Investing

Live Market News: Nasdaq Composite Rebounds | Micron (MU) Plummets After Earnings

Eric Bleeker

Published: December 19, 2024 10:57 am

Live Updates

Markets plummeted yesterday after the Federal Reserve dialed back expectations for 2025 interest rate. Today, they’ve opened in the green, but how much recovery will we see? Let’s check in on major indexes as of 10:00 a.m. ET:

• Nasdaq: Up 107.16 (+.55) 
• S&P 500: Up 26.94 (+.46%) 
• Dow Jones Industrial Average: Up 193.99 (+.46)

The Dow is looking to break its historic 10-day losing streak, which is the longest since 1974. Markets opened higher and have trended down in the first 30 minutes of trading, so it’s not unlikely they could still close in the red today if money managers are exiting to cash or fixed income. 

Fed News Conference Sends Markets into Tailspin 

The big news shaping markets today is the Federal Open Market Committee (FOMC) announcing it would cut rates by 25 basis points. That aspect of the Fed’s decision yesterday was expected. 

However, the Federal Reserve’s outlook for 2025 now has two rate cuts as a median consensus. 2026 is another period with a 2-rate cut median, meaning FOMC members now see rates at 3.75% to 4.00% by the end of 2025, a significant reduction from recent expectations. 

It is worth noting that yesterday was the largest reaction to an FOMC meeting ever. The largest reaction to an FOMC announcement post-Covid was a drop of a little more than 2% in November 2022. Yesterday the S&P dropped 2.95%, the Nasdaq dropped 3.56%, and the Russell 2000 dropped more than 4%. 

That is to say, we may have seen an overreaction yesterday that the market unwinds in the weeks to come. 

Micron Down Big 

The biggest earnings announcement yesterday came from Micron (Nasdaq: MU), and the market wasn’t please. Micron has become an ‘AI winner,’ but AI only accounts for a portion of its business, and the non-AI areas are struggling. 

Micron outperformed last quarter, with EPS of $1.79 versus expectations of $1.73, but its guidance disappointed. The company projected EPS next quarter of $1.43, well below expectations of $1.97. The company reiterated booming demand for the memory used in AI – high-bandwidth memory (HBM). Micron sees HBM’s total addressable market growing from $16 billion in 2024 to $100 billion in 2030. That would make HBM larger than the entire DRAM industry that’s Micron’s focus today. 

However, today, Micron’s business is mostly DRAM and NAND, and excess inventory in those markets is pulling down prices. That led to the shortfall next quarter. In the long run, Micron may perform well thanks to the growth of AI, but it must work through a down cycle in the near term.