Completes First Starlink Satellite Constellation For Cell Phones

Benzinga News — Thu, 05 Dec 2024 12:05:06 -0500

Elon Musk's SpaceX has completed its first Starlink satellite constellation aimed at direct-to-cell phone connectivity, making the service fully operational.

What Happened: Making the announcement, Musk revealed that the current bandwidth per beam is approximately 10Mb, with future constellations expected to enhance this capability.

The completion of this constellation was made possible by launching 20 Starlink satellites via the Falcon 9 rocket.

The first Starlink satellite direct to cell phone constellation is now complete.

The first Starlink satellite direct to cell phone constellation is now complete.
This will enable unmodified cellphones to have Internet connectivity in remote areas.Bandwidth per beam is only ~10Mb, but future constellations will be much more capable. - Elon Musk (@elonmusk) December 5, 2024

This initiative is part of Starlink's broader mission to extend global Internet coverage, particularly in regions where traditional connectivity poses challenges.

Shedding light on Starlink's performance, Australian consumer watchdog, ACCC, revealed that SpaceX's satellite constellation delivered better results than local rival NBN's Sky Muster service.

While Starlink delivered average download speeds and latency of 470 Mbps and 29.8 milliseconds, NBN's service managed only 111 Mbps and 664.9 milliseconds, respectively.

Why It Matters: The recent operational status of Starlink's satellite constellation follows a series of strategic developments.

In late November, SpaceX secured a commercial license from the Federal Communications Commission (FCC) for its Starlink Direct-to-Cell service. This license permits SpaceX to operate its Gen2 Starlink satellites for non-geostationary orbit fixed-satellite services, marking a pivotal step in expanding satellite-based mobile connectivity.

Earlier, in October, NASA endorsed the initial deployment of 400 Starlink satellites closer to Earth. This move is part of a study to assess the impact on travel to and from the International Space Station (ISS). NASA's support underscores the potential benefits of deploying satellites at lower altitudes.

Additionally, Musk has indicated that the third generation of Starlink satellites will significantly improve Internet speeds, offering multi-gigabit bandwidth. These advancements are expected to be launched on SpaceX's larger Starship vehicle, promising a tenfold increase in bandwidth and reduced latency.

SpaceX is also reportedly preparing to launch a tender offer that values the company at $250 billion. While the company is private, investors can leverage Destiny Tech100 Inc. (DXYZ ) and Cathie Wood's Ark Venture Fund (ARKVX ) to participate in the Musk-led space company's growth.

Dollar General Clocks Upbeat Q3 Same-Store Sales Despite Hurricanes And Financially Constrained Core Customers, Tightens Annual Outlook

Benzinga News — Thu, 05 Dec 2024 12:05:00 -0500

Dollar General Corporation (DG ) reported third-quarter adjusted EPS of $0.89, down 29.4% year-over-year, missing the consensus of $0.94.

The retail behemoth reported quarterly sales of $10.2 billion, slightly above the consensus of $10.14 billion.

Sales increased 5%, driven by favorable sales contributions from new stores and growth in same-store sales, partially offset by the impact of store closures.

Same-store sales increased 1.3%, reflecting increases of 1.1% in average transaction amount and 0.3% in customer traffic. Same-store sales included growth in the consumables category, partially offset by declines in home, seasonal, and apparel categories.

"We are pleased with our team's execution in the third quarter, particularly in light of multiple hurricanes that impacted our business," said Todd Vasos, Dollar General's chief executive officer.

"While we continue to operate in an environment where our core customer is financially constrained, we delivered same-store sales near the top end of our expectations for the quarter," Vasos added.

Outlook: Dollar General has updated its financial guidance, including the negative impact of hurricane-related expenses of $32.7 million in the third quarter and an estimated fourth-quarter negative impact of approximately $10 million.

The company expects 2024 net sales growth of approximately 4.8% to 5.1%, compared to its previous expectation of roughly 4.7% to 5.3%.

Same-store sales growth in the range of approximately 1.1% to 1.4%, compared to its previous expectation in the range of 1.0% to 1.6%
Diluted EPS of approximately $5.50 to $5.90, compared to its previous expectation of approximately $5.50 to $6.20 and the consensus of $5.82.

Dollar General expects 2,435 real estate projects in fiscal year 2024, including 730 new store openings, 1,620 remodels, and 85 store relocations.

Dollar General plans to increase real estate projects for fiscal year 2025. According to CFO Kelly Dilts, the company focuses on enhancing its stores through Project Elevate, which introduces lighter remodels for mature stores that are not yet ready for full renovations.

These updates will include customer-focused improvements, such as updated layouts and expanded product displays. Key initiatives for fiscal year 2025 include:

Opening approximately 575 new U.S. stores and up to 15 in Mexico.
Fully remodeling 2,000 stores.
Remodeling 2,250 stores as part of Project Elevate.
Relocating approximately 45 stores.

In total, the company plans to complete about 4,885 real estate projects.

Price Action: At the last check on Thursday, DG stock was down 3.00% to $77.12 sday.

Fed Chair Powell Says Economy Remains Strong, Bitcoin Is 'Like Gold': Expert Weighs In

Benzinga News — Thu, 05 Dec 2024 12:04:31 -0500

Federal Reserve Chair Jerome Powell said the U.S. economy remains strong and even commented on Bitcoin at the New York Times DealBook Summit on Wednesday.

The Details: "The U.S. economy is in very good shape right now. It's in remarkably good shape, we are sort of the envy of other large economies around the world, and I'm going to do everything I can to keep it there during the rest of my term, and I feel very good about where the economy is and where monetary policy is," Powell said.

Powell said the current state of the economy allows the Fed to exercise caution in moving rates back down to a more neutral level.

"We view this as slightly hawkish - but stopping well short of challenging the market's growing confidence that a December cut is the base case, which has been our view all along," Krishna Guha at Evercore said, per Bloomberg.

The Fed's next rate decision is scheduled for Dec. 18 and markets are placing about a 75% probability that the Federal Open Market Committee will cut its key borrowing rate by a quarter percentage point. According to CNBC, the expectation is that the Fed then skips the January meeting before cutting a few more times in 2025.

Powell on BTC: Powell also addressed Bitcoin at the DealBook Summit.

"People use Bitcoin as a speculative asset. It's like gold - it's just virtual and digital," Powell said during the discussion.

"It's not a competitor for the dollar. It's really a competitor for gold," he added.

The price of Bitcoin pushed higher, approaching the $100,000 level, after Powell's comments and crypto-proponents spoke out on social media.

Anthony Pompliano, CEO of Professional Capital Management, reflected on the crypto market's reaction to Powell's comments.

"Bitcoin is going up because people are realizing central banks and countries don't hate Bitcoin anymore. Poetic," Pompliano posted on X.

ESPN Lands On Disney+ in Major Content Fusion: Here's What It Actually Means

Benzinga News — Thu, 05 Dec 2024 12:03:52 -0500

On Wednesday, Walt Disney Co.'s (DIS ) Disney+ announced its expansion in sports content via the integration of ESPN into its platform.

What Happened: Subscribers to the Disney+ bundle, which includes Hulu and ESPN+, will now be able to access all their content in one place.

Standalone Disney+ subscribers will also benefit by gaining access to ESPN+ content, primarily featuring college football and basketball, along with select premium live events.

This integration is a step towards launching ESPN's direct-to-consumer service Flagship, which is expected in Fall 2025, the company stated in a blog post.

Standalone Disney+ users will have access to live ESPN events, including five NBA games on Christmas Day and the opening day of the Australian Open.

Special broadcasts like the "Monday Night Football" alternate featuring The Simpsons and the "Dunk the Halls" NBA broadcast are already scheduled for Disney+.

Why It Matters: In September, Macquarie analyst Tim Nollen said, the launch of ESPN's direct-to-consumer platform could accelerate cord-cutting trends, which will impact traditional cable revenues.

Earlier this month, it was reported that PENN Entertainment (PENN ) has been closely monitoring ESPN's integration. The company sees potential growth opportunities in 2025, partly due to ESPN's expanded reach and product enhancements.

Disney's fourth-quarter earnings report highlighted a 6% increase in revenue, reaching $22.57 billion, slightly surpassing the projected $22.35 billion from analysts.

Price Action: Disney's stock edged up by 0.46% on Wednesday, closing at $116.99, with a further 0.060% increase in after-hours trading. So far this year, Disney shares have risen 28.97%, slightly trailing the Nasdaq 100 index, which has gained 29.91% during the same timeframe, as per Benzinga Pro data.

Disney has a consensus price target of $121.41 from 30 analysts, with the highest set at $140 by BofA Securities on Nov. 15. The latest ratings from Needham, Evercore ISI Group, and Needham average $131.33, indicating a potential 12.19% upside.

Market Update: Stocks Little Changed Ahead of November Jobs Report

Rachel Hemple — Thu, 05 Dec 2024 11:26:19 -0500

Stocks were little changed Thursday following a record day for equities, as bullishness from the cryptocurrency market drove most gains early in the session. Stocks continued to dip as market participants looked ahead towards Friday's key jobs report, with the Dow Jones Industrial Average falling over 200 points, and the S&P 500 Index and Nasdaq Composite slipping below the flatline.

Here's how the market settled on Thursday:

S&P 500 Index (SPY ): -0.19% or -11.32 points to 6,075.16

Dow Jones Industrial Average (DIA ): -0.55% or -247.97 points to 44,766.07

Nasdaq Composite Index (QQQ ): -0.18% or -34.86 points to 19,700.26

Bitcoin Strength

Cryptocurrency names like MicroStrategy (MSTR ), Robinhood Markets (HOOD ) and Coinbase Global (COIN ) each climbed higher on Thursday morning as bitcoin rose above $100,000 for the first time overnight, but ultimately gave up gains in the afternoon.

Being a stock with large exposure to bitcoin, MicroStrategy has risen nearly 500% year-to-date as the cryptocurrency market continues to garner strength heading into the year's end. Coinbase has also doubled its value this year as the company operates a popular crypto exchange, while Robinhood's crypto trade options have led the stock to gain over 200% year-to-date.

In the News:

Boeing's (BA ) plea deal connected to a criminal fraud charge tied to fatal crashes of its 737 Max planes was rejected by U.S. District Judge Reed O'Connor of the U.S. District Court for the Northern District of Texas on Thursday, with O'Connor expressing concern that a government-appointed monitor selection would include diversity, equity and inclusion policies.

The judge wrote that "the Court is not convinced in light of the foregoing that the Government will not choose a monitor without race-based considerations and thus will not act in a nondiscriminatory manner. In a case of this magnitude, it is in the utmost interest of justice that the public is confident this montir selection is done based solely on competency."

The deal was set to allow Boeing to avoid a trial, with the company instead facing a fine of up to $487.2 million in addition to the appointed monitor.

Discount prescription provider GoodRx (GDRX ) announced Thursday that U.S. prescriptions for weight loss drugs have more than doubled in 2024, as demand for the "miracle" injections continues to swell across the market.

Prescription fills for Novo Nordisk's (NVO ) Wegovey and Eli Lilly's (LLY ) Zepbound increased by more than 100% and 300%, respectively, since the start of the year, according to GoodRx's new Weight Loss Medications Tracker -- monitoring U.S. trends and spending patterns for the drugs. This comes as only 9% of Americans with commercial insurance have unrestricted coverage (without need for further authorization or BMI requirements) for Zepbound and 14% for Wegovy, according to GoodRx.

"It's just a pretty astronomical increase in sales, and because of that, a lot of eyes are on them around their affordability and accessibility," said Tori March, director of research at GoodRx, in an interview, quote by CNBC.

American Airlines (AAL ) announced it has completed its credit card deal with Citigroup (C ) on Thursday, officially dropping Barclays (BCS ) -- one of its last relationships from its 2013 merger with US Airways. The carrier plans to start transitioning Barclays cardholders to Citi in 2026, with the bank taking over credit card sign-up promotions from there.

The airline expects payments for its co-branded credit card and other partners to increase 10% a year. In the 12 months through Sept. 30, American earned $5.6 billion from these deals.

In Economic News:

Initial Unemployment Claims rose at a more-than-expected rate for the week ended Nov. 20, the Labor Department reported Thursday, increasing by 9,000 from the previous week to 224,000. Continuing claims, which are tracked a week behind, dipped lower are trending higher for the past two months, totaling 1.87 million.

