U.S. Equities Rise as Inflation Remains Cool
The S&P 500 jumped 1% on Friday, Aug. 30, after the Federal Reserve’s preferred inflation gauge showed price pressures were cool in July. This latest data supports the likelihood of an interest rate cut by the Federal Reserve next month. The Dow also added 0.6%, ending the month with its first-ever close above 41,500, while the Nasdaq was up 1.1%.
Intel Considers Divestment of Foundry Business
Shares of Intel (INTC) soared 9.5% following reports that the chipmaker is considering a possible spinoff or sale of its foundry business. Intel is exploring multiple options for the section of the company that makes semiconductors for other firms. However, it may take time for Intel to make a move, with board members likely to discuss the possibilities at their meeting in September.
GE Vernova Reaches All-Time High
Shares of GE Vernova (GEV), the energy-focused business that spun off from General Electric in April, jumped 4.8% to an all-time high. The stock received an “outperform” rating from brokerage firm William Blair, as analysts predict high demand for energy to power artificial intelligence (AI) technology, which will likely require more natural gas and natural gas turbines. GE Vernova is well-positioned to benefit from turbine service contracts.
Western Digital and Hewlett Packard Enterprise Gain
Western Digital (WDC) shares were up 4.1% on the day after analysts at Citi boosted their sales estimates for solid-state drives. The company also received approval this week for a project to expand hard disk production in Thailand. Meanwhile, shares of Hewlett Packard Enterprise (HPE) gained 3.7% ahead of the company’s upcoming earnings report. The stock surged to a record high following HPE’s most recent quarterly report, which showed strong sales of AI-optimized servers.
Ulta Beauty Faces Challenges
Ulta Beauty (ULTA) shares dropped 4.0%, losing the most ground of any S&P 500 stock. The cosmetics retailer reported quarterly sales and profits that came in below estimates, with an unexpected decline in comparable store sales. Ulta cited subdued consumer spending and heightened competition as the main factors impacting its performance. The company also reduced its full-year forecasts, noting market share challenges.
APA Corp. and Super Micro Computer Experience Declines
Shares of APA Corp. (APA), an oil and gas exploration firm, sank 2.9% on Friday. Although APA beat quarterly sales and profit estimates in its most recent report, the stock has been trending downward since then. Super Micro Computer (SMCI) shares also dropped 2.5% after the server and data storage firm announced a postponement of its annual filing with the Securities and Exchange Commission (SEC). This move followed a report by activist investment firm Hindenburg Research that flagged irregularities in Supermicro’s accounting practices.
Conclusion
The U.S. equities market ended the month of August on a positive note, with major indexes rising as inflation remained cool. Intel’s potential divestment of its foundry business and GE Vernova’s all-time high were among the highlights of the day. However, Ulta Beauty faced challenges with lower-than-expected sales and profits, while APA Corp. and Super Micro Computer experienced declines. Investors will be closely watching upcoming earnings reports and any further developments in the market.
