S&P 500 hits new all-time high despite hot inflation print | Wall Street Week, 15 Mar 2024 08:22

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S&P 500 hits new all-time high despite hot inflation print | Wall Street Week

15 March 2024, 08:22

Stocks lower as investors await key US inflation data / Image Source: Adobe

There is a new term for the US market doing the rounds in financial circles – move over ‘Goldilocks’, stocks are now ‘Teflon’.

In other words, even if the economic news is bad – such as the latest US inflation data, which topped analysts’ forecasts – it doesn’t stick because stocks are only going up, and whereas investors used to fear a sell-off their greatest worry right now is not being in the market.

This week’s new all-time high in the S&P 500 has been driven once again by the Magnificent Seven with the addition of enterprise database firm Oracle (ORCL:NASDAQ) whose shares jumped more than 10% as it became the latest stock to be seen as an AI winner.

That means the index is up 17 of the last 20 weeks, a winning streak it hasn’t pulled off since 1964, driven by a combination of AI ‘fever’ and an explosion in short-dated options trading.

Meanwhile the VIX, or ‘fear index’, is dead in the water and has been since the end of November, while the Greed & Fear indicator has been in Greed or Extreme Greed territory since the start of the year.

BOEING

In contrast to the broader market, airplane-maker Boeing (BA:NYSE) has had an awful start to 2024 with its shares down more than a quarter.

To add insult to injury, shares in European rival Airbus (AIR:EPA) are hitting all-time highs after the firm posted strong full-year results and unveiled a special dividend payment.

As Bloomberg points out, the gap between the two companies market caps has never been bigger with Airbus worth around $24 billion more than the Seattle-based firm.

Boeing’s safety record has been seriously called into doubt in recent years after two fatal crashes, a drawn-out grounding of its planes and a string of accidents and mishaps in 2024.

Deliveries have slowed, with just 27 aircraft handed over last month compared with 49 for Airbus, and the firm faces a Department of Justice criminal investigation into the Alaska Airlines 737 Max 9 midair blowout.

Even some of its staunchest supporters are stepping back, with United Airlines (UAL:NASDAQ) chief executive Scott Kirby telling Boeing to stop making its long-delayed Max 10s and opting to switch to Airbus A321s instead.

FREEPORT MCMORAN

Shares in copper producer Freeport-McMoran (FCX:NYSE) jumped over 10% this week to $43.41, a new three-month high although still below their highs of last July, thanks to a surge a surge in copper prices.

Prices hit a seven-month high this week as China’s top copper smelters, which process half the world’s mined copper, agreed to cut production at some loss-making plants.

The benchmark three-month copper futures contract on the London Metal Exchange hit $8,799 per metric tonne, the highest price since the beginning of August last year.

Freeport is due to report first-quarter earnings on 19 April, with the consensus forecasting a rise of roughly 5% in revenue to $5.64 billion but a more than 30% drop in earnings per share to $0.36 according to Zacks Research.

Analysts at Jeffries are positive on the stock, saying ‘growing demand for copper, coupled with supply constraints should benefit Freeport over the coming years’.

Meanwhile, attention will be on new president and chief executive Kathleen Quirk who was appointed last month after a 35-year career at the mining giant.

ORACLE

Enterprise database giant Oracle (ORCL:NYSE) is fast becoming a major player in AI (artificial intelligence).

Shares in the Austin, Texas-based company reached all-time highs as it reported third quarter (to the end of February) earnings per share of $1.41 against the $1.38 pencilled in by analysts with revenue also a smidge ahead at $13.3 billion. This marked a 7% advance on the total for the same period in the previous financial year.

‘Large new cloud infrastructure contracts signed in Q3 drove Oracle’s total remaining performance obligations up 29% to over $80 billion, an all-time record,’ said Oracle chief executive Safra Catz in a statement announcing the results, with the promise of more of the same to come.

‘We expect to continue receiving large contracts reserving cloud infrastructure capacity because the demand for our Gen2 AI infrastructure substantially exceeds supply — despite the fact we are opening new and expanding existing cloud datacentres very, very rapidly,’ Catz added.