U.S. Trade Deficit came in at a lower-than-expected print in October, the Census Bureau reported Thursday, totaling $73.8 billion. That total was $10 billion below September's deficit and less than the $74.8 billion estimated by Dow Jones consensus. For the year, the deficit in goods and services is up 12.3% compared to the same period in 2023.

On the Earnings Front:

American Eagle (AEO ) shares fell on Thursday after the apparel retailer offered weak holiday-quarter guidance after narrowing missing third-quarter expectations late Wednesday. Chief Executive Officer Jay Schottenstein noted that demand has remained inconsistent as value-seeking consumers look to only spend during sales events.

"We have entered the holiday season well positioned, with our leading brands offering high-quality merchandise, great gifts and an outstanding shopping experience across channels," Schottenstein said in a statement. "Key selling periods have seen a positive customer response, yet we remain cognizant of potential choppiness during non-peak periods."

For its holiday quarter, American Eagle expects comparable sales to increase by 1% and total sales to decline by 4%, with the outlook including a $85 million impact from a later start to the holiday shopping season. For its full-year, the company expects comparable sales to rise by 3%, below its prior forecast of 4% growth, and sales to increase by 1%, compared to its previous guidance of growth between 2% and 3%.

Looking Ahead:

The Federal Reserve is set to issue its final monetary policy decision on the year Dec. 17-18, with nearly 72% of investors expecting policymakers to issue another 25 basis rate cut from its current target range of 4.50% to 4.75%.

On Wednesday, Fed Chair Jerome Powell said during an interview at The New York Times' DealBook Summitt that the U.S. economy is currently strong enough for policymakers to carefully consider further rate cuts.

"The labor market is better, and the downside risks appear to be less than the labor market," Powell said. "Growth is definitely stronger than we thought, and inflation is coming [out] a little higher. So, the good news is that we can afford to be a little more cautious as we try to find neutral.

For Friday:

Market participants will parse through November's "official" jobs report due out Friday morning, alongside December's preliminary consumer sentiment reading and a series of Fedspeak. Key earnings reports for Friday include Lululemon Athletica (LULU ), Ulta Beauty (ULTA ) and DocuSign (DOCU ).

Applovin Set To Capitalize On AI Frenzy, Ad Growth, Analyst Cautions On Near-Term Volatility

Benzinga News — Wed, 04 Dec 2024 15:46:27 -0500

In November, Applovin Corp (APP ) reported third-quarter revenue of $1.20 billion, up 39%, topping the analyst consensus estimate of $1.13 billion. EPS of $1.25 beat the analyst consensus estimate of $0.94.

Despite the strong results, Goldman Sachs analyst Eric Sheridan maintained a Neutral rating on the stock, with a price target of $220.

Applovin's board raised the company's share buyback program by $2 billion.

The company expects fourth-quarter revenue of $1.24 billion-$1.26 billion compared to the consensus of $1.25 billion.

Sheridan's rating reflects his view that the stock from current levels is potentially volatile on short- and medium-term results. It presents a more balanced risk and reward in a multi-year timeframe.

Sheridan recapitulated his recently hosted investor meeting with AppLovin chief Adam Foroughi, CFO Matt Stumpf, and Head of IR David Hsiao. The analyst flagged the evolution of AXON 2.0 to drive continued growth, strong operating margins, a capital-light model, and longer-term upside optionality by applying generative AI to a creative and faster cadence of developer enhancements.

Like the trends and themes from their third-quarter 2024 earnings call, management highlighted how AXON 2.0 continues to evolve as a neural net and AI platform that can improve the efficiency of its current advertising business. In addition, it demonstrated some early success around the eCommerce opportunity. The last point also aligns with some of the analyst's early fourth-quarter advertising industry channel checks.

Despite the management team's success in terms of revenue growth (as reflected in its market cap - shares are up 856% year-to-date), the company continues to emphasize a focus on driving operational execution in a relatively asset-light model while maintaining company culture, cost efficiencies, and returning capital to shareholders.

While management expressed optimism about the multi-year market opportunity ahead, the key investor debate will likely remain focused on the linearity of the path forward in terms of sequential and year-on-year revenue trajectory as the platform scales, Sheridan said.

Putting aside any such quarterly short-term debates, Sheridan noted that AppLovin was positively exposed to the broader secular growth themes in advertising of AI and machine learning, increased ad budgets, and campaign efficiency.

In the coming quarters, investors are likely to continue to examine operating results for outcomes around the emerging revenue streams (into 2025 and 2026), especially regarding the ramp of the broader commerce opportunity.

On the operating fundamentals, Sheridan remained constructive that AppLovin has a collection of businesses that can produce above-average advertising and marketing industry growth (Sheridan's fiscal 2024-2027 revenue CAGR is ~19%) and a strong margin profile in normalized mobile ads and mobile gaming landscape.

Sheridan projected fiscal 2024 revenue of $4.59 billion and EPS of $4.02.

Price Action: APP stock is up 1.3% at $371.32 at last check Wednesday.

Amazon Emerges As Top Analyst Pick In Holiday Season

Benzinga News — Wed, 04 Dec 2024 14:34:06 -0500

JP Morgan analyst Doug Anmuth named Amazon.Com Inc (AMZN ) the top pick following a solid start to the early holiday shopping season.

Early holiday 2024 data points suggest solid U.S. e-commerce growth, with third-party estimates indicating U.S. e-commerce Cyber Week sales growth mainly in line with Anmuth's projected +7.5% fourth-quarter U.S. e-commerce sales growth (vs. +9.8% in fourth-quarter of 2023).

Adobe and Mastercard data suggest growth exceeded the analyst's +7.5% estimate on Black Friday, and Adobe indicated in-line growth trends during Cyber Monday and Cyber Week.

Salesforce data implies growth in line with Anmuth's expectations during Black Friday and Cyber Week but with softer Cyber Monday trends. Amazon announced its Black Friday Week and Cyber Monday holiday shopping period was once again its biggest ever, with record sales, record number of items sold, and customers saving billions of dollars.

Holiday 2024 marks the shortest since 2019 (27 days between Thanksgiving and Christmas), but earlier promotions and deeper markdowns should continue to drive solid growth, the analyst said.

Consumers face still-elevated inflation and interest rates, though macro headwinds are broadly stable compared to a year ago.

The analyst projected U.S. e-commerce penetration at 24.5% of adjusted retail sales this holiday season, +119bps above 23.3% in 2023.

Longer-term, Anmuth noted U.S. e-commerce penetration of adjusted retail sales could nearly double from ~22% today to 40%+ supported by gains across large, underpenetrated categories such as CPG (including Grocery), Apparel & Accessories, & Furniture, Appliances, & Equipment.

Amazon maintains a leading ~45% share of U.S. e-commerce. Anmuth noted it is well positioned during the holiday season, with strong momentum from early holiday promotions, SD1D delivery, regionalization, expansion of the Prime ecosystem, and competitive prices.

Profitero suggested Amazon prices at ~14% average discount to competitors.

Anmuth projected fourth-quarter retail revenue (non-AWS) growth of +8.9%.

The analyst modeled Amazon's +7.6 % U.S. GMV (ex Physical Stores) growth, which is in line with his estimated +7.5 % U.S. e-commerce growth and 46.7% U.S. e-commerce share in the fourth quarter (+2bps).

Is Amazon A Good Stock To Buy?

An investor or trader's decision to buy or sell a stock is unique to their time horizon and risk tolerance. Many typical investors evaluate earnings growth and valuation on a particular stock before making a decision.

For example, for Amazon.com, you'll notice that earnings in its last quarter grew 25.44% source. As an investor, you'll want to decide whether that's better or worse than what you'd like to see among stocks in your portfolio.

On the valuation side, Amazon.com's price to earnings ratio - a measure of how much an investor pays for the company's earnings - is compressed 50.9% in the current quarter when compared with last year. That places it above similar businesses Alibaba Gr Hldgs (BABA ), PDD Holdings (PDD ), MercadoLibre (MELI ) in its sector. You'll need to decide whether that makes it more or less attractive based on how you think the company will perform over time.

Price Action: AMZN stock is up 2.35% at $218.47 at last check Wednesday.

Meta Joins Big Tech's Shift To Nuclear Power For AI Ambitions

Benzinga News — Wed, 04 Dec 2024 14:31:59 -0500

On Tuesday, Meta Platforms Inc (META ) announced plans to seek proposals from nuclear energy developers to accomplish its artificial intelligence innovation and sustainability goals.

The artificial intelligence frenzy has been pivotal in the accelerated adoption of nuclear energy as a power source, prompting big tech firms to indulge in nuclear energy-related projects to generate power for their ongoing AI development initiatives, Reuters reports.

The parent company of Facebook, Instagram, and Threads is eyeing 1-4 gigawatts (GW) of new nuclear generation capacity in the U.S. starting in the early 2030s.

The company emphasized the importance of electric grids expanding and adopting new sources of reliable, clean, and renewable energy to drive the technologies that will build the future of human connection, including the next wave of AI innovation.

According to Reuters, Meta Platforms expects nuclear energy to support the growth needs of the electric grids that power its data centers and the communities around them.

Meanwhile, Amazon.Com Inc (AMZN ) cloud unit Amazon Web Services tapped with Dominion Energy, Inc D to develop a small modular reactor near Dominion's existing North Anna nuclear power station. In October, Amazon committed over $500 million in nuclear power across three projects from Virginia to Washington state. AWS expects the new SMRs to add a minimum of 300 megawatts of power to the Virginia region.

Alphabet Inc (GOOG ) (GOOGL ) Google forged a deal with Kairos Power to buy power via SMRs, enabling up to 500 MW of new carbon-free power to U.S. electricity grids.

Microsoft Inc (MSFT ) engaged Constellation Energy Corp CEG to reopen Pennsylvania's Three Mile Island nuclear plant. Microsoft agreed to exclusively purchase the plant's energy for two decades.

Meta Platforms stock has surged over 77% year-to-date. Bank of America, Rosenblatt, Goldman Sachs, and Needham analysts projected upside for the stock fueled by Llama and Meta AI. Meta's AI investments drove the 20% revenue growth and have the potential for upside despite higher capex, as per the analysts.

Price Action: META stock was down 0.77% at $608.75 at last check Wednesday.

How Nvidia, PayPal, Adobe Are Driving GenAI's Productivity Revolution: Report

Benzinga News — Wed, 04 Dec 2024 14:31:53 -0500

Generative AI isn't just hype-it's sparking opportunities for investors. At Bloomberg Intelligence's "GenAI: Will It Deliver on the Productivity Promise?" conference, tech titans and emerging innovators outlined how AI is reshaping industries from finance to healthcare.

Here's where the next opportunities might lie, as noted by JPMorgan's insights on AI's transformative potential.

Nvidia: The Backbone Of GenAI's Infrastructure

No GenAI discussion is complete without mentioning Nvidia Corp (NVDA ), whose chips have become synonymous with AI development. As the industry's go-to hardware provider, Nvidia's GPUs power everything from hyperscalers like AWS to startups revolutionizing healthcare and media.

While Bloomberg's AI Index shows mixed performance among AI stocks, JPMorgan has emphasized Nvidia's consistent outperformance. They highlight the company's pivotal role in enabling GenAI applications, cementing its position as the backbone of GenAI infrastructure.

With 2025 set to broaden AI's impact across software and adjacent themes like fintech and 5G, Nvidia's growth story is far from over. JPMorgan further underscores the sustained demand for Nvidia's AI solutions, particularly in emerging verticals.

PayPal's AI-Powered Fintech Makeover

In financial services, AI adoption is surging, and PayPal Holdings Inc (PYPL ) is using it to redefine customer experiences. CTO Srini Venkatesan highlighted how AI connects merchants and consumers, boosting revenue with personalized shopping insights. By sharing purchase data, PayPal empowers merchants with smarter retargeting strategies-imagine buying a tent online and being seamlessly recommended hiking boots from another retailer.

This isn't just about efficiency; JPMorgan notes that AI-driven tools like PayPal's are fostering a dynamic ecosystem where small businesses thrive alongside global brands. Their analysis suggests PayPal's innovation could further enhance profitability and customer retention.

