Wednesday, December 11, 2024

Markets posted mixed results this Hump Day, with the blue-chip Dow unable to hold onto its gains at the open. It was the only index in the top 4 to spend any time in the red today. The Nasdaq performed great: +347 points, +1.77%, while the S&P 500 and small-cap Russell 2000 split the difference, +0.82% and +0.84% for the session, respectively.

The big news of the morning came in the form of the Consumer Price Index (CPI) for last month, which displayed a +2.7% Inflation Rate (headline CPI year over year) and +3.3% on year-over-year core. Both these figures were in-line with expectations.

It’s now in the Fed’s hands what they want to do about interest rates at their two-day meeting starting next Tuesday. By a week from now, we are very likely to see another 25 basis-point (bps) cut to a 4.25-4.50% Fed funds rate. More importantly, we will hear from Fed Chair Powell about what the Fed will be thinking going forward in terms of further interest rate reductions.

Deep Cut to U.S. Budget: -$366.8B

The monthly U.S. Federal Budget came out this afternoon, resulting in a notably deeper cut than anticipated: -$366.8 billion, versus -$350 billion expected. The previous month was revised to a lighter -$257 billion (from -$314 billion initially reported). Much of the added deficit came from -$80 billion worth of calendar outlays and adjustments.

This is far from the worst we’ve seen, budget-wise. Back in June 2020, only months into the Covid pandemic, the U.S. hit a record-low -$864 billion. So, while today’s news is not good, we’ve come back quite a bit from these utterly sunken levels.

Adobe Beats in Q4, Shares Down -6%

After today’s close, web design software giant Adobe ADBE reported fiscal Q4 results that surpassed expectations on both top and bottom lines. Earnings of $4.81 per share easily outpaced the Zacks consensus of $4.66, while quarterly sales grew to $5.61 billion from $5.54 billion expected. Digital Media climbed +12% year over year in the quarter.

Next quarter guidance on earnings are mildly ahead of previous expectations, to $4.95-5.00 per share, but apparently this wasn’t enough to keep late traders from selling the news. Shares are down -6% in the after-market, digging the -5% hole year to date even deeper. Adobe had carried a Zacks Rank #4 (Sell) into today’s earnings report.

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