NEW YORK, NEW YORK - JANUARY 22: Traders work on the floor of the New York Stock Exchange during afternoon trading on January 22, 2024 in New York City. The Dow Jones and S&P both hit all time highs with the Dow Jones closing over 38,000 points for the first time ever as stocks continue to rise. (Photo by Michael M. Santiago/Getty Images)
Michael M. Santiago | Getty Images News | Getty Images
Nasdaq 100 futures slid on Thursday evening after Intel issued an outlook that fell short of Wall Street's expectations.
Futures linked to the tech-heavy index shed 0.5%. dropped 0.2%, while Dow Jones Industrial Average futures slipped 81 points, or 0.2%.
In after-hours trading, Intel's stock price sunk 10% after the chip manufacturer posteddisappointing fiscal first-quarter guidance for the top and bottom lines. Semiconductor stock KLA Corp slid more than 5% after the company posted light revenue and earning per share guidance for its fiscal third quarter.
During the regular session, the leapt to a fresh all-time high. The broad market index and the Nasdaq Composite posted gains for the sixth straight day and overcame significant drag from Tesla shares, which slumped more than 12%. The S&P 500 advanced 0.5%, and the Nasdaq ticked up by 0.2%, while the Dow added 0.6%.
The major averages are also tracking for a winning week. The S&P 500 is up 1.1%, while the Dow has added 0.5%. The Nasdaq is the outperformer of the three, pacing for a 1.3% jump.
Stocks' steady gains were buoyed by encouraging economic data released on Thursday. Gross domestic product data revealed higher-than-expected economic growth in the fourth quarter, piling onto investors' hopes that the economy has avoided a deep recession.
Additional inflation data is on deck, with December's personal consumption expenditures price index due Friday morning. The PCE is a preferred inflation gauge for the Federal Reserve, and the outcome could inform the central bank's upcoming policy decision. Economists polled by Dow Jones expect that core PCE prices gained 3% in December on a year-over-year basis.
Companies reporting earnings on Friday include Norfolk Southern, Colgate-Palmolive and American Express.
Want to buffer your portfolio from a downturn? Step away from cash and into bonds, UBS says
Proactive investors will want to switch out of their cash-heavy positions now and get into bonds before the Federal Reserve begins cutting rates, said UBS's Mark Haefele.
The 100 largest money market funds are still yielding well over 5%, but those rates will come down as the Fed trims rates. Haefele, global chief investment officer for wealth management, said that in its base case UBS expects 8.5% returns for high-quality medium duration bonds, compared to 4.3% for cash.
Another reason to go for longer-term fixed income: In a hard landing situation, portfolio losses would be cushioned by those bonds. In a recession scenario, UBS anticipates equity markets could tumble more than 15% on a total return basis, but those losses would be curbed by a 16% rally in bonds.
A portfolio that is allocated 60% toward stocks and 40% in bonds would see just a 3% decline in this circ*mstance, Haefele said.
"Investors holding excessive cash would not be as well insulated in this scenario – cash does not 'rally, and the returns on rates would likely fall in this scenario,'" he wrote.
-Darla Mercado
Transportation stocks poised to catch a bid, MRB Partners says
With the downturn in freight shipments poised to reverse in 2024, partly due to low inventories spurring a revival in manufacturing output, transportation stocks should similarly rebound, according to a Thursday note from MRB Partners. Increased global trade should also give the stocks a boost, the researcher said.
Within the industry, MRB recommends air freight and logistics companies, saying, "the recent upswing in air freight revenue ton miles bodes well for the relative forward earnings of air freight stocks, which are also attractively valued."
Railroads and truckers, meanwhile, are being held in check by "muted growth in non-intermodal rail traffic, subdued pricing trends, and elevated relative valuations," MRB strategist Salvatore Ruscitti wrote.
The Dow Jones Transportation Average is higher by 2.3% so far this week and up 0.34% for the year thus far, exactly matching the S&P 500 this week but lagging the S&P's 2.6% gain in 2024.
— Scott Schnipper, Michael Bloom
Intel, AMD, Nvidia drag Nasdaq 100 futures lower
Shares of major semiconductor stocks dragged Nasdaq 100 futures lower on Thursday evening. The index sank by 0.5%, losing about 90 points in after-hours trading.
Semiconductor manufacturer Intel lost about 10% after reporting disappointing first-quarter guidance.
Shares of another semiconductor company, Advanced Micro Devices, sank more than 3%, while software and manufacturing equipment provider Applied Materials lost 2.3%. Semiconductor company KLA also shed 6% after posting lower-than-expected guidance for the fiscal third quarter, and Nvidia shed 1.7% on the back of the sector's declines.
— Pia Singh
Intel, Levi Strauss among companies moving in after-hours trading
Check out the companies making headlines in after-hours trading:
- T-Mobile— The telecommunications stock shed 2.9%% after T-Mobile missed on earnings expectations for the fourth quarter, but beat on revenue. The company posted $1.67 per share in earnings, while analysts polled by LSEG expected $1.90 per share. Revenue came out at $20.48 billion for the period, higher than the expected $19.64 billion according to LSEG.
- Intel— Shares of the chip manufacturer lost nearly 8% in after-hours trading after the company posteddisappointing first-quarter guidance. Intel expects adjusted earnings of 13 cents per share for the first quarter of 2024, while analysts surveyed by LSEG called for 33 cents per share. Anticipated revenue of $12.2 billion to $13.2 billion also came short of analysts' expectations of $14.15 billion in revenue for the period.
- Levi Strauss— Shares of Levi Strauss declined nearly 1% after the apparel company said Thursday it willcut at least 10% of its global corporate workforcethrough restructuring efforts. The job cuts will happen in the first half of 2024, the company said. Fourth-quarter earnings also came out Thursday, with Levi's adjusted earnings per share beating estimates, but falling short on expectations for revenue.
For the full list, read here.
— Pia Singh
Stock futures open in the red
Futures tied to theDow Jones Industrial Averagewere lower on Thursday, down 67 points, or 0.18%.
S&P 500 futuresshed about 0.15%. Nasdaq 100 futuresdropped 0.4%, led by declines from Intel after a disappointing first-quarter guidance.
— Pia Singh
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