Adobe's Creative Edge With Firefly

In the media and design world, Adobe Inc (ADBE ) is leveraging GenAI to push creative boundaries. Its Firefly suite integrates generative imaging, video tools, and features like text-to-image directly into Photoshop and Illustrator. The result? A transformative workflow for artists and designers.

According to JPMorgan, Adobe's leadership in GenAI innovation solidifies its standing as the go-to platform for creative professionals while addressing regulatory challenges around intellectual property and deepfakes. This balance of innovation and responsibility positions Adobe as a top pick in the AI-driven creativity space.

Healthcare: A Rising Star For Amazon

AI is also transforming healthcare, and Amazon.com Inc (AMZN ) is a surprise leader. Amazon Health Services revealed its GenAI tools have cut primary care administrative workloads by 40% and sped up document processing by 90%.

JPMorgan sees Amazon's healthcare innovations as pivotal, citing the company's ability to tackle inefficiencies and reduce burnout in a cost-intensive sector. As GenAI continues to revolutionize healthcare, Amazon's position as both a disruptor and enabler makes it a stock to watch in this evolving space.

What's Next For AI Stocks?

Despite the buzz, Bloomberg's AI Index reveals that software and application stocks like Adobe are still undervalued compared to pre-pandemic highs. However, JPMorgan projects this valuation gap to narrow as GenAI applications mature, driving sector-wide growth in areas like cloud, 5G, and fintech.

For investors, the message is clear: keep an eye on established leaders like Nvidia, PayPal, and Adobe, but don't overlook rising stars in vertical-specific AI applications. JPMorgan analysts suggest that diversifying across these AI themes could offer robust long-term returns.

As 2025 approaches, the AI productivity revolution is just getting started.

Salesforce Analysts Raise Forecasts After Q3 Earnings: 'Leading The Way In Agentic AI Cycle'

Benzinga News — Wed, 04 Dec 2024 14:31:38 -0500

Salesforce Inc (CRM ) shares were climbing in on Wednesday, despite the company reporting an earnings miss in the third quarter.

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

Stifel On Salesforce

Analyst J. Parker Lane reiterated a Buy rating while raising the price target from $390 to $425.

Salesforce reported current RPOs (remaining performance obligations) of $26.4 billion, representing 10% year-on-year growth and beating consensus estimate of $26.1 billion, Lane said in a note. The company's cRPO growth remains in double-digits for the second consecutive quarter, despite Agentforce and Data Cloud not contributing meaningfully as of now, he added.

"With the story now centered around the Agentforce/AI opportunity, we believe management's disclosure of 200 Agentforce deals (GA late in the quarter) and a significant pipeline served as solid initial proof-points in the company's ability to capture AI workloads and its positioning relative to enterprise competitors," the analyst wrote.

Salesforce is "the best way to play AI within our coverage universe," he further stated.

RBC Capital Markets On Salesforce

Analyst Rishi Jaluria maintained an Outperform rating while lifting the price target from $300 to $420.

Salesforce's third-quarter results were "solid," sending shares higher by 11% in the after-hours session on Tuesday, Jaluria said. "Subscription revenue growth stabilized, and cRPO growth was solid, remaining in double-digits," he added.

The company raised the midpoint of its fourth-quarter guidance for total revenue by around $50 million, while stating that its acquisition of Own closed at the end of the quarter, the analyst stated. "While Agentforce updates were encouraging, we question if expectations are getting ahead of NTM (next twelve months) reality," he further wrote.

JPMorgan On Salesforce

Analyst Mark Murphy reaffirmed an Overweight rating while raising the price target from $340 to $380.

Salesforce's earnings slightly missed expectations due to strategic investments, Murphy said. Total revenue came in at $9,444 million, beating Street estimates of $9,351 million, he added.

Although the company's fourth-quarter revenue guidance came in below consensus, this was "overshadowed by successful attainment or slight upside across other metrics" in the third quarter, including cRPO, margins, and cash flows, the analyst stated.

Salesforce was expected to be "ultra-bullish" about Agentforce during its earnings call and the company "actually surpassed that expectation," he further wrote.

BMO Capital Markets On Salesforce

Analyst Keith Bachman reiterated an Outperform rating while lifting the price target from $385 to $425.

Salesforce delivered strong quarterly results and guided to cRPO in-line with estimates, Bachman said. The company closed 200 paying Agentforce deals post general availability (GA) in the last week of the quarter, he added.

"In addition, management stated that 25% of the F100 have adopted Data Cloud, though we believe a very small percent of Salesforce installed base has adopted to date," the analyst wrote. He stated, however, that the adoption of Data Cloud could be "a source of friction" in the adoption of Agentforce.

Oppenheimer On Salesforce

Analyst Brian Schwartz maintained an Outperform rating while raising the price target from $385 to $415.

Salesforce achieved operating margins of 33.1%, higher than the consensus by 80 basis points (bps), Schwartz said. Pro forma earnings of $2.41 per share came in three cents below the consensus, driven by strategic investments, excluding which the figure would have come in at $2.59 per share, he added.

This was another quarter of double-digit cRPO billings growth and "this positive trend looks durable," as software spending trends are likely to normalize as macro uncertainties ease and the "rising importance of IT and AI in driving growth and efficiencies with the enterprise," the analyst wrote.

"This development positions CRM to reaccelerate top-line revenue growth, as soon as F2Q:26," he further stated.

Needham On Salesforce

Analyst Scott Berg reaffirmed a Buy rating while lifting the price target from $345 to $375.

Salesforce reported total revenue growth of 8.3% year-on-year, with subscription revenue growth of 9.1%, "driven by resilience in core Clouds," Berg said. Professional services revenue contracted by 2.4%, but came in above expectations, he added.

"While not a material contributor to financial results yet, Salesforce noted that the company closed over 200 Agentforce deals during 3Q in the one week the product was available during the quarter, with notable brands utilizing it already," the analyst wrote.

Management raised its revenue guidance for the full year to a range of $37.8 billion to $38.0 billion, from its prior projection of $37.7 billion to $38.0 billion, he added.

Piper Sandler On Salesforce

Analyst Brent Bracelin reiterated an Overweight rating while raising the price target from $325 to $395.

Salesforce's revenue growth slowed to 7%-8% on "more of the same" challenges that it faced through the year, including "macro pressures, internal budgetary battles, AI experimentation and evaluation, and longer sales cycles," Bracelin said.

"F2026 is shaping up to be an important transitional year for CRM as it executes on laying the groundwork to bring AI agents to the enterprise masses with new pricing and packaging offerings (Agentforce, Foundations, Data Cloud, etc.) that could better position the company for a F2027 rebound," the analyst wrote.

There is downside risk to the current consensus estimate for revenue growth of 9% for that year, he added.

BofA Securities On Salesforce

Analyst Brad Sills maintained a Buy rating while raising the price target from $390 to $440.

The third-quarter results suggest that Salesforce is "leading the way in agentic AI cycle with Agentforce," Sills said. Management pipeline commentary indicated "meaningful customer interest" in the weeks after the tool's release in October, he added.

The company raised its full-year margin guidance by 10 basis points, which indicates that "this emerging product cycle is not derailing margin expansion," the analyst stated. "Ongoing acceleration in the core from agents and multi-cloud strength is likely to more than offset softness in non-core businesses," he further wrote.

Guggenheim Securities On Salesforce

Analyst John DiFucci maintained a Neutral rating on the stock.

Salesforce exceeded consensus estimates, including cRPO, "which benefited from early renewals more than from strong new bookings," DiFucci said. The company's fourth-quarter guidance came in below the Street, "despite getting about 1% of growth from acquisitions completed in November," he added.

Street expectations of 9% revenue growth in fiscal 2026 appears "optimistic," unless the company makes more acquisitions, the analyst stated.

CRM Price Action: Shares of Salesforce had risen by 8.19% to $358.01 at the time of publication on Wednesday.

UnitedHealth 'Deeply Saddened' By Death Of Executive Brian Thompson: New York Police Offer $10K Reward For Information

Benzinga News — Wed, 04 Dec 2024 14:30:58 -0500

The New York City shooting death of UnitedHealthcare (UNH ) CEO Brian Thompson Wednesday is believed to be a preplanned and premeditated, police said Wednesday hours after the attack.

What Happened: Thompson, who was CEO of UnitedHealth Group Inc's insurance division UnitedHealthcare, was fatally shot while outside the New York Hilton Midtown hotel in Manhattan, New York, where the company was hosting its investor day.

Police said the shooting appears to be preplanned and premeditated with the shooter, who is still at large, having known which door Thompson was going to enter and waiting for him there.

New York Police Commissioner Jessica Tisch called Wednesday's shooting a "brazen targeted attack," as reported by the New York Times.

New York Chief of Police Jeffrey Maddrey and Chief of Detectives Joseph Kenny also spoke at a Tuesday press conference.

The shooter fled the scene on a bike, police said. Surveillance video shows the shooter leaving of the scene. There is no audio on the surveillance footage. Police are offering a reward up to $10,000 for more information on the case.

Police said they are trying to identify a witness who was near Thompson when the shooting occurred.

Thompson was getting to the conference early to help set up and he did not travel with security detail, according to police, who added that early findings show he did not typically travel with security.

A cell phone that could belong to the shooter was located in a nearby alley and is undergoing forensics testing. Police also said they have a search warrant and were looking through Thompson's hotel room to try and find more clues.

Kenny said it was too early to answer whether a silencer was used on the weapon in response to a press question Wednesday. The chief of detectives said it's too early to know if the shooter was a professional but surveillance shows he was able to fix a firing malfunction quickly, suggesting proficiencytwith firearms.

Police are interviewing Thompson's coworkers to see if any threats were recently been made against him and also checking social media for more clues.

Thompson, who joined UnitedHealth Group in 2004 and held various positions, arrived in New York Monday ahead of the conference, according to police.

Statements Pour In: UnitedHealth Group shared a statement on Wednesday's killing shortly before noon ET.

"We are deeply saddened and shocked at the passing of our dear friend and colleague Brian Thompson, the CEO of UnitedHealthcare. Brian was a highly respected colleague and friend to all who worked with him. We are working closely with the New York Police Department and ask for your patience and understanding during this difficult time. Our hearts go out to Brian's family and all who were close to him," the statement reads.

New York Gov. Kathy Hochul called Wednesday's events "horrific" and said state police will help if they are needed for the investigation.

"Our hearts are with the family and loved ones of Mr. Thompson, and we are committed to ensuring the perpetrator is brought to justice," Hochul said, as reported by the New York Times.

New York City Mayor Eric Adams told reporters the shooting was targeted and "does not appear to be a random act of violence.

U.S. Sen. Amy Klobuchar of Minnesota, where UnitedHealth Group is headquartered, said Wednesday's event was "a horrifying and shocking act of violence."

What's Next: Police officials told the public that the event was preplanned and premeditated and encouraged New Yorkers to go on with their daily routines while also reporting any suspicious activity and taking a look at the surveillance footage to help identify the shooter.

Wednesday's shooting occurred the same day as the lighting of the Christmas tree in Rockefeller Center, located several blocks away from the crime scene.

The tree lighting, which is set to air as a two-hour special beginning at 8 p.m. ET on Comcast Corporation (CMCSA )-owned NBC and Peacock, will go on as planned.

"We will have a massive police presence," Maddrey said.

Additional police will be located in subways to help ease the concern of New Yorkers traveling to the tree lighting ceremony, Maddrey added.

New York police are using drones, K9 units and aviation with no expenses spared to "keep New Yorkers safe," Maddrey said.

UNH Price Action: UnitedHealth Group stock is up 1% to $613.66 on Wednesday versus a 52-week trading range of $436.38 to $630.73.

Ford's Mustang Mach-E Sales Skyrocket 38.3% In November Amid Growing EV Momentum

Benzinga News — Wed, 04 Dec 2024 14:30:43 -0500

Ford Motor Co. (F ) reported U.S. sales growth of 14.3% year-over-year to 166,373 units in November.

This was driven by a 27.1% increase in F-Series trucks, a 38.3% surge in Mustang Mach-E sales, and a 20.8% Y/Y rise in EV sales.

