The U.S. stock market rebounded on Wednesday, with the Nasdaq and S&P 500 up more than 1% each after upbeat outlooks from Micron Technology and other companies boosted investor confidence and eased worries about the economy.
Companies Making Headlines in Midday Trading
Lululemon Athletica Inc reported strong earnings and revenue, resulting in a more than 13% increase in their shares. Micron Technology’s shares also increased by 5.3% due to plans for a bigger headcount reduction, despite missing top and bottom line estimates. Carnival’s shares gained 3.6% after being upgraded by Susquehanna to “positive” from “neutral” due to an expected EBITDA recovery until 2024.
UBS announced the return of former CEO Sergio Ermotti, resulting in a 4.2% increase in shares. Emergent BioSolutions’ shares added 3.8% after FDA approval for over-the-counter sales of their Narcan nasal spray, while Lucid’s shares declined by 2.5% following a report of planned layoffs.
CalMaine Foods’ stock jumped more than 10%, thanks in part to higher egg prices and a stronger-than-expected report for their fiscal third quarter. However, major retailers such as Urban Outfitters, Burlington Stores, Foot Locker, and Ross Stores saw declining shares after being downgraded to “sell” from “neutral” by UBS. Bath & Body Works’ shares fell more than 2% following a UBS downgrade due to expectations of a recessionary environment.
Dave & Buster’s stock rose 1.5% following better-than-expected results and an announced share repurchase program. Meanwhile, Petco’s shares increased by 5% after the CEO disclosed a significant share purchase. Newmark Group’s stock gained 7% after being hired by the FDIC to sell about $60 billion worth of Signature Bank’s loans.
Nasdaq and S&P 500 Up More than 1%
The Nasdaq and S&P 500 were up more than 1% each on Wednesday, boosted by Micron Technology’s upbeat outlook and a positive earnings forecast from Lululemon Athletica Inc. Micron shares were up 7%, leading gains in the PHLX semiconductor index.
Investors were also trying to gauge whether banking system turmoil may be subsiding, and what that may mean for Federal Reserve policy. Personal Consumption Expenditures data due on Friday is the next key U.S. economic report, with Fed funds futures traders now pricing in a 47% chance of a 25 basis points increase in May.
Stock Market Premarket Activity and Analyst Recommendations
Lululemon’s strong holiday quarter and guidance uplifted shares by over 16%, while Susquehanna upgraded Carnival to “positive” due to ample liquidity and expected margin improvement. UBS downgraded Urban Outfitters, Burlington, Foot Locker, and Ross Stores due to expected downside to price targets from slowdown in consumer spending, as well as Bath & Body Works due to expected recessionary environment affecting discretionary spending.
Micron Technology’s shares rose by 2.6% after announcing a larger headcount reduction to combat bloated customer inventories. Paychex Inc.’s premarket shares rose by 3% ahead of the fiscal third-quarter earnings report.
In other news, UBS’s former CEO, Sergio Ermotti, will replace current CEO Ralph Hamers effective next week, after UBS agreed to buy Credit Suisse for 3 billion Swiss francs.
Overall, despite some downgrades and layoffs reported in individual companies, positive outlooks from others led to a strong rebound in the U.S. stock market on Wednesday, with energy stocks also rising due to oil prices gaining for a third day.
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