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

Eric Bleeker

Published: December 19, 2024 10:57 am

Last Updated: December 19, 2024 3:01 pm

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Dow Set to Break 10-Day Losing Streak

2:55 pm

With an hour to go left in the trading day, it looks like the Dow Jones Industrial Average will break its 10-day losing streak. Another streak to watch is whether the market continues to see more losers than gainers.

The S&P 500 has seen an incredible mark of 13 consecutive trading sessions where more stocks declined than advanced, which is the longest streak in more than four decades.

Some notable stock moves later into trading include:

• Darden Restaurants: Up 15% following strong 2025 guidance.
• Palantir: Up 5% after winning another Army contract worth $619 million.
• Accenture: Up 7.5% after reporting stronger than expected guidance for next year amid strong AI bookings growth.

Bitcoin Back Below $100,000

1:50 pm

Bitcoin has dropped back below $100,000 after hitting nearly $108,000 per Bitcoin on Tuesday. Its price had jumped on optimism around the US creating a Strategic Bitcoin Reserve.

It’s worth noting that Bitcoin has often fallen when expectations for interest rates rose. For example, the price dropped throughout 2022 as the year saw increasing interest rate expectations as inflation continued to sar.

Sectors Outperforming Today

10:52 am

What sectors are seeing the biggest rebound after yesterday’s drop?

Winners include:

• Utilities: Up 1.03%
• Financials: Up 1.02%
• Information Technology: Up .99%

Sectors struggling today:

• Health Care: Down .67%
• Materials: Down .41%
• Real Estate: Down .14%

The performance of real estate in particular will be one to watch in the weeks to come. Data released today showed home sales grew more than expected in November, which is a positive for the industry. However, on the other side, persistently high interest rates will continue to put a headwind on real estate activity.

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.