The Lincoln brand experienced significant growth, with sales up 48.7% Y/Y. Electric vehicle sales growth in the U.S. was also led by an increase in E-Transit sales (+357.6% Y/Y).

However, with a drop in sales for its F-150 Lightning EV (-17.1% Y/Y) and Ford sold 10,821 electric vehicles in the month, with its Mustang Mach-E generating 5,938 unit sales.

Combustion engine vehicles sales rose 13.4% Y/Y, while Hybrid Vehicles sales surged 18.5% Y/Y.

Last month, the company reportedly slowed production of the electric Capri and Explorer at the Cologne factory in Germany owing to slowing EV demand.

Ford also said that it would pause the production of its F-150 Lightning pickup truck for six weeks through the end of the year at the Rouge Electric Vehicle Plant in Michigan.

Apart from this, Ford agreed to $165 million NHTSA penalty for delayed recalls of defective rearview cameras, marking second-largest fine in agency's history.

Investors can gain exposure to the stock via First Trust Nasdaq Transportation ETF (FTXR ).

Price Action: Ford shares are down 1.71% at $10.64 at the last check Wednesday.

US Services Sector Growth Cools More Than Expected In November As Businesses Show 'Cautionary Outlooks' On Tariffs

Benzinga News — Wed, 04 Dec 2024 14:30:24 -0500

The U.S. services sector experienced an unexpected slowdown in its growth momentum last month as respondents expressed caution regarding the economic impact of recent elections and impending tariffs.

The Services Purchasing Managers Index released Wednesday fell to 52.1% in November, down from a two-year peak of 56% in October, missing expectations of a slower deceleration to 55.5%, according to data from the Institute for Supply Management.

"The decrease in the Services PMI in November was driven by decreases in each of the four directly impacting subindexes - Business Activity, New Orders, Employment and Supplier Deliveries," stated Steve Miller, chair of the ISM Services Business Survey Committee.

November ISM Services PMI: Key Highlights

The broader ISM Services PMI index recorded its fifth straight month of expansionary conditions in November, albeit at a slower speed compared to October. The survey results reinforce the view that the services sector "has returned to sustained growth," Miller said.
The subindex for Business Activity eased from 57.2% in October to 53.7% in November.
The subindex for New Orders eased from 57.4% to 53.7%.
The subindex for Prices inched up from to 58.1% to 58.2%.
The subindex for Employment fell from 53% to 51.5%.

"Generally, respondents' comments were neutral to positive, and both positive and negative impacts were attributed to seasonality," Miller said.

"Election ramifications and tariffs were mentioned often, with cautionary outlooks related to the potential impact on respondents' specific industries," he added.

Market Reactions

The U.S. dollar index (DXY) - as tracked by the Invesco DB USD Index Bullish Fund ETF (UUP ) - fell in the aftermath of the ISM report and erased session gains.

Treasury yields also reversed their trend and flattened across the curve, with the 10-year yield returning to 4.23%, down from 4.27% hit earlier in the day.

Stocks maintained modest early morning gains, with the S&P 500 - tracked by the SPDR S&P 500 ETF Trust (SPY ) - up by 0.2%.

Blue chips, as monitored through the SPDR Dow Jones Industrial Average ETF (DIA ), also inched up by 0.2%. The tech-heavy Nasdaq 100, tracked by the Invesco QQQ Trust, Series 1 (QQQ ), rose 0.6%.

Eli Lilly's Zepbound Vs. Novo Nordisk's Wegovy - Which Shows Greater Weight Loss?

Benzinga News — Wed, 04 Dec 2024 14:30:17 -0500

On Wednesday, Eli Lilly And Co (LLY ) revealed topline data from the SURMOUNT-5 phase 3b trial evaluating the efficacy and safety of Zepbound (tirzepatide) compared with Novo Nordisk A/S' (NVO ) Wegovy (semaglutide) in adults with obesity, or overweight with at least one of the following comorbidities: hypertension, dyslipidemia, obstructive sleep apnea or cardiovascular disease, who did not have diabetes.

Zepbound provided a 47% greater relative weight loss compared to Wegovy.

On average, Zepbound led to a superior weight loss of 20.2% compared to 13.7% with Wegovy.

At 72 weeks, Zepbound beat Wegovy on both the primary endpoint and all five key secondary endpoints in this trial of adults living with obesity or overweight with at least one weight-related medical problem and without diabetes.

In addition, in a key secondary endpoint, 31.6% of people taking Zepbound achieved at least 25% body weight loss compared to 16.1% of those taking Wegovy.

The overall safety profile of Zepbound in SURMOUNT-5 was similar to previously reported SURMOUNT trials.

The most commonly reported adverse events in SURMOUNT-5 for Zepbound and Wegovy were gastrointestinal-related and generally mild to moderate in severity.

Lilly will continue to evaluate the SURMOUNT-5 results, which will be published in a peer-reviewed journal and presented at a medical meeting next year.

Last month, Eli Lilly released detailed results from the SUMMIT Phase 3 trial showing tirzepatide reduced the risk of worsening heart failure events in adults with heart failure with preserved ejection fraction (HFpEF) and obesity.

According to research published in JAMA Network Open, the use of anti-obesity medications, including glucagon-like peptide-1 receptor agonists, was associated with lower incidence and recurrence of alcohol use disorder.

A new cohort study highlights a notable trend among participants in weight loss programs: a significant portion of individuals reduced their alcohol consumption after starting anti-obesity medications.

Price Action: LLY stock is up 1.74% at $827.49 at the last check on Wednesday.

Marvell Technology Posts Solid Q3 Beat: Analysts Raise Forecasts, Expect 40%-50% Earnings Growth

Benzinga News — Wed, 04 Dec 2024 14:29:58 -0500

Shares of Marvell Technology Inc (MRVL ) climbed in early trading on Wednesday, after the company reported upbeat earnings for the third quarter.

Bank of America Securities analyst Vivek Arya maintained a Buy rating, while raising the price target from $108 to $125.
Stifel analyst Tore Svanberg reiterated a Buy rating, while raising the price target from $114 to $125.
Goldman Sachs analyst Toshiya Hari reiterated a Buy rating, while raising the price target from $87 to $115.
Oppenheimer analyst Rick Schafer maintained an Outperform rating, while raising the price target from $110 to $125.
KeyBanc Capital Markets analyst John Vinh reaffirmed an Overweight rating, while raising the price target from $95 to $125.
Piper Sandler analyst Harsh Kumar maintained an Overweight rating, while raising the price target from $100 to $120.
Cantor Fitzgerald analyst Quinn Bolton maintained a Buy rating, while raising the price target from $95 to $120.

BofA Securities: Marvell Technology presents "a unique investment in AI electro-optics and custom chips," Arya said. It also has more than 75% data center exposure, and is well positioned to drive 40%-50% annual earnings growth for the next several years.

The company delivered a strong beat and raise quarter, the analyst stated. "We see upside to both MRVL's custom chip ramp and to its operating margin," he wrote.

Stifel: Marvell delivered its quarterly results at the high-end of its guidance, Svanberg said. Data center and AI revenues grew by 25% sequentially "on significant custom silicon ramps, proving out mgt.'s prescient strategic focus years ago," he added.

The company raised its guidance for the January quarter, "on further DC/AI acceleration while non-DC segments continue their cyclical recovery," the analyst wrote. Marvell's ASIC business could generate $8 billion to $10 billion over the next 10 years.

Goldman Sachs: Marvell reported revenues of $1.52 billion, 4% higher than consensus. Hari said. Marvell guided to fourth-quarter revenues to $1.8 billion, representing 26% year-on-year growth at the midpoint and coming in 9% above Street consensus, he added.

The company expects all business segments to grow sequentially, the analyst stated. "Importantly, we expect robust topline growth to translate into strong margin and earnings expansion supported by the operating leverage inherent in Marvell's business model," he further wrote.

Oppenheimer: Marvell reported its third-quarter sales and earnings higher than consensus by 4% and 5%, respectively. "More impressively, F4Q (Jan.) guided 9%/13% ahead of Street led by accelerating custom AI ASIC and networking," Schafer said.

Data center and AI revenues could grow by more than 50% next year, the analyst stated. "In our view, custom ASIC could approach $4B in CY25, roughly 2x investor expectations," he further wrote.

KeyBanc Capital Markets: Marvell reported revenues of $1.52 billion, higher than consensus of $1.46 billion, and earnings of 43 cents per share, topping expectations of 41 cents per share, Vinh said. The company guided to fourth-quarter revenues of $1.8 billion, higher than consensus of $1.65 billion, and earnings of 59 cents per share, higher than consensus of 52 cents, he added.

The upside was driven by "significant volume ramp of AI custom ASICS," with Data Center revenues growing almost 100% year-on-year, the analyst stated. "MRVL reiterated plans to significantly exceed its FY25/FY26 AI rev targets of $1.5B/$2.5B with FY25 exceeded by several hundred millions of dollars," he added.

Piper Sandler: Marvell indicated that data center growth was driven "predominantly by the step up of the custom AI silicon ramp," Kumar said. Further commentary suggested that AI revenues are tracking ahead of the company's original target of $1.5 billion and $2.5 billion for this year and next year, respectively.

"From an end market perspective, data center, carrier, and consumer outperformed expectations, while networking missed expectations and auto/industrial was roughly in-line with the Street," the analyst wrote. He expressed optimism around tailwinds in custom ASICs continuing into next year.

Cantor Fitzgerald: The company expanded its strategic relationship with Amazon.com Inc's AWS business, "through a five year, multi-generational agreement that includes collaboration across multiple AWS products," Bolton said. As part of the agreement, AWS will acquire up to around 4.2 million of Marvell shares with an exercise price of $87.7706 per share, he added.

The company reported strong results and guidance, with the Data Center segment continuing to outperform. "Next year, both custom AI silicon and electro-optics are expected to grow meaningfully, leading to significant upside to our prior estimates," he further wrote.

Price Action: Shares of Marvell had risen by 21.44% to $116.47 at the time of publication on Wednesday.

UnitedHealth Group Issued 2025 Guidance Ahead Of Now Stopped Investor Conference

Benzinga News — Wed, 04 Dec 2024 12:23:59 -0500

On Tuesday, UnitedHealth Group (UNH ) introduced its 2025 outlook ahead of its Investor Conference on Wednesday, which had to be stopped abruptly. The company's insurance division, United Healthcare's CEO Brian Thompson, was fatally shot in a reportedly targeted attack.

The healthcare giant expects 2025 sales of $450 billion-$455 billion, exceeding the consensus of $431.397 billion.

The guidance includes Optum sales of $277 billion-$280 billion and UnitedHealthcare sales of $337 billion-$340 billion.

The company expects net earnings of $28.15 to $28.65 per share and adjusted net earnings of $29.50 to $30.00 per share.

According to October's SEC filing, the company anticipated diluted earnings per share at the upper end of a range of approximately $28.75 for 2025. Adjusted net earnings per share of $30.00 excludes amortization expense of approximately $1.65 per share and the related tax impacts of $0.40 per share.

Cash flows from operations for 2025 are expected to range from $32 billion to $33 billion.

As announced in the third quarter earnings release, UnitedHealth 2024 net earnings are expected to be $15.50 to $15.75 per share and adjusted net earnings $27.50 to $27.75 per share.

For 2025, the company expects a Medical Care Ratio of 86.5% ± 50 bps, with an Operating Cost Ratio of 12.5% ± 50 bps.

The company expects the number of consumers served to be 50.97 million-51.32 million, including 8.4 million-8.45 on Medicare Advantage and 7.675 million-7.775 million on Medicaid.

Last month, the Justice Department sued to block UnitedHealth's $3.3 billion purchase of healthcare services company Amedisys, citing concerns about competition in the home health services market.

UnitedHealth's Optum unit launched a website that aims to highlight the benefits of the combination. The website notes that the home healthcare industry remains highly fragmented despite the growing market.

Price Action: UNH stock is up 2.63% at $621.12 at last check Wednesday.

EVgo And General Motors Hit Major Milestone With 2,000 Fast-Charging Stalls, Powering Up EV Access Nationwide

Benzinga News — Wed, 04 Dec 2024 12:23:51 -0500

EVgo Inc. (EVGO ) and General Motors Company (GM ) celebrated a significant milestone.

