Fear of Inflation Rises as Stocks Dip During Quiet Trading Week
Fear of Inflation Rises as Stocks Dip During Quiet Trading Week
By:JJ Kinahan
Also, Broadcom projects AI growth, ServiceTitan soars and oil prices rebound
- Broadcom projects growth in AI sales of 65%, leading a 14% premarket stock surge.
- Oil rebounds abov e $70, and bond rates raising concern over inflation, as bond rates remain elevated.
- ServiceTitan’s successful IPO sparks optimism for a recovering market heading into 2025.
Stocks saw modest declines yesterday, with the S&P 500 falling 0.5% and the Nasdaq Composite down 0.7%. Small caps underperformed, as the Russell 2000 dropped 1.3%, while the Dow Jones Industrial Average declined 0.5%. Overall, it’s been a quiet week for the markets, which is typical for this time of year.
Despite the broader market’s subdued performance, there were notable individual stock moves. Broadcom (AVGO) shares surged 14% in premarket trading following strong earnings and a projection of 65% growth in artificial intelligence sales for the first quarter of 2025, building on a 200% increase this year.
Costco (COST) reported earnings that beat expectations on both revenue and profit, with e-commerce sales up 13% from last year. However, its shares remained flat. RH (formerly Restoration Hardware) missed earnings estimates but raised its fourth-quarter guidance, driving an 18% premarket gain.
The initial public offering (IPO) market saw a spark of activity with ServiceTitan (TTAN), a cloud-based service provider for trades like plumbing and landscaping, debuting yesterday. Its shares surged 40% after being priced at $71, signaling potential optimism for the IPO market in 2025 after a prolonged slowdown.
News from around the markets
Google announced a subscription price hike for YouTube TV, increasing monthly costs to $83, up from the $35 launch price in 2017. Warner Bros. Discovery (WBD) revealed plans to carve its operations into two divisions, one for legacy cable TV and the other for studios and streaming, boosting its stock by over 15% yesterday.
In the commodities market, crude oil prices rebounded above $70 after falling below $68 earlier in the week. As a key driver of inflation, oil remains a critical factor to monitor.
Elsewhere, long-term bond rates remain elevated, reflecting bond market concern about future interest rates. Despite expectations of a Federal Reserve rate cut at next week’s meeting, the steepening yield curve indicates lingering uncertainty.
Prospects for today’s trading
Premarket indicators showed stocks trending higher today, following a week where the S&P 500 fell in three of the last four sessions despite reaching record highs.
As the holidays approach, trading volume is likely to slow, with key economic data, such as inflation metrics, still to come. Investors are advised to stick to their plans and long-term goals amid these market dynamics.
JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan
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