After a difficult start US stocks recovered through the course of the week as hopes of a rate cut later this month solidified.
This followed jobless claims data for the week to 30 August which showed an increase to 237,000. This was above expectations and meant for the first time since April 2021 the world’s largest economy has more unemployed people than job openings.
The labour market is typically a key influence on the decision making of the Federal Reserve.
Data storage firm Western Digital (WDC:NASDAQ) advanced as it received positive broker coverage and shares in chip designer Broadcom (AVGO:NASDAQ) surged in after hours trading on 4 September as it emerged the company has signed up the company behind ChatGPT – OpenAI – as a new multi-billion-dollar customer.
On the back foot were brewer Constellation Brands (CTX:NYSE) – which shocked the market with a big profit warning on Tuesday – and discount retailer Dollar Tree (DLTR:NASDAQ) amid concern about tariff impacts.
ALPHABET
If Alphabet’s (GOOG:NASDAQ) Google empire is to get broken up, it won’t be by regulators anytime soon. In a landmark antitrust ruling, US judge Amit Mehta determined that the internet search giant will not be required to divest its Chrome browser or the Android operating system, a significant victory for Google’s parent.
The ruling spares Alphabet from one of the most drastic measures in its ongoing legal battle with the US Department of Justice, although it does impose new obligations on Alphabet to share certain search data with competitors, a move intended to foster greater competition in the online search market.
Market relief was palpable, Alphabet shares surging nearly 10%, continuing its steady recovery since April to hit all-time highs.
Despite avoiding the forced sale of Chrome, Alphabet is not entirely off the hook, with the court insisting that, in future, Alphabet must no longer enter exclusive distribution contracts for its Search, Chrome, Google Assistant, and Gemini app.
This adjustment is intended to give phone manufacturers the freedom to offer alternative search engines, browsers, or AI assistants, potentially shifting the competitive dynamics of the tech industry. Yet the decision, crucially, does not prevent Alphabet throwing billions of dollars at Apple (AAPL:NASDAQ) to have its search embedded in iPhones, easing pressure on both tech titans.
Analysts note that this decision reflects the evolving landscape of technology, particularly with the advent of generative AI tools.
AMERICAN EAGLE OUTFITTERS
Shares in clothing and accessories retailer American Eagle Outfitters (AEO:NYSE) soared more than $5 or 38% to $18.79 on 4 September after the firm smashed second-quarter earnings expectations thanks to a major sales boost from its latest advertising campaign.
The Pittsburgh-based company reported higher demand in the three months to the start of August thanks to marketing campaigns featuring actress Sydney Sweeney and sports star Travis Kelce, who recently got engaged to pop star Taylor Swift.
Net income for the period was $77.6 million or $0.45 per share against analysts’ estimates of $0.21 and a prior-year figure of $0.39 per share.
‘The fall season is off to a positive start’, said chairman and chief executive Jay Schottenstein. ‘We have seen an uptick in customer awareness, engagement and comparable sales.’
The firm also raised its forecast for third-quarter and fourth-quarter comparable sales thanks to the Sydney Sweeney ‘Great Jeans’ campaign which it said had generated increased traffic in-store and online.
MACY’S
Department store operator Macy’s (M:NYSE) was marked up 20% to $16.28 this week after delivering forecast-busting second-quarter earnings (3 September). Revenues were boosted by store revamps and a US shopper that has so far remained resilient, although management expects the consumer to become ‘more choiceful’ in the company’s second half.
While quarterly revenues fell 2.5% to $4.81 billion, that was better than the $4.76 billion Wall Street expected and earnings per share of 41 cents came in handily ahead of the 18 cents called for by consensus. Macy’s, which has begun to push through price increases to mitigate against tariffs, benefited from a standout performance from the iconic Bloomingdale’s, which posted its fourth consecutive quarter of growth.
And though Macy’s remains cautious ahead of the second half, the Tony Spring-steered retailer felt sufficiently confident to hike its full-year sales and earnings guidance. Macy’s now expects full-year adjusted earnings of $1.70 to $2.05, up from previous guidance of $1.60 to $2, and revenue in the $21.15 billion to $21.45 billion range, an upgrade on the previously forecast $21 billion to $21.4 billion.