The two companies have surpassed 2,000 public fast-charging stalls as part of their ongoing metropolitan charging collaboration. To date, EVgo and General Motors have installed fast charging stations at over 390 locations across 45 metropolitan markets in 32 states, aiming to expand access to public charging in convenient, amenity-rich locations such as grocery stores, retail centers, and city hubs.

The partnership, which serves renters and those unable to charge at home or work, is on track to reach 2,850 DC fast charging stalls nationwide.

This includes 400 public fast chargers at flagship destinations in major cities across states like California, New York, and Texas.

The 2,000th charging stall was part of a newly opened station in Murrieta, CA, featuring five 350kW chargers capable of serving up to 10 vehicles simultaneously. The site, funded by the California Energy Commission's FAST program, offers drivers easy access to nearby retail and dining amenities.

EVgo President Dennis Kish highlighted that the collaboration has expanded charging access in over 30 states, while General Motors' Vice President Wade Sheffer emphasized their shared commitment to enhancing the EV charging experience for drivers across the country.

Price Action: EVGO shares are trading lower by 3.13% to $6.19 at last check Wednesday.

Dollar Tree Boosts Annual Outlook After Q3 Performance, Talks Family Dollar Strategic Review

Benzinga News — Wed, 04 Dec 2024 12:23:45 -0500

On Wednesday, Dollar Tree, Inc. (DLTR ) reported third-quarter adjusted EPS of $1.12, up 15.5% year over year and beating the consensus of $1.07.

The discount variety store chain reported sales of $7.57 billion, up 3.5% year-over-year, beating the consensus of $7.44 billion.

Enterprise same-store net sales increased 1.8%, driven by a 1.6% increase in traffic and a 0.2% increase in average ticket.

Dollar Tree's same-store net sales increased 1.8%, driven by a 1.5% increase in traffic and a 0.3% increase in average ticket. Family Dollar's same-store net sales increased 1.9%, driven by a 1.8% increase in traffic and a flat average ticket.

The company continues reiterating its commitment to completing its formal review of strategic alternatives for the Family Dollar business segment.

As a result of the portfolio optimization review, the company identified approximately 970 underperforming Family Dollar stores, including approximately 600 stores to be closed in the first half of fiscal 2024 and around 370 stores to be closed at the end of each store's current lease term.

As of November 2, the company closed approximately 670 stores and expects to close an additional 25 during the remainder of fiscal 2024.

"Our Dollar Tree and Family Dollar merchandising efforts produced tangible results, and our third quarter sales came in at the high end of our expected range," said Mike Creedon, Interim Chief Executive Officer.

Dollar Tree also announced that Jeff Davis will step down from his role as the Chief Financial Officer. The company has launched an external search.

Guidance: Dollar Tree expects fiscal year 2024 sales of $30.7 billion-$30.9 billion, compared to prior guidance of $30.6 billion-$30.9 billion and the consensus of $30.73 billion.

The company still expects to deliver comparable store net sales growth in the low-single-digits for the enterprise and both the Dollar Tree and Family Dollar segments.

Dollar Tree expects 2024 adjusted EPS of $5.31-$5.51 compared to prior guidance of $5.20-$5.60, versus the consensus of $5.38.

For the fourth quarter of 2024, Dollar Tree forecasts sales of $8.1 billion-$8.3 billion, compared to the consensus of $8.26 billion, based on comparable store net sales growth in the low single digits for the enterprise and both the Dollar Tree and Family Dollar segments.

Adjusted diluted EPS for the fourth quarter is estimated to be $2.10-$2.30 compared to the consensus of $2.22.

Price Action: At last check on Wednesday, DLTR stock was up 4.93% at $76.05 during the premarket session.

Amazon Takes On Nvidia With Cheaper AI Supercomputers, Servers

Benzinga News — Wed, 04 Dec 2024 12:22:26 -0500

On Tuesday, Amazon.com Inc's (AMZN ) cloud unit showcased fresh data center servers embedded with its artificial intelligence (AI) chips at the company's Re:Invent event.

The new servers, dubbed Trn2 UltraServers, will target Nvidia Corp's (NVDA ) flagship server, packed with 72 of its latest Blackwell chips, Reuters reports. Nvidia commands the AI chips market with over 70% market share.

Amazon Web Services disclosed Apple Inc (AAPL ) as a customer for the AI chips during the event.

Amazon is building artificial intelligence supercomputers in collaboration with OpenAI rival Anthropic, which will feature hundreds of thousands of Amazon's latest AI training chip, Trainium 2.

Apple executive Benoit Dupin told Reuters that Apple is already using Trainium2 chips, and AWS chief Matt Garman told Reuters that Trainium3 will debut in 2025.

Gadi Hut, the business development lead for AI chips at AWS, said that AWS can connect more chips than Nvidia and that some AI models can be trained at a 40% lower cost than Nvidia chips.

Amazon also announced expanded collaboration with Marvell Technology, Inc (MRVL ) on AI and data connectivity products, which Bank Of America Securities analyst Justin Post deems mutually beneficial for the companies and will help alleviate some AWS dependence on supply-constrained Nvidia chips. Prior reports indicated Blackwell chips' production challenges at Nvidia impacted AWS' data center plans.

Amazon also announced an expanded partnership with Oracle Database, Orbital Materials, and AWS' overhaul of the cloud contact center solution with new Generative AI solutions.

Price Action: AMZN stock is up 1.9% at $217.60 at last check Wednesday.

Private Employers Add Fewer November Jobs Than Expected: 'Manufacturing Was The Weakest We've Seen Since Spring'

Benzinga News — Wed, 04 Dec 2024 12:22:16 -0500

The pace of monthly employment growth among U.S. private businesses decelerated in November and slightly missed economist expectations.

Private employers added 146,000 new payrolls in November, down from the downwardly revised 184,000 in October and slightly below the expected 150,000, as reported by Automatic Data Processing Inc. (ADP) on Wednesday.

"Strong hiring at large employers led this month's growth, yet industry performance was mixed" according to the November's ADP National Employment Report.

"Manufacturing was the weakest we've seen since spring. Financial services and leisure and hospitality were also soft." Nela Richardson, chief economist at ADP, added.

The ADP National Employment Report sets the stage for the highly anticipated non-farm payrolls data from the Bureau of Labor Statistics on Friday, where economists forecast a significant employment jump from October's 12,000 to 200,000.

ADP Employment Report For November: Key Highlights

In November, goods-producing industries saw an increase of only 6,000 jobs.
Manufacturing lost 26,000 payrolls, while construction added 30,000 jobs.
Service-providing industries experienced a more robust employment growth, adding 140,000 jobs.
Education and health services led with 50,000 new payrolls; trade, transportation, and utilities added 28,000.
Employment in leisure and hospitality grew by 15,000, while information and financial services activities witnessed weak growth, up by 4,000 and 5,000, respectively.
Salary growth for job stayers rose to 4.8% year-over-year, marking the first increase in 25 months. For job changers, pay gains rose to 7.2%

Market Reactions

The U.S. dollar gained ground on Wednesday, with the U.S. dollar index - as tracked by the Invesco DB USD Index Bullish Fund ETF (UUP ) - up 0.3% on the day.

Yields on longer-dated Treasuries surged, with the 10-year yield rising by 5 basis points to 4.27%.

Equity futures were up during the premarket trading in New York. Contracts on the S&P 500 rose 0.3%, while those on the Nasdaq 100 and the Dow Jones were up 0.7% and 0.4%, respectively.

On Tuesday, the SPDR S&P 500 ETF Trust (SPY ) closed at $604.16, setting a record-high closing price.

S&P 500's Record-Breaking Streak In 2024 Could Signal Caution For Investors In 2025, Warn Analysts: 'Stocks Do Not Go Up Forever'

Benzinga News — Wed, 04 Dec 2024 12:21:55 -0500

The stock market's remarkable performance in 2024, with the S&P 500 hitting 54 all-time highs, may not be a positive indicator for the future, according to analysts.

What Happened: The S&P 500's record-breaking run in 2024, fueled by factors such as Fed rate cuts, enthusiasm for artificial intelligence, and Donald Trump's pro-market policies, has been impressive. However, this trend could be a cause for concern, as historically, years with numerous record highs have been followed by poor stock performance, analysts at Ned Davis Research said in a Monday note.

Historical data since 1928 shows that in years when the S&P 500 hit more than 35 record highs, the median gain for the index the following year was a mere 5.8%, falling short of the long-term average of 8%. In years with at least 50 record highs, the median return was -6% the following year.

"The obvious challenge to momentum studies is that stocks do not go up forever," strategists said.

"Perhaps AI will drive another productivity and profit boom that will keep inflation and Fed policy benign. History suggests that is the exception rather than the rule."

There have been exceptions to this trend, such as in 1996 when the S&P 500 returned 20% despite 77 record highs the previous year. However, these gains were largely attributed to the dot-com productivity boom. "The obvious challenge to momentum studies is that stocks do not go up forever," the strategists pointed out.

Other technical indicators also suggest a weaker 2025, with the majority of the stock market's gains being concentrated among a handful of companies.

"Continued narrowing would set the stock market up for a tougher 2025," the strategists warned.

Why It Matters: Despite this warning, some analysts remain optimistic about the stock market's future. Bank of America analysts have predicted a positive outlook for stocks in 2025, with the S&P 500 Index expected to reach 6,666 by the end of 2025, marking a 10% increase from current levels. This forecast is based on confidence in productivity gains, resilient corporate earnings, and strategic sector rotation.

Furthermore, Ark Invest's Cathie Wood has expressed her positive outlook for the stock market under President-elect Donald Trump's administration. She believes that the market is already starting to anticipate a shift, indicating potential future growth.

Despite a few dips, the equity markets have been trading higher than the pre-election levels after President-elect Trump's victory.

The Dow Jones recorded a gain of 7.5% for November. The S&P 500, reflected in the SPDR S&P 500 ETF Trust (SPY ) gained 5.6% last month. The Invesco QQQ Trust, Series 1 (QQQ ), which follows the tech-heavy Nasdaq, has posted returns close to 6%.

Meanwhile, the Dow and S&P 500 recorded their best months of the year in November, according to data from Benzinga Pro.

Foot Locker Cuts Outlook On Soft Consumer Spending In Q3, Stock Tanks

Benzinga News — Wed, 04 Dec 2024 12:21:37 -0500

Foot Locker, Inc (FL ) stock tumbled in the premarket session on Tuesday. The company reported a third-quarter adjusted EPS of $0.33, missing the analyst consensus estimate of $0.41. Quarterly sales of $1.96 billion missed the street view of $2.02 billion.

Total sales decreased 1.4% year over year. Comparable sales grew by 2.4%, led by 2.8% growth in global Foot Locker and Kids Foot Locker comparable sales.

During the quarter, the company opened ten new stores and closed 24. It also remodeled or relocated 20 stores and updated 167 stores to current design standards. Inventory decreased 6.3% year over year.

As of November 2, the company operated 2,450 stores in 26 countries in North America, Europe, Asia, Australia, and New Zealand.

In addition, 214 franchised stores were operating in the Middle East and Asia.

Foot Locker's gross margin increased by 230 basis points. Quarterly adjusted net income was $31 million, compared with $28 million in the prior year.

At quarter-end, the company's cash and cash equivalents totaled $211 million, while total debt was $445 million.

CEO Mary Dillon flagged a softening of consumer spending trends following the peak Back-to-School period in August and a more-than-expected elevated promotional environment, leading to the third-quarter consensus misses.

Despite disappointing trends in early November as consumers held back their spending ahead of the holiday season, the company noted a meaningful and positive acceleration over the key Thanksgiving week, especially in stores.

Outlook: Foot Locker lowered fiscal 2024 adjusted EPS guidance to $1.20-$1.30 (prior $1.50-$1.70) versus the $1.53 consensus.

Foot Locker revised sales growth outlook to 1.5% to 1.0% decline (prior (1%) to +1%) in fiscal 2024 year over year, or $8.032 billion- $8.072 billion (prior $8.072 billion-$8.236 billion) versus the consensus of $8.143 billion.

It lowered the gross margin guidance to 28.7% to 28.8% (prior to 29.5%-29.7%) to reflect promotional pressure.

