US indices made new all-time highs on 11 July despite the ongoing threat posed by tariffs as stocks were lifted by M&A and some excitement in pockets of the market.
While the 9 July deadline, created when the Trump administration hit pause on the 'Liberation Day', tariffs, was extended out until the beginning of August, there were threats of new 50% levies on Brazil and copper. This lifted the metal to its own record high and ensured trade policy remained a live issue for the markets.
Elsewhere, minutes from the latest Federal Reserve meeting suggest a spread of opinion among Fed officials over how aggressively to cut interest rates. At a stock level Moderna (MRNA:NASDAQ) was among the big gainers as its Covid shot was fully approved by by regulators for use in children.
Among the fallers was engineering software play Autodesk (ADSK:NYSE) as investors reacted negatively to speculation it might bid for its rival PTC (PTC:NASDAQ).
NVIDIA
Boom, $4 trillion. What a week it’s been for Nvidia (NVDA:NASDAQ). Sure, the stock has risen a modest looking 4% or so yet that has taken the AI chips giant’s market cap beyond the $4 trillion market cap ceiling, the first company in history to do so, closing at $164.10 on 10 July.
But as the saying goes, ‘time and tide wait for no man’, and nor does the market, so it seems only natural to look at what’s next. And what’s next could be very exciting because, having run the numbers, Nvidia at $5 trillion may not be in the realms of fantasy.
Sceptics will scoff, after all no company has ever been valued at $4 trillion before, let alone $5 trillion. However, looking at current consensus forecasts for this full year (to end January 2026) plus the following two, we calculate Nvidia’s average three-year PE (price to earnings) would stand below 40, still lower than five-year averages, based on Koyfin data.
The three-year average PEG (price to earnings growth) would stand at approximately 1.2 times, significantly below the PEGs of the rest of the S&P 500’s 10 most valuable companies, which range between 1.8 and 3.2 times.
KELLOGG
Shares in Kellogg (KLG:NYSE) leapt 30% on Thursday (10 July) after the cereal-maker agreed a $3.1 billion takeover offer from Italian firm Ferrero.
The deal, Ferrero’s largest since its 2018 purchase of Nestle’s US confectionery business, will bring the Ferrero Rocher, Kinder and Nutella brands together with iconic breakfast products such as Frosted Flakes and Special K.
Analysts at Jefferies flagged stakebuilding earlier this year by European parties, despite a falling market for cereals and a consistent erosion of the firm’s market share, and suggested the 60% premium to Kellogg’s share price made it ‘hard to envision another bidder coming over the top’.
Kellanova (K:NYSE), which was previously spun off from the cereals business, is also being taken over by US confectionery giant Mars in a $36 billion deal.
DELTA AIR LINES
US carrier Delta Air Lines (DAL:NYSE) flew 12% higher on Thursday (10 July) after reinstating its outlook and forecasting a strong summer travel season, catching analysts off-guard.‘People are still traveling,’ insisted CEO ED Bastien. ‘What they’ve done is they’ve shifted their booking patterns a little bit.
They’re holding off making plans until they’re a little closer to their travel dates,’ explained Bastien.The shares were also buoyed by better than expected second quarter earnings with adjusted EPS (earnings per share) coming in at $2.1 compared with Street forecasts of $2.05.The company’s reinstated guidance is calling for full year adjusted EPS in the range of $5.25 to $6.25, ahead of consensus estimates of $5.39.
The company said it expects lower seating capacity to have a positive effect on pricing.The surprise trading update saw other airlines catching the updraft with United Airlines (UAL:NYSE) jumping 14% and American Airlines (AAL:NYSE) up nearly 13%.
