2/4/25

US stocks jump as drama-free session spurs rebound

A day largely bereft of immediate tariff threats was music to traders’ ears, with the S&P 500, Nasdaq 100, and Russell 2000 all booking strong gains on Tuesday.

Energy was the best-performing S&P 500 sector ETF, as the lack of immediate supply distributions from Canada buoyed the group despite a downdraft in the price of crude oil. Tech and consumer discretionary were also up more than 1%, while the defensive consumer staples and utilities sectors suffered declines and were at the bottom of the sector leaderboard.

Palantir skyrocketed on the heels of blowout revenue growth and guidance that suggests more of the same is in the offing. Some bears are admitting the error of their ways, while bulls rejoice and look for further gains.

Nvidia rebounded from Monday’s tumble as traders showed persistent demand to buy the dip, and Bank of America doubled down on the stock as its top pick in the industry.

Embattled server company Super Micro Computer surged after saying it would provide a “business update” next week, which has spurred hopes that the company will get its corporate filings in order in time to avoid delisting from the Nasdaq.

Fox jumped on top- and bottom-line results that surpassed every analysts’ expectation and plans to launch its first streaming service this year.

Merck got slammed after pausing shipments of one of its key drugs to China on poor demand.

PayPal had its worst day since February 2022 as analysts fret that the payments company is losing market share.

North America has not been kind to PepsiCo, with its lackluster results for the region prompting a large retreat in the stock.

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markets

2h

Analysts on hard drives: “Supply remains tight”

BofA analysts bumped up price targets for hard disk drive (HDD) industry leaders — and S&P 500 top stocks — Seagate Technology Holdings and Western Digital — as surging AI data center demand for these low-cost, long-term data storage devices continues to ramp up. They wrote:

We raise our calendar year hard disk drive exabyte shipment forecast to 1,602 exabytes (+28% y/y) from 1,575 exabytes (+26% y/y) and see room for further upside as demand continues to outpace supply. Despite double digit percentage increases in total capacity ... from STX & WDC so far during C25, HDD industry supply remains tight.

BofA boosted its price target for Seagate from $170 a share to $215, slightly above where the stock is trading on Monday. The analysts also increased their stock price target on Western Digital from $100 to $123, implying a roughly 20% premium to where its share were trading Monday afternoon shortly before 2 p.m. ET.

Besides being an influential market driver this year, demand for hard disk data storage also reflects the vast amounts of data that the boom in AI is expected to generate. (An single exabyte is the equivalent of 1 billion gigabytes.)

As a result, hard drive makers like Seagate and Western are focusing on the next generation of high capacity data storage gizmos that pack more data bits. These devices are also more profitable than traditional disk drives, which has helped to boost the profitability of the industry, BofA analysts said.

“As HDD demand continues to outpace supply, STX & WDC have seen profitability metrics hit all-time highs,” they wrote.

Those profitability metrics could help explain why the stocks have suddenly caught the fancy of traders.

“We estimate that STX & WDC can get above 42-43% corp gross margin levels exiting [calendar year 2028.],” they wrote. “But if pricing is stronger than expected or if manufacturing efficiencies lower COGS, we believe margins could go even higher. Key risks include pause in hyperscaler capex (low probability) and tariffs.”

markets

3h

Alaska Air declines as it warns its profit will be dinged by fuel costs, weather, and air traffic control problems

Seattle-based Alaska Air is trading lower Monday afternoon as the airline warned investors that its third-quarter profits will likely come in on the low end of its prior outlook.

When Alaska Air reported its second-quarter earnings in July, the airline said it expected third quarter earnings to land between $1 and $1.40 per share. As of early Monday, analysts polled by FactSet estimated $1.35.

A host of issues are behind the company's expectations of a dent to earnings. ALK said it's projecting fuel costs to climb to between $2.50 and $2.55 per gallon, up from its previous estimate of $2.45, due to West Coast refinery disruptions. Weather and air traffic control issues “led to increased costs from overtime, premium pay and passenger compensation,” said Alaska.

With Monday afternoon’s move, ALK shares are down about 8% year to date.

markets

4h

Intel cuts expense forecast, sees best gain in weeks

Intel shares jumped after the partially nationalized US chip giant snipped its forecast for operating expenses this year to $16.8 billion from $17 billion after finalizing the divestiture of 51% of its stake in its Altera programmable chip unit to private equity firm Silver Lake.

Shortly after 12 p.m. ET the stock was up 4%, Intel’s best gain since August 22, when the Trump administration announced the extraordinary step of having the federal government take a 10% ownership stake in the private chip company.

Intel trims full-year expense outlook following Altera stake sale

Intel trims full-year expense outlook following Altera stake sale

Complex Simplicity

OpenAI doesn’t have the cash to pay Oracle $300 billion — raising it will test the very limits of private markets

The ChatGPT maker plans to burn though $115 billion by 2029. No company in history has ever lit that much money on fire intentionally, let alone tried funding such a splurge through private markets alone.

David Crowther5h

markets

5h

Seagate, Western Digital romp as hard drive makers dominate S&P 500 leaderboard

Hard drive makers Seagate Technology Holdings and Western Digital surged Monday, putting them comfortably in the top two spots of this year’s top performers in the S&P 500.

Shortly after 10:30 a.m. ET, they were looking at gains of roughly 145% and 130%, respectively, for the year.

Not much news on the day, though Bank of America analysts have boosted the price target for Seagate to $215 from $170 while upwardly revising their outlook for hard disk drive demand this year, per The Fly.

Positive background music on the US and China’s trade relationship, important to IT hardware makers, is also likely helping, along with a general upswing in the AI data center trade.

Data storage is so hot right now

Data storage is so hot right now

Not much news on the day, though Bank of America analysts have boosted the price target for Seagate to $215 from $170 while upwardly revising their outlook for hard disk drive demand this year, per The Fly.

Positive background music on the US and China’s trade relationship, important to IT hardware makers, is also likely helping, along with a general upswing in the AI data center trade.

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