The company expects fourth-quarter adjusted EPS of $0.70-$0.80 (versus consensus of $0.94), sales change of (3.5)%-(1.5)% or $2.297 billion-$2.344 billion (versus consensus of $2.351 billion) and gross margin of 29.0%- 29.2%.

Foot Locker stock has plunged 22% year-to-date.

Price Action: FL stock is down 17.10% to $20.10 premarket at the last check on Wednesday.

PlayStation Bosses Discuss Future Of AI In Gaming: Why Human Creativity Will Always Be Essential In Game Development

Benzinga News — Wed, 04 Dec 2024 12:20:43 -0500

The co-CEOs of PlayStation, a home video game console by Sony Computer Entertainment, a subsidiary of Sony Group Corp. (SONY ) have shared their perspectives on the evolving role of artificial intelligence in the gaming industry.

What Happened: In an interview with BBC that was published on Tuesday, Hermen Hulst and Hideaki Nishino addressed concerns of developers about AI's potential to automate routine tasks, impacting employment.

Hulst reassured that human developers will continue to play a crucial role. "I suspect there will be a dual demand in gaming: one for AI-driven innovative experiences and another for handcrafted, thoughtful content," he stated, adding that balancing AI and human input is essential.

Since taking the helm in June, Hulst and Nishino have faced hurdles, including the failure of the game Concord and criticism over the PlayStation 5 Pro's pricing.

However, they remain hopeful about the future, citing the success of Astro Bot and exploring new gaming experiences, such as cloud streaming for handheld devices.

Sony also plans to continue expanding PlayStation's game IP into film, following the success of "The Last of Us" and "Uncharted." Hulst mentioned a God of War series in development for Amazon Prime as an example.

Why It Matters: The appointment of Hulst and Nishino as co-CEOs of PlayStation followed the retirement of former PlayStation boss Jim Ryan. Hulst and Nishino report to Hiroki Totoki, who is the chairman of SIE and president, COO, and CFO of Sony Group.

Earlier this month, Sony Group reported a 3% year-on-year increase in consolidated sales for the second quarter of 2024, reaching $19.44 billion, which fell short of the analyst consensus estimate of $19.62 billion.

Price Action: Sony's stock rose by 2.3% on Tuesday, finishing at $20.47. In pre-market trading, it climbed another 2.74% to reach $21.03. Year-to-date, Sony shares have increased by 9.7%, according to Benzinga Pro.

The three most recent analyst ratings for Sony Group Corp were issued by Oppenheimer, and TD Cowen on Nov. 12 and Oct. 11, respectively. These ratings suggest an average price target of $52, indicating a potential upside of 147.27% for the stock based on the analysts' assessments.

Pet Supplies Retailer Chewy's Q3 Performance Builds On Q2 Momentum, Raises Annual Outlook

Benzinga News — Wed, 04 Dec 2024 12:20:11 -0500

On Wednesday, Chewy Inc. (CHWY ) reported a third-quarter adjusted EPS of $0.20, up 33.3% year-over-year, compared to the consensus of $0.08.

The retailer of pet supplies reported sales of $2.88 billion, compared to the consensus of $2.90 billion and the management guidance of $2.84 billion-$2.86 billion.

Autoship customer sales reached $2.30 billion, up 8.7%. Autoship customers are customers in a given fiscal quarter for whom an order has shipped through the Autoship subscription program during the preceding 364-day period.

Net Sales Per Active Customer increased by 4.2% to $567.

"Our third quarter results continued to build on the positive momentum we observed in Q2," said Sumit Singh, Chief Executive Officer of Chewy. "We delivered topline growth exceeding the high-end of our net sales guidance range, a sequential increase in active customers, continued adjusted EBITDA margin expansion, and robust free cash flow generation," Singh added.

Guidance: For fiscal year 2024, the company expects sales of $11.79 billion-$11.81 billion, up around 6% year over year, compared to prior guidance of $11.6 billion-$11.8 billion and the consensus of $11.878 billion.

The company raised its 2024 adjusted EBITDA margin guidance to 4.6% - 4.8% compared to prior guidance of 4.5%-4.7%.

Chewy expects fourth quarter 2024 sales of $3.18 billion-$3.20 billion compared to the consensus of $3.174 billion.

Price Action: CHWY stock is down 9.64% at $30.38 at last check on Wednesday.

China Retaliates Against US Chip Sanctions, Tightens Mineral Exports

Benzinga News — Wed, 04 Dec 2024 12:19:52 -0500

China responded swiftly on Tuesday to new U.S. restrictions on semiconductor technology exports by imposing tighter controls on critical minerals used in chip manufacturing.

The move targets gallium, germanium, and antimony - essential materials for advanced electronics and defense applications, The Wall Street Journal reports.

What Happened: A day after the U.S. blacklisted 140 Chinese entities and restricted exports of memory chips vital to artificial intelligence, Beijing retaliated with export bans and reviews for U.S.-bound shipments of these minerals. The Chinese Ministry of Commerce justified the measures as necessary for national security.

China also cautioned its businesses against purchasing American chips due to reliability and safety concerns.

The restricted minerals are critical to the U.S. economy and defense supply chains, with Beijing accounting for a significant portion of imports between 2019 and 2022. For instance, the U.S. relied on China for 80% of its antimony needs during this period, WSJ reports.

The new U.S. export controls, which took effect Monday, primarily target Chinese firms such as Naura Technology Group, Huawei-linked companies and equipment manufacturers. These measures also extend restrictions to non-U.S. chip suppliers reliant on American technologies, sparking concern among global players like Taiwan Semiconductor Manufacturing Co. (TSM ).

Why It Matters: The clash underscores the fragility of global supply chains and the geopolitical stakes tied to semiconductor dominance. With China tightening its grip on critical materials, the U.S. faces mounting pressure to diversify its supply sources.

Experts warn these developments could reshape the global semiconductor landscape as companies and governments navigate new trade barriers. U.S. firms such as Nvidia Corp. (NVDA ), Lam Research Corp. (LRCX ), and KLA Corp. (KLAC ) may feel the ripple effects alongside international players exempt from these restrictions, including Dutch firm ASML International (ASML ).

ETFs such as the Invesco Semiconductors ETF (PSI ) and the SPDR S&P Semiconductor ETF (XSD ) could also feel the effects of these trade restrictions, given their exposure to impacted companies.

Market Update: Dow Jumps 300 Points, S&P 500, Nasdaq Climb to Record Highs

Rachel Hemple — Wed, 04 Dec 2024 10:44:05 -0500

Stocks rose Wednesday as strong earnings reports pulled the broader market higher. The Dow Jones Industrial Average climbed over 300 points -- closing above 45,000 for the first time -- while the S&P 500 Index and Nasdaq Composite added about 0.6% and 1.3%, respectively, both posting fresh record highs.

Here's how the market settled on Wednesday:

S&P 500 Index (SPY ): +0.61% or +36.61 points to 6,086.49

Dow Jones Industrial Average (DIA ): +0.69% or +308.51 points to 45,014.04

Nasdaq Composite Index (QQQ ): +1.30% or +254.21 points to 19,735.12

In the News:

UnitedHealth Group (UNH ) Healthcare CEO Brian Thompson was fatally shot outside the Hilton hotel in midtown Manhattan Wednesday morning, the New York Police Department said. In a statement Wednesday, UnitedHealth group said it was "deeply saddened and shocked at the passing" of Thompson, who led the company's largest private health insurer in the United States, adding that he was a "highly respected colleague and friend to all who worked with him."

The company's investor day was canceled after the fatal shooting.

Eli Lilly's (LLY ) Zepbound led to more weight loss than Novo Nordisk's (VO ) Wegovy in a head-to-head clinical trial of the popular obesity drugs, based on results released Wednesday. Zepbound helped obese or overweight patients lose more than 20% of their body weight on average after 72 weeks of treatment, compared to Wegovy's roughly 14% weight loss for the same period.

Moving Markets:

Private Payrolls grew at a less-than-expected rate in November, according to date from payroll firm ADP released Wednesday, signaling labor market weakness heading into the end of the year. U.S. companies added 146,000 jobs this month, down from October's downwardly revised print of 184,000 and less that the 163,000 expected by Dow Jones consensus.

Beneath the headline, education and health services led job creation, contributing 50,000 positions, while construction added 30,000 new jobs, trade, transportation and utilities grew by 28,000, and other services contributed 20,000 positions. Meanwhile, manufacturing was down 26,000 jobs in November, and businesses with fewer than 50 employees also declined by 17,000.

"While overall growth for the month was healthy, industry performance was mixed," said Nela Richardson, chief economist at ADP, in a statement. "Manufacturing was the weakest we've seen since spring. Financial services and leisure and hospitality were also soft."

Bank of America believes the Federal Reserve is unlikely to hold interest rates steady in December, even if November's upcoming "official" jobs report shows stronger-than-expected private payrolls growth on Friday.

"Fed Governor Waller expressed a very similar view on Monday. Waller argued, as many other Fed speakers have done of late, that policy is still restrictive. We think this means that the risks around Friday's Nov jobs report are asymmetric: soft data would strengthen the case for a cut, but a robust report would not prevent a cut," the bank wrote in a Wednesday note.

On the Earnings Front:

Salesforce (CRM ) shares were higher after the software company's fiscal third-quarter earnings topped analyst expectations and it issued positive fourth-quarter outlook. The company is expecting current-quarter sales between $9.90 billion and $10.10 billion with earnings per share in range of $2.57 and $2.62. Salesforce also raised its low-end fiscal 2025 revenue guidance to a new range of $37.8 billion to $38 billion -- bringing its midpoint to $37.9 billion, coming in ahead of estimates.

"We delivered another quarter of exceptional financial performance across revenu, margin, cash flow, and cRPO," CEO Marc Benioff said in a statement. "Agentforce, our complete AI system for enterprises built into the Salesforce Platform, is at the heart of a groundbreaking transformation."

Marvell Technology (MRVL ) shares rose higher on Wednesday after the chipmaker reported strong third-quarter earnings and issued better-than-expected forward guidance, driven by increased demand for its custom AI chips. The company expects current-quarter revenue of $1.80 billion, plus or minus 5%, well above analyst estimates of $1.65 billion.

Chewy (CHWY ) reported in-line third-quarter results late Tuesday, with its sales notably rising 4.8% annually. "Our third quarter results continued to build on the positive momentum we observed in Q2," CEO Sumit Singh said in a statement. "We delivered topline growth exceeding the high-end of our net sales guidance range, a sequential increase in active customers, continued adjusted EBITDA margin expansion, and robust free cash flow generation."

Foot Locker (FL ) delivered disappointing third-quarter earnings on Wednesday and cut its full-year guidance, warning of softening demand, especially for its largest brand partner Nike (NKE ). For its holiday quarter, Foot Locker expects sales to decrease between 1.5% and 3.5%. For the full year, the retailer now expects sales to fall between 1% and 1.5%, from is prior guidance of a decrease of 1% to an increase of 1%.

The company also lowered its full year comparable sales outlook to now grow between 1% and 1.5%, from its previous guidance of 1% to 3%. Foot Locker further lowered its full-year earnings outlook, now calling for adjusted earnings per share to be between $1.20 and $1.30.

"There are definitely some brands that we're seeing comp gain and then, you know, we're also contending with some more recent softness out of Nike," CEO Mary Dillon told CNBC in an interview Wednesday. "Given their size and scale, it's kind of makes sense that it would have an impact."

Dollar Tree (DLTR ) shares rose higher Wednesday after the discount retailer reported better-than-expected third-quarter results and narrowed its full-year revenue outlook, lifting its low end to a new range of $30.7 billion to $30.9 billion. The company also raised its full-year adjusted earnings per share to a new range of $5.31 and $5.51.

Separately, Dollar Tree announced Wednesday that CFO Jeff Davis will step down.

For Thursday:

Market participants will turn their attention to earnings reports from companies including Kroger (KR ), Dollar General (DG ) and Five Below (FIVE ) on Thursday as they look ahead towards Friday's key jobs report.

Dollar General, Dollar Tree, Five Below Q3 Earnings Preview: Can Discount Retailers Rebound Ahead Of Holidays?

Benzinga News — Tue, 03 Dec 2024 17:20:35 -0500

Discount retailers Dollar General (DG ), Dollar Tree Inc (DLTR ) and Five Below Inc (FIVE ) will look to win over investors when each company reports third-quarter financial results this week.

