Another strong week for US stock indexes as technology shares continue to lift the mood in New York as markets look past President Donald Trump’s semiconductor tariffs. According to analysts at Bank of America, 10 ‘tech’ stocks have driven 80% of the S&P 500 recovery since ‘Liberation Day’ (2 April), - the Mag Seven plus Broadcom (AVGO:NASDAQ), Oracle (ORCL:NYSE), Palantir (PLTR:NASDAQ).
Yet tariffs remain a real issue for investors, with reciprocal levies against a host of major trading partners taking effect from 7 August, keeping markets on edge over their potential impact. Trump also announced a 100% duty on semiconductor imports, but exempted companies with manufacturing operations in the US, leaving most major chip imports unimpeded.
Speaking of tariffs, gold is up to some funny business with the US apparently slapping tariffs on one-kilo bars, sparking a New York futures surge. Similar to the copper market, political shenanigans are unbalancing the usual internal structure of the physical vs futures markets, where bullion banks use gold bars as a hedging tool, so we’re seeing shorts intended as hedges get blown up.
Signs of further cooling in the labour market weighed following data showing a rise in weekly jobless claims, although the reading furthered bets that the Fed will cut interest rates in September. Trump has repeatedly called on the central bank to cut interest rates and stem an economic slowdown, so don’t be surprised if it sees the president expedite his selection of Jerome Powell’s successor.
Apple (AAPL:NASDAQ) extended gains over the past week, and investors might wonder whether markets were just waiting for tariff overhangs to clear - Trump said during the week that the company’s investments in US manufacturing exempt it from a 100% chip tariff.
PALANTIR TECHNOLOGIES
The secretive AI firm continues to make a mockery of its triple-digit PE (241, on a rolling 12-month basis), rallying close on 20% over the past week after quarterlies topped Wall Street estimates and hiked its full year guidance.
Palantir’s revenues grew 48% during the three months to end June, hitting $1 billion for the first time. The software analytics company also boosted its full year guidance, now anticipating revenues to range between $4.14 billion and $4.15 billion, up from prior guidance of $3.89 billion to $3.90 billion.
‘We’re planning to grow our revenue… while decreasing our number of people’, CEO Alex Karp said. ‘This is a crazy, efficient revolution. The goal is to get 10-times revenue and have 3,600 people’, said Karp. Palantir currently employs around 4,100.
ELI LILLY
Anti-obesity drug maker Eli Lilly (LLY:NYSE) sank more than 14% on Thursday (7 Aug) after revealing disappointing results for its oral weight-loss pill orforglipron in the first of two pivotal late-stage trials.
Obesity patients taking Lilly’s oral pill lost 12.4% in body weight after 72 weeks versus expectations of around 15% while adverse side effects were higher than anticipated.
Shares in arch rival Novo Nordisk (NOVO-B:CPH) rallied as much as 13% in a reversal of fortunes for the two leading weight-loss drug makers. Novo’s oral obesity pill, already submitted for approval in the US, helped patients lose around 15% of their body weight.
Lilly also revealed second quarter results ahead of analysts’ forecasts and raised full year guidance. Revenue increased 38% year-on-year to $15.56 billion and adjusted earnings per share jumped 61% to $6.31.
The company now expects full year revenue in a range of $60 billion to $62 billion, up from $58 billion to $61 billion previously and adjusted earnings per share in a range of $21.75 to $23 versus consensus calling for $21.94.
MCDONALD’S
Investors were lovin’ McDonald’s (MCD:NYSE) this past week, chasing the fast-food giant’s shares higher following forecast-beating second quarter results (6 August).
Management’s guidance that the second half of the year should be stronger as the burgers, fries and milkshakes seller laps soft fourth quarter comparatives also stoked appetite for the stock. Revenues rose 5% to $6.84 billion in the quarter ended 30 June, ahead of the $6.7 billion expected and boosted by marketing efforts and new menu items, while earnings per share of $3.19 came in 7% higher year-on-year, topping the $3.15 Wall Street analysts were looking for.
Global same-store sales increased 3.8% for their biggest jump in nearly two years, while the Chicago-based foodservice retailer’s US restaurants served up same-store sales growth of 2.5%, reversing two consecutive quarters of declines. Despite McDonald’s tastier quarterly performance, CEO Chris Kempczinski told analysts he remains cautious about the overall near-term health of the US consumer.