Here's a look at their earnings estimates and what analysts are saying.

Dollar General

The Goodlettsville, Tennessee-based company is set to report third-quarter financial results before the market opens Thursday, Dec. 5.

According to data from Benzinga Pro, analysts expect:

Third-quarter revenue of $10.15 billion, up from $9.69 billion in last year's third quarter,
Earnings per share of 94 cents, down from $1.26 in last year's third quarter.

The company has beaten analyst estimates for revenue in six of the last 10 quarters, as well as estimates for earnings per share in five of the last 10 quarters.

Data from Placer.ai shows third quarter visits to Dollar General were up 4.8% year-over-year - positive in all the months tracked for the quarter. The report said discount and dollar store leaders like Dollar General are showing consistent strength in the retail space.

Oppenheimer analyst Rupesh Parikh currently has a Perform rating and no price target.

There are low expectations for Dollar General and a risk of lower guidance from the company, he said. It could also see pressure from the impact of several hurricanes in the south and the continued macroeconomic backdrop.

"On the top line, we expect another soft quarter driven by ongoing discretionary category headwinds and expectations for continued pressures on the company's low-end consumer," Parikh said.

Dollar General stock typically struggles after the company reports quarterly results. Shares fell each of the past eight report days, Parikh said, adding, "We remain sidelined with our entire dollar store coverage."

Dollar Tree

The Chesapeake, Virginia-based company reports third-quarter financial results before the market opens on Wednesday, Dec. 4.

Analysts expect:

Third-quarter revenue of $7.44 billion, up from $7.32 billion in last year's third quarter.
And third-quarter earnings per share of $1.07, up from last year's 97 cents per share in the third quarter.

The company has beaten analyst estimates for revenue in six of the last 10 quarters, plus estimates for earnings per share in six of the last 10 quarters.

Data from Placer.ai shows third quarter visits to Dollar Tree up 5.3% year-over-year, with each month in the quarter up year-over-year.

In the second quarter, Dollar Tree initiated a formal review of strategic alternatives for its Family Dollar business, which include a sale or spin-off. Investors will be looking for an update on how the review is going.

Five Below

The Philadelphia-based company reports third-quarter financial results after the market closes on Wednesday, Dec. 4.

Analysts expect:

Third-quarter revenue of $795.4 million, up from $736.4 million in last year's third quarter.
Third-quarter earnings per share of 17 cents, down from 26 cents per share in last year's third quarter.

The company has beaten analyst revenue estimates in five of the last 10 quarters and estimates for earnings per share in five of the last 10 quarters.

Data from Placer.ai shows third quarter visits for Five Below up 13.8% year-over-year, suggesting a potentially strong quarter for the company. The report highlights Five Below opening a record 205 new stores last year, which will add to its potential growth for the 2024 holiday shopping season.

Telsey analyst Joseph Feldman recently downgraded Five Below stock from Outperform to Sector Perform and lowered the price target from $102 to $95.

The analyst cautioned on the stock with a transition for its business model and leadership changes taking time.

"The company dealt with the last round of tariffs by breaking the $5 price point and gradually increasing prices since then, while quality did not always keep pace, thereby eroding value," Feldman said.

What's Next: Placer.ai said weekly visits to both Dollar Tree and Dollar General locations tend to increase after Black Friday and peak around the last full week before Christmas.

This could make early commentary on the current fourth quarter and guidance important when the companies report.

Similarly, Five Below sees its traffic increase leading up to the Christmas holiday with its busiest day often Super Saturday, or the Saturday before Christmas. Last year, Five Below saw traffic up 337.3% on Super Saturday compared to its daily average.

Price Action:

Dollar General stock is up 1.62% Tuesday to $79.04 versus a 52-week trading range of $72.12 to $168.07. Shares are down 43% year-to-date in 2024.
Dollar Tree stock is down 0.45% to $72.48 on Tuesday versus a 52-week trading range of $60.49 to $151.22. Shares are down 49% year-to-date.
Five Below stock is up 4% to $103.20 at last check Tuesday versus a 52-week trading range of $64.87 to $216.18. Shares are down 52% year-to-date.

Meta Platforms Talks Political Misinformation, Content Moderation In Latest Blog

Benzinga News — Tue, 03 Dec 2024 17:20:29 -0500

Meta Platforms Inc (META ) Global Affairs President Nick Clegg flagged the company's evolving role in content moderation amid global elections, the latest of which was the U.S. presidential election.

Clegg acknowledged the company's responsibility as an operator of platforms where public exchange of views occurs amid elections in the world's biggest democracies, including India, Indonesia, Mexico, and the European Union.

Previously, social media companies drew flak globally for spreading misinformation and content that perpetrated violence during elections.

Facebook had suspended Donald Trump's (then U.S. President) account from January 6, 2021, to January 7, 2023, following the Capitol Hill riot in January 2021. X, formerly known as Twitter, also banned Trump's account after Facebook.

Therefore, Clegg acknowledged that the company had evolved its approach to elections since 2016 via trial and error, including forming a team of experts from its intelligence, data science, content and public policy, and legal teams.

In 2024, Meta ran multiple election operations centers globally amid primary elections, including the U.S., Bangladesh, Indonesia, India, Pakistan, and the EU Parliament.

Meta updated and applied its content policies throughout the year to help users freely communicate and exchange views.

Meta introduced political content controls on Facebook, Instagram, and Threads in the U.S. to recommend political content based on users' choices, the blog read. It is amid efforts to roll out the feature globally.

Meta permitted social media users to question or flag doubts about election processes, avoiding election-related speculation or bias that could promote violence.

For paid content, Meta barred ads that questioned the legitimacy of an election, something the company had done since 2020.

Meta revised its penalties system in 2023 to enable an effective exchange of views while punishing the policy violators. The company conducted annual audits of words it considered slurs under its Hate Speech policy.

Meta also revised its penalty protocol for public figures suspended for violations.

Clegg also acknowledged monitoring deepfakes and AI-enabled disinformation campaigns during the elections that helped combat potential threats from the misuse of generative AI.

Meanwhile, Tesla Inc (TSLA ) chief and owner of X, Elon Musk, has actively promoted free speech and Trump during his 2024 presidential campaigns.

Meanwhile, Trump now expresses his views on Trump Media & Technology Group Corp (DJT ) Truth Social, where he has a majority stake.

Price Action: META stock closed higher by 3.61% at $613.65 on Tuesday.

Market Update: S&P 500 Rises to Another Record Close

Rachel Hemple — Tue, 03 Dec 2024 17:20:23 -0500

The S&P 500 Index ticked higher to a record close on Tuesday as market participants looked ahead towards more key economic reports later in the week. The broader market index rose 0.05% to close at 6,049.98 for the first time, while the Dow Jones Industrial Average slipped over 75 points lower and the Nasdaq Composite added 0.4%.

Here's how the market settled on Tuesday:

S&P 500 Index (SPY ): +0.05% or +2.73 points to 6,049.98

Dow Jones Industrial Average (DIA ): -0.17% or -76.47 points to 44,705.53

Nasdaq Composite Index (QQQ ): +0.40% or +76.96 points to 19,480.91

Moving Markets:

Job Openings rose in October as payrolls growth slipped to its lowest level in nearly four years, the Bureau of Labor Statistics reported Tuesday.

Available jobs totaled 7.74 million last month, increasing by 372,000 from September's total and coming in above analyst estimates, the Job Openings and Labor Turnover Survey (JOLTS) showed. The rate of openings as a share of the labor force also rose to 4.6% from 4.4% in September.

Meanwhile, hiring totaled 5.31 million in October, falling by 269,000 month-over-month, to bring the hiring rate down 0.2 percentage point to 3.3%.

On the Earnings Front:

Zscaler (ZS ) reported better-than-expected fiscal first-quarter earnings late Monday. However, the IT software provider issued disappointing fiscal second-quarter guidance, expecting earnings per share between $0.68 and $0.69 on revenue in a range of $633 million to $635 million -- both coming roughly in-line with analyst estimates.

For its full year, Zscaler expects earnings per share between $2.94 to $2.99 on revenue in a range of $2.62 billion to $2.64 billion.

"Growing customer engagements and strong sales execution drove a solid Q1 with all metrics exceeding our guidance. The combination of Zero Trust and AI is creating exciting new opportunities, which we are well positioned to capture with our large and expanding platform," said CEO Jay Chaudhry in a release. "With our customer obsession, the world's largest cybersecurity cloud, and an upleveled go-to-market machine, we are driving strong growth."

In the News:

AT&T (T ) announced its three-year vision for its business as it expands its 5G and fiber services across the United States on Tuesday. The company expects its free cash flow to raise above $18 billion in 2027, as it works to double its fiber internet availability to reach more than 50 million locations by 2029.

Bernstein analyst David Vernon downgraded FedEx (FDX ) shares to Market Perform from Outperform on Tuesday and lowered the firm's price target to $316 per share from its previous $337, implying about 7% upside from Monday's close.

"Longer-term we still see value in the stock, but adding at these levels ahead of increasing execution, event, and policy risk seems difficult to defend," Vernon wrote in a Tuesday note to clients. "We're taking a tactical pause and lowering our rating ahead of a widely expected reset in the near-term guidance framework / uncertainty around meeting high LTL freight spinoff expectations."

For Wednesday:

Wall Street will focus on ADP's employment report for November on Wednesday for more insight on the health of the U.S. economy, alongside afternoon remarks from Federal Reserve Chair Jerome Powell. Earnings reports from companies including Salesforce (CRM ), Marvell Technology (MRVL ), Dollar Tree (DLTR ) and Chewy (CHEY ) are also due.

Amazon Stock Moves Higher As AWS Unveils New AI Advancements: What You Need To Know

Benzinga News — Tue, 03 Dec 2024 16:58:27 -0500

Amazon.com Inc (AMZN ) shares are trading higher Tuesday. Amazon Web Services made a slew of announcements at its re:Invent 2024 conference, including the general availability of Trainium2, new database capabilities, Bedrock updates and new foundation models. Here's what you need to know.

What To Know: Amazon's biggest conference of the year, AWS re:Invent 2024, kicked off this week with sessions set to run through Friday.

Amazon Web Services CEO Matt Garman on Tuesday gave his first keynote since taking the helm of AWS in June. The company announced the general availability of its Trainium2 chip and brought Benoit Dupin, senior director of machine learning and AI at Apple Inc , on stage.

Amazon and Apple have been working together for years. Dupin highlighted some of the success the companies have shared and suggested on stage that Apple will use Amazon's Trainium2 chip to pre-train its models, per CNBC.

Amazon said its Trainium2 chip offers 30% to 40% better price performance than the current generation and is purpose-built to support the largest generative AI workloads for both training and inference.

Amazon also announced new features that make Amazon S3 Tables the first cloud object store with fully managed support for Apache Iceberg for faster analytics. The new features also include the ability to automatically generate queryable metadata, helping to simplify data discovery.

Amazon further introduced new capabilities for Amazon Aurora and Amazon DynamoDB to support customers' demanding workloads. Amazon Aurora is a cloud-native relational database that delivers the performance and capability of a high-end commercial database, with the flexibility and cost-effectiveness of an open-source database.

Amazon also announced new capabilities for its AI building and scaling service Amazon Bedrock that helps customers prevent factual errors, direct multiple AI-powered agents and create smaller, task-specific models.

Amazon and GitLab Inc GTLB announced an integrated offering that brings together GitLab Duo with Amazon Q to provide a seamless AI-powered developer experience that combines DevSecOps workflows with Amazon Q autonomous agents to help companies deliver secure software more quickly.

One of the latest announcements from the re:Invent conference is Amazon's new generation of foundation models called Amazon Nova. The following models will be available in Amazon Bedrock:

Amazon Nova Micro, Lite & Pro: very fast, text-to-text model
Amazon Nova Premier: multi-modal models that can process text, images and videos to generate text
Amazon Nova Canvas: additional model that generates studio-quality images
Amazon Nova Reel: additional model that generates studio-quality videos

"Inside Amazon, we have about 1,000 generative AI applications in motion, and we've had a bird's-eye view of what application builders are still grappling with," said Rohit Prasad, SVP of Amazon Artificial General Intelligence.

"Our new Amazon Nova models are intended to help with these challenges for internal and external builders, and provide compelling intelligence and content generation while also delivering meaningful progress on latency, cost-effectiveness, customization, Retrieval Augmented Generation (RAG), and agentic capabilities."

Amazon's AWS re:Invent 2024 event is ongoing and further updates will likely be announced throughout the week.

AMZN Price Action: Amazon shares were up 0.89% at $212.58 at the time of publication, according to Benzinga Pro.

Salesforce Q3 Earnings Preview: Analyst Says 'Transitional Year' Coming, Recommends To Add Shares On Pullbacks

Benzinga News — Tue, 03 Dec 2024 16:58:12 -0500

Analysts expect Salesforce Inc (CRM ) to post revenue of $9.35 billion for the third quarter after market close Tuesday.

That's up from $8.72 billion in last year's third quarter, according to data from Benzinga Pro.

The cloud-based software company beat revenue estimates in the second quarter. It has beaten analyst estimates in nine of the past 10 quarters overall.

Analysts anticipate Salesforce's third-quarter earnings per share to be $2.44, up from $2.11 in last year's third quarter. The company has beaten analyst estimates for earnings per share in more than 10 straight quarters.

Guidance from the company calls for third-quarter revenue to be in a range of $9.31 billion to $9.36 billion. Earnings per share should fall between $2.42 to $2.44.

What Analysts Are Saying: Salesforce has two more quarterly results to report for fiscal 2025.

"F2026 is shaping up to be an important transitional year for CRM as it executes on laying the groundwork to bring AI agents to the enterprise masses with new pricing and packaging offers that could better position the company for a F2027 rebound," Piper Sandler analyst Brent Bracelin said.

Bracelin maintained an Overweight rating and raised the price target from $325 to $395 in a new investor note.

There could be some downside risk to fiscal 2026 revenue estimates, he added. But free cash flow growth could be a key moving forward. Pressure includes macroeconomic concerns, budget battles for customers, AI experimentation and longer sales cycles.

"Investor sentiment has clearly improved with CRM shares +30% in the last three-months. We would look to opportunistically add to positions on potential pullbacks."

Needham analyst Scott Berg maintained a Buy rating and $345 price target on Salesforce ahead of the third-quarter financial results.

"We expect CRM to report modest upside during third quarter as we believe the overall demand environment showed signs of subtle improvement versus last quarter," Berg said.

The analyst expects a "marginal upside" in the third quarter after a second-quarter report mostly in line. Positive pipeline trends have been driven by Agentforce, which will be a main topic of discussion from the company, Berg added.

"We expect strength in the quarter to be driven by the continued ramp of Data Cloud, which could gain a tailwind from the recently released Agentforce solution."

Berg said Agentforce could drive incremental sales to sales and services and the demand for the product could help re-accelerate subscription revenue growth.

Price Action: Salesforce stock was down 0.11% from $331.01 in pre-market trading Tuesday versus a 52-week trading range of $212 to $348.86. Salesforce stock is up 29% year-to-date in 2024.

Trump's Tariff Plan Risks Economic Pain For North America, Goldman Sachs Warns

Benzinga News — Tue, 03 Dec 2024 16:58:05 -0500

President-elect Donald Trump's aggressive tariff proposal-25% on imports from Canada and Mexico-could wreak havoc on North America's economies. Goldman Sachs predicts losses for Canada and Mexico, surging consumer prices, and a slowdown in U.S. growth.

In a note shared on Monday, Goldman Sachs economists, including Joseph Briggs, estimate that Canada and Mexico could see their gross domestic product shrink by as much as 4% under Trump's full 25% tariff proposal, while U.S. GDP could contract by 0.4%

"A large increase in tariffs on North American imports would entail significant economic costs, particularly for Canada and Mexico," the economists said.

Canada And Mexico Face The Hardest Hit

The economic fallout of Trump's proposal could be catastrophic for America's closest trading partners.

Goldman Sachs estimates that every 10-percentage-point increase in tariffs between the U.S. and its North American neighbors would cut GDP by roughly 1.5% in Canada and 2% in Mexico. Under the full 25% tariff scenario, the damage would grow to over 2.5% for Canada and 3.5% for Mexico.

The economists also warned of inflationary risks: A 25% tariff hike could raise consumer prices in Canada and Mexico by more than 2%.

This comes as both nations are already grappling with high inflation, leaving central banks with fewer tools to soften the blow.

Ripple Effects On The US Economy

The tariffs aren't painless for the U.S. either. Goldman's "tariff rules of thumb" suggest that every 1 percentage point increase in the effective U.S. tariff rate raises core personal consumption expenditures prices-the Fed's favorite inflation gauge-by 0.1% and shaves 0.05% off GDP.

Trump's North American tariff plan would increase the U.S. tariff rate by 7.3 percentage points, translating to a 0.7% bump in core PCE prices and a 0.4% GDP decline.

Trade policy uncertainty is already weighing on U.S. businesses.

"Anecdotal reports suggest that the threat of U.S. tariffs is already leading companies to reevaluate expansion plans in Mexico and Canada," said the economists. Delayed investment and supply chain disruptions could exacerbate the economic drag.

The U.S. auto industry is particularly exposed to the risk of higher tariffs on Mexico and Canada. Shares of General Motors Company (GM ) have fallen by 9% since Trump's announcement to raise tariffs on both countries.

From Trade Boost to Trade Bust?

Free trade agreements like NAFTA and the USMCA have historically boosted North American economies. Goldman estimates these agreements raised GDP by 1.5% in Canada, 2.6% in Mexico, and 0.5% in the U.S. Reversing those gains with aggressive tariffs would erase decades of progress and impose lasting damage.

"These estimates serve as a reminder of the sizable economic and market risks associated with Trump's trade proposals," the investment bank wrote.

Currency markets are already bracing for turbulence. Goldman's FX team believes the tariff threats will force markets to "embed a more lasting, and broader, tariff premium," potentially weakening the Canadian dollar and Mexican peso against the U.S. dollar.

Apple Might Have To Commit $1 Billion To Indonesia To Reverse iPhone 16 Ban

Benzinga News — Tue, 03 Dec 2024 16:57:57 -0500

Apple Inc (AAPL ) could commit to a $1 billion investment in Indonesia in a week, Reuters cites the country's investment minister Rosan Roeslani on Tuesday.

Indonesia had banned the sale of iPhone 16 due to a violation of the country's content rules that mandated a minimum of 40% locally sourced components for companies aiming to sell smartphones in the country.

Indonesia plans to raise the investment criteria, Reuters cites a deputy minister.

In November, Indonesia rejected Apple's $100 million investment offer to build an accessory and component plant, deeming it insufficient to lift the ban.

Apple has no manufacturing facilities in Indonesia. Indonesia expects more investment from Apple in return for its inclusion in the company's supply chain, Reuters cites Roeslani in a hearing.

Previously, Indonesia barred Alphabet Inc (GOOG ) (GOOGL ) from selling its Google Pixel phones in the country for similar non-compliance.

Apple's geographical diversification of its supply chain marks its attempts to reduce dependence on China due to the disruption following China's pandemic in 2020 and intensifying geopolitical tensions with the U.S.

On Monday, the Biden administration launched its third semiconductor embargo on China, restricting Chinese chip equipment manufacturers from advanced memory chips and chipmaking tools, citing national security threats.

The iPhone company reported fiscal fourth-quarter revenue of $94.9 billion, topping analyst estimates of $94.56 billion. Adjusted EPS of $1.64 surpassed forecasts of $1.60.

Bank of America flagged potential in Apple Intelligence, boosting iPhone cycles and product demand. Goldman Sachs also projected growth with iPhone 16 and Apple Intelligence.

Is Apple A Good Stock To Buy?

An investor can make a few decisions when deciding whether a stock is a good buy. In addition to valuation metrics and price action which you can find on Benzinga's quote pages - like Apple's page for example - there are factors like whether or not a company pays a dividend or buys a large portion of its stock each quarter.

These are known as capital allocation programs. Apple does pay a dividend, which yields 0.5% per year as of the closing price on Dec. 3, 2024. Feel free to search Benzinga's dividend calendar for the next company that is due to pay a dividend and determine what kind of yield you can earn for holding a share of the company.

For example, if you're looking to earn an annualized return of 13.81%, you'll need to buy a share of PIMCO Dynamic Income by the Dec. 12, 2024. Once done, you can expect to receive a nominal payout of $0.22 on Jan. 2, 2025.

Buyback programs are obviously different and highly variable. A company can approve a buyback program and purchase shares as it sees fit over the course of time in which the buyback was authorized. Looking through the latest news on Apple will often yield whether or not the company has approved a buyback program recently. Buyback programs usually serve as a support for share prices, serving as a backstop for demand.

Price Action: AAPL stock is up 0.56% at $240.94 at the last check on Tuesday.

Chewy Q3 Earnings Preview: Analyst Says Company 'Well Positioned As The Leader' In Online Pet Supplies

Benzinga News — Tue, 03 Dec 2024 16:57:51 -0500

Chewy Inc (CHWY ) could show continued strength and subscription revenue when reporting third-quarter financials before the market opens Wednesday.

Earnings Estimates: Analysts expect the online retailer to report third-quarter revenue of $2.89 billion. That's up from $2.74 billion reported in last year's third quarter, according to data from Benzinga Pro.

Chewy missed analyst estimates for revenue in the last quarter while beating estimates in seven of the last 10 quarters.

Analysts expect third-quarter earnings per share of 8 cents, down from 15 cents per share in last year's third quarter. The company has beaten analyst estimates for earnings per share in 10 straight quarters.

If the company reports earnings of eight cents per share it would be the lowest quarterly total in seven quarters.

Guidance from the company calls for third-quarter revenue to be in range of $2.84 billion to $2.86 billion.

What Analysts Are Saying:

Bank of America analyst Curtis Nagle upgraded Chewy from Underperform to Buy. He raised the price target from $24 to $40.

The analyst said investors underestimate Chewy's expense discipline, which could lead to earnings growth.

"Stabilizing industry trends lay path to pawsitive growth," Nagle said.

Nagle said animal shelters are taking in a large number of pets, but adoption trends have improved since the start of 2024.

Pet spending also appears to have bottomed since being negative year-over-year earlier this year, the analyst added.

Chewy's website traffic jumped 6% year over year in the third quarter compared to down 11% year over year in the first quarter. That could support market share gains and a higher customer count, Nagle added.

The improving industry data could lead to stronger earnings leverage for Chewy, something Nagle said is being underestimated regarding the stock.

The analyst said Chewy's subscription-like model should command a premium and the company's low exposure to discretionary categories minimizes the impact for increased Chinese tariffs.

Nagle predicts that Chewy can beat the third-quarter Street estimate of 50,000 net adds for active customers, given the pet industry trends and website traffic. The analyst notes that over the last 10 quarters, the active customer count has been a leading indicator of which way the stock will move.

JPMorgan analyst Doug Anmuth expects Chewy to continue to execute with stable industry trends ahead for the company. He reiterated an Overweight rating and raised the price target from $33 to $37 recently.

Product improvements, better execution and stabilizing trends lead to the price target increase, Anmuth said.

"We believe pet is a growing and highly attractive category that is early in the shift online, and, in our view, Chewy is well positioned as the leader in online pet with a ~33% market share," Anmuth said.

Anmuth said the shift to online sales for the pet care sector, growth of pet health for Chewy and international expansion can help the company.

"We remain bullish on CHWY's category positioning, improving profitability, and efforts to diversify revenue into healthcare."

Chewy's Autoship subscription program is called a "key competitive advantage" by the analyst.

Here are other analyst ratings for Chewy and their price targets:

Piper Sandler: Maintained an Overweight rating, raised price target from $35 to $40
Morgan Stanley: Maintained an Overweight rating, raised price target from $33 to $36
Baird: Maintained an Outperform rating, raised price target from $35 to $40
Deutsche Bank: Maintained a Hold rating, raised price target from $24 to $28
Barclays: Maintained an Overweight rating, raised price target from $34 to $40

Price Action: Chewy stock is down 1% to $33.36 on Tuesday versus a 52-week trading range of $14.68 to $39.10. Chewy stock is up 49% year-to-date in